GE Capital has released a national survey of C-suite executives at middle market companies (ranging from $10 million - <$1 billion in sales). The survey, which is broken out by industry including Food and Beverage, examines opinions on financial performance, operational issues and the economic outlook. 

KEY FINDINGS - The most significant insights to emerge from GE Capital’s survey of leaders of U.S. middle market firms include:

• The food and beverage sector continues to enjoy strong growth despite concerns about an increasing cost structure driven by increasing commodity prices.
• Revenue growth remains strong and the number of firms reporting year-over-year gains in employment is higher than it was in March of this year.
• The key consumer preferences driving product innovation in this sector are health and wellness, value and convenience.
• Many firms will look for operational efficiencies by increasing automation, reducing waste created during processing and adding more efficient equipment to replace older models.

THE FOOD & BEVERAGE INDUSTRY

·         Average revenue of commercial aviation firms surveyed = $206,940,000

·         $10MM-$49.99MM: 48%

·         $50MM-$99.99MM: 14%

·         $100MM-$499.99MM: 21%

·         $500MM-$999.99MM: 16%

·         Average number of employees = 766

·         Full time salary: 46%

·         Full time hourly: 33%

·         Contract: 6%

·         Part time: 15%

Nearly two-thirds of middle-market food and beverage firms are privately held corporations.

·         Privately held: 60%

·         Partnership: 12%

·         Sole proprietor ship: 10%

·         Public companies: 9%

·         Other:9%

ECONOMIC STRENGTH
The majority of food and beverage firms are confident in their local economy and the U.S. economy.

COMPANY PERFORMANCE

The proportion of food and beverage companies reporting year-over-year gains in performance continues to be very high. The number of firms reporting increased employment is up since March.

·         Improved overall performance: 66% (compared to 72% in March 2014)

·         Improved financial performance: 73% (compared to 68% in March 2014)

·         Increased employment: 59% (compared to 49% in March 2014)

TOP BUSINESS CHALLENGES
Similar to what other middle-market firms say, those in the food and beverage industry are concerned with the cost of healthcare and the uncertainty of government actions. The cost of doing business, especially commodity pricing, continues to be one of the primary challenges of the food and beverage industry.

INDUSTRY-SPECIFIC QUESTIONS

·         Nearly 60% of food and beverage firms expect their cost structure to increase in the next 12 months, and a similar proportion plan to increase the pricing of their products and services

·         More than half of food and beverage firms plan to improve operational efficiencies in the next 12 months, primarily by increasing automation, reducing waste created during processing and replacing old equipment with more efficient models

·         In addition to commodity costs, leaders in food and beverage are concerned about labor costs and food safety

·         Consumer preferences for health and wellness, value and convenience are likely to have the biggest impact on new product offerings in the next 12 months

STATE OF INDUSTRY AND PIPELINE
Over half (53%) of food and beverage firms will add workers. Employment in the sector is expected to grow an average 5.4% year over year.

·         Improved: 53% (compared to 55% in March 2014)

·         Same: 42% (compared to 41% in March 2014)

·         Down: 5% (compared to 4% in March 2014)

·         Mean total growth: 5.4%

Food and beverage firms expect a greater need for financing due to expansion.

·         41% believe the sector will expand in the year ahead

·         Capital expenditures are expected to be greater this year for half of food and beverage firms

·         40% of firms in the food and beverage sector will be considering additional financing for equipment

Margin growth is expected to be 6.4% in the food and beverage sector in the coming year.

• Increase: 39% (compared to 36% in March 2014)
• Same: 31% (compared to 42% in March 2014)
• Decline: 30% (compared to 22% in March 2014)
• Mean total growth: 6.4%
  
  

ABOUT THE SURVEY
GE Capital surveyed 50 companies in the food and beverage industry to ascertain their views on the global and U.S. economies and their outlook on a variety of important economic, industry and business-level issues, including growth expectations and financing needs. The decision-makers who were surveyed represent middle-market companies with revenue ranging from $10 million to $1 billion. For more information on food and beverage visit gecapital.com/food.

The full GE Capital U.S. CXO Industry Economic Outlook Survey covers the following industries:

·         Commercial aerospace

·         Food & beverage

·         Construction/contractors

·         Construction dealers

·         Fleet

·         Healthcare services & healthcare products

·         Retail

·         Telecom & media

·         Trucking

For information on these additional industries, visit gecapital.com/cxosurvey.

ABOUT GE CAPITAL, AMERICAS
GE Capital, Americas is a leading provider of loans and leases to mid-market businesses in the U.S., Canada and Mexico. We make it easier for companies to purchase or lease equipment; manage vehicle fleets, acquire businesses, and otherwise grow and thrive in the changing marketplace because we understand the industries we finance. As part of GE, we also deliver more than money. Our customers benefit from direct access to more than 100 years of successful innovation and resources from GE to help them become smarter, faster and more efficient. Visit www.gecapital.com/americas.

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