National Coffee Day Welcomed by Gloomy Report

Kimberly Watson, Editor in Chief
September 29, 2011 /

As USA celebrates the National Coffee Day, a gloomy report on the future of Coffee Maker Manufacturing market projected a decline in revenue to $637.2 million, or 1.1 percent annually on average in the five years to 2011, according to IBISWorld.

The publisher of industry market research stated that the recession did not only send the demand of the discretionary goods produced by the coffee maker manufacturing industry crumbling, increasing import penetration has swept away the sales of domestic manufacturers.

While US-based companies produce coffee maker brands, most firms offshore production to low-cost facilities, especially those in China. IBISWorld has expanded its industry research report collection to include the Coffee Maker Manufacturing market.

Elsewhere in the world, the Uganda Coffee Development Authority recently released its June report showing that the farm-gate prices ranged between Shs1, 800- 2,000 for a kilogram of Robusta dry cherries known as Kiboko and Fairly Average Quality, which was sold at Shs4, 500- 4,800 per kilo.

The recent recent has seen consumers cutting back on unimportant spending as per capita disposable income fell for the first time in 20 years.

More consumers preferred home-made coffee to the ones sold in local coffee shops, but the crisis produced slim motivation to purchase new small household appliances, including coffee makers.

In addition, the poor housing market has dampened the hope of industry operators, as prospective consumers often buy coffee makers when they move to new homes.

Last month, new home sales dropped 2.3 percent to 295,000 according to Beth Ann Bovino, Senior Economist at Standard & Poor’s Ratings Services.

In a blog post, Bovino said: “It was in line with consensus expectations and comes after July was upwardly revised to a 302,000 unit pace (was 298,000). The Northeast fell 13.6% to a 19,000 unit pace, likely from Hurricane Irene distortions. However the South and the West also saw declines, down 2.4% and 6.3%, respecitively.

“The Midwest saw a 8.2% gain to 53,000, the third monthly gain. Total sales are up 6.1% over last August, with the Midwest up 65.5% y/y and the South up 9.3%. The Northeast and the West are down 36.7% and 10.6%, respectively. The months’ supply of unsold homes on the market edged up to 6.6 months, near the 6.5 month rate seen in July, though near historic averages of 5.5 to 6 months. The median sales price fell 8.7% to $209,100 in August over last year.”

Notwithstanding, IBISWorld projects the revenue to increase 1.3 percent in 2011 as consumer sentiment and disposable income are expected to increase.

“With the economy anticipated to continue its slow recovery, consumer demand for coffee makers will likely increase in the coming years. However, rising consumer demand will not likely benefit domestic manufacturers in the long run, since cheap imports will capture an increasing proportion of domestic demand,” IBISWorld said in a press release.

“Furthermore, rising input costs are expected to place pressure on manufacturers, causing revenue and profit margins to decline over the next five years. Consequently, IBISWorld forecasts that the Coffee Maker Market revenue will fall 1.0 percent annually in the five years to 2016 to total $604.7 million.”

 

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