VCU The Consumer Defensive Sector and Beverages Non Alcoholic Industry Analysis The paper should be no less than 2 pages excluding reference page, graphs,

VCU The Consumer Defensive Sector and Beverages Non Alcoholic Industry Analysis The paper should be no less than 2 pages excluding reference page, graphs, charts, etc. About 650 words. Analyzer the sector (shorter portion of the paper- 1/4) and continue with the industry analysis. I am doing analysis based on PEPSICO which operates in that industry. Discuss the health, growth or decline of the industry, why, trends, etc. Is PEPSICO positioned to take advantage of these trends? How is the industry affected by the COVID19 and would numbers change? Mention how the company compares to the industry and the trends. Is the company a leader, a laggard, or a niche in the industry. You do not have to analyze the company, just make the conclusions. Please make sure that you don’t copy and paste.Your analysis should be your own understanding and words. You could copy and paste tables or graphs but with proper referencing. You could download charts and data into Word documents but NO PLAGIARISM! Cite your work an include references Here are some resources to use but you will have to find more credible ones as these will not be enough , also see attached but use with caution as one of the attachments discusses a couple of industries in one report. Again, the main focus here is on the industry. IBISWorld (school Database)https://www.bls.gov/iag/tgs/iag312.htm Industry
Surveys
Food, Beverages, Tobacco
& Cannabis
DECEMBER 2019
Arun Sundaram, CFA, CPA
Equity Analyst
Xiong Jun Goon
Industry Analyst
CONTENTS
5
Industry Snapshot
6
Financial Metrics
7
Key Industry Drivers
8
Industry Trends / Porter’s Five Forces
11
17
21
24
28
32
35
Food Products
Non-Alcoholic Beverages
Alcoholic Beverages
Tobacco Products
Cannabis
Regulatory Update
M&A Environment
Contacts
Sales Inquires & Client
Support
800.220.0502
cservices@cfraresearch.com
Media Inquiries
press@cfraresearch.com
CFRA
One New York Plaza
New York, NY 10004
Contributors
Beth Piskora
Vice President, Editorial
Marc Bastow
Senior Editor
36
How the Industry Operates
47
How to Analyze a Company in this Industry
52
Glossary
Garrett Nelson
Equity Analyst
53
Industry References
Aaron Ho
Equity Analyst
54
Comparative Company Analysis
Raymond Jarvis
Associate Editor
Jia Man Neoh
Equity Analyst
Varun Venkatraman
Equity Analyst
Copyright © 2019 CFRA, One
New York Plaza, New York,
NY 10004. All rights reserved.
CHARTS & FIGURES
6
Median Revenue Growth
Median Gross Margin Growth
Median Operating Margin Growth
7
Consumer Confidence Index
Producer Price Index
U.S. Dollar Index
8
Profit Share Map of Consumer Staples Sector
Revenue Share Map of the Global Food
Products Industry
9
Revenue Share Map of the Alcoholic
Beverages Industry
Revenue Share Map of the Non-Alcoholic
Beverages Industry
10
Revenue Share of the Tobacco Industry
Revenue Share of the Cannabis Industry
13
Natural Foods Stores in the U.S.
15
Pork Production-Major Markets
16
Global Alternative Meat Market
U.S. Alternative Meat Market
18
Leading Liquid Refreshment Trademarks
19
Changes in U.S. Beverage Consumption
20
Fastest Growing Non-Alcoholic Beverage
Categories in the U.S.
23
Alcohol Consumption-Key Markets
26
Worldwide Tobacco Market Share in 2017
30
Current & Forecasted Cannabis Market Size
31
Canada: Monthly Sales & Inventories of Dried
Cannabis
NEW THEMES
What’s Changed: Our survey
is new! We’ve combined our
U.S. Food & Beverages
Survey with Food &
Beverage-Europe, and added
Asia to the mix, along with
introductions to Tobacco and
Cannabis.
What’s Changed: We are
pleased to re-introduce
Tobacco to this survey. The
landscape has changed since
we last looked in November
2014, and yet, as you can see
in our Profit Pool chart on
Page 9, some things are still
the same.
What’s Changed: We are
pleased to introduce an entire
section on Cannabis, an area
that is growing like a ‘weed’,
but not without its stops and
starts. We kick it off starting
on Page 28.
EXECUTIVE SUMMARY
Walk into virtually any pub or restaurant in the U.S. and you are bound to find an international beer available
to quench your thirst. Similarly, tobacco products from around the world can be found, well, virtually
anywhere around the world, for those in search of a personally satisfying smoke. Meanwhile, the food
industry tries to find ways to satisfy the Millennial generation. With the globality of beverages, tobacco and
food in mind, and with an introduction to cannabis, CFRA is pleased to introduce this newest Industry
Survey, which combines our U.S. Food & Beverages survey with our Food & Beverage-Europe survey,
while adding other regions of the world, specifically Asia, as well as introducing tobacco and cannabis to
the mix. In other words, this survey reflects the Food, Beverage & Tobacco industry group within the Global
Industry Classification Standard (GICS). CFRA has a neutral outlook on the Food, Beverage, Tobacco and
Cannabis industries. Below are the key themes we highlight for 2020.
Healthy Trends and Demographics Continue to Shape These Industries
Consumers around the world remain interested in how their food is produced and grown. Organic or
“natural” labels have been growth drivers for food and beverage manufacturers, some of which have added
brands through acquisitions. Along with an increased curiosity, consumers are dynamically changing
preferences and consumption patterns, causing food and beverage manufacturers to adapt and
continuously shift portfolios, which could be a huge supply chain headache. Most of the trends that are
reshaping how we eat, drink and carry out our day-to-day activities can be attributed to the rise and influence
of the millennial generation. In the U.S., millennials make up the largest portion of the labor force. In
emerging markets, you can find about 86% of the world’s millennials, accounting for almost two billion
people. We’re currently at the start of a major global demographic shift, one that is unprecedented in human
history. As a result, new opportunities exist for food and beverage manufacturers; however, it could be
tougher than ever to effectively compete and seize these opportunities.
Recent Cannabis Legalization Has Led to Severe Market Oversaturation
Global cannabis sales are forecasted to grow from $150 billion to $231 billion over the next 15 years. This
figure can look very attractive for companies looking to enter this space, especially since more and more
countries and U.S. states are taking action to legalize certain aspects of cannabis sales. However, one
major concern is the market oversaturation that has been caused due to the low barriers of entry. As
legalization expands, we expect markets to become even more saturated. We’ve started seeing this occur
in countries that have legalized recreational cannabis. For example, in Canada, growth in cannabis supply
has far outpaced the increase in consumption, producing a massive inventory glut and a steep drop in
prices. As a result, we are concerned that if legalization occurs in the U.S., we’ll see even greater production
and price erosion. This could create distress for companies with high production costs and weak balance
sheets/liquidity profiles, thus potentially leading to more consolidation within the industry.
Amazon Raises E-commerce Stakes
According to Packaged Facts, online U.S. grocery sales will more than triple by 2022, reaching $41.7 billion,
a compound annual growth rate of 27.1% — reflecting a growing consumer preference for convenience. In
fact, according to a recent survey, 55% of U.S. millennials said convenience is the most important factor
when buying food. According to the latest ‘Digitally Engaged Food Shopper’ report published by Nielsen
and the Food Marketing Institute, in 5-7 years, 70% of U.S. consumers will regularly purchase groceries
online. Walmart, the largest U.S. grocer, recently reported 43% growth in U.S. e-commerce net sales (which
includes grocery pickup and delivery and ship-to-home) for its most recent fiscal year, and guided for a
further 35% increase for the current year. In April 2019, Amazon raised the competitive stakes by
announcing plans to make one-day delivery the default shipping option for Prime members. A month later,
Walmart announced plans to unveil free one-day shipping with no membership fees on orders over $35.
INDUSTRY SURVEYS
FOOD, BEVERAGES, TOBACCO & CANNABIS / DECEMBER 2019
4
Industry Snapshot
www.cfraresearch.com
GLOBAL FOOD, BEVERAGE, TOBACCO & CANNABIS
Outlook: Neutral
KEY TAKEAWAYS:
The global competitive landscape is
rapidly changing. Consumer preferences
are changing more rapidly than ever
before. Driven by the rise of the
millennial generation, there is now a
greater demand for convenience,
healthier lifestyles and sustainability. In
developing markets, the rise of the
middle class is causing consumer
packaged goods companies to rethink
long-term strategies.
In the tobacco and cannabis industries,
recent regulatory changes are closing
certain doors but opening new ones. In
this survey, we’ll walk you through our
assessment of these industries in their
current states.
No.
1
2
3
4
5
TOP U.S. COMPANIES
Name
Mkt Cap. (USD)
Coca-Cola
231,148
PepsiCo
189,518
Philip Morris
128,329
Altria Group
92,939
Mondelez
75,922
2019/2020 PREVIEW
Revenue
Growth
Forecast
EBIT Margin
Growth
Food Products: 5.8% in 2020 and 4.5% in 2021 vs. 4.0% in 2019
Alcoholic Bev.: 6.2% in 2020 and 6.1% in 2021 vs. 4.9% in 2019
Non-Alcoholic Bev.: 4.0% in 2020 and 4.2% in 2021 vs. 3.0% in 2019
Tobacco: 3.5% in 2020 and 4.6% in 2021 vs. 4.3% in 2019
Cannabis: 85.0% in 2020 and 62.8% in 2021 vs. 308.7% in 2019
Food Products: 200 bps in 2020 and 77 bps in 2021 vs. 6 bps in 2019
Alcoholic Bev.: 310 bps in 2020 and -60 bps in 2021 vs. 130 bps in
2019
Non-Alcoholic Bev.: 30 bps in 2020 and 30 bps in 2021 vs. 90 bps in
2019
Tobacco: 60 bps in 2020 and 360 bps in 2021 vs. -220 bps in 2019
Cannabis: 3,720 bps in 2020 and 3,100 bps in 2021 vs. 6,940 bps in
2019
IndustryFocused
ETFs:
First Trust Nasdaq Food & Beverage ETF (FTXG), Invesco Dynamic
Food & Beverage ETF (PBJ), IQ Global Agribusiness Small Cap ETF
(CROP), VanEck Vectors Agribusiness ETF (MOO)
2019 YEAR-TO-DATE REVIEW*
S&P Composite 1500 Food, Beverage & Tobacco
S&P Europe 350 Food, Beverage & Tobacco
Nasdaq DM Asia Food & Beverage Index
Global Cannabis Companies Index
-4.0%
17.6%
-1.7%
-43.1%
* Through November 27, 2019
TOP EUROPEAN COMPANIES
No. Name
Revenue (USD)
1
Nestlé
92,929
Anheuser2
54,619
Busch InBev
British American
3
31,215
Tobacco
No.
1
2
3
TOP ASIA/PACIFIC COMPANIES
Name
Revenue (USD)
Wilmar Intl
44,498
WH Group
22,605
Japan Tobacco
20,197
Source: CFRA; S&P Global Market Intelligence
Note: Market capitalization and revenue figures are
in USD billions.
5
NEAR-TERM THEMES
 Alternative Meat Growth
 Healthy Alcohol
CFRA forecasts the global
alternative meat market growing to
about $100 billion by 2030, up
from about $19 billion in 2018.
 Marijuana Oversaturation
Alcohol consumption is stagnating
in many parts of the world. Yet,
healthier alcoholic drinks (i.e.
lower calorie, less sugary) are
making a strong comeback.
 E-Cigarette Scrutiny
Recent legislation allowing for
either medical or recreational
usage of marijuana has led to a
massive inventory glut. We expect
prices to remain depressed as
more legislation legalizes
cannabis.
FOOD, BEVERAGES, TOBACCO & CANNABIS / DECEMBER 2019
We think more restrictions will be
imposed on the e-cigarette
industry, including bans on certain
flavored products. This could have
a major detrimental impact on
sales.
INDUSTRY SURVEYS
FINANCIAL METRICS
Median Revenue Growth
 We project median revenue growth for the
industries in 2020 and 2021 as follows:
Food Products:
6.0%; 4.5%
Alcoholic Bev:
5.8%; 6.1%
Non-Alcoholic Bev: 4.0%; 4.2%
Tobacco:
4.2%; 4.4%
Cannabis:
85.0%; 62.8%
Median Gross Margin Growth
 We project median gross margin growth for the
industries in 2020 and 2021 as follows:
Food Products:
90 bps; 0 bps
Alcoholic Bev:
150 bps; -200 bps
Non-Alcoholic Bev: 40 bps; -10 bps
Tobacco:
50 bps; 20 bps
Cannabis:
310 bps; 140 bps
Median Operating Margin Growth
 We project median operating margin growth for
the industries in 2020 and 2021 as follows:
Food Products:
180 bps; 70 bps
Alcoholic Bev:
310 bps; -40 bps
Non-Alcoholic Bev: 40 bps; 20 bps
Tobacco:
70 bps; 350 bps
Cannabis:
3,720 bps; 3,090 bps
INDUSTRY SURVEYS
FOOD, BEVERAGES, TOBACCO & CANNABIS / DECEMBER 2019
6
KEY INDUSTRY DRIVERS
Consumer Confidence Index
 In the U.S., the Consumer Confidence Index
(CCI) averaged 130.1 in 2018. We project that
the index will average 129.4 in 2019 and 133.7
in 2020.
 The CCI in Europe has remained stable since
recovering from its low in late 2012 and is
expected to continue to do so in 2020.
 China’s CCI hit an all-time high of 126 index
points in February 2019. Its record low was 97
index points in November 2011. As of October
2019, the index was 124 points.
Producer Price Index
 We project the U.S. Producer Price Index (PPI)
will increase by 1.8% in 2019 and 2.8% in 2020
after rising by 2.6% in 2018, with the increases
driven primarily by transportation and raw
materials costs.
 In Europe, we see the PPI staying depressed
amid political tensions and the uncertainties
caused by Brexit.
 In China, the PPI has been negative for several
months, indicating manufacturers are having to
discount products due to the slowdown in the
economy amid the trade war with the U.S. We
expect a rebound once trade tensions settle.
U.S. Dollar Index
7

The U.S. dollar has gotten slightly stronger
relative to most other major currencies, a
tailwind for companies that translate sales
denominated in USD to a domestic currency;
however, it would be a headwind for companies
that translate a foreign currency to the USD.

A weaker currency typically helps a country’s
export market because its goods are less
expensive compared to goods priced in
stronger currencies.

We think the USD could soften since the
Federal Reserve is in a rate-cutting cycle.
Investors typically move capital to other regions
with higher returns during these periods.
FOOD, BEVERAGES, TOBACCO & CANNABIS / DECEMBER 2019
INDUSTRY SURVEYS
INDUSTRY TRENDS
Industry Profit Share Map
The Food, Beverage and Tobacco industry group comprises 33.0% revenues of the entire Consumer
Staples sector. The following charts illustrate the profitability map of the Global Consumer Staples sector,
Food Products industry, Alcoholic Beverages industry, Non-Alcoholic Beverages industry, Tobacco
industry and the Cannabis industry.
INDUSTRY SURVEYS
FOOD, BEVERAGES, TOBACCO & CANNABIS / DECEMBER 2019
8
9
FOOD, BEVERAGES, TOBACCO & CANNABIS / DECEMBER 2019
INDUSTRY SURVEYS
INDUSTRY SURVEYS
FOOD, BEVERAGES, TOBACCO & CANNABIS / DECEMBER 2019
10
Operating & Competitive Environment
FOOD PRODUCTS
Porter’s Five Forces
Threat of new
entrants
(Moderate)
Threat of
substitutes
(Moderate)
Degree of
rivalry (High)
Porters Five
Forces
Bargaining
power of
suppliers (Low)
Bargaining
power of
buyers (High)
1) Degree of Rivalry/Competition (High)
The degree of rivalry in this industry has been known to be particularly high. In developed markets, this
industry is mature and there are limited whitespace opportunities. As a result, we’re seeing more
companies focus on expanding their geographic footprint by penetrating new, developing markets, such
as India, China and Brazil. With the rise of globalization, it is becoming easier for companies to expand
their supply chain into new regions.
Another reason for the high degree of rivalry and competition in this industry is changing consumer
preferences. Consumers, especially millennials, are exhibiting less brand loyalty and are looking to
purchase high-quality, premium items, regardless of the brand. This dynamic has leveled the playing field
for smaller competitors that don’t necessarily have the same economies of scale as the larger
competitors.
2) Bargaining Power of Buyers (High)
In the packaged foods & meat sub-industry, the buyers are typically retailers, wholesalers, distributors or
foodservice operators like casual dining restaurants or quick service restaurants. These entities fill their
inventory by purchasing products from thousands of domestic and international companies. As a result,
most packaged food & meat companies rely much more on these companies than vice-versa. For
example, one “buyer” with enormous bargaining power is Walmart. There are several companies in the
food products industry that have more than 10% of their sales just with Walmart. As such, Walmart and
many other big-box retailers, have the ability to flex their bargaining power much more than their
suppliers.
In the agricultural products (i.e. agribusiness) sub-industry, the buyers are typically food and beverage
companies that turn agricultural commodities, such as oilseeds, corn, wheat, etc., into products sold to
the consumer. Other buyers include companies within the energy or industrial industry that consume
agricultural commodities for biofuels or other industrial uses. Unlike the packaged foods & meat subindustry, where there are thousands of companies fighting for market share, there are only a handful of
large agribusinesses in the world. The major agricultural trading firms are Archer Daniels Midland
Company, Bunge Limited, Cargill and Louis Dreyfus.
11
FOOD, BEVERAGES, TOBACCO & CANNABIS / DECEMBER 2019
INDUSTRY SURVEYS
3) Bargaining Power of Suppliers (Low)
The bargaining power of the suppliers in this industry is low since most of them supply commodityoriented products to the food products industry. In the packaged foods & meats sub-industry, the
suppliers are typically either agricultural trading companies or farmers. Most large packaged food
companies have established relationships with several suppliers throughout different parts of the world in
order to reduce risk and exposure to any single one. In the agricultural products sub-industry, suppliers
are mainly farmers who plant, harvest and sell agricultural commodities to agribusinesses who then pass
these products along to the food, energy or industrial industries.
4) Threat of Substitutes (Moderate)
If we define the threat of substitutes as a product from another industry that offers the same or similar
benefits as a product sold in the food products industry, then we believe the level of risk is low. This is
because most of the products sold in this industry are staple goods that consumers will purchase
regardless of the state of the economy or their financial situation. However, if we define the threat of
substitutes as newer forms of a product intended to replace an entire category or sub-category, then we
believe the risk is moderate to high. For example, the alternative meats industry, or plant-based protein
industry, has been gaining traction throughout the world. We think this is due to the growing awareness of
climate change, natural resources constraints and the health risks associated with red meat consumption.
A recent study conducted by YouGov and Whole Foods Market showed that 63% of millennials are trying
to incorporate plant-based foods into their diet. This shift in consumer preference is driving consumers to
substitute meat with plant-based meat alternatives. Many staple products found in the grocery store have
faced similar dynamics. For example, soy milk vs. dairy milk, margarine vs. butter, artificial sweeteners vs.
sugar.
5) Threat of New Entrants (Moderate)
Less than a decade ago, we would have said the threat of new entrants is low since the brand power and
economies of scale possessed by larger firms would be difficult to replicate by new entrants. However,
times have changed, as well as consumer preferences. We’re in the age of dying brand loyalty when it
comes to consumers purchasing items in a grocery store. Consumers, especially younger generations,
are now less brand loyal and more likely to try new brands based on quality and price. As a result,
smaller, emerging brands have been thriving. We’re now seeing more large companies acquire these upand-coming brands as a means to finding growth opportunities.
E-commerce: The Growth Driver for Food Retailers
According to Packaged Facts, online grocery sales will more than triple by 2022, reaching $41.7 billion, a
compound annual growth rate of 27.1%. This trend reflects the wider consumer tendency for convenient
and time-saving practices. Online grocery shopping cuts out a lot of unnecessary experiences of the
usual grocery trip, including travel to and from the store, the in-store walk to search for items and the
queuing to pay. Coupons and/or promotional discounts are also easier to find and apply through online
shopping.
Only about a quarter of American households make online grocery purchases, according to ‘The Digitally
Engaged Food Shopper’ report published in 2017 by Nielsen and the Food Marketing Institute. This
means that the remaining three quarters either do not have the service available to them or they simply
choose not to engage in online grocery shopping. Hence, in the short run, we forecast online food
retailers will attempt to solve the latte…
Purchase answer to see full
attachment

Don't use plagiarized sources. Get Your Custom Essay on
VCU The Consumer Defensive Sector and Beverages Non Alcoholic Industry Analysis The paper should be no less than 2 pages excluding reference page, graphs,
Just from $13/Page
Order Essay
Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.