The consolidation effect
In the past few years, commercial baking has seen an increase in equipment supplier consolidation. This year’s study surveyed executives on how they see these mergers and acquisitions affecting business in relation to capital investment plans.
When asked for benefits related to supplier consolidation, 68% of respondents indicated increased innovation. Sixty-four per cent recognized the benefits of increased resources and technical support, and 56% said they saw more turnkey solutions as a positive factor. Just shy of half (47%) identified increased international representation as a benefit of consolidation.
“The consolidated companies have wider knowledge of the industry as a whole. With this, they can design better equipment to complement baking processes,” one survey respondent noted.
While bakers are always concerned with price increases, they clearly recognize the benefits of dealing with fewer suppliers for those turnkey solutions and smoother start-ups.
In general, just like a bluebird day on the slopes, the climate is positive. Bakers may always be a cautious lot, and they’re going to take all the necessary precautions before they strap in to go shussing down the slopes. But for the first time in a long time, the industry just might see some positive movement.
2018 Capital Spending Survey sample
For Baking & Snack’s annual industry study, Kansas City-based Cypress Research Associates, L.L.C., surveyed 180 companies from across a variety of baked foods and snacks categories.
Of the survey sample, most companies (54%) produce fully baked bread, rolls and other items. The next largest participant categories included cakes and sweet goods (45%) and cookies and crackers (40%). Others included par-baked bread and rolls (22%) and frozen dough (22%). Companies could identify with more than one category.
Other producers in the sample included snack foods (potato chips, popcorn, pretzels); tortillas; pasta; waffles, wafers and confectionery; pizza; and other items.
Additionally, 31% of respondents indicated a company-wide annual gross revenue of $500 million or more, and 30% indicated revenue of less than $25 million. Bakeries with a gross revenue of $25 million to $49.9 million represented 18% of the sample, and $50 million to $99.9 million represented 12%. Bakeries reporting $100 million to $499.9 million were 9% of the survey participants.
The online survey was fielded prior to the December 2017 passage of the Tax Cuts and Jobs Act.
