PROFIT POOL UPDATING

Profit Pool Updating



Profit Pool Updating

Profit Pool

A Profit Pool is a part of a market that offers some sort of economic return to participant players. A good Profit Pool offers a large amount of cash-based profit over a certain amount of time into the future. A less attractive Profit Pool simply offers a smaller profit opportunity, while an unattractive Profit Pool offers net losses to its participants.

Cake making (confectionary industry)- $ 1.7 million

The US Confectionery Wholesaling industry is typified by a high level of concentration with the top four players estimated to account for over 70.0% of the industry in 2011. All of these major players are manufacturers' sales branches and offices (MSBOs), which are confectionery producers with distribution divisions of their own. These major players continually expand their distribution networks because they earn more revenue if they work directly with retailers and bypass the middleman. Manufacturers' sales branches and offices represented about 69.0% of industry revenue in 2007 according the United States Census Bureau. IBISWorld expected that this percentage has increased in the last four years.

The confectionery and snack foods that are wholesaled by this industry are often high in sugar. Demand for these products is reflected in the consumption of sugar and sweeteners. This driver is expected to decrease slowly during 2012. This is a potential threat to the industry.

The growth of the time-poor consumer and need for convenience have proved beneficial for this industry, with retail channels such as convenience stores, vending machines and drug stores (which all rely heavily on wholesalers) experiencing increased traffic. Nevertheless, health concerns, volatile input prices and the poor state of the economy have squeezed revenue from wholesale operations. In the five years to 2011, industry revenue is estimated to slightly increase 0.9% per year to $40.0 billion.

Since 2005, the chocolate and confectionery production industries have been adversely affected by the consumer trend toward increasing health consciousness. As consumers have become more aware of obesity and heart disease, they have grown more discerning about their food choices. Confectionery and salty snacks are typically higher in calories, sugar and fat. Furthermore, dental health concerns from excess sugar consumption have taken their toll.

Confectionery manufacturers have responded to these concerns by introducing new products, such as dark and low-fat chocolate, healthier snacks and sugar-free chewing gum, which have been received favorably by the marketplace. For example, sales of low-sugar or sugar-free candy and gum grew by more than 11.0% in 2008. These new product introductions partially offset a reduction in wholesaler output caused by nutritional concerns.

Packaging - $1.3 million

The majority of the Packaging and Labeling Services industry's growth occurred prior to the recession. During those years, operators benefited from strong economic growth and outsourcing activity. Disposable income and consumer spending were strong, requiring more packaging and labeling services from the industry. Since then, a severe drop in economic activity has hampered growth. As a result, revenue growth slowed to 2.3% in 2008 before declining a severe ...