US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Companies Adjusting as Consumer Behavior Begins to Return to Pre-Pandemic Norms

While the coronavirus – particularly the delta variant – remains a threat to the US economy, many consumers are guardedly optimistic about the future. Indeed, for those who have been fully vaccinated, there is much more freedom of activity, and the prospect of dining out, shopping, and doing other activities without wearing a mask has encouraged people to return to the modes of behavior they exhibited before the pandemic. Indeed, these changes are taking hold in the economy in surprising ways.

One change is that as people re-embrace in-store shopping, they are relying less on online purchasing. Thus, UPS reported that in the second quarter of 2021, it shipped fewer packages than the year before. While package shipping volumes are expected to remain high going forward, it is anticipated that as consumers continue to return to stores, shipments of packages will continue to recede. This, in turn, will affect demand for such packaging materials as:

  • corrugated boxes and sleeves
  • plastic films and bubble wrap
  • tapes and other materials used to secure packages

Similarly, as concerns about the virus lessen, demand for cleaning products will also be affected. Indeed, the manufacturer of Lysol reported a decline in quarterly sales as consumers were less likely to religiously disinfect surfaces – a practice that became commonplace in the early stages of the COVD-19 pandemic when transmission vectors were less certain. Much as with UPS, while demand for these products is expected to remain high, sales are expected to recede from their elevated levels as consumers become less concerned about surface disinfection practices.

One thing that is NOT expected to recede going forward: the prices consumers pay for these and other products. Manufacturers of a wide range of items – food and drink, consumer products – expect prices to continue to rise throughout the rest of the year. While rising demand is playing a part in these rising prices, many of these price hikes are due to such factors as:

  • rising costs of raw materials
  • higher transportation and shipping costs
  • higher prices and shortages of packaging materials

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Packaging area, as well as analysis from our sister publisher Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Packaging    

Packaging Supply Challenges Hit Liquor, Maple Syrup Suppliers & More

Shifts in demand, labor challenges, raw materials shortages, and shipping difficulties have made things tough for the whole pandemic-era economy. However, some challenges are industry-specific.

Any type of packaging that is niche is having issues with lead times and supply chains. The “why” of this situation is not complicated: if there aren't many suppliers of what you want, there is no one else to turn to if your usual supplier is unable to fill your order in time or in the quantity you need.

Maple syrup suppliers are one group hit by this challenge. Real maple syrup is often sold in recognizable plastic jugs, often with the farm’s information printed directly on it. Maple farms are finding their typical lead time to get more jugs has risen to 10 months and longer. Trying to find blank jugs (that don’t have the farm’s customized printing and require adhesive labels) on the secondary market isn’t any easier, and it is also more expensive.

Liquor suppliers are also struggling to have enough of the types of glass bottles they are used to using. While some are able to shift to other types of packaging, liquor bottling rules and customer preferences have made that challenging. Until stocks are refilled, consumers may periodically see shortages of certain products, might find it packaged in a different container, and will certainly see some price increases.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Packaging area. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Packaging    

Necessity Is the Mother of Invention: Shortages Propel a New Idea in Paint

There has been some amount of paint shortage over the past year…not only from the supply end from outbreaks slowing production that we’ve come to expect and even build into assumptions in recent months, but also the kinks from the February winter storm in Texas that slowed production of key supplies. Additionally, the boom in pandemic-era home renovations – and painting has been a popular DIY activity – raised demand at the same time.

What has been one of the big losses? Paint sample cans. Companies would rather be able to supply enough for customers’ projects, but classic paint chips are not enough for many customers and particular interior designers to select the right color.

The solution was the rapid adoption of what had been a niche option: peel-and-stick paint samples. In some locations, quart sample options were either not available or customers were at least being actively directed toward the peel-and-stick option as most major paint suppliers had arrangements with Samplize. While people tend to have a preference for the way they’ve always done things, these peel-and-stick options had benefits too:

  • Ecofriendly: less waste as customers receive a 12”x12” swatch rather than a whole small can
  • Convenient: they are repositionable (so you can test it in more than one place/no wall damage) and easy to use (no paint mess/clean up, already in 2 coats without waiting to dry) 

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products and Consumer Goods areas, particularly titles such as Global Architectural Paint and Global Paint & Coatings. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Chemicals      Construction & Building Products      Consumer Goods      Covid-19      Packaging      Plastics & Other Polymers    

Mergers & Acquisitions Are Booming in 2021: Key Factors Driving Increased Activity

M & A activity has been very busy this spring. Across a wide variety of industries, we’re seeing a range of announcements from market leader combos to roll-ups of smaller, regional operations. But what’s behind this rise in activity?

Here are a few key factors driving acquisition and divestiture activity across the economy in 2021:

  • Owners of smaller firms are looking to retire after their businesses’ survived the COVID-19 pandemic (or in some cases, these businesses struggled and owners did not want to rebuild).
  • Certain industries with high pandemic-era sales (e.g., construction goods suppliers, home improvement distributors/retailers, packaged food companies, grocers, lawn and garden equipment and supplies firms) are flush with cash and high stock values and are looking to expand.
  • Pent-up interest from the limited activity of 2020, as transactions that were planned or considered pre-pandemic were put on hold due to economic uncertainty or the difficulty of completing due diligence when you aren't traveling. Some of these previously planned transactions are now going through.
  • Expectations of higher tax rates are leading some firms to cash out now or to make shifts that put them on better footing.
  • SPACs (special purpose acquisition companies) are being increasingly used for acquisitions to expand existing public or private companies.
  • Companies are reevaluating their business operations in the post-pandemic era and are sometimes making changes to what they see as their core operations, or are building on key capabilities that have grown over the course of the pandemic.

Freedonia Group analysts are keeping watch across a wide variety of industries for changes that portend market movements and shifts in the competitive environment.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Chemicals      Construction & Building Products      Consumer Goods      Covid-19      Energy & Petroleum      Food & Beverage      Industrial Components      Machinery & Equipment      Packaging      Plastics & Other Polymers      Services      Textiles & Nonwovens    

Food & Beverage Companies Are Still Growing, Even Off the Spike in Retail Sales in 2020

Food and beverage sales at retail are holding strong so far in 2021, even when compared to the 2020 stock-up trends that occurred in the early months of the COVID-19 pandemic. But what else is going on in 2021 for packaged and fresh food suppliers?

Below are a few trends to watch, affecting the food and beverage industry across most categories:

  • Food prices are rising in a significant way. Sometimes these rising prices are coming from increased sales of higher value versions (e.g., the rise of plant-based or organic versions) and sometimes they are due to rising costs of ingredients, packaging, and shipping being passed along. This is propelling gains above what would be expected when looking at volume sales or inflation adjusted value gains.
  • The foodservice market is coming back. As traditional restaurants reopen, expand operational capacity, or see more in-person diners, sales to this market are trending up. This will be especially important for foods aligned with quick service or fast food options (e.g., semi-prepared foods and frozen foods). Fresh food might still be slower as restaurants will be cautious about overbuying so as not to get burned by having too much fresh stock as in 2020.
  • Foodservice is not just restaurants. Schools and colleges are expected to reopen to more normal operations (in-person learning, on-campus dining/living) in the fall. Cafeterias at hospitals, offices, and other places are also reopening. Also, it’s worth noting that rising vaccinations will correlate with increased foot traffic at malls and their food courts, and more visits to recreation places like amusement parks, museums, and zoos, along with their corresponding food and snack stands.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Packaging area, as well as Food and Beverage industry analysis from our sister publisher Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage      Packaging