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.

Opportunities in the Pet Industry

The pet industry is expected to see declines in three out of the four pet industry sectors –pet food and treats, veterinary services, non-food pet supplies, non-medical pet services – in a year affected by COVID-19 and economic challenges.  

Non-medical pet service sales are expected to suffer the sharpest drop in 2020 – at 47% – due primarily to the link between pet boarding services and business/leisure travel. Also projected to drop in 2020  are sales to the veterinary sector and of non-food pet supplies, reflecting in part the discretionary nature of some of the services and products involved.

However, somewhat mitigating the overall market loss will be continued (though tapered) growth in essentially non-discretionary pet products, primarily pet food and cat litter. Pet food, the largest pet industry sector, is forecast to grow 4% in 2020, compared with a 6% growth forecast before the COVID-19 pandemic impact. A slightly less rosy outlook for pet food sales will reflect, as during the Great Recession, some trading down to value and store brands.

Key opportunities exist in products and services that emphasize the ongoing well being of pets. Suppliers will also want to emphasize the value associated with their products.

For more information, see Pet Market Outlook 2020-2021 along with the rest of the pet industry coverage from our sister publisher, Packaged Facts.

  Consumer Goods      Covid-19    

Pet Industry: Opportunities in E-Commerce

A continued boom in pet product e-commerce delivered incremental gains in 2019, while a larger-than-expected pet food sales increase in mass channels bolstered the overall market.

Online retailers are well-positioned to continue gains in shares and sales. A pre-coronavirus pandemic surge in Internet sales of pet products – leading to a platinum-plated IPO for Chewy.com – spurred massive pet market investment in e-commerce logistics, which should help shore up the products side of the industry in the coming months. This advantage is doubly important because the shift to e-commerce has grown the overall pet products sector and not merely cannibalized sales from brick-and-mortar outlets. Packaged Facts projects the online share of overall pet product sales to reach 24% this year and 26.5% by 2024.

For more information, see Pet Market Outlook 2020-2021 along with the rest of the pet industry coverage from our sister publisher, Packaged Facts.

  Consumer Goods    

Domestic Textile & Apparel Companies Developing Safety Masks

Although N95 respirators are the face masks most in demand by healthcare workers and first responders, they require a meltblown polypropylene filter material that is not easily produced at the high quality necessary for it to be effective. Therefore, most of these products are still being made by companies such as 3M and Honeywell that already have knowledge and capabilities in this area.

However, a coalition of apparel and textile companies in the US have begun supplying a useful but less sophisticated class of face masks. Because these companies are not technical textile companies, they are making masks with jersey cotton and antimicrobial coatings using a design approved by the US Department of Health and Human Services. These masks were also approved by the US Food and Drug Administration so that they could be labeled as medically certified for use in hospitals. While they are not able to filter out viruses, they are better than nothing for use by healthcare workers interacting with patients or for the general public in situations where there is not an known infection present.

Others are developing a mask that is generally reusable but that features a replaceable meltblown polypropylene N95-level filter. Another group, Stop the Spread, is innovating by promoting partnerships. The organization is a new coalition of volunteer CEOs seeking to connect businesses that can provide different levels of assistance in the production of goods needed to respond to the COVID-19 crisis.

Joint ventures, technology transfers, and industry coalitions will allow companies to adapt to the changing conditions and needs of the COVID-19 crisis and expand production capacities into needed areas. The assistance of regulatory agencies that can either fast-track approval or offer a pre-approved design will allow manufactures to respond more nimbly.

For more information, see The Freedonia Group’s Global Nonwovens, US Nonwovens, Global Filters, Global Medical Disposable Supplies, and Disposable Medical Supplies inthe US reports. Each report includes analysis of competitive strategies, including joint ventures and merger and acquisition activity. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Textiles & Nonwovens    

The Defense Production Act & Recasting Manufacturing Capacity For Ventilators

In a time of lean manufacturing and just-in-time operations, there are often limited stocks available for supply chain crunches or other sudden shifts in demand. So on Friday March 27, President Trump used the Defense Production Act to compel General Motors to produce ventilators, even as insiders noted that the company was already putting workers on an urgent project to do so.

General Motors, Ford, and others are repositioning their operations to produce or procure through their supply chains the components needed by ventilator manufacturers. They and others are also using capacity made available by reductions in their regular manufacturing operations due to reduced demand or challenges accessing key components.

Because ventilators are complex items produced under strict safety measures that often require medical-grade plastics and cleanroom operations that a vehicle manufacturer may not have, joint ventures are needed. Stop the Spread, a new coalition of volunteer CEOs seeking to connect businesses that can provide different levels of assistance in the production of goods needed to respond to the COVID-19 crisis, helped connect GM with its partner Ventec among other companies that can help GM meet its needs.

Manufacturing firms have long used joint ventures to adapt to changing conditions, improve technological capabilities, and expand production capacities. Companies will need to dive into such operations in more depth to respond swiftly to the coronavirus pandemic. Considering how current capabilities align with the needs of other businesses and how current needs in industry and health align with their operations would be the way to start.

For more information, see The Freedonia Group’s extensive catalog of off-the-shelf research. Each report includes analysis of competitive strategies, including joint ventures and merger and acquisition activity. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Concerns About Coronavirus Transmission Promote Use of Single-Use Plastic Bags

One unintended consequence of the coronavirus outbreak has a been a resurgence in the use of single-use plastic bags. Derided by many due to their perceived negative effects on the environment, many local and state governments across the US – including the key states of California and New York – have banned use of or begun charging fees for single-use bags in recent years, and leading grocery retailers announced plans to stop giving them away at their stores.

However, a growing number of stores are again giving away single-use plastic bags as part of their efforts to reduce the spread of coronavirus. In fact, one state – New Hampshire – has temporarily banned reusable bags, and Maine postponed the implementation of its plastic shopping bag ban. The reason: concerns about the cleanliness of reusable bags. While coronavirus can be removed from plastic surfaces (many plastic shopping bags are made from a high level of recycled plastic content), few shoppers clean their own reusable bags after each use. Thus, to minimize concerns about coronavirus spreading via cross-contamination, retailers are encouraging and again supplying single-use plastic bags.

While the long-term effect of these efforts remain unclear – no one is sure how hygienic practices will change as the virus becomes less of a threat – in the short term, at least, demand for single-use plastic bags is expected to rise.

This presents an opportunity for plastic bag manufacturers to reargue their position that plastic shopping bags – which are readily recyclable (even if the recycling rate remains low) and often made with high post-consumer recycled content – are the more sustainable option compared to polypropylene reusable bags, which are not recyclable. However, now they are adding the hygiene angle. In fact, the Plastics Industry Association has already requested that the US Department of Health and Human Services endorse plastic bags as the safest choice during this pandemic.

To counter that argument and support what had been the increasing consumer habit of carrying reusable bags, the reusable bag industry will need to educate consumers about adequate bag cleaning measures and ensure that the bags are able to withstand frequent cleaning cycles.

For more information, see The Freedonia Group’s Retail Bags report as well as total coverage of the Plastics and Packaging industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Packaging      Plastics & Other Polymers