Adrian has been conducting research on, and managing teams of analysts covering, the technology industry for over 20 years. He has pioneered many data analysis techniques and methods that are used widely by analysts today, as well as having created frameworks for measuring numerous technology markets from industrial automation products to semiconductors.
Interact Analysis’s recent Manufacturing Industry Output (MIO) Tracker update puts the 2020 value of the food and beverage production sector at or near the top of the industry league table in all the regions the MIO covers. The industry accounted for a massive 30% of MIO value for the UK, and over a quarter of total value for Brazil and France, while major players such as the US and China registered figures of 19% and 12% respectively. These figures are significant, but where did this put the food and beverage machinery sector in 2020? Our analysts have found that the sector was knocked back by the pandemic, particularly in European countries, but steady year-on-year growth is expected up to 2025.
2020: The COVID-19 effect: down, but by no means out
The figure above demonstrates how, historically, food and beverage machinery revenues have shadowed food and beverage production rates. 2020, the year of the pandemic, however, saw the machinery sector struggle as factories slowed or shut down; and order-books remained empty as food and beverage producers reduced investment in the face of the uncertainties caused by COVID-19.
The machinery sector has actually seen a decline in year-on-year growth since 2018 when it reached a relative high-point of 10% growth, not surpassed since 2011. The chart below shows historic growth in the industry, and also describes how Interact Analysis has had to revise its forecasts in the face of the COVID-19 shock. Our latest data set puts growth for 2020 at -6%, giving the food and beverage machinery sector a global production value of $57.8bn for 2020.
The main driver of decline in the sector in 2020 has been the sluggish market in Europe, which accounts for 59% of the total market size, as the region struggled badly with the virus.
2021-2025: Not exactly a bounce-back, but a recovery nonetheless
Unlike some sectors which may take years to recover to pre-COVID levels owing to longer-term decreased demand – aeronautics and automotive come to mind – the demand for food and drink is sure to remain a constant and so the food and beverage machinery sector will recover in a relatively short time. Our analysts predict that food and beverage machinery will in the long term only suffer a minimum negative impact from the pandemic. Major regions, with the exception of Europe, are expected to return to 2019 levels by 2022 at the latest. Europe’s rebound will be slower, dragging down global forecasts for the sector. We are positing global growth of 3.8% for 2021, which is a slower recovery than we previously expected.
On the chart above, which shows the time expected for the top 10 countries for food and beverage machinery production to recover to 2019 levels, the red dotted line marks the point at which 2019 levels of production are reached. We can see on the chart a marked difference between the performance of the sector in countries such as China and Germany. Interact Analysis’s research has concluded that the biggest dip in revenues for 2020 will be in Germany and in Italy, being of the order of -13.4% and -14.9% respectively. APAC saw slight growth in most regions in 2020, with the exception of India, whilst in the USA, growth was flat. Beyond 2020, the chart clearly illustrates a steady uptick in growth for the sector in all regions up to 2025, as the pandemic is left behind. Interestingly, the highest CAGRs for the period 2021 – 2025 are two of the major casualties of 2020, Italy, and Germany, and also the USA, the figures being, respectively, 6.3%, 4.7% and 5.0%. Brazil has been predicted to end up with the lowest CAGR for the period – an unenviable 2.2%.
Technological advance in the world of food and beverage machinery: the COVID boost
Plague pandemics may keep us all at home and shut down factories, but they won’t stop the inexorable advance of technology. The food and beverage machinery industry is as much in the thrall of technological innovation as any other sector. In October 2020, Louis Biscotti, a contributor to Forbes, reported on some of the innovations coming on stream: “Tech is revolutionizing food and beverage as the COVID-19 crisis accelerates the pace of robotics and AI. Computers help manage supply chains and reduce waste, and software helps control costs, order inventory, and stock shelves.” Some of the reported advances are highly impressive. AI is being incorporated into the food sorting process, for example, with software, sensors, and cameras such as in machinery developed by Tomra Systems to analyse the size, shape and colour of French fries and the fat content of meat. Or Key Technology’s laser sorter which can use shape recognition technology to identify and remove impurities from fresh farm produce.
Louis Biscotti says that, in technological terms, the future is now for the food and beverage machinery sector. And our MIO Tracker shows that, from the perspective of market growth as well, the post-COVID future looks bright.
To continue the conversation about the food and beverage machinery market, please contact Adrian direct on Adrian.Lloyd@InteractAnalysis.com