US plastic bottle manufacturing industry demonstrates a trend toward acquisitions

Modest improvements are set to occur for plastic bottle manufacturers over the next five years, says IBISWorld. Modest improvements are set to occur for plastic bottle manufacturers over the next five years, as future demand for bottled beverages takes off. Besides, industry operators will continue to benefit from economies of scale due to the recent rush of mergers and acquisitions among major players, according to the updated report of the industry research firm IBISWorld.

In the five years to 2012, industry revenue is expected to decrease at an average annual rate of 0.4% to $12.4 billion. “The Plastic Bottle Manufacturing industry relies on several key industries to purchase its products,” says IBISWorld industry analyst Lauren Setar. “Soft drink producers, for example, account for nearly half of industry revenue. However, since 2007, revenue in the Soda Production industry has declined due to changes in consumer tastes and reduced spending during the recession.” This decline has led to weakened demand for the plastic bottles in which soft drinks are packaged. In 2010, downstream markets began their recovery from the recession, and as a result, revenue for the industry is expected to rise 2.4% in 2012.

Meanwhile, the industry has had to contend with production abroad; industry imports are expected to grow at an average annual rate of 5.9% in the five years to 2012. The United States has been a net importer of miscellaneous plastic bottles and containers since 2004. As globalization increases, domestic companies will continue to shift manufacturing abroad to leverage lower production costs, though foreign imports will continue to challenge the viability of domestic manufacturing, the industry research firm adds.

Besides, over the past five years, the industry’s concentration has increased as a result of a growing number of mergers and acquisitions. Industry operators will continue to benefit from economies of scale due to the recent rush of mergers and acquisitions among major players. These moves demonstrate a trend toward acquisitions as a means to become more competitive within the industry.

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