Will Consumers Drink Through the Global Downturn?

With global unemployment tipped to rise above 10 percent during the year, and consumer confidence slumping across all developed and most developing markets, many people are wondering whether any industry will be spared. Alcohol production has been touted as one group of industries which maybe recession proof, but IBISWorld analysis suggests otherwise. Global Spirits Manufacturing is the only alcohol industry expected to grow during 2009.

Global Sprits Manufacturing is expected to fare best, as momentum from previous years pushes industry revenue up by 2.5 percent during 2009 – compared to 12.8 percent growth in 2008. Consumers in China, a key growth market, are expected to be less affected than the global average. Chinese consumers will continue to spend more on spirits, resulting in an increase in Chinese Distilled Alcohol Manufacturing of another 11.9 percent. This will be the main driver of global industry revenue growth with consumers in developed markets expected to curtail their spending on spirits.

Global Sprits Manufacturing is expected to fare best, as momentum from previous years pushes industry revenue up by 2.5 percent during 2009 – compared to 12.8 percent growth in 2008. Consumers in China, a key growth market, are expected to be less affected than the global average. Chinese consumers will continue to spend more on spirits, resulting in an increase in Chinese Distilled Alcohol Manufacturing of another 11.9 percent. This will be the main driver of global industry revenue growth with consumers in developed markets expected to curtail their spending on spirits.

Global Wine Manufacturing relies heavily on international trade, which accounts for 43.3 percent of industry revenue. Major importers include the USA, UK and Germany – all of which have been hit hard by the global downturn. IBISWorld estimates that U.S. Wine imports will slump by 4.9 percent during the year, whilce major exporting regions such as the EU and Australia will have significantly lower demand for their wine. One wine region which has benefited from the downturn is Argentina, experiencing a surge in exports to the U.S. and a rise of 36.9 percent so far in 2009. As demand in key importing markets falls, global industry revenue will slide by 3.4 percent to $59.52 billion.

The new super brewer in Global Beer Manufacturing, Anheuser-Busch InBev, will find times tough in its first year of operation. Global Beer Manufacturing Revenue is expected to fall by 3.6 percent during the year. While some consumers in developed markets will trade down from spirits towards beer, many more consumers will be trading down from their premium brew towards more standard offerings.

Global Alcohol Manufacturing industries are expected to also suffer through this global downturn. Tough times may drive some consumers to drink – it’s just unfortunate for producers that they will be choosing cheaper beverages, while others may choose to abstain all together.

Internet Advertising Revenues Surpass $23 Billion in ’08, Reaching Record High

In a year already struck by high-profile accidents, the aviation industry has repeated its anxiety about safety, in a survey for Ascend, the aerospace specialists.

Internet advertising revenues in the U.S. remain strong, topping $23 billion, according to the 2008 Internet Advertising Revenue Report, released today by the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers LLP (PwC). Despite a difficult U.S. economy, interactive advertising’s continued growth, albeit at a slower pace, confirms marketers’ increased recognition of the medium’s value in reaching consumers online where they are spending more and more of their time.

• Full-year 2008 revenues totaled a record $23.4 billion, exceeding 2007’s performance, itself the former record of $21.2 billion, by $2.2 billion or 10.6%. By comparison, a variety of sources indicate weakness in overall advertising spending. The Nielsen Company, for example, reported that U.S. advertising for the full year 2008 was down 2.6% compared to the full year 2007.
• Fourth-quarter revenues of $6.1 billion mark the first time the interactive advertising industry achieved, and surpassed, $6 billion in a single quarter. The figures represent a $154 million or 2.6% increase from 2007’s fourth quarter, which had revenues of $5.9 billion.
• This is the fifth consecutive year of record results.

“We are seeing an ongoing secular shift from traditional to online media as marketers recognize that ad dollars invested in interactive media are effective at influencing consumers and delivering measurable results,” said Randall Rothenberg, president and CEO of the IAB. “In this uncertain economy, where marketers know they need to do more with less, interactive advertising provides the tools for them to build deep, engaging relationships with consumers—the experience marketers gain from this will deliver dividends especially after the economy turns around.”

Search remains the main driver of revenue growth according to the report, showing a 19.8% increase over 2007. Digital video, though still a small overall contributor, more than doubled its revenue with an increase to $734 million from $324 million in 2007, demonstrating how both marketers and consumers are embracing this dynamic platform.

As in 2007, retail, financial services, computing and automotive remained the four largest verticals among Internet advertisers in 2008. Consumer packaged goods, an industry vertical historically slow to embrace interactive advertising, notably increased its share of total Internet ad revenues by 60 percent over 2007. The Internet is now the third largest ad-supported medium, marking its increasing significance to marketers and consumers.

“Though some categories in the fourth quarter slowed or even dipped, reflecting the current economic challenges, the overall performance is up, confirming interactive’s ever-growing importance to the successful marketing mix,” said David Silverman, Partner, Assurance, PricewaterhouseCoopers.

A copy of the full report is available at: http://www.iab.net/AdRevenueReport

Video Games Not Recession Proof With Female Demographic

Photo by VinnyPrime

Companies like Ubisoft are trying to get a piece of the female demographic with games like Fashion Designer, Movie Star and Babyz, but they may not be putting all their eggs in one basket.

Demand from the female demographic is expected to slow according to industry research firm IBISWorld, and for this reason gaming companies may refocus on their loyal, most important demographic – young male gamers.

Reasons:

• The recession is hurting female spending on games more than male spending. Male gamers are more inclined to consider gaming as a ‘compulsory’ expense than women, for whom it is unequivocally a luxury.

• The popularity of communal games such as Guitar Hero, SingStar and the Wii console’s offerings have been far more popular than strictly female-oriented games.

These factors will all combine to slow growth in female gaming. By 2013, IBISWorld expects female gamers to represent around 41 percent of all gamers.

Retailers Get Rotten Eggs this Easter

 

Photo by polska1

The Easter Bunny will have less in its basket this year as holiday expenditure is expected to decline eight percent, according to industry research firm IBISWorld. Total sales from Easter clothing, candy, flowers, decorations, food and greeting cards are expected to fall from $14.8 billion in 2008 to $13.6 in 2009.

Holiday gift giving will take a hit because many households are continuing to tighten purse strings due to the financial climate. Candy sales in particular are estimated to reach only $1.77 billion, down by 10.2 percent from Easter 2008. Interestingly, the forecast for candy sales could have been much worse had it not been for the holiday’s calendar date.

“Easter falls on April 12, compared to March 23 of last year, so candy producers and marketers have 20 additional days to merchandise their products and entice the public to spend,” explained George Van Horn, senior analyst with IBISWorld.  ”This will cushion some of the inevitable blow on spending.”

Businesses still expected to perform well this Easter are supermarkets. This industry will experience a 3.5 percent rise in food sales as families prepare their holiday meals at home, rather than dining out. Though these meals will be on a budget, the nation will spend about $4.6 billion on food this Easter.