Hose + Coupling World December 2021 Sample - Page 30

MARKET REPORT

Most Profitable Sectors of the Food Industry for Hoses & Couplings

The world GDP is over $ 80 trillion , and more than $ 15 trillion of that is spent on food . Sugar purchases alone account for over $ 1 trillion of this GDP . The percentage of food revenues spent on hoses and couplings is very small compared to that spent on municipal water treatment . It is even less than what is spent on mining , refining , and most other industrial sectors related to food production . 1 It is however , still quite large .
By Robert McIlvaine , President & Founder , The McIlvaine Company
The hose and coupling market for processing equipment is valued at well over $ 500 million per year . When discrete applications are included and a broader definition of hoses and / or couplings products is used , the market is worth closer to $ 1,200 million . 1
The Food Market in Relation to Hoses and Couplings The food and beverage market includes not only hoses and couplings , which are used directly in the creation process , but also the materials required in the use of utilities such as water , electricity , and waste treatment . Many food processing companies even generate their own electricity and utilize small processors to generate steam . The treatment of wastewater on site , for example , rather than discharging it to a public treatment plant , is common . In fact , in several small towns the food processing company also supplies municipal wastewater treatment for the residents .
Some of the world ’ s largest hose and coupling suppliers look at the food market and ask themselves : ‘ Where can we sell the same hoses we supply to other industries ?’ This is a relevant question because it can lead to the most profitable orders . Much of the success that arises from this approach is from buying small companies who have found highly profitable niches .
The rationale is that if the market for an existing grade is expanded , the cost of production will be less , and the margins and earnings before interest , taxes , and amortization ( EBITA ) can be increased . However , some companies have taken a different approach ; they ask : ‘ What are the customer needs ? Can we supply a product with lower total cost of ownership than our competitors ?’
Some of the companies who have taken this customer-first approach have generated greater EBITA than the industry as a whole . Their approach is to thoroughly understand all the processes and the cost of ownership and then develop solutions which deliver lower costs than the competition . Some of the questions that should be asked are :
• How big is the market ?
• How fast is the market growing ?
Figure 1 .
• How important are hoses and couplings in this market ?
• What are the specific hose and coupling uses in general , critical , severe , and unique service ?
To understand this process more thoroughly , different market avenues are explored .
Sector
Beer
$ 1.2 billon Food Hose and Coupling Market
Coffee , Tea Carbonated Cider Hard Seltzer Juice Plant Based Spirits Still Drinks
Process Steam Water Waste Discrete
Water ( bottled ) Wine
Markets for Beverages - 2021
Revenues $ billions
600 120 420 4 8 257 23 500 20 220 430
CAGR % Service 1 H & C % 2
Figure 2 : C-Critical , G-General , S-Severe , U-Unique , H-High , M-Medium , L-Low .
6 7 5 3 11 4 14 7 5 11 6
C , G , S , C , G C , G C , G C , G C , G C , G , S , U C , G , S , U C , G C , G C , G , S , U
H L L M M M H H L L H
30 Hose + Coupling World , December 2021