Foodservice Equipment Reports Fortnightly
www.fermag.com

Welcome to FER Fortnightly Online Newsletter
July 31, 2007








Regulatory Report:
Sponsored by:
Enodis
Illinois Legislature OKs Electric Rate Relief
California Produce Handlers Start Using Service Mark
Chicago, Sarasota Won't Let Sleeping Dogs Lie
Food Companies Go On Junk Food Ad Diet

Industry Report:
Sponsored by:
Server Products
Sweeney Leaves AARP To Head NRA
NAFEM Debuts Online Scheduling Tool For Show
Ronald McDonald Turns Green With Solar House
IH/M&RS Adds Green To Editor's Choice Awards



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In This Section:
Missing FER's President's Preview Forecast Meeting Aug. 1? Another Chance
Finally, Good News On Nickel, Stainless Steel Prices
Another Bit of Good News: Consumer Sentiment Is Up
How Big Is Equipment Market In Europe?

This issue's Regulatory ReportSponsor: Enodis
Industry ReportSponsor: Server Products
Economic Report Manitowoc Foodservice Group

Missing FER's President's Preview Forecast Meeting Aug. 1? Another Chance
Foodservice Equipment Reports' 2008 E&S Market Forecast President's Preview will be held tomorrow, Aug. 1, at the Eaglewood Resort & Spa in Itasca, Ill.

The meeting features FER's exclusive, hard-number forecasts of E&S market growth in 2007 and '08, analysis of general economic and operator metrics and trends, materials price forecasts and exclusive data on E&S price changes from AutoQuotes.

If you can't make tomorrow's meeting, you have another chance to get FER's exclusive in-depth forecast material and participate in the give-and-take of a forecast meeting.

FER's 2008 E&S Market Forecast Focus on Channels is slated for Oct. 25 at the Embassy Suites O'Hare near Chicago. This meeting is designed for dealers, consultants, reps and service agents, as well as manufacturers. One special panel will probe the health of the various E&S market functions. Another will probe service costs for chain operators, including warranty and non-warranty pricing and issues.

Further information on the Focus on Channels program, costs and registration forms are available at www.fermag.com/events/index.htm or by calling Chris Palmer at 847/336-2049 or e-mailing her at cpalmer@fermag.com.

 

Section sponsored by Manitowoc Foodservice Group

Finally, Good News On Nickel, Stainless Steel Prices
For the first time in more than a year, there is finally some good news about the soaring cost of food-grade stainless steels.

"The price of nickel is coming down," Tom Stundza, executive editor at Purchasing magazine told us last week. "The bubble has finally burst."

The soaring price of nickel, only 8% of most commonly used foodservice steels, has driven stainless to dizzying heights since the beginning of 2006. Type 304 stainless sheet rose a staggering 25% during the second quarter over a number in the first quarter that was already a record, according to transaction price data from Purchasing. Since first quarter '06, the average price of a ton as risen a staggering 144%.

Stundza says the cost of nickel has dropped 20% to 30% on the London Metals Exchange the past two months. "Supply is finally catching up with demand," he said. He expects stainless prices to start declining by September.

The outlook for the future is more mixed, as demand for stainless is still strong in Asia and Europe. But at least for now, the picture has improved.

For complete information on Purchasing's transaction price data and forecasts, go to www.purchasingdata.com or call Kathy Becker at 781/734-8203.


Section sponsored by Manitowoc Foodservice Group

Another Bit of Good News: Consumer Sentiment Is Up
June retail numbers were nothing to write home about. And the University of Michigan's Index of Consumer Sentiment that month hit a 10-month low. But mid-July actually had a bit of good news on the consumer front.

The mid-month reading of Michigan's Consumer Sentiment Index, reported exclusively by Reuters, popped back up, somewhat surprisingly. The reading, reported July 13, stood at 92.4, well above late June's 85.3. It was the highest number since January.

In the release accompanying the report, the research group said "Consumer confidence rose more than expected in early July due to surging stock market, a reluctant acceptance of high gas prices and a slight improvement in expected trends in home prices."

The preliminary figure on consumer expectations also rose sharply to 83.9 from June's final reading of 74.7.


Section sponsored by Manitowoc Foodservice Group

How Big Is Equipment Market In Europe?
We had an interesting exchange last week here at FER Fortnightly and Foodservice Equipment Reports about the size of the European market for foodservice equipment and supplies, and American manufacturers' penetration there.

Jean-Francois Versele, a leading equipment and supplies rep and distributor who represents a number of leading U.S. manufacturers, asked how much American equipment goes into Europe each year. We also brought Peter Backman, a leading U.K.-based consultant and principal of Horizons for Success, into the discussion.

Here's how Backman estimated the market: "The U.K. foodservice market is 15.2% of the total European market," his firm has estimated. "Europe includes the whole of the continent (EU, west, central and east Europe including Turkey and European Russia). Thus, making the simple assumption that the U.K. represents 15.2% of the European foodservice equipment market, (knowing the size of the U.K. market) we come to a European figure of € 6.6 billion ($9.055 billion at July 26 exchange rates) at operator buying prices." Now if we assume manufacturer nets at about 50% of this figure, at the manufacturer level, the European market estimate becomes about $4.5 billion.

Here's how we figured the U.S. share: In 2005, NAFEM said equipment exports were $623 million (excluding supplies and tabletop). It's safe to assume Europe gets at least 50% of that equipment, so figure $300 million to $325 million. So the U.S. share of the European market is around 7%. Which seems reasonable.

For the value of U.S. equipment in Europe, we can extend the estimate. Figure the existing base is replaced every eight years. So the total base is about $2.5 billion. If anything, I suspect both share and total value in place are bigger. Estimates, yes, but reasonable estimates.



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