Can't decide what type of business to start? Marketing research firm IBISWorld has seen the future, and it is hot and spicy.
The firm recently released its list of the top 10 fastest-growing industries in the U.S., based partly on their contributions to the economy as a whole (measured as industry value added), absolute revenue growth over the past 10 years and forecast revenue through 2017. U.S. gross domestic product is forecast to grow 3.3 percent per year over the next five years—compared with the 0.6 percent per year for the past five years.
There are some fairly intuitive segments on the list (social network game development, which is supposed to more than triple its revenues in the next five years), and some surprises (hot sauce production).
Observed the report: "Whether by focusing on environmentally friendly practices and operations or benefiting from technological advances, these industries are expected to continue their meteoric rise and far outpace the rest of the economy."
Here's the list of the top 10 fastest-growing industries:
• Generic pharmaceutical manufacturing
• Solar panel manufacturing
• For-profit universities
• Pilates and yoga studios
• Self-tanning product manufacturing
• 3D printer manufacturing
• Social network game development
• Hot sauce production
• Green and sustainable building construction
• Online eyeglasses and contact lens sales
The David and Goliath of Growth
Though generic pharmaceutical marketing is a $52-billion-a-year industry (and one that's ballooned as health care costs do), the company is careful to note this is not a list of the biggest industries. (Online eyeglass sales, for example, had just $348 million in revenue in 2012, making it tiny compared to pharmaceuticals.) This list represents which industries have the most potential for growth.
It's probably not a surprise that environmentally friendly industries, such as solar manufacturing and "green building," are booming. They're the recipient of subsidies in recent energy and stimulus bills, but they'll grow even when the subsidies shrivel, says IBISWorld. The $4.6 billion solar manufacturing industry will grow 8 percent in the next five years, the company predicts. Revenue in the green building industry will more than double, from $103 billion in 2012 to $288 billion in 2017. (The average annual growth rate for the industry will be 22 percent, says the report.)
No Brainers and Eyebrow Raisers
Another as-expected choice: Pilates and yoga studios, forecasted to grow from $6.9 billion in revenue in 2012 to $8.6 billion in 2017. Unlike all the other industries, there are no major players with whom to compete in this category. This industry has been recession-resistant, too: revenue slowed in 2008 and 2009 but growth was not negative. Revenue is predicted to grow an average of 4.8 percent annually.
Now for the "upstarts," as the report refers to them. Self-tanning has grown 22.7 percent per year since 2002, thanks to consumer awareness about the dangers of tanning beds and UV rays. That's created huge growth potential for self-tanning creams, mousses and sprays—specifically, an average annual growth of 10.7 percent over the next five years.
As for hot sauce, the report notes that it has "earned its tenure at the dinner table" because of a combination of demographic changes, immigration and the rising popularity of spicier ethnic food in the U.S., Canada and Japan. The industry has grown at a rate of 9.3 percent per year over the past decade, and is forecast to grow at an average annual rate of 4.1 percent over the next five years. That will make it a $1.3 billion industry by 2017, led by the McIlhenny Co.'s iconic Tabasco sauce.
For-profit universities are estimated to grow 3.6 percent per year until 2017–growth fueled by the increasing expense and exclusivity of public and private universities. (They've grown 13.6 percent per year since 2002.)
Another "upstart" is the online glasses industry, which has benefited from more broadband in homes, plus new technologies that allow consumers to "try on" glass virtually. The latter has made customers more confident about buying online, and over the next five years, industry revenue is predicted to grow 8.8 percent per year on average. Contact lenses are also included in the total industry revenues, which should reach $530 billion by 2017.
What industry do you think is missing from this list? Are there any you would have left off?
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