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France Food and Drink Report Q1 2011
Business Monitor International, Dec 2010, Pages: 79
Business Monitor International's France Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on France's food and drink industry.
GDP contracted by 2.6% in 2009 in France with the global economic crisis having a profound impact on the domestic economy. This negatively affected consumer confidence and therefore consumer spending. It also exacerbated the trend towards private label products and discount retailing, and had a negative impact on consumption. Although economic growth has improved during 2010, we expect it to slow again in 2011 due to fiscal cuts that are set to weigh on household consumption.
Headline Industry Data
- 2011 per capita food consumption = +1.2%; forecast to 2015 = +5.2%
- 2011 alcoholic drink sales = -0.2%; forecast to 2015 = -0.8%
- 2011 soft drink sales = +2.6%; forecast to 2015 = +13.1%
- 2011 mass grocery retail sales = +3.1%; forecast to 2015 = +12.6%
Key Industry Trends & Developments
Battle for Yoplait Starts in Earnest
– French private dairy company Lactalis has recently placed a EUR1.3bn bid for yoghurt manufacturer Yoplait, co-owned by French milk cooperative Sodiaal and private equity group PAI Partners. The Lactalis bid would have the advantage of keeping the Yoplait brand under French control, while all the other interested parties are foreign players. The possibility of a foreign bidder for Yoplait could once again test French openness to foreign investment after the yoghurt sector was dubbed ‘strategic’ back in 2005 when PepsiCo was rumoured to be mounting a bid for Danone.
Opportunities Remain in Difficult Beer Sector
– The Chief Executive of France's leading brewer Brasseries Kronenbourg has recently said that the company's sales are likely to increase by 1.5% in 2010, implying that revenues are on course to hit EUR825mn. However, Thomas Amstutz suggested that France's total beer market was likely to decline by 1% in 2010, in line with the trend of the last 20 years.
Although Kronenbourg's eponymous brand is particularly exposed to the decline in demand for massmarket beer, the firm also sells a number of premium beers such as 1664 and Gold. In addition, sales of imported beer have been increasing, suggesting another avenue for parent company Carlsberg to exploit with its global portfolio of international beer brands.
Key Risk to Outlook Eurozone debt crisis
– The greatest short-term risk to the French outlook is a credit event elsewhere in the eurozone. This would elevate risk aversion toward and could destabilise the economic recovery. It would also raise questions about the fiscal solvency of other countries in the eurozone, and while France is among the bloc's 'core' states, its government debt pile of over 80% of GDP in 2010, according to our forecasts, compares unfavourably even with the likes of Spain. Faltering Recovery
– Another risk is that with the economic recovery still very weak, the government’s plans for significant fiscal retrenchment could weigh more heavily on growth than we expect. Given that fiscal stimulus has been a key factor keeping the economy afloat during the global downturn, normalising the budget now could have a more detrimental impact on growth than we currently anticipate, and as such, this remains a downside risk to our consumption forecasts.'
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