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France Food and Drink Report Q3 2008

http://www.companiesandmarkets.com/Summary-Market-Report/france-food-and-drink-report-q3-2008-49331.asp

Report Summary

As discussed in BMI's newly-published Q308 French Food & Drink Report, the French wine industry is set to be among the most highly impacted by the European Union (EU) wine reforms now formally approved by the Council of the European Union. Although, sales of the best quality French wine have increased rapidly over the past few years, partly thanks to growing demand in emerging markets, France also produces a large amount of low quality table wine, which often struggles to find a market. This part of the industry may shrink significantly after the full package of reforms is implemented. 2007 was a record year for Burgundy and Champagne – two of the most highly prized and expensive French wines.

According to the Bureau Interprofessional des Vins de Bourgogne (BIVB), exports of burgundy over the year increased by 14% in volume terms and generated a turnover of EUR718mn (US$1.1bn) – a rise of 21%. Meanwhile the Comité Interprofessionnel du Vin de Champagne (CIVC) reports that exports of champagne in 2007 were up by 7.3% on the previous year and set a new record. These record sales figures were thanks growing demand for high quality French wine in emerging markets such as China and Russia along with sustained growth in more traditional markets such as the UK and Japan.

However, so far in 2008 there are signs that this rate of growth may have slowed – a spokesman for BIVB reports that exports of burgundy slowed in March and April 2008 meanwhile the Union des Maisons de Champagne (UMC) reports that in the first quarter of 2008 sales of Champagne were flat compared to the same period in 2007. This is largely due to a slump in demand in the US and reflects how closely premium wine sales are tied to economic prosperity. Despite this slowdown in 2008, the long term prospects for top-end French wine look very strong thanks to the growing demand for premium European food and drink products in emerging markets.

However, at the bottom-end of the industry things look less rosy and the package of wine reforms agreed by the EU council is likely to lead to a significant decline in production. The reforms mean that EU subsidies for wine producers will be phased out by 2012 and inefficient and uncompetitive producers will be encouraged to leave the industry via a three-year voluntary grubbing-up scheme that will pay producers to decrease their number of vines. France's Languedoc Roussillon wine region is likely to be among the worst hit by these reforms as it generates one of the lowest incomes per hectare in the EU.

The wide scale destruction of vineyards, although economically sensible, is likely to be an emotive issue in France, as the countryside will be significantly altered. However, the reforms will also mean the scrapping of planting rights that restrict the planting of new vines. This could potentially lead to a massive increase in planting in popular regions such as Bordeaux and Burgundy, and production of high quality French wines could therefore increase significantly.

Table of Contents

Executive Summary 7

Business Environment 8

Western Europe Food & Drink Business Environment Ratings .. 8

Western Europe Food & Drink Business Environment Ratings Q3 2008 11

France’s Food & Drink Business Environment Ratings ...... 11

Table: Global Food & Drink Business Environment Ratings – France’s Peer Group . 13

SWOT Analysis . 14

Food And Drink 14

France Food And Drink Industry SWOT .. 14

Mass Grocery Retail ...... 15

France Mass Grocery Retail Industry SWOT ..... 15

Macroeconomic Outlook ..... 16

Table: France – Macroeconomic Forecasts ...... 18

Food ......19

Industry Forecast Scenario . 19

Food Consumption 19

Table: France Food Consumption Indicators – Historical Data & Forecasts .. 19

Prepared Food / Canned Food . 20

Table: Canned Food Value/Volume Sales – Historical Data & Forecasts 20

Confectionery . 20

Table: Confectionery Value/Volume Sales – Historical Data & Forecasts 21

Private Label . 21

Industry Developments . 21

Market Overview 24

Food Production ... 24

Organic.. 26

Prepared Food ...... 26

Drink .....28

Industry Forecast Scenario . 28

Hot Drinks . 28

Table: Hot Drink Value Sales – Historical Data & Forecasts ... 28

Soft Drinks . 28

Table: Soft Drink Value Sales – Historical Data & Foreca 29

Alcoholic Drinks ... 29

Table: Alcoholic Drink Value/Volume Sales – Historical Data & Forecasts .... 30

Industry Developments . 31

Market Overview 33

Soft Drinks . 33

Alcoholic Drinks ... 33

Agriculture At A Glance ....34

Table: France Agricultural Sub-Sector Production .... 34

Table: France Organic Agricultural Data 34

Table: France Dairy Production, Farming & Consumption 34

Agricultural Commodity Price 35

Mass Grocery Retail .36

Industry Forecast Scenario . 36

Table: France Mass Grocery Retail Sales By Format (US$bn) – Historical Data & Forecasts 37
Table: Grocery Retail Sales By Format .... 37
Industry Developments . 38
Market Overview 40
Table: Structure Of France's MGR Market By Estimated Number Of Outlets .. 42
Table: Structure Of France MGR Market – Sales Value By Format (US$bn) ... 43
Table: Average Value Of Sales Per Outlet (US$mn) By Format 2006 43
Competitive Landscape ....44
Key Players. 44
Food And Drink 44
Table: Key Players In France's Food & Drink Sector – 2006 ... 44
Mass Grocery Retail ...... 45
Table: Key Players In France's Mass Grocery Retail Sector – 2007 45
Table: Key Players In France's Mass Grocery Retail Sector – 2007 (continued) ...... 46
Company Analysis ...... 47
Food ... 47
Groupe Danone 47
Nestlé France . 48
Drink ... 49
LVMH Group (Moet Hennessy Louis Vuitton) ... 49
Pernod Ricard 50
Mass Grocery Retail ...... 51
Carrefour... 51
Groupe Auchan ..... 52
Groupe Casino ...... 53
Deep US Recession Scenario .54
Global Scenario 54
Table: World GDP Growth ..... 54
Table: US GDP Growth, Investment Growth And Private Consumption Growth ...... 55
Table: Eurozone GDP Growth 56
Table: Asia, Excluding Japan, GDP Growth ..... 57
Table: China GDP Growth ..... 58
Table: Mexico GDP Growth ... 58
Table: Africa GDP Growth ..... 59
Western Europe Recession Scenario ..... 60
Table: Impact Of Deep US Recession On Total Food Consumption In Selected Western European Markets – Cumulative Difference Between
Core And Recession Scenarios (%) .. 61
Appendix 63
Food & Drink Business Environment Ratings .63
Ratings Methodology . 63
Ratings Overview 63
Ratings System ...... 63
Indicators... 63
Limits Of Potential Returns ..... 64
Risks To Realisation Of Potential Returns 65
Weighting... 66
Weighting... 66
BMI Food & Drink Industry Glossary ..67
Food & Drink . 67
Mass Grocery Retail .. 67
BMI Food & Drink Forecasting & Sourcing 69 How We Generate Our Industry Forecasts .... 69 Sourcing ... 70