Executive Summary .7

Business Environment ....8

Western Europe Food & Drink Business Environment Ratings .. 8

Table: Western Europe Food & Drink Business Environment Ratings Q3 2008 11

Table: Global Food & Drink Business Environment Ratings – United Kingdom’s Peer Group 13

SWOT Analysis . 14

Food And Drink 14

United Kingdom Food And Drink Industry SWOT ...... 14

Mass Grocery Retail ...... 15

United Kingdom Mass Grocery Retail Industry SWOT . 15

Macroeconomic Outlook ..... 16

Table: United Kingdom - Macroeconomic Forecasts . 19

Food ......20

Industry Forecast Scenario . 20

Food Consumption 20

Table: UK Food Consumption Indicators – Historical Data & Forecasts . 21

Canned Food / Prepared Food . 21

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

Confectionery . 21

Table: Confectionery Value/Volume Sales – Historical Data & Forecasts 22

Industry Developments . 22

Market Overview 24

Food Production ... 24

Prepared Food ...... 24

Livestock 25

Dairy ... 25

Seafood .. 26

Organic Food 26

Drink .....27

Industry Forecast Scenario . 27

Hot Drinks . 27

Soft Drinks And Bottled Water 27

Table: Soft Drink Value Sales – Historical Data & Foreca 28

Alcoholic Drinks ... 28

Table: Alcoholic Drink Value/Volume Sales – Historical Data & Forecasts .... 29

Industry Developments . 29

Market Overview 31

Soft Drinks . 31

Alcoholic Drinks ... 31

Agriculture At A Glance .33

Table: United Kingdom Agricultural Sub-Sector Production .... 33

Table: United Kingdom Dairy Industry Data .... 33

Table: United Kingdom Organic Agricultural Data ... 33

Agricultural Commodity Price 34

Mass Grocery Retail 35

Industry Forecast Scenario . 35

Table: Structure of UK Mass Grocery Retail Market – Sales By Format (US$bn) – Historical Data & Forecasts 37
Table: Sales Breakdown By Retail Format Type 37
Industry Developments . 37
Market Overview 40
Online Retailing 43
Table: Structure Of The UK's Mass Grocery Retail Market By Estimated Number Of Outlets.. 44
Table: Structure Of The UK's Mass Grocery Retail Market – Sales Value By Format (US$bn), estimates ... 44
Table: Annual Average Sales Per Outlet By Format (US$mn) – 2006 45
Competitive Landscape .46
Key Players. 46
Food And Drink 46
Key Players in the UK's Food & Drink Sector - 2006/2007. 46
Mass Grocery Retail ...... 47
Key Players in the UK's Mass Grocery Retail Sector . 47
Company Analysis ...... 49
Food ... 49
Associated British Foods . 49
Dairy Crest Group Plc ... 50
Drink ... 51
Diageo 51
Cadbury Schweppes Plc . 52
Mass Grocery Retail ...... 53
Tesco ... 53
J. Sainsbury Plc 54
Asda .... 55
Deep US Recession Scenario ..56
Global Scenario 56
Table: World GDP Growth ..... 56
Table: US GDP Growth, Investment Growth And Private Consumption Growth ...... 57
Table: Eurozone GDP Growth 58
Table: Asia, Excluding Japan, GDP Growth ..... 59
Table: China GDP Growth ..... 60
Table: Mexico GDP Growth ... 60
Table: Africa GDP Growth ..... 61
Western Europe Recession Scenario ..... 62
Table: Impact Of Deep US Recession On Total Food Consumption In Selected Western European Markets – Cumulative Difference Between
Core And Recession Scenarios (%) .. 63
Appendix 65
Food & Drink Business Environment Ratings ...65
Ratings Methodology . 65
Ratings Overview 65
Ratings System ...... 65
Indicators... 65
Limits Of Potential Returns ..... 66
Risks To Realisation Of Potential Returns 67
Weighting... 68
Weighting... 68
BMI Food & Drink Industry Glossary 69
Food & Drink . 69
Mass Grocery Retail .. 69
BMI Food & Drink Forecasting & Sourcing ...71 How We Generate Our Industry Forecasts .... 71 Sourcing ... 72