BMI's Executive Summary

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A key recent development in the French food and drink market involves the slow and painful steps being taken towards liberalisation and deregulation as reported in BMI's newly-published Q108 France Food & Drink Report. With food prices being driven up due to rising energy and commodity prices, the new government of President Nicolas Sarkozy has made it a priority to reform the extremely complicated laws that govern the relationship between suppliers of branded goods and retailers, which have held prices artificially high. With a President who leans towards economic liberalisation, France may potentially begin to roll back some of its other laws that currently deter foreign companies from investing in the country.

An increasingly liberal attitude towards economic affairs may be partly responsible for the surprising lack of objection to the takeover of part of the French food group Danone. In November the world's second largest food and beverage company Kraft Foods acquired French producer Danone's biscuit and cereal division for EUR5.3bn (US$7.6bn). The biscuit business, which generates annual sales of around EUR2bn (US$2.9bn) includes the leading brands in France, LU and Petit Déjeuner. Up until now France has adopted a protectionist attitude to many of its most prestigious national companies, including Danone. In 2006 when PepsiCo was rumoured to be looking to acquire Danone, which owns the valuable Evian and Volvic bottled water brands as well as the Actimel and Activia yoghurt brands, the yoghurt industry was declared an industry of strategic importance immune to foreign takeover. This type of restriction is unlikely to be repealed any time soon however moves around the edges hint that France may soon become a more favourable climate for foreign businesses to operate in. Indeed, with a rising trade deficit France may eventually be compelled to encourage more foreign direct investment (FDI) to make up for its lack of export growth.

More immediate moves towards liberalisation involve the regulations that govern the relationship between suppliers of branded products and retailers. A long-standing ban on selling products for below cost price has been present in France, designed to allow smaller retailers to compete with the big chains. This law has been regularly updated and modified to specify exactly which costs and charges need to be included in the final retail price. In addition, current laws mean that it is difficult for large retailers to negotiate large discounts, as suppliers are compelled to offer similar terms to all retailers. These laws have been a boon to discount retailers, whose large percentage of private-label products are not affected by the laws and the laws have also had the unintended effect of stimulating supermarket and hypermarket operators to extend their own private label offerings. Recently their have been moves to relax these laws and the newly proposed 'Chatel bill', that President Sarkozy wants to be voted into law before the end of the year, would allow retailers to pass on 'back margins' – discounts that suppliers currently give to retailers after selling a certain quantity of theirs goods – to consumers. This would effectively let large retailers who sell greater quantities to sell at lower prices than smaller, local retailers. This could possibly stimulate growth in the beleaguered supermarket and hypermarket sector and make discount stores, which are currently growing very rapidly, less attractive.

Contents

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Chapter 1 – Business Environment

SWOTs

France Food, Drink & Tobacco Industry SWOT

Macroeconomic Outlook

Table: France - Macroeconomic Forecasts

Chapter 2 – Retail

Regional Overview

Discounting In Western Europe

Table: Types Of Discount Stores - Western Europe

Table: Leading Discount Store Operators - Europe* 2005

Industry Forecast Scenario

Table: France Mass Grocery Retail Sales By Format (US$bn) – Historical Data & Forecasts

Industry Developments

Company Developments

Market Overview

Table: Structure Of France's MGR Market By Number Of Outlets

Table: Structure Of France MGR Market – Sales Value By Format (US$bn)

Table: Average Value Of Sales Per Outlet (US$mn) By Format 2005

Chapter 3 – Food & Drink

Regional Overview

Bottled Water In Western Europe

Table: Leading Bottled Water Manufacturers By Country – Western Europe

Industry Forecast Scenario

Table: France Food Consumption Indicators

Table: France Food Sub-sector Indicators

Table: France Drinks Indicators

Table: France Alcoholic Drinks Indicators

Table: France Sectoral Trade Indicators

Industry Developments

Company Developments

Market Overview

Chapter 4 – Tobacco

Industry Forecast Scenario

Table: France Tobacco Indicators

Industry Developments

Company Developments

Market Overview

Chapter 5 – Competitive Landscape

Key Players

Table: Key Players In France's Mass Grocery Retail Sector

Regional Company Case Studies

Metro Group In Western Europe

Table: Metro Group – Number Of Outlets By Country And Fascia 2004 & 2005

Table: Metro Group – Fascia statistics

Unilever plc/Unilever NV In Western Europe

Table: Unilever Food & Beverage Main Brands by Country – Western Europe

Table: Unilever Sales By Geographical Area 2004 & 2005 – Continuing Operations

Table: Unilever – Principal Group Companies Western Europe

Nestlé In Western Europe

Table: Nestlé Sales in Leading Western European Markets in 2005

Table: Nestlé In Western Europe – The Figures

Carlsberg In Western Europe

Table: Carlsberg Sales (US$) & Growth (%) By Region – 2005

Table: Carlsberg Sales (US$) & Growth (%) by Region – Q106

Table: Carlsberg Regional Strategies

Table: Carlsberg Operations In Western Europe

Company Profiles

Groupe Danone

LVMH Group (Moet Hennessy Louis Vuitton)

Groupe Casino

Carrefour

Nestlé France

Pernod Ricard

BMI Forecast Modelling

How We Generate Our Industry Forecasts

Retail Industry

Sources

Competitive Landscape for Europe Food & Drink Reports: Sample of  
Companies Ranked

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At-a-glance perspective on the strengths, weaknesses, opportunities and threats facing each market’s food & drink industry. BMI also provides similar economic and business environment studies. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) covering all leading food and drink companies operating in each market, including competitive intelligence on geographic presence and competitive positioning of multinationals against local companies; leading products, services and brands; sales and local market share; foreign direct investment, projects, partners and acquisition strategy. Illustration of the industry via rankings tables comparing revenues, number of outlets, number of employees and registration dates. BMI analyses each company’s performance, market position, strategy and investment potential.

Network of European Food Sources

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BMI's European Food Reports are based on an extensive network of multilateral organisations, government departments, food industry associations, chambers of commerce and company reports. Information sources include: