BMI's Executive Summary

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Environmental, heath and ethical concerns remain a top priority for an increasing number of UK consumers, and are becoming a major factor driving, not just consumption choices, but also the strategies of both food producers and retailers. Tesco, Asda, and Sainsbury have all announced new green initiatives in the past few months – including plans to move towards bag-free checkouts – while Morrisons unveiled a new green logo, which will become operational in July 2007.

Many of the UK's grocery retailers continue to expand their selling space and extend their outlet reach into new parts of the country. However, with the ‘big four' controlling some 79% of the food and drink retail market, the market is already one of Europe's most consolidated; the large number of smaller players in the market look set to undergo major changes and further consolidation in the months ahead.

While 'top end' food and drink retailers such as Waitrose and Marks & Spencer continue to report surging sales and new store launches, and while hard discount mass grocery retailers (MGRs) such as Lidl and Aldi reformulate their UK strategies, traditional operators in the low cost and convenience sectors are facing more challenging times. Some, such as the Co-operative Group (Co-op) and Spar, are looking better-placed to take on their larger rivals; Spar and Co-op entered into a buying alliance at the end of 2006, in order to reduce their own costs. It also emerged in April 2007, that a proposed merger between Co-op and United Co-operatives, was set to be completed in July 2007, and which will lead to the creation of the world's largest consumer co-operative group. In contrast to the successes of Co-op and Spar, other smaller retailers, including Iceland, Somerfield and Costcutter, appear to have had negative or flat sales growth of late. Furthermore, in June 2007, it was revealed that Kwik Save, which was previously acquired by Somerfield but subsequently hived off, in March 2006, as a separate business, faced the very real prospect of administration.

Meanwhile, UK drinks manufacturers wait with baited breath to discover what will be the effects on their industry of a public smoking currently being extended throughout the UK. Reflecting on mixed reports on the effects of similar bans elsewhere in Europe (including Scotland and the Republic of Ireland), BMI believes the argument that public smoking bans undermine commercial drinks sales in bars and restaurants to be far from settled. There is considerable evidence from other countries which suggests an actual increase in bar and restaurants visits followed the introduction of no-smoking bans. Contrary to trends seen elsewhere in Europe, we predict that the annual amount spent in the UK on alcoholic drinks will continue to grow over the next five years, reaching US$17,134mn in 2011.

With MGR sales of food and drink predicted grow by 37.9% over the next five years, and with food, drink and tobacco consumption expenditure set to expand by 17% to reach US$228bn, the UK food and drink sector looks set to retain its reputation as one of Europe's most dynamic, as well as one of those sector most dominated by MGRs.

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: