BMI has revised upwards its 2009 and 2010 growth forecasts for France on the back of preliminary Q209 data. Most impressive was the resilience of the consumer (where private consumption rose by 0.3% quarter-on-quarter (q-o-q), up from 0.2% in Q109), combined with a dramatic turnaround in exports (from -7.1% q-o-q in Q1 to 1.0%). Our 2009 real GDP growth forecast now stands at -2.6% (previously -3.0%), while the 2010 projection is 0.5% (previously 0.0%).

However, the country’s food and drink operators have not emerged unscathed. During the quarter, France's fourth-largest Champagne house Laurent-Perrier reported a 45% drop in net profits for the 12 months to the end of March on the back of a 27% decline in revenues to EUR181mn (US$257mn). The fall is in line with a widespread decline in demand for France's alcohol exports. Trade body Fédération des Exportateurs de Vins et Spiritueux (FEVS) has announced that wine and spirit exports fell by 30% in the first quarter of 2009, and that it expects exports over the year as a whole to be 20% lower than in 2008. Demand has fallen across nearly every market, with FEVS Deputy Director General Renaud Gaillard revealing that China and Hong Kong were the only regions not to register a decline. Premium drinks have been particularly hard hit with Gaillard revealing that shipments of Champagne, Bordeaux, Burgundy, Cotes du Rhone wines and Cognac all falling significantly. At the end of July, Groupe Danone reported increased sales and profits for the first half of 2009. Sales to the end of June rose by 1.6% to come in at EUR7.5bn (US$10.7bn) while net profits were up by 3% to EUR722mn (US$1bn), if capital gains are excluded. Danone managed to reverse a decline in quarterly sales volumes at its dairy unit, which accounts for more than half of group profits. Up until the second quarter of 2009, volumes at Danone's dairy unit had declined for five successive quarters. Dairy accounts for 58% of its revenues and is the company's most important driver of profits. In addition to lowering prices of its core portfolio, which include brands such as Actimel and Activia, Danone has introduced lower cost products, such as 'Eco-Pack' in France, a strategy likely to continue.

The current market conditions are putting many dairy producers under strain and pushing companies to consolidate. Indeed, French dairy group Lactalis is reportedly poised to strike for struggling French rival Entremont Alliance. However, trade unions have suggested that the move could face regulatory hurdles as it would give Lactalis a monopoly in the French market for emmental. Lactalis has been among the most active consolidators in the last 12 months with acquisitions in France, Croatia, Poland, Romania and Switzerland. The firm appears intent on maintaining this acquisition drive and in June, following the demise of UK-based Dairy Farmers of Britain (DFoB), Lactalis snapped up the firm's highly prized Lubborn Cheese dairy, which brought with it DfoB's best known brand, Seriously Strong Cheddar. Lactalis's move for the struggling Entremont would continue this strategy, adding weight to its portfolio of cheese brands for what can be expected to be a bargain price. The current market conditions are likely to throw up similar opportunities in the next 12 months, and BMI does not expect Lactalis to be the only opportunist in town, with all of the world's top players likely to be pushing to expand so as to reap the benefits of a recovering global economy and an expanding dairy market.

Chapter 1 - Executive Summary

SWOT Analysis

France Food Industry SWOT

France Drink Industry SWOT

France Mass Grocery Retail Industry SWOT

Chapter 2 - Business Environment

BMI’s Core Global Industry Views

BMI's Core Views For The Food & Drink Industry

Western Europe Food & Drink Business Environment Ratings Q4 2009

France’s Food & Drink Business Environment Ratings

Macroeconomic Outlook

France – Economic Activity, 2005-2013

Chapter 3 - Food

Industry Forecast Scenario

Food Consumption

France Food Consumption Indicators – Historical Data & Forecasts, 2006-2013

Prepared Food / Canned Food

Canned Food Value/Volume Sales – Historical Data & Forecasts, 2006-2013

Confectionery

Confectionery Value/Volume Sales – Historical Data & Forecasts, 2006-2013

Private Label

Functional Food

Trade

Food & Drink Trade Balance – Historical Data & Forecasts, 2006-2013

Industry Developments

Market Overview

Food Production

Leading Players

Food Consumption

Prepared Food/Canned Food

Confectionery

Trade

Agriculture

Sugar Production

Organic Farming

Chapter 4 - Drink

Industry Forecast Scenario

Hot Drinks

Hot Drink Value Sales – Historical Data & Forecasts, 2006-2013

Soft Drinks

Soft Drink Value Sales – Historical Data & Forecasts, 2006-2013

Alcoholic Drinks

Alcoholic Drink Value/Volume Sales – Historical Data & Forecasts, 2006-2013

Industry Developments

Market Overview

Soft Drinks

Hot Drinks

Alcoholic Drinks

Beer

Wine

Spirits

Chapter 5 - Mass Grocery Retail

Industry Forecast Scenario

France Mass Grocery Retail Market – Sales By Format (US$bn) – Historical Data & Forecasts, 2006-2013

Grocery Retail Sales By Format

Industry Developments

Market Overview

Leading Players

Structure of France's MGR Market – Estimated Number of Outlets, 2002-2008

Structure of France MGR Market – Sales Value by Format (US$bn), 2002-2008

Average Value of Sales per Outlet (US$mn) by Format

Chapter 6 - Competitive Landscape

Key Players

Key Players in France's Food Sector

Key Players in France's Drink Sector

Key Players in France's Mass Grocery Retail Sector

Company Analysis

Food

Groupe Danone

Nestlé France

Drink

LVMH Group (Moët Hennessy Louis Vuitton)

Pernod Ricard

Mass Grocery Retail

Carrefour

Groupe Auchan

Groupe Casino

Chapter 7 - Appendix

Country Snapshot: France Demographic Data

Section 1: Population

Table: Demographic Indicators, 2005-2030

Table: Rural/Urban Breakdown, 2005-2030

Section 2: Education and Healthcare

Table: Education, 2002-2005

Table: Vital Statistics, 2005-2030

Section 3: Labour Market and Spending Power

Table: Employment Indicators, 2000-2005

Table: Consumer Expenditure, 2000-2012 (US$)

Table: Average Annual Wages, 2000-2012

Chapter 8 - BMI Food & Drink Methodology

Food & Drink Business Environment Ratings

Ratings Methodology

Ratings Overview

Ratings System

Indicators

Limits of Potential Returns

Risks to Realisation of Potential Returns

Weighting

Table: Weighting

BMI Food & Drink Industry Glossary

Food & Drink

Mass Grocery Retail

BMI Food & Drink Forecasting & Sourcing

How We Generate Our Industry Forecasts

Sourcing