Boston, MA -- (ReleaseWire) -- 04/15/2014 -- France's economic stagnation is becoming increasingly salient as recovery in the rest of the eurozone picks up momentum. In response to weaker demand, domestic manufacturers continued to cut jobs. The growing underperformance of French exports suggests that the lack of competitiveness in the manufacturing sector remains a major impediment to economic growth, and the increasing strength of the euro is likely to further exacerbate this dynamic. Spending by households was surprisingly strong in Q213, growing by 0.5% y-o-y against a contraction of 0.1% in the first quarter of the year, although, as previously noted, this was largely due to higher energy spending. French household consumption has historically proven relatively resilient to economic downturns, in part due to the difficulties businesses experience in shrinking the workforce but also due to the state's generous social security system. Nonetheless, with unemployment now above the 3.0 million mark - bringing the unemployment rate to 10.5% - and unlikely to fall substantially over the near term, the outlook for household consumption remains relatively subdued. Still, domestic food sales will benefit from the fact that France is one of the few European countries with a growing, young population: 20% of its population is under 25.
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- 2014 per capita food consumption = +0.3%; forecast compound annual growth rate (CAGR) to 2018 = +0.8%.
- 2014 alcoholic drink value sales = +0.4%; forecast CAGR to 2017 = +0.5%.
- 2014 soft drink value sales = +2.6%; forecast CAGR to 2017 = +2.6%.
- 2014 mass grocery retail sales = +2.5%; forecast CAGR to 2017 = +2.5%.
Poultry Only Segment To See Growth: We have turned more positive regarding poultry production in the EU-28 in 2013 and 2014, as the sector has benefited from strong regional and export demand growth. Poultry is less affected by periods of economic weakness, as it is cheaper and more convenient to cook. EU-28 production in 2013 is estimated to have increased owing to higher broiler meat production in all major EU producing countries, including the UK, Benelux, Spain, Poland, Germany, Italy and France. In France, poultry production decreased during 2012 on the back of the demise of Doux, the largest French broiler producer. However, French output was expected to rebound in 2013 as competitors replaced the company's lost market share.
Remy Cointreau Faces Tough Strategic Decisions: The announcement that Frederic Pflanz is stepping down after only three months as CEO of Remy Cointreau is the latest development in a torrid six months for the French distiller. In our view, the company must meaningfully and actively shift its strategy away from a reliance on Chinese growth.
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