Boston, MA -- (ReleaseWire) -- 11/12/2012 -- Real GDP growth in France has now stuttered to a halt against an uncertain global macroeconomic backdrop. We therefore maintain our forecast for the country's real GDP to contract by 0.2% in 2012, before growing by just 0.9% in 2013. French household consumption is expected to remain extremely weak throughout the course of 2012, primarily due to concerns over employment and housing.
Headline Industry Data (local currency)
- 2012 per capita food consumption = +0.9%; forecast to 2016 = +4.9%
- 2012 alcoholic drink value sales = 1.6%; forecast to 2016 = +3.0%
- 2012 soft drink value sales = +1.3%; forecast to 2016 = +14.0%
- 2012 mass grocery retail sales = +1.6%; forecast to 2016 = +12.6%
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Key Industry Trends And Developments
Some Signs of Optimism in French Beer Sector: In July 2012, Netherlands-based brewer Heineken suggested that a focus on its premium brands can help it overcome a decline in the size of the overall beer market in France. The firm's French president, Pascal Sabrie, was reported saying that the company's portfolio is priced at between 10-50% above the average for French beer, and that premium beers were gaining market share - with the sector accounting for 49.5% of the overall market in 2011, from 30% 10 years ago. Thanks to increasing prices and the strong performance of more expensive premium beers, overall sales in value terms on the French market have been increasing despite subdued volume sales.
Carrefour H1 Earnings Down: Carrefour's recent first-half results included an 8.2% year-on-year (y-o-y) decline in operating income. We have argued that for the retailer to win back investors' confidence, it will have to focus heavily on making its food a lot cheaper. Carrefour has found itself in an uncomfortable position in France, where many of its hypermarkets are arguably dated and not conveniently accessible at a time when convenience has become so important. Indeed, Carrefour is now focusing more heavily cutting food prices, which is the way forward, in our opinion. Georges Plassat, Carrefour's new CEO, has a reputation for cost-cutting, which could well make him more suitable for reviving Carrefour's competitiveness in France over the near-to-medium term.
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