Spain Food and Drink Report Q4 2012

We continue to see limited scope for growth in private consumption. Ultimately, high unemployment, falling real wages, a large stock of private sector debt and fiscal austerity will keep consumers focused on deleveraging rather than spending for the foreseeable future, particularly as taxes on consumption have been pushed up to help bring down Spain's deficit. This means we see very little chance of another consumption-led boom over the next five years and see the environment continuing to favour pricefocused retailers and cheaper food and drink options over most of this period.

Headline Industry Data ?? 2012 per capita food consumption = +0.3%; forecast to 2016 = +7.8%. ?? 2012 alcoholic drink sales = +0.5%; forecast to 2016 = +6.2%. ?? 2012 soft drink sales = +0.1%; forecast to 2016 = +8.3%. ?? 2012 mass grocery retail sales = +0.6%; forecast to 2016 = +10.9%.

Key Company Trends & Developments Dia H1 Results Impress Market – Although so much uncertainty surrounds the Spanish economy, there are some bright spots in food and drink. The discounter retailer Dia, which was a Carrefour spin-off from mid-2011, has performed well through 2012 with its value message providing an excellent competitive advantage in such challenging trading conditions. The firm posted good first-half results, which included a 6% increase in Spanish sales to about EUR2.4bn.

Ebro's Net Profit Up 19.1% In H112 – In July 2012, Spanish food manufacturer Ebro Puleva reported that its net profit increased 19.1% y-o-y to EUR67.2mn (US$81.4mn) in H112. The rise has been attributed to the successful integration of businesses acquired by the food producer in 2011. The firm's earnings before interest and tax rose 14.2% y-o-y to EUR106.3mn (US$128.7mn), while its net sales jumped 20.6% y-o-y to EUR1.02bn (US$1.23bn) in H112. Ebro's H112 results were helped by a relatively stable commodity market, new product development and its Memphis-based rice plant becoming fully operational.

Key Risk to Outlook The biggest risk to our forecasts stems from the government's fiscal strategy. While the private sector remains in no state to drive the economy forward, should the government push too hard on the fiscal brakes, it could lead to an even greater downturn in real GDP. This would render the government's fiscal consolidation strategy as self-defeating and would prompt us to reassess our growth, fiscal and debt forecasts. Spain Food & Drink Report Q4 2012 © Business Monitor International Ltd Page 8

Similarly, a further decline in eurozone economic activity would have a severe impact on the Spanish economy. While net exports will not be sufficiently strong enough to pick Spain up out of recession in 2013, for now it remains a positive contributor to headline growth. As such, weaker export growth could see Spain's economic contraction over the next two years prove even more severe than currently envisaged.

Table of contents

Chapter 1 - BMI Industry View

Chapter 2 - SWOT Analysis

Spain Food Industry SWOT

Spain Drink Industry SWOT

Spain Mass Grocery Retail Industry SWOT

Chapter 3 - Business Environment

BMI’s Core Global Industry Views

Table: Core Views

Western Europe Risk/Reward Ratings

Table: Western Europe Food & Drink Risk/Reward Ratings Subcategories, Q (scores out of )

Table: Western Europe Food & Drink Risk/Reward Ratings, Q

Spain’s Food & Drink Risk/Reward Ratings

Macroeconomic Outlook

Growth Downgrade As Bailout Looms

Table: Spain – Economic Activity, -

Chapter 4 - Industry Forecast Scenario

Consumer Outlook

Food

Food Consumption

Table: Spain Food Consumption Indicators – Historical Data & Forecasts, -

Canned Food/Prepared Food

Table: Canned Food Value/Volume Sales – Historical Data & Forecasts, -

Confectionery

Table: Confectionery Value/Volume Sales – Historical Data & Forecast, -

Frozen Vegetables

Table: Frozen vegetables, -

Baked Goods

Table: Baked Goods & Jam, -

Pasta

Table: Pasta, -

Meat And Fish

Table: Meat, -

Table: Fish, -

Oils and Fats

Table: Oils and fats, -

Dairy

Table: Dairy, -

Drink

Hot Drinks

Table: Hot drinks, -

Soft Drinks

Table: Soft Drink Sales – Historical Data & Forecasts, -

Alcoholic Drinks

Table: Alcoholic drinks, -

Mass Grocery Retail

Spain Food & Drink Report Q

© Business Monitor International Ltd Page

Table: Mass Grocery Retail Market – Sales by Format (US$bn) – Historical Data & Forecasts, -

Table: Grocery Retail Sales By Format (%)

Trade

Table: Food & Drink Trade Balance – Historical Data & Forecasts, -

Chapter 5 - Food

Key Industry Trends And Developments

Ebro to Grow Via Geographic Expansion and M&A

Weak Spanish Market Pushes International Growth

Stevia’s EU Approval Will Spur Product Development

Agro-Food Fund Established in Spain

Nueva Rumasa Restructuring Continues

Ebro Sees Revenue Increase But Earnings Seeing Impact of Rising Costs

SOS Posts First Profit In Three Years

Smithfield No Longer Looking To Raise Stake In Campofrio

Mixed Signs For Investment In Sector

Private Labels Gaining Market Share

Market Overview

Organic

Chapter 6 - Drink

Key Industry Trends And Developments

Henkell Positions for Sparkling Growth with Cava Acquisition

Mahou San Miguel Moves into India

Heineken to Cut Further in Europe/Spain Stagnant

Spirits Hit by New Taxes

Wine Exports Exposed To Currency Fluctuations

Mahou-San Miguel Extends Beverage Portfolio

Market Overview

Soft Drinks

Alcoholic Drinks

Chapter 7 - Mass Grocery Retail

Key Industry Trends And Developments

Dia H Results Impress Market

Metro Reorganises Iberian Cash & Carry Operations

Eroski Focuses on Franchising

Lithuanian Maxima Moves into Spain

Dia And Eroski Post Contrasting Spanish Results

Eroski Posts Loss for Third Consecutive Year

Dia’s First Results As Independent Operator Hint At Opportunities Ahead

Retailers Continue To Invest

Market Overview

Table: Structure Of Spain’s Mass Grocery Retail Market By Estimated Number Of Outlets, -

Table: Structure Of Spain’s Mass Grocery Retail Market By Value (US$mn), -

Table: Structure Of Spain’s Mass Grocery Retail Market By Value (EURmn), -

Table: Annual Average Sales Per Outlet By Format –

Table: Grocery Retail Sales By Format – Historical Data And Forecasts

Chapter 8 - Competitive Landscape

Table: Key Players in Spain's Food Sector

Table: Key Players in Spain's Drink Sector

Spain Food & Drink Report Q

© Business Monitor International Ltd Page

Table: Key Players in Spain's Mass Grocery Retail Sector

Chapter 9 - Company Monitor

Food

Grupo Ebro Puleva

Grupo Leche Pascual Alimentación

Campofrio Alimentación SA

Deoleo (SOS Corporación Alimentaria)

Drink

Heineken España SA

Mass Grocery Retail

Auchan

Centros Comerciales Carrefour

Eroski Group (Including Caprabo)

Mercadona

Chapter 10 - Demographic Outlook

Table: Spain's Population By Age Group, - (')

Table: Spain's Population By Age Group, - (% of total)

Table: Spain's Key Population Ratios, -

Table: Spain's Rural And Urban Population, -

Chapter 11 - BMI Methodology

Food & Drink Business Environment Ratings

Ratings Methodology

Ratings System

Indicators

Table: Limits Of Potential Returns

Table: Risks To Realisation Of Potential Returns

Weighting

Table: Weighting

Chapter 12 - BMI Food & Drink Industry Glossary

Food & Drink

Mass Grocery Retail

Chapter 13 - BMI Food & Drink Forecasting And Sources

How We Generate Our Industry Forecasts

Sources

Related research categories

By sector: General drinks

By market: Spain (in Europe)