Boston, MA -- (SBWIRE) -- 07/25/2012 -- Proving that the UK is far from immune to the turmoil afflicting the eurozone, data published by the Office for National Statistics show the economy contracted during the first quarter of 2012, pointing to a double-dip recession. The headline GDP data published by the ONS is often revised and is somewhat at odds to leading and survey data compiled by different sources, which arguably suggest positive (albeit anaemic) growth rather than contraction. However, this weak economic backdrop continues to fit our core view that the consumer recovery in the UK will remain subdued in 2012 and 2013 with any significant growth in consumption likely to occur towards the end of our forecast period.
Headline Industry Data (local currency)
- 2012 per capita food consumption = +1.4%; forecast to 2016 = +11.4%
- 2012 alcoholic drinks value sales = +2.7%; forecast to 2016 = +16.0%
- 2012 soft drinks value sales = +4.7%; forecast to 2016 = +22.1%
- 2012 mass grocery retail sales = +3.1%; forecast to 2016 = +18.8%
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Key Company Trends
Minimum Pricing Would Have Biggest Impact On Spirits Sector: In March 2012, the UK government proposed implementing a minimum price for alcohol, set at GBP0.40 per unit. The move would act as a floor on the price of alcohol and could have significant repercussions for the entire industry. Similar moves have already been proposed by the devolved Scottish parliament, but the UK government had previously been cautious about such a move. Minimum pricing legislation could potentially have regional implications, with any move likely to be replicated in other countries were it shown to have a significant impact on problem drinking.
Bright Food Continues International Push With Weetabix Stake: In May 2012, state-owned Chinese food group Bright Food purchased a 60% stake in UK breakfast cereal maker Weetabix from private equity firm Lion Capital. The deal values the business at GBP1.2bn and comes after Bright Food secured majority stakes in food companies in Australia and New Zealand. For Bright Food the acquisition can be seen as part of its strategy to build an international food business; it also affords the firm strong Western brands that could be leveraged in its domestic market.
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