2010-09-07 20:02:09 -

Research and Markets ( www.researchandmarkets.com/research/eaa31c/united_states_food : ) has announced the addition of the " United States Food and Drink Report Q3 2010 : " report to their offering.

United States Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the United States' food and drink industry.

The ramifications of the Kraft acquisition of Cadbury continue to unfold. In May the US food giant posted its first results post acquisition, with a sharp increase in earnings indicating the potential benefits to be had from the deal. For Q110, Kraft's revenues increased by 26% to US$11.3bn while net profits were up by 19.5% to

US$1.9bn. With the firm only just beginning to realise synergies from the deal, these results which were ahead of expectations point to strong operational logic behind the deal. The firm has already announced plans to merge the UK head offices of the two companies but further operational overlap is sure to be found in the areas of production, marketing and distribution.

While synergistic benefits will prove to be an important factor that determines the eventual success of the takeover, the principal motivating factor for the deal was Cadbury's strong record of sales growth, which Kraft hopes can restore momentum to its own business. This record of growth can be attributed to Cadbury's greater exposure to emerging markets, through its historical Commonwealth links and was clearly evident in the latest results, with Cadbury's organic sales increasing by 8.2% compared to growth in the overall group of 3.3%.

Meanwhile, Nestls head of UK and Ireland confectionery David Rennie revealed that the company is looking to raise its share in the GBP4.5bn (US$6.6bn) UK confectionery market despite the emergence of a new Kraft- Cadbury combination, planning to raise its existing 16% market share by 10-20 basis points per annum. He added that the company aims to retain its 2,000 UK jobs although the industry is facing intense cost pressure with cocoa prices reaching 32-year highs. Ongoing consumer apprehension was reflected in new data from the Soil Association showing that sales of organic products registered a 12.9% drop to GBP1.84bn (US$2.81bn) in the UK during 2009. The high price of organic food and drink, which sells at a premium of between 30% and 100%, was clearly partly responsible for this reduction in demand. Over the last three years, the rate of growth in the UK organic sector has slowed, as it has done across much of Europe. The impact from this downturn in demand is likely to show itself through fewer farmers taking up organic farming and some organic farmers converting back to non-organic methods, a trend already reported in the milk and egg sectors. The reduction in supply could make it harder to rebuild sales once the economic situation improves. On the retail front, Asda continues to battle with Sainsburys to be the UKs largest second retailer. However, when compared to rivals, Asda generates its sales with far fewer stores, due to a greater percentage being large hypermarket outlets. Slowing sales growth in the last six months has been attributed to this disparity, with poor weather conditions meaning that consumers were more reluctant to drive to its stores, (mainly on city outskirts). The firm will also have been impacted by petrol prices hitting record highs. In response Asda has announced plans to accelerate the opening of smaller format stores, creating a separate division for its 21 stores under 25,000ft2 and planning to open 100 smaller stores over the next five years. Reflecting this desire Asda announced plans at the end of May to acquire the 193 UK store portfolio of discount chain Netto.


Key Topics Covered:

Industry View


SWOT Analysis


Business Environment


Industry Forecast Scenario


Food


Drink


Mass Grocery Retail


Competitive Landscape


Appendix.

BMI Methodology


Companies Mentioned.

- Associated British Foods
- Dairy Crest Group
- Cadbury
- Diageo
- Tesco
- J Sainsbury
- Asda


For more information visit www.researchandmarkets.com/research/eaa31c/united_states_food :


Research and MarketsLaura Wood, Senior Manager, press@researchandmarkets.com : mailto:press@researchandmarkets.com U.S.

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