Consumer Index Europanel Newsletter

- Global European Trends -

Quarter 4 | 2006

Total FMCG – Trends weighted by Population % value changes

The FMCG growth in the CEE countries is more than 5 percentage points higher than in Western Europe. However the differential is closing as the growth rate in CEE is diminishing – more notably in countries like Russia, Ukraine, Slovakia and Czech Republic (in negative growth).

25

20

HH WEIGHTED TRENDS

19.9

15

13.7 10

11.2

9.9 6.8

1.2

Q4 2005

Q1 2006

0

Total Europe

Q2 2006

5.7

3.2

3.1

Q3 2006

Q4 2006

2.1

Western Europe

In Western Europe, France & Spain are showing increasingly strong growth against the general trend.

8.8

6.4

6.2

5

1.7

10.2

Eastern Europe

FMCG Consumer Dashboard Q4 2006 vs. Q4 2005 - % value changes This dashboard has been simplified. Only the 3 fastest growing categories in each country are displayed in green in order to highlight the main areas of growth.

Western Europe

Eastern Europe

12.1

Total FMCG

3.1

5.5

2.5

3.0

2.4

2.6

4.2

10.4

3.2

5.2

10.2

12.3

8.9 2.3

-0.1

. -3 5

Soft drinks scores in almost every country whilst alcohol is only featured once in Hungary.

Fresh Food Chilled Food Packaged Grocery Frozen Food Alcohol Soft Drinks Personal Care Home Care Pet Food = Fastest categories

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= Not covered

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© 2007 Europanel GIE

Consumer Index

Consumer Index

Europanel Newsletter

- Western Europe -



Quarter 4 | 2006

FMCG Trends % value changes

Welcome to the Q4 06 edition of Consumer Index, our quarterly barometer designed to keep you up to date with the latest European trends on FMCG categories and trade channels in the big 6 Western European countries. This Index is also now available for 11 Central and Eastern European countries. In addition we are summarising the trends at regional level in a third document called “Consumer Index – Global European Trends”. These three publications have been sent to you together. If you have any feedback please use the contact details below.



2006 ended more strongly with a return to growth in France confirmed for a second consecutive quarter. Once again the soft drinks category has experienced a fast growth almost everywhere due to a combination of factors such as warmer temperature and healthy trends towards mineral water and chilled juices.

Inside this issue: • Total Europe – Shopping Behaviour

p.1

• Trade Channel and Category Trends: - France

p.2

- Germany

p.3

- Italy

p.4

- The Netherlands

p.5

- Great Britain

p.7

- Source and Definitions

p.8

For more information, please contact:

Europanel Westgate London W5 1UA United Kingdom

1

Tel: +44 (0) 20 8967 4560 [email protected] www.europanel.com

© 2007 Europanel GIE

Consumer Index

France – Quarter 4 2006 France - Category Trends

With 2.5% growth in Q4, 2006 ends more positively than it started. Although FMCG consumption has increased, when asked about their economic situation, French households still perceive that their purchasing power is not increasing when it actually is.

% changes vs. previous year - in value

With all the categories showing a turnaround since Q1 06, this indicates a comprehensive recovery. Even personal care, which had been decreasing since the beginning of 2005, is now returning to growth. Frozen foods have experienced the strongest growth, driven mainly by frozen ready meals and frozen fish.

France - Trade Channel Trends

French households continue to concentrate their shopping in fewer retailers (5.4 different retailers are visited in 2006, against 5.7 in 2003). This phenomenon explains why competition between retailers is becoming more and more intensive.

value shares 2003-2006 - % changes vs. previous year

All the retailers are experiencing this reduced shopping frequency but some have been more successful at gaining market share: Carrefour and Intermarché are the main winners this year, while Leclerc has experienced its first underperformance for several years, although stabilising at the end of the year. Systeme U, thanks to some new store openings, is the only retailer gaining a higher shopper base. The strong performance by discounters in December was not enough to reverse the annual trend, as their price image is still under pressure.

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© 2007 Europanel GIE

Consumer Index

Germany – Quarter 4 2006 Year on year FMCG sales have increased for the fourth consecutive quarter.

Germany - Category Trends % value changes vs. previous year - in value

German consumers are shifting their demand to better quality and higher priced products across all FMCG categories. The performance of the frozen food category corresponds to a new consumer trend, with shoppers rediscovering their preference for brands and convenience products. In addition, frozen fish products are becoming more expensive due to increasing commodity prices. Finally the relatively warmer weather helped ice cream sales this year. Warmer temperatures also benefited soft drinks sales - conversely the confectionery market has been suffering. Sales in the personal and home care categories have been boosted by price increases – brought forward by drugstores in anticipation of the 2007 VAT increase from 16% to 19 %.

Germany - Trade Channel Trends

The Christmas period was more successful for hypermarkets, where shoppers could spend on a broader range of products.

value shares 2003-2006 - % changes vs. previous year

Hard discounters are again showing the highest growth rate. They are catering for their customers’ needs by listing more and more premium private labels which are priced above entry level and in some cases as expensive as medium-range brands. Within hard discounters, Lidl is now growing faster than Aldi. Although they have opened approximately 200 new stores in 2006 compared with 100 for Aldi, over the course of 2006 Aldi South has made a large number of their stores more attractive by now offering pre-packaged fresh meat.

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© 2007 Europanel GIE

Consumer Index

Italy – Quarter 4 2006 Italy - Category Trends % changes vs. previous year - in value

The Italian market has started to recover in the second half of 2006 led by fruit and vegetables - the most dynamic category both in terms of volume and price. In most categories, innovation is the main category driver; categories such as the healthy drinks and yoghurts category have benefited from this trend. The target groups which respond particularly well to this are higher income groups and private label fans. The decline in the frozen foods category should be short-term as in volume sales are still growing.

Italy - Trade Channel Trends value shares 2004-2006 - % changes vs. previous year

The growth of supermarkets in 2006 has been driven by Esselunga thanks to an expansion of its shopper base and an improvement in the loyalty amongst its existing shoppers. Small format self service stores (