Britvic

We believe a number of core attributes are required for a soft drinks business to be able to compete effectively across categories and routes to market. These include having:

• strong brands across all major sub-categories;
• the ability to innovate and respond to consumer trends;
• strong customer relationships across the main channels to market; and
• the infrastructure necessary to produce, market, sell and distribute products.

Britvic’s main competitor in the GB market is Coca-Cola Enterprises ("CCE"). In take-home, CCE is the number one supplier with Britvic as number two. The pie charts below show the relative market shares in take home, including a break down of the sales of carbonates and stills. CCE is market leader in carbonates in the GB take-home channel with Britvic as number two. However, according to AC Nielsen, Britvic’s ‘‘better for you’’ low or no-sugar colas have grown more quickly in the year to April 2008, than the CCE alternatives. In the stills category, Britvic was the number one supplier along with Danone, primarily through the strength of their water offering (see following chart).

In the licensed on-premise, Britvic is the market leader with CCE number two. The pie charts below show the relative market shares in the licensed on-premise, including a breakdown of the sales of stills and carbonates. Britvic is also the market leader in stills and number two in carbonates.

The competitive tension between the two market leaders means that each has to monitor closely the pricing and promotional strategies of the other (in particular, in relation to carbonates) as these have a significant impact on the other's sales (particularly during the life of any particular promotion).

Stills	+	Carbonates	=	Total
£4.1 billion	+	£4.0 billion	=	£8.1 billion

Stills

+ Carbonates

= Total

Source: AC Nielsen Scantrack & Licensed On-Trade data to 30 September 2006 Total Coverage MAT.

In addition to CCE, there are a number of other companies with brands that are strong in certain sub-categories and/or in particular regions of Great Britain including:

• in terms of bottled water, Danone (with Evian, Volvic and Badoit), Highland Spring and Nestle (with Buxton, Perrier and Vittel) are the key suppliers to the GB market. The strength of its water brands means that Danone is the third largest branded soft drinks supplier to the GB take-home channel in volume terms
• GSK plc supplies soft drinks under both the Lucozade and Ribena brands, with Lucozade being GB’s leading sports drink and leading glucose drink in terms of both volume and retail sales value;
• Red Bull GmbH supplies the Red Bull energy drink;
• AG Barr supplies the carbonates Irn Bru and Tizer and has a strong distribution network in Scotland; and
• in terms of the pure juice sub-category, the key GB players are Tropicana UK Limited (a subsidiary of PepsiCo, whose brands include Tropicana and Copella), Gerber Foods (whose brands include Ocean Spray and Sun Pride) and Del Monte (with Del Monte and Just Juice).

The market thereafter becomes more fragmented with a number of companies supplying niche brands (for example, Nichols with Vimto) or operating in niche sub-categories such as dairy drinks and smoothies. Danone also supplies the dairy drink Actimel and PepsiCo has P&J Smoothies (to compete with Innocent in the smoothies sub-category) which (like Tropicana and Copella) PepsiCo continues to distribute through a third-party distributor.

In the GB take-home channel, Britvic products also face competition from the own-label soft drinks products of the multiple retailers. According to AC Nielsen, as at April 2008, sales of own-label products represented 37% of total GB take-home sales by volume. Whilst own-label sales are, in aggregate, significant in volume terms, they are fragmented across various retailers. Accordingly, we do not view own-label products as a single competitor but rather treat each retailer’s own-label products as separate competitors within the relevant subcategories. Whilst we do not consider that own-label presents a significant threat to Britvic on a portfolio-wide basis, there are certain sub-categories where own-label does provide competition (for example, pure juices, water, squash and lemonade).

There has been consolidation amongst own-label suppliers (for example, Cott’s acquisition of Macaw in August 2005), creating two large scale players, Princes and Cott. We believe this consolidation has not had a material effect on Britvic’s business.

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