Although the food manufacturers have had a good year, their profit margins are still no match for alcoholic drinks companies, which achieved an average of 16.3% compared with 9.5% at the food companies, according to the drinks index compiled by OC&C. However, this was a fall on last year's 16.7%, which Jensen says is down to the price pressure throughout Europe.
He points to Diageo. Its operating profit fell by 8.1% and although it achieved the highest profit margin in the index, at 23.8%, this was a reduction on its 26.4% of last year.
Profitability in the drinks index is driven by the spirits producers. Their average margin was 20.3% compared with 12.5% for the brewers.
Jensen says: "The sprits companies have created stronger brands. Beer is a much more fragmented market, with even Stella having a much smaller market share than, say, Bacardi in the rum market. Consumers are less loyal to beer brands than spirits brands."
The brewers did at least show an increase on last year's 11.3% margin. They also managed turnover growth of 8.1% across the index but Jensen says that this was heavily skewed by the performance of beer giant SAB Miller, which accounted for more than three quarters of this growth. SAB Miller also affected the revenue growth of the overall drinks index - accounting for 3% of its 5.5% growth.
Although the growth in sales at SAB Miller has been largely down to its highly acquisitive strategy, which included the major purchase of Bavaria in late 2005, there has also been some organic growth, according to James Crampton, media relations manager at SAB Miller.
After the Bavaria acquisition, total lager sales grew by 19% and like-for-like sales increased by 5%.
That the company has been able to grow its margins is testament to its ability to tap into the trend for premium branded beers. Although this has taken off particularly in its more developed markets such as Europe and the US, the company expects it also to be replicated in its less developed markets.
This is something that Scottish & Newcastle - third in the drinks index with sales of £3.3bn - is also benefiting from as it achieved a profit margin of 13.3%. As with SAB Miller, this is well above the levels achieved by most other brewers.n