Big is not always beautiful in grocery. Carrefour and Tesco, the second and third-biggest global supermarkets, were outwitted over Christmas by smaller rivals.

Tesco’s 2.3% decline in like-for-like UK sales prompted the biggest slump in its share price since the 1980s, from 385p to 323p in a single day. Over the channel, Carrefour has been in deep water for some time. The French giant issued five profit warnings last year and added to the bad news last week by warning 2011’s operating profits would be at the bottom end of its 15%-20% downward forecast. Accustomed to disappointing news - the share price has fallen more than 50% over the past year - investors’ reaction was muted.

The decline in Tesco’s share price was fuelled partly by fear that the British supermarket is heading the way of its French counterpart. A look at the historic share price performance of both retailers should go some way to dispelling that fear. Tesco has easily outperformed Carrefour over the past five years. Unlike Tesco, Carrefour has failed to pick up on the potential of the internet, instead embarking on an attempt to go upmarket with Carrefour Planet. But theatrical displays of organic veg have failed to win over cash-strapped consumers, and the experiment is now under review.

Meanwhile, the City was cheered by more positive news from British food manufacturers. Britvic’s share price rose over 3% to 347.2p on Wednesday after it announced encouraging Christmas sales, boosted by a market share gain for Pepsi. The company lost more than 100p from its share price in 2011 after sales of more expensive still drinks struggled and Irish sales retreated.

Another climber was Finsbury Food Group, up 1p to 30p on Monday after breaking through £100m in half-year sales for the first time. Its turnover for the six months to 31 December grew 16% to £102m, boosted by sales of its celebration cakes, and deals to distribute Burton’s biscuits and Tayto products in France through its Lightbody joint venture.

The City’s reaction to Zetar’s results on Tuesday was more mixed. The share price slumped over 8% on the day to 173.5p, but rebounded to 180p on Wednesday. Although the confectionery and snack group had reported a 13% increase in pre-tax profits to £2.8m for the six months to 31 October, investors were put off by its warning that Easter orders were down on the levels seen in 2011.

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