Overview and Outlook

We are one of the world's largest non-alcoholic beverage companies and the world's largest retailer brand soft drink company.

Our objective of creating sustainable long-term growth in revenue and profitability is predicated on success across three key strategic priorities: 1) being the lowest cost producer; 2) becoming the retailers' best partner; and 3) building and sustaining a product innovation pipeline.

Current industry reports show a continued decline in the carbonated soft drinks ("CSD") category in the North American Food and Mass Merchandiser Channels. We anticipate this decline to continue throughout 2008 as consumers gravitate towards non-carbonated beverages and soft drink manufacturers raise prices to reflect significantly higher commodity costs. This decline in CSDs is reflected in a decrease in shelf space of our CSDs at our major customer, Wal-Mart. Energy drinks, sparkling waters and non-carbonated beverages, including bottled water and ready-to-drink teas, continue to show growth in North America.

As previously disclosed, Wal-Mart has begun reducing shelf space in its United States stores dedicated to its retailer brand CSDs, which Cott supplies on an exclusive basis. As a result, we expect an adverse impact on volume for the second quarter due to inventory and shelf adjustments, and although we are unable to estimate the full year impact of this change, we are taking actions designed to mitigate sales and volume loss in the second half of the year.

In addition, a long-term contract with Wal-Mart for the lease and maintenance of vending machines will be allowed to expire in June 2008, in connection with Wal-Mart's plans to implement a different approach to soft drink vending. The existing program was designed to support Wal-Mart's brands. The new program will result in a significant reduction in the number of our vending machines at Wal-Mart. Accordingly, we have reduced the expected useful life of these assets, and as such, we recorded accelerated depreciation of $0.9 million in the first quarter of 2008 and expect additional accelerated depreciation in the second quarter of 2008.

We also made changes in our leadership structure, replacing both our Chief Executive Officer ("CEO") and the President of our International Division. While the $8.0 million in executive transition costs associated with this change materially affected the first quarter of 2008, we believe the long-term effects from the change in leadership will be positive for the Company. Included in the executive transition costs are $1.9 million of non-cash stock compensation expense. We appointed an Interim CEO and are actively searching for a permanent CEO.

Importance of being a low cost producer

Ingredients and packaging costs represent a significant portion of our cost of sales and therefore, we are focusing on managing such costs. Most of these costs are subject to global and regional commodity price trends. Our three largest commodities are aluminum, polyethylene terephthalate ("PET") resin and high fructose corn syrup ("HFCS"). In 2007, the average price paid for aluminum increased significantly, reflecting world pricing resulting from global demand for the commodity.

We entered into a supply agreement to mitigate the impact of aluminum market fluctuations on pricing by minimizing price increases on our business into the fourth quarter of 2008. We are currently working with PET resin suppliers to manage pricing in 2008, but at this point in time, because PET resin is not a traded commodity, no fixed price mechanism has been implemented. HFCS has a history of volatile price changes. We expect HFCS market prices will continue to increase as a result of growing demand for corn-related products. Therefore, we have locked in the price for the majority of our HFCS requirements for our North American business into the fourth quarter of 2008.

We have taken, and intend to continue to take, steps to mitigate the effects of this cost environment through a variety of initiatives, including cost reductions and fixed price agreements. We have covered most of our commodities costs for the bulk of 2008, and expect that this will reduce our exposure to commodity price volatility.

Our cost reduction programs include initiatives to optimize asset utilization, reduce fixed costs and implement world-class efficiencies, optimization of selling, general and administrative expenses, centralization of key raw materials procurement, ongoing SKU rationalization and optimization of capital investments.

Importance of our partnership with retailers

As part of our efforts to become the retailers' best partner, we have created fully-integrated business units and customer development and solutions teams which will allow for further cost reduction, as well as improve service to and connections with our major customers. The North American structure implemented in 2007 more closely aligns resources to customer needs. Our customer development and solutions teams provide integrated services that are dedicated to specific customer needs and opportunities.

We are a preferred retailer brand partner because our large network of manufacturing and distribution facilities can meet the needs of national and regional retailers. Our infrastructure allows us to deliver to our retailers' quality, profitable products that help them build their brands with their customers. We generally have strong relationships with our retail partners, and continuously work to provide them with new products that reflect market trends.

Importance of new product innovation

We continue to work toward strengthening our innovation pipeline. We are rolling out a new product portfolio, which is focused on the higher growth, higher margin categories of ready-to-drink teas, energy drinks and nutrient-infused waters.

While focused on driving improved performance in our North America core portfolio with current customers, our business strategy also contemplates the continued expansion of our business outside North America. We continue to view Mexico and the U.K./Europe as long-term growth opportunities and are working to grow our business in these markets. We also expect to explore opportunities to expand to new global customers and geographies.

Summary financial results

Our net loss in the three months ended March 29, 2008 was $21.3 million or $0.30 per diluted share, compared with net income of $4.8 million or $0.07 per diluted share in the first quarter of 2007. The increased loss resulted from:

• the highly competitive environment and continued decline in the North American CSD industry, particularly in the United States;

• executive transition costs;

• increased selling, general and administrative costs associated with new distribution channels, increased expenses for expiring trade names and bad debt expense;

• accelerated depreciation resulting from Wal-Mart's decision to remove certain of our vending machines from Wal-Mart stores; and

• a higher effective income tax rate resulting from a valuation allowance on U.S. deferred income tax assets.

Non-GAAP Measures

In this report, we present certain information regarding changes in our revenue excluding the impact of foreign exchange. We believe that this is a useful financial measure for investors in evaluating our operating performance for the periods presented, as when read in conjunction with our changes in revenue on a U.S. GAAP basis, it presents a useful tool to evaluate our ongoing operations and provides investors with an opportunity to evaluate our management of assets held from period to period. In addition, these adjusted amounts are one of the factors we use in internal evaluations of the overall performance of our business. This information, however, is not a measure of financial performance under U.S. GAAP and should not be considered a substitute for changes in revenue as determined in accordance with U.S. GAAP.

Results of Operations



                                                             For the three months ended
                                                  March 29, 2008                     March 31, 2007
                                            Millions of       Percent of        Millions of     Percent of
                                           U.S. Dollars        Revenue         U.S. Dollars      Revenue
Revenue                                    $       389.7           100.0 %     $       400.2         100.0 %
Cost of sales                                      348.9            89.5 %             346.7          86.6 %

Gross profit                                        40.8            10.5 %              53.5          13.4 %
Selling, general and administrative
expenses ("SG&A")                                   52.8            13.6 %              37.7           9.4 %
Loss on disposal of property, plant and
equipment                                            0.2              -                   -             -
Restructuring, asset impairments and
other charges                                         -               -                  0.3           0.1 %

Operating (loss) income                            (12.2 )          (3.1 )%             15.5           3.9 %
Other (income) loss, net                            (1.4 )          (0.3 )%              0.2           0.1 %
Interest expense                                     7.7             2.0 %               7.8           1.9 %
Minority interest                                    0.4             0.1 %               0.7           0.2 %

(Loss) income before income taxes                  (18.9 )          (4.9 )%              6.8           1.7 %
Income tax expense                                   2.4             0.6 %               2.0           0.5 %

Net (loss) income                                  (21.3 )          (5.5 )%    $         4.8           1.2 %


Depreciation & amortization                $        20.9             5.4 %     $        17.9           4.5 %

Analysis of Revenue, Operating (Loss) Income and Case Volume by Geographic
Region:



                                                                 For the three months
                                                                        ended
                                                             March 29,          March 31,
(In millions of U.S. Dollars)                                  2008               2007
Revenue
North America                                               $     274.6        $     295.5
International                                                     115.1              104.7

Total                                                       $     389.7        $     400.2

Operating (loss) income
North America                                               $     (14.0 )      $      10.6
International                                                       1.8                4.9

Total                                                       $     (12.2 )      $      15.5

Volume 8oz equivalent cases - Total Beverage (including
concentrate)
North America                                                     156.9              164.3
International                                                     114.8              153.5

Total                                                             271.7              317.8

Volume 8oz equivalent cases - Filled Beverage
North America                                                     135.6              147.1
International                                                      47.4               45.8

Total                                                             183.0              192.9

Revenue - Revenue in the first quarter of 2008 decreased 2.6% from the comparable prior year period and decreased 4.5% when the impact of foreign exchange is excluded. The decrease in revenue was primarily the result of a 7.8% decrease in North American case volume in filled beverage 8-ounce equivalents ("beverage case volume"). The North America beverage case volume decline was primarily due to continued softness in the carbonated soft drink category and elevated promotional activity by other national brands that continued from the prior year.

Our North American revenue in 2008 decreased 7.1% from 2007. Excluding the impact of foreign exchange, revenue decreased by 9.1% from 2007 primarily due to a decrease in beverage case volume. Our International segment revenue increased 9.9% over 2007 due to price increases after reporting a 3.5% increase in beverage case volume. The International concentrate case volume decreased 37.4% due to a drop in our concentrate volume at Royal Crown International ("RCI") reflecting higher than normal bottler shipments in the fourth quarter of 2007 ahead of 2008 price increases. The U.K./Europe business reported revenue growth of 13.4% on volume growth of 3.7% due to pricing increases and a shift in sales and improved product mix towards higher margin products, such as energy drinks and products that have no artificial flavors and no artificial colors ("NAFNAC"). Mexico reported strong revenue growth of 8.8% even as beverage case volume decreased by 1.3%, primarily as a result of price increases and broadening distribution within non-mass channels.

Analysis of Revenue by Geographic Region:



                                                                          North           Inter-
(In million of U.S. dollars)                               Cott 1        America         national
Change in revenue                                          $ (10.5 )     $  (20.9 )     $     10.4
Impact of foreign exchange                                    (8.0 )         (6.7 )           (1.3 )

Change excluding foreign exchange                          $ (18.5 )     $  (27.6 )     $      9.1

Percentage change in revenue                                  (2.6 %)        (7.1 %)           9.9 %

Percentage change in revenue excluding foreign exchange       (4.5 %)        (9.1 %)           8.6 %

1 Cott includes North America and International.

Analysis of Revenue by Product:

                                               For the three months ended
                                               March 29,        March 31,
           (In millions of U.S. dollars)         2008             2007
           Revenue
           Carbonated soft drinks*           $       260.6    $       277.3
           Concentrate                                 7.2              9.1
           All other products                        121.9            113.8

           Total                             $       389.7    $       400.2

           (In millions of physical cases)
           8 ounce volume
           Carbonated soft drinks*                   123.2            135.3
           Concentrate                                88.7            124.9
           All other products                         59.8             57.6

           Total                                     271.7            317.8

* includes carbonated soft drinks and sparkling water

Cost of Sales - Cost of sales was 89.5% of revenue for the first quarter of 2008, as compared to 86.6% of revenue in the first quarter of 2007. Variable costs represented 78.8% of total cost of sales in the first quarter of 2008, up from 77.2% in the first quarter of 2007. Major elements of these variable costs included ingredients and packaging costs, distribution costs and fees paid to third-party manufacturers. Our cost of sales increased mainly due to a higher mix of lower-margin bottled water products, lower utilization of our North American plant facilities and higher ingredient and packaging costs as compared to the comparable prior year period. In the third and fourth quarter of 2007, we recorded costs related to our voluntary product recall in the U.K. as "Cost of Sales." We are currently in the process of trying to negotiate a recovery of some of these costs through claims under our insurance coverage.

Gross Profit - Gross profit for the first quarter of 2008 was 10.5% of revenue, down from 13.4% of revenue in the first quarter of 2007. The overall gross profit decline of 23.7% was primarily due to lower sales, higher ingredient and packaging costs, higher fixed operating costs due to an 8.5% decrease in the utilization of our North American plant facilities, and the sale of more lower-margin products such as bottled water.

Gross profit changes for selected geographic regions were:

• North American decrease of 30.5%

• International decrease of 9.9%

• U.K./European decrease of 7.0%

• RCI decrease of 11.8%

• Mexico decrease of 33.3%

All of our regions were adversely affected by higher ingredient and packaging costs as compared to the comparable prior year period. Our North American region was materially affected by a drop in beverage case volume as a result of the continued decline in the demand for our core products in the U.S. North American gross margins were impacted by lower volumes and a higher mix of lower-margin bottled water volume. Absent foreign exchange impact, North American revenue declined 9.1%.

International revenue grew 9.9% in the first quarter of 2008 as compared to the comparable prior year quarter. Absent foreign exchange impact, International revenue grew 8.6% as compared to the prior year. The U.K./Europe total case volume increased 3.9% to 39.6 million cases and revenues increased 13.4% to $92.9 million, which reflects positive volume growth, pricing and a significant shift in mix towards more healthy and premium NAFNAC products. In Mexico, higher pricing drove a revenue increase of 8.8% to $16.1 million, although due to softness with modern trade and club customers, overall case volumes were relatively flat at 7.6 million cases as compared to the prior year quarter. We view Mexico as a strong growth market as evidenced by the increases in revenue in that market even as their gross profit was adversely impacted by certain non-income based taxes.

RC International concentrate case volume was down 39.2% to 62.6 million cases and revenue was down 26.6% to $5.8 million, due to increased order volume in the fourth quarter of 2007 in advance of higher pricing in 2008.

Selling, General and Administrative Expenses ("SG&A") - SG&A in the first quarter of 2008 was up $15.1 million or 40.1% over the first quarter of 2007. As a percentage of revenue, SG&A increased to 13.6% during the first quarter of 2008, up from 9.4% for the same period last year. Both the overall increase and the percentage of revenue increase were primarily due to $8.0 million of executive transition costs, $2.1 million of increased bad debt expense, $1.3 million of increased amortization related to the change in the estimated life of certain trade names, $1.1 million of additional depreciation and impairments associated with vending equipment, $2.4 million of additional selling and marketing costs associated with new products, and the adverse impact of $1.3 million of foreign exchange.

Operating (Loss) Income - Operating loss was $12.2 million in the first quarter of 2008, as compared with operating income of $15.5 million in the first quarter of 2007.

Interest Expense - Net interest expense was down 1.3% compared to the first quarter of 2007 primarily due to lower overall average interest rates even as we have higher overall debt amounts.

Income Taxes - We recorded an income tax expense of $2.4 million and for the first quarter of 2008 as compared with an income tax expense of $2.0 million for the first quarter of 2007. The non-recognition of a tax benefit was primarily due to losses generated in the U.S. for which no tax benefit can be recognized until the probability of future recovery is improved. The valuation allowance resulted in the non-recognition of $7.3 million in tax benefits in the first quarter of 2008.

Net Loss Per Share - Net loss for the quarter was $21.3 million or a loss of $0.30 per diluted common share as compared to net income of $4.8 million for 2007 or income of $0.07 per diluted common share.

Liquidity and Financial Condition

The following table summarizes our cash flows for the three months ended
March 29, 2008 and March 31, 2007 as reported in our Consolidated Statements of
Cash Flows in the accompanying Consolidated Financial Statements:



                                                      For the three months ended
                                                     March 29,           March 31,
 (in millions of U.S. dollars)                         2008                2007
 Cash (used in) provided by operating activities   $        (1.1 )     $        15.4
 Cash used in investing activities                         (19.1 )             (16.4 )
 Cash provided by (used in) financing activities            14.7                (6.1 )
 Effect of exchange rate changes on cash                    (0.5 )              (0.1 )

 Net decrease in cash                                       (6.0 )              (7.2 )
 Cash, beginning of period                                  27.4                13.4

 Cash, end of period                               $        21.4       $         6.2

Financial and Capital Resources

Our sources of capital include operating cash flows and short term borrowings under our bank facilities. We believe we have adequate financial resources to meet our ongoing cash requirements for operations and capital expenditures, as well as our other financial obligations based on our operating cash flows and our new ABL facility, which replaced our senior secured credit facility and receivables securitization facility on March 31, 2008.

We began taking delivery beginning in the first quarter of 2008 of approximately $31.4 million of new equipment and will incur $8.3 million of related infrastructure costs to support our North American bottled water business, which is expected to significantly lower production costs for this line of business. We are funding the equipment commitment through an interim financing and capital lease arrangement that was signed in January 2008. In connection with this, we recorded $28.5 million of construction in progress costs within the "Property, plant and equipment" category on our balance sheet as of March 29, 2008. We are required to make additional payments totaling $5.0 million through June 2008. Under the lease agreement, the lessor has reimbursed us $10.0 million for payments already made, paid $5.0 million directly to the manufacturer, will reimburse us an additional $10.2 million through June 2008 and will pay an additional $6.2 million directly to the manufacturer. The $5.0 million paid directly to the manufacturer is reflected as a reduction in the "Issuance of short-term debt" against the $15 million borrowed from the lessor as interim financing. The $5.0 million paid directly to the manufacturer is also reflected as a reduction to "Additions to property, plant and equipment."

Operating activities

Cash used in operating activities in the first three months of 2008 decreased by $16.5 million primarily as the result of cash used in operations as reflected by our operating loss and a decrease in accounts payable.

Investing activities

Cash used in investing activities increased by $2.7 million primarily as a result of the addition of the water bottling equipment and software in the United States and various software costs.

Financing activities

Cash provided by financing activities increased by $20.8 million due primarily to $8.5 million of interim financing for the water bottling equipment and $8.8 million to fund our operating activity cash shortfall as opposed to a partial pay down of our short-term borrowings in the prior year period.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as defined under Item 303(a) (4) of Regulation S-K as of March 29, 2008.

Long-term Liquidity

We believe that, based on current operations and anticipated growth, our cash flow from operations, together with available sources of liquidity, including borrowings under the new ABL facility, will be sufficient to fund anticipated capital expenditures, make required payments of principal and interest on our debt, and satisfy other long-term contractual commitments for the next twelve months.

On March 31, 2008, we entered into an agreement which created a new ABL Facility that provides for financing in the United States, Canada, and the United Kingdom. We anticipate the ABL Facility will be expanded to provide funding for Mexico commencing in the second quarter ending June 28, 2008. The new ABL Facility replaced our former senior secured credit facilities in the United States, Canada, the United Kingdom, and Mexico and our receivables securitization facility in the United States, the latter of which was terminated on March 28, 2008. Cott Corporation, Cott Beverages Inc. and Cott Beverages Limited are borrowers under the ABL Facility. On March 31, 2008, we paid off the remaining balance of the former senior secured credit facility and terminated our agreements. At that time, there were no amounts due under the receivables securitization facility.

Long-term debt-Long-term debt as of March 29, 2008 was $268.3 million, compared with $269.0 million as of December 29, 2007. For more information regarding our debt, see Note 11 to our consolidated financial statements.

ABL Facility

The ABL Facility is a five-year revolving facility of up to $250.0 million. The five-year term is subject to the refinancing of our 8% senior subordinated notes due 2011; the new ABL Facility will mature early if such notes have not been refinanced six months prior to their maturity on terms and conditions specified in the ABL Facility.

However, for periods extending beyond twelve months, if our operating cash flow and borrowings under the ABL facility are not sufficient to satisfy our capital expenditures, debt service and other long-term contractual commitments, we would be required to seek alternative financing. These alternatives would likely include refinancing our long-term debt, the sale of a portion or all of our assets or operations, or the sale of additional debt or equity securities.

The borrowers and restricted subsidiaries are subject to a number of business and financial covenants and events of default. The ABL Facility contains customary limitations on indebtedness, liens, mergers, consolidations, liquidations and sales, payment of dividends, investments, loans and advances, optional payments and modifications of subordinated and other debt instruments, and transactions with affiliates. Events of default under the ABL Facility include nonpayment, inaccuracy of representations and warranties, violation of . . .