This discussion is intended to further the reader's understanding of the consolidated financial condition and results of operations of our Company. It should be read in conjunction with the financial statements included in this quarterly report on Form 10-Q and our annual report on Form 10-K for the year ended December 27, 2008 (the "2008 Annual Report"). These historical financial statements may not be indicative of our future performance. This Management's Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks described in Part I, Item 1A. "Risk Factors" in our 2008 Annual Report.

Overview

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 working closely with our retailer partners to provide proven profitable products. As a fast follower of innovative products, our goal is to identify which new products are succeeding in the marketplace and develop similar private label products to provide our retail partners and their consumers with high quality products at a better value. This objective is increasingly relevant in more difficult economic times.

Sales of our products tend to be seasonal, with the second and third quarters accounting for higher unit sales of our products than the first and fourth quarters. The seasonality of our sales volume, combined with the accounting for fixed costs such as depreciation, amortization, rent and interest expense, impacts our results on a quarterly basis. Accordingly, our results for the first quarter of 2009 may not necessarily be indicative of the results that may be expected for the full year.

Retailer brand suppliers, such as us, typically operate at low margins and therefore relatively small changes in cost structures can materially impact results. In 2008 and during the first quarter of 2009, industry-wide carbonated soft drink ("CSD") sales continued to decline, and ingredient and packaging costs remained volatile.

During the first quarter of 2009, consumers seeking better value in private label products during difficult economic times, coupled with the impact of our plan to refocus on private label, resulted in increased CSD sales volume and market share gains in North America. This increased sales volume and market share, along with lower operating costs, plant efficiencies, and improved net selling prices and product mix in North America, resulted in improved gross profit margins during the first quarter of 2009 as compared to the first quarter of 2008. Some of the factors that improved gross profit margins during the first quarter of 2009 are not expected to recur this year.

Ingredient and packaging costs represent a significant portion of our cost of sales. These costs are subject to global and regional commodity price trends. Our three largest commodities are aluminum, PET resin, and corn (which is used to produce high fructose corn syrup ("HFCS"). We attempt to manage our exposure to fluctuations in ingredient and packaging costs of our products by implementing price increases as needed and entering into price control contracts where possible. In 2008 and 2009, we entered into contracts locking in the price for a majority of our 2009 HFCS and aluminum requirements, with the remaining forecasted requirements to be purchased at the prevailing 2009 market prices. We have also entered into contracts to lock in the price for a base amount of our aluminum requirements for 2010.

Summary financial results

Our net income for the first quarter of 2009 was $19.9 million or $0.28 per diluted share, compared with our net loss for the first quarter of 2008 of $21.3 million or $0.30 per diluted share.

The following items of significance impacted the first quarter of our 2009 financial results:

• the consumer trend toward private label;

• overall flat beverage case volume reflecting an increase in our North America reporting unit offset by declines in the U.K. and Mexico reporting units;

• improved gross margins to 15.9% from 10.5%, reflecting higher volumes, increased efficiencies from the utilization of plants, lower ingredient and packaging costs, and the benefit of price increases announced in 2008;

• decrease in the foreign exchange rate for the Canadian dollar, pound sterling and Mexican peso as compared to the U.S. dollar that resulted in a $37.7 million adverse impact on revenues and a $4.5 million adverse impact on gross profit;

• additional selling, general and administrative cost savings;

• restructuring, severance and lease termination costs of $1.2 million in connection with the 2009 Restructuring Plan;

• a tax benefit resulting from the reversal of uncertain tax positions that generated an $8.0 million tax benefit and a lower effective income tax rate resulting from intercompany debt structures and a reversal of the valuation allowance in the U.S. offset by a valuation allowance in Mexico and reduced tax rates in Canada.

The following items of significance impacted the first quarter of our 2008 financial results:

• executive transition costs of $8.0 million (including $1.9 million of non-cash stock compensation expense);

• increased selling, general and administrative costs associated with expiring trademarks and bad debt expense;

• accelerated depreciation of $0.9 million resulting from Wal-Mart's decision to remove certain of our vending machines from Wal-Mart stores; and

• a higher effective tax rate resulting from the U.S. valuation allowance.

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. 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



                                                    March 28, 2009             March 29, 2008
                                                            Percent of                 Percent of
(In millions of U.S. dollars)                   Dollars      Revenue       Dollars      Revenue
Revenue                                           367.0          100.0 %     389.7          100.0 %
Cost of sales                                     308.8           84.1 %     348.9           89.5 %

Gross profit                                       58.2           15.9 %      40.8           10.5 %
Selling, general, and administrative expenses      34.7            9.5 %      52.8           13.5 %
(Gain) loss on disposal of property, plant
and equipment                                      (0.1 )          0.0 %       0.2            0.1 %
Restructuring                                       1.2            0.3 %        -             0.0 %
Asset impairment                                    0.1            0.0 %        -             0.0 %

Operating income (loss)                            22.3            6.1 %     (12.2 )         -3.1 %

Other expense (income), net                         0.1            0.0 %      (1.4 )         -0.3 %
Interest expense, net                               7.6            2.1 %       7.7            2.0 %

Income (loss) before income taxes                  14.6            4.0 %     (18.5 )         -4.8 %

Income tax (benefit) expense                       (6.2 )         -2.2 %       2.4            0.6 %

Net income (loss)                                  20.8            6.2 %     (20.9 )         -5.4 %

Less: Non-controlling interests                     0.9            0.2 %       0.4            0.1 %


Net income (loss) attributed to Cott
Corporation                                        19.9            6.0 %     (21.3 )         -5.5 %


Depreciation & amortization                        17.0            4.6 %      20.9            5.4 %

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



                                                                  Three months ended
(In millions of U.S. Dollars)                          March 28, 2009            March 29, 2008
Revenue
North America                                         $           289.0         $          274.6
United Kingdom                                                     64.0                     92.9
Mexico                                                              9.8                     16.1
RCI                                                                 4.2                      5.8
All Other                                                            -                       0.3

Total                                                 $           367.0         $          389.7


Operating (loss) income
North America                                         $            26.3         $          (14.0 )
United Kingdom                                                     (2.6 )                    2.2
Mexico                                                             (2.3 )                   (2.4 )
RCI                                                                 0.9                      2.1
All Other                                                            -                      (0.1 )

Total                                                 $            22.3         $          (12.2 )


                                                                  Three months ended
(In millions of cases)                                 March 28, 2009            March 29, 2008
Volume 8oz equivalent cases - Total Beverage
(including concentrate)
North America                                                     160.8                    156.9
United Kingdom                                                     39.6                     44.4
Mexico                                                              5.6                      7.6
RCI                                                                49.1                     62.6
All Other                                                            -                       0.2

Total                                                             255.1                    271.7


Volume 8oz equivalent cases - Filled Beverage
North America                                                     141.8                    135.6
United Kingdom                                                     35.7                     39.6
Mexico                                                              5.6                      7.6
RCI                                                                  -                        -
All Other                                                            -                       0.2

Total                                                             183.1                    183.0

Analysis of Revenue by Geographic Region:



                                                           Three months ended March 28, 2009
                                                     North        United
(In million of U.S. dollars)           Cott 1       America      Kingdom      Mexico        RCI        All Other
Change in revenue                      $ (22.7 )   $    14.4     $  (28.9 )   $  (6.3 )   $  (1.6 )   $      (0.3 )
Impact of foreign exchange                37.7           8.4         25.5         3.9           -            (0.1 )
Change excluding foreign exchange      $  15.0     $    22.8     $   (3.4 )   $  (2.4 )   $  (1.6 )   $      (0.4 )

Percentage change in revenue2             -5.8 %         5.2 %      -31.1 %     -39.1 %     -27.6 %        -100.0 %

Percentage change in revenue
excluding foreign exchange2                4.3 %         8.6 %       -5.0 %     -19.7 %     -27.6 %        -100.0 %

1 Cott includes the following reporting units: North America, United Kingdom, Mexico, RCI and All Other.

2 Percent change in revenue and percent change in revenue excluding foreign exchange is N/A for other countries due to this category representing our China business unit which did not begin operations until the fourth quarter of 2007.

Analysis of Revenue by Product:



                                           For the three months ended March 28, 2009
(In millions of U.S. dollars)                 North America      United Kingdom      Mexico      RCI       All Other      Total
Revenue
Carbonated soft drinks                       $         193.9    $            28.3    $   9.4    $   -     $        -     $ 231.6
Concentrate                                              1.5                  0.9         -        4.2             -         6.6
All other products                                      93.6                 34.8        0.4        -              -       128.8

Total                                        $         289.0    $            64.0    $   9.8    $  4.2    $        -     $ 367.0


                                           For the three months ended March 28, 2009
(In millions of physical cases)               North America      United Kingdom      Mexico      RCI       All Other      Total
8 ounce volume
Carbonated soft drinks                                  93.0                 17.6        5.4        -              -       116.0
Concentrate                                             19.0                  3.9         -       49.1             -        72.0
All other products                                      48.8                 18.1        0.2        -              -        67.1

Total                                                  160.8                 39.6        5.6      49.1             -       255.1


                                           For the three months ended March 29, 2008
(In millions of U.S. dollars)                 North America      United Kingdom      Mexico      RCI       All Other      Total
Revenue
Carbonated soft drinks                       $         167.6    $            40.2    $  15.3    $   -     $       0.3    $ 223.4
Concentrate                                              1.4                  1.9         -        5.8             -         9.1
All other products                                     105.6                 50.8        0.8        -              -       157.2

Total                                        $         274.6    $            92.9    $  16.1    $  5.8    $       0.3    $ 389.7


                                           For the three months ended March 29, 2008
(In millions of physical cases)               North America      United Kingdom      Mexico      RCI       All Other      Total
8 ounce volume
Carbonated soft drinks                                  80.5                 20.0        7.2        -             0.2      107.9
Concentrate                                             21.1                  4.8         -       62.6             -        88.5
All other products                                      55.3                 19.6        0.4        -              -        75.3

Total                                                  156.9                 44.4        7.6      62.6            0.2      271.7

Revenue - Revenue decreased 5.8% in the first quarter of 2009 from the comparable prior year period. This change was primarily due to a decrease in filled beverage 8-ounce equivalents ("beverage case volume") in our U.K. and Mexico reporting units and adverse foreign exchange rates offset in part by an increase in North American beverage case volume. The 21.0% decrease in the Canadian dollar, the 28.8% decrease in the pound sterling and the 27.1% decrease in the Mexico peso relative to the U.S. dollar since March 29, 2008 collectively had a $37.7 million negative impact on our revenue and a $4.5 million negative impact on our gross margin from the comparable prior year period. Our overall pricing was relatively flat as compared to the comparable prior year period due to adverse foreign exchange impact.

Our North America reporting unit revenue increased 5.2% in the first quarter of 2009 from the comparable prior year period, primarily due to a 4.6% increase in beverage case volume. The North America beverage case volume increase was primarily due to the change in consumer trends toward private label CSDs offset in part by a decline in water and energy products. Net selling price per beverage case (which is net revenue divided by beverage case volume) increased by 0.4% for the first quarter of 2009 from the comparable prior year period. Absent foreign exchange impact, overall North America net revenue for the first quarter increased 8.6%.

Our U.K. reporting unit revenue decreased 31.1% in the first quarter of 2009 from the comparable prior year period, primarily due to unfavorable foreign exchange fluctuations and a 9.8% decrease in beverage case volume. Absent foreign exchange impact, U.K. revenue decreased 5.0% for the first quarter of 2009 as compared to the prior year. Net selling price per beverage case decreased 23.6% on a translated basis for the first quarter of 2009 from the comparable prior year period. The U.K. case volume decreased in the first quarter of 2009 by 10.8% due in part to declines in the CSD, water and fruit drink categories offset in part by increases in revenue from the energy drink category.

Our Mexico reporting unit revenue decreased 39.1% in the first quarter of 2009 from the comparable prior year period, primarily due to a 26.3% decrease in beverage case volume. Absent foreign exchange impact, Mexico revenue decreased 19.7% for the first quarter of 2009 as compared to the prior year period. Net selling price per beverage case decreased 17.4% on a translated basis for the first quarter of 2009 from the comparable prior year period. The Mexico case volume decreased for the first quarter of 2009 due to an overall weak economy, softness with modern trade customers and the continuing impact of our credit policies.

Our RCI revenue decreased 27.6% in the first quarter of 2009 from the comparable prior year period, primarily due to a 21.6% decrease in case volume. Net selling price per beverage case decreased 7.7% in the first quarter of 2009 from the comparable prior year period. RCI only sells concentrate case volume.

Cost of Sales - Cost of sales as a percentage of revenue in the first quarter of 2009 decreased by 540 basis points primarily due to a reduction in costs in the first quarter. Variable costs represented 74.2% of total sales in the first quarter of 2009, down from 78.8% in the first quarter of 2008. Major elements of these variable costs included ingredient and packaging costs, distribution costs and fees paid to third-party manufacturers. Our cost of sales as a percentage of revenue for the quarter decreased mainly due to improved pricing of ingredients and packaging and higher efficiencies from plant utilization in our North American plant facilities as compared to the comparable prior year period.

Gross Profit - Gross profit for the first quarter of 2009 as a percentage of revenue increased by 540 basis points to 15.9% from 10.5% in the comparable prior year period. The quarterly increase was due to lower operating costs, higher volumes, plant efficiencies, and improved net selling prices and product mix in North America.

Selling, General and Administrative Expenses ("SG&A") - SG&A was down $18.1 million or 34.3% in the first quarter of 2009 from the comparable period in 2008. As a percentage of revenue, SG&A decreased to 9.5% during the first quarter of 2009, from 13.5% for the same period last year.

Both the overall decrease and the percentage of revenue decrease in SG&A for the first quarter of 2009 were primarily due to the non-recurrence of $8.0 million of executive termination costs (including $1.9 million of stock compensation related to executive transition costs), a $1.2 million reduction in marketing costs as we refocus away from branded products and related promotional activity, a $1.3 million decrease in professional fees, a $1.2 million reduction in depreciation expense primarily related to our vending assets, $1.2 million of lower bad debt expense primarily resulting from a reduction in North America and $5.4 million of favorable foreign exchange impact.

Operating Income (Loss) - Operating income was $22.3 million in the first quarter of 2009, as compared with an operating loss of $12.2 million in the first quarter of 2008, primarily due to lower gross profit margin in the prior year and higher SG&A costs in the prior year.

Interest Expense - Net interest expense decreased 1.3% in the first quarter of 2009 compared to the first quarter of 2008, respectively, primarily due to lower overall average interest rates and lower average short-term debt amounts.

Income Taxes - We recorded an income tax benefit of $6.2 million for the first quarter of 2009 as compared with an income tax expense of $2.4 million in the first quarter of 2008. This benefit reflects the reversal of uncertain tax positions that generated an $8.0 million tax benefit, a lower effective income tax rate resulting from intercompany debt structures and a reversal of a valuation allowance in the U.S. offset by a valuation allowance in Mexico, and reduced tax rates in Canada.

Net Loss Per Share - Net income attributed to us for the first quarter was $19.9 million or income of $0.28 per diluted common share as compared to a net loss of $21.3 million for the first quarter of 2008 or a loss of $0.30 per diluted common share.

Liquidity and Financial Condition

The following table summarizes our cash flows for the three months ended
March 28, 2009 and March 29, 2008 as reported in our Consolidated Statements of
Cash Flows in the accompanying Consolidated Financial Statements:



                                                            For the three months ended
(in millions of U.S. dollars)                       March 28, 2009              March 29, 2008
Net cash provided by operating activities          $           21.0            $           (1.1 )
Net cash used in investing activities                          (4.7 )                     (19.1 )
Net cash provided by (used in) financing
activities                                                    (20.2 )                      14.7
Effect of exchange rate changes on cash                        (0.2 )                      (0.5 )

Net decrease in cash & cash equivalents                        (4.1 )                      (6.0 )
Cash & cash equivalents, beginning of
period                                                         14.7                        27.4


Cash & cash equivalents, end of period             $           10.6            $           21.4

Financial, Capital Resources and Liquidity

As of March 28, 2009, we had a total of $390.7 million of indebtedness.

We believe that our level of resources, which includes cash on hand, available borrowings under the ABL facility and funds provided by operations, will be adequate to meet our expenses and debt service obligations for the next twelve months. Our ability to generate cash to meet our current expenses and debt service obligations will depend on our future performance. If we do not have enough cash to pay our debt service obligations or if the ABL facility or the Notes were to become currently due, either at maturity or as a result of a breach, we may be required to take actions such as amending our ABL facility or the indenture governing our Notes, refinancing all or part of our existing debt, selling assets, incurring additional indebtedness or raising equity.

For periods extending beyond twelve months, we believe that our ability to generate cash to meet our expenses and debt service obligations and to otherwise reduce our debt as anticipated will primarily depend on our ability to reduce the rate of revenue decline, retain a substantial amount of volume from our key customers and improve the profitability of our business. If we do not generate sufficient cash from operations or have excess debt availability to meet our expenses and debt service obligations or if the ABL facility or the Notes were to become currently due, either at maturity or as a result of a breach, we may be required to take actions such as amending our ABL facility or the indenture governing our Notes, refinancing all or part of our existing debt, selling assets, incurring additional indebtedness or raising equity. If we need to seek additional financing, there is no assurance that this additional financing will be available.

As of March 28, 2009, our total availability under the ABL facility was $170.5 million which was based on our borrowing base (accounts receivables, inventory, and fixed assets) as of February 22, 2009 (the February month-end under the terms of the credit agreement) and we had $90.5 million of ABL borrowings outstanding and $9.9 million in outstanding letters of credit. As a result, our excess availability under the ABL facility was $70.1 million. Each month's borrowing base is not effective until submitted to the lenders, which usually occurs on the fifteenth day of the following month.

Operating activities

Cash provided by operating activities during the first quarter of 2009 increased by $22.1 million compared to the first quarter of 2008 primarily driven by improved operating results even as we increased our working capital due to a slight buildup in our accounts receivable and inventory as we prepare for anticipated increased volume in North America.

Investing activities

Cash used in investing activities during the first quarter of 2009 decreased by $14.4 million compared to the first quarter of 2008 primarily due to reduced capital expenditures year-over-year. During the first quarter of 2008, we made significant expenditures for our water bottling equipment project.

Financing activities

Cash used in financing activities during the first quarter of 2009 decreased by $34.9 million compared to the first quarter of 2008 primarily as the result of payments related to our ABL facility.

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 28, 2009.

Debt

8% Senior Subordinated Notes due in 2011

Our Notes are due on December 15, 2011. As of March 28, 2009, the principal . . .