August 28, 2008

Scottish & Newcastle Beers Bring Good Cheer ; RBS The Royal Bank of Scotland

By Peter McCusker

SALES of famous Scottish & Newcastle brands have seen Dutch brewing giant Heineken outperform the weakening UK beer market.

Heineken, which completed the pounds 7.8bn acquisition of S&N with Danish rival Carlsberg earlier this year, said Kronenbourg 1664 and John Smith's gained share despite a 2.5% fall in the wider domestic market.

The firm has faced headwinds such as alcohol duty hikes, rising input costs and a weaker economy, but a strong performance in the UK and Switzerland offset declines in Italy, Spain and Holland, the brewer said.

Volumes of its Heineken premium brand rose 2.5% to 390m litres, driven by France and the UK, the firm added. Alongside a strong performance from S&N beers, the company has also been pushing its main Heineken brand.

It sold 1.29bn litres of Heineken in the first half, while it is a sponsor of the Uefa Champions League and the new James Bond film, Quantum of Solace.

"The Heineken brand is well positioned to exploit the positive trend for international premium brands, and the growth of our top- of-mainstream brands will add to our margin and profit growth as well," the firm said.

The brewer added that cider brands Strongbow and Bulmers showed "sustained growth" in the UK after continued spending on advertising and sales.

The group, which has around 4,500 UK staff, said the integration of the business was "proceeding well" and had added pounds 485.9m to revenues since May.

The takeover included the Newcastle Brown Ale brewery in Gateshead which has about 200 staff. It now expects to make an extra pounds 25m in cost savings from the acquisition of S&N, which called time on more than 250 years of brewing history.

Alongside a strong performance from S&N beers, the company has been pushing its Heineken brand

(c) 2008 The Journal - Newcastle-upon-Tyne. Provided by ProQuest LLC. All rights Reserved.