UK, Russia hold up S&N beer sales
& Newcastle to improve sales and profits in 2005, helping to
offset the market slump in mainland Western Europe.
Scottish and Newcastle (S&N), which has 27 per cent beer market share in the UK, reported 2005 sales of £3.92bn, up four per cent on 2004, and net profits at £392m, up 9.5 per cent on last year.
The group's core brand focus in the UK helped it to out-perform the market, with the Foster's lager sales rising 10 per cent across the year.
Russia, meanwhile, continued to inject extra life into the company. BBH, S&N's joint-venture brewer with Carlsberg, increased beer volumes by 12 per cent last year - helping both companies offset weaker performances in mainland Western Europe.
S&N, in particular, was hampered by poor growth in France, where its Kronenbourg brand has struggled amid poor economic conditions and private label competition.
The group's premium Grimbergen beer, however, increased volumes by 22 per cent, helping to rescue the situation.
S&N has undertaken a six-part battle plan in France over the last few months, which included increased promotion for its premium brands, a new on-trade, national call centre and the launch of new Super Chilled cold beer technology across 4,000 French bars.
S&N claimed it was leading the beer category in new product development. Money spent on this last year equalled a tenth of branded net sales, more than double that spent in 2004.
The firm said it would roll out more Super Chilled technology across Europe, after a successful launch in the UK. The group plans to install another 50,000 condensation founts this year, which would give it a total of 100,000 by the end of 2006, with 14,000 outside the UK.
It also expects the 2006 football world cup in Germany to boost beer volumes this year. Russia, meanwhile, should continue to help out, although S&N predicted a slight slow-down in the country's beer market growth - predicting this would be three-five per cent over the year.
Rising input costs remain a big challenge in 2006 for many food and beverage firms.
S&N said the picture in Europe was mixed, but warned it was "not immune" to cost pressures. The brewer spent 2005 working to cut expenses and expects to be making £60m annual cost-savings in the UK by the end of 2006.
