SABMiller warns growth could stall SABMiller yesterday warned about a possible finanical hit in the second half of its financial year because of the rising cost of raw materials. However, the world's third largest brewer seems to be getting its markets right, reporting it sold 135 million hectolitres of lager in the six months to 30 September, representing organic growth of 11 per cent. "We have delivered a good first half performance, benefiting from the weighting of our portfolio of businesses towards emerging markets, and a focus on developing our premium brands," the company stated. Revenues rose 15 per cent to $10.8bn (€7.4bn). Group operating earnings rose 10 per cent on an organic basis, once currency exchange rate changes are taken out of the equation. Margins fell to 18.9 per cent from 19.1 per cent recorded in the same period last year. In Europe the company reported double digit volume growth, with operating earnings up 29 per cent. Taking out the effects of currency exchange rates, operating earnings grew by 17 per cent, driven by volume growth and market share gains in Poland, Russia and Romania. Premium brand sales recorded 13 per cent volume growth, which the company stated reflected a move to meet consumer tendencies towards premium products. "This growth in higher margin brands, in addition to price increases and efficiency gains, mitigated the impact of significant increases in the cost of raw materials, real wage increases and the negative mix effect of the strong growth in cans in certain markets," the company stated. In the US, the company's Miller brand bounced back to growth, with organic sales to retailers up 1.4 per cent, and operating earnings rising by 19 per cent. Lager volumes in Latin America rose 8 per cent, the company reported. In Africa and Asia the company sold 29 per cent more lager by volume, with China and India driving the growth. The group's joint-venture in China, CR Snow, recorded organic volume growth of 22 per cent. The national brand, Snow, now accounts for about 70 per cent of volumes sold and is expected to become the world's second largest beer brand by volume within calendar year 2007, SABMiller stated. The company said it would boost capital investment across its global businesses to provide for continuing growth. "We are continuing to invest in our businesses to drive revenues, which, together with ongoing productivity gains, are offsetting industry wide cost pressures. We expect to make progress in the balance of the year but face a more challenging environment." Constellation expands brand portfolio Constellation Brands this week said it would acquire the US wine business of Fortune Brands for $885m (€604m). The transaction is expected to close by 31 December. The business to be acquired includes some of California's top wineries. In total the US business produces about 2.6 million cases a year, from brands that include Clos du Bois, Geyser Peak and Wild Horse. About1,500 acres of vineyards in Napa, Sonoma and Carneros, Calif., are included in the purchase, in addition to five California wineries. Rob Sands, Constellation Brands' president and chief executive officer, said the portfolio fits in with the company's strategy to expand into the growing high-end segments of the wine market. Constellation Brands produces and markets of wine, spirits and imported beer, with a significant market presence in the US, Canada, the UK, Australia and New Zealand. The company has about 250 brands in its portfolio, including Corona Extra, Black Velvet Canadian Whisky, the Svedka vodka line, Robert Mondavi wines, Ravenswood, Blackstone, Hardys, Banrock Station, Nobilo, Kim Crawford, Inniskillin, Jackson-Triggs and Arbor Mist. The company claims to be the largest wine producer in the world, and the third largest spirits company in the US. S&N rejects fresh takeover offer Scottish & Newcastle (S&N) yesterday rejected a sweetened takover offer from Carlsberg and Heineken, indicating that the company's executives are in no mood to relinquish control. Carlsberg and Heineken raised their initial offer to 750 pence per share, valuing Scottish & Newcastle at £7.3bn (€10.2). "The board, having consulted its advisers, has no hesitation in rejecting this wholly inadequate proposal as it substantially undervalues the unique strengths and market positions of S&N," the UK-based company stated. The board also said members were "particularly concerned" by Carlsberg's continuing refusal to disclose relevant information about of Baltic Beverages Holdings, the jewel in the crown. S&N and Carlsberg jointly own Baltic Beverages, which has turned into a lucrative money spinner as the Eastern European market explodes into growth. The takeover bid has left one of the fastest growing Eastern European brewers up for grabs, highlighting the possible difficulties in operating a company with an industry rival. Under the original offer, S&N and its stake in Baltic Beverages would have been valued at £6.8bn (€9.7bn). However, S&N rejected the bid outright and announced its own plan to keep its stake of BBH and replace Carlsberg with a new partner. Carlsberg and Heineken first announced last month that they had formed a consortium to purchase S&N. In a joint statement, the potential buyers said that should a deal go ahead, they would look to split the group's regional operations between themselves. Through this plan, Heineken would control S&N's Western European operations, including the UK market, while Carlsberg would claim full ownership of the Baltic Beverages. During the first quarter of the year, BBH posted a 37.1 per cent increase in net sales to €1.3bn during the first half of the current fiscal year, resulting from its continued expansion into the region.