Can brewers weather the storms?

Aug 10, 2007

Chief executive Tony Froggatt bemoaned this summer’s “stinking weather”, but brewer Scottish & Newcastle’s (SCTN) broadbased international business helped it “weather the storm” in the first half, said Questor in The Daily Telegraph. While beer sales across Europe slid, they jumped 23% in Russia and overall interim pre-tax profits rose 5.5% to £191m.

How sales improved

S&N should thank Irish competitor C&C (GCC) for promoting its rival Magners cider brand as “a trendy brew”, said David Prosser in The Independent. First-half sales of S&N’s own Bulmers Original and Strongbow were up nearly 25%, thanks to the group’s “superior marketing and distribution power” – galling for C&C, whose growth is faltering.

Meanwhile, in Russia a joint venture with Carlsberg is still going great guns, thanks to Russian drinkers’ “voracious thirst” and a e450m investment programme, said Simon Bowers in The Guardian.

The outlook for S&N

Diageo (DGE) is “pretty sniffy” about cider’s longer-term prospects, said Prosser.  And poor weather and the hitherto unclear impact of England’s smoking ban cast doubt over S&N’s full-year outlook, added Questor. Still, S&N is deemed “a strong takeover target” – with Carlsberg “usually the name in the frame”.

SCTN: 591p; 12m change 14%

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