S&N plans £8m Foster's television campaign

SCOTTISH & Newcastle said yesterday that trading in the first six months of the year "has been better than the comparative period in 2003 in all our key businesses".

It came as Britain’s biggest brewer, which has closed two breweries this year in Edinburgh and Newcastle, also said that it now anticipated greater overall cost-savings of 60 million a year by 2006, compared with its previous estimate of 45m per annum.

Alongside the trading statement ahead of S&N’s half-year results on 3 August, managing director John Dunsmore said the group was to sharply beef-up its total spending behind lead brand, Foster’s lager.

Dunsmore said that spending behind Foster’s - from television advertising to superchilled drinks dispensers to a launch in Russia this year - would jump 40 per cent this year.

A total of 8m alone will be spent on television advertising for the brand by the end of this year - also up 40 per cent.

Dunsmore said Foster’s contributes nearly 45 per cent of total UK beer sales for S&N - the UK in turn chipping in about a third of group profits.

He said: "We are absolutely unequivocal about saying this is the one we have got to win with."

He added that three very strong support brands for Foster’s were Kronenbourg 1664 lager, John Smith’s bitter and Strongbow cider.

Dunsmore said he saw a particular opportunity for greater cider sales through the "spectacular decline" in ready-to-drink products aimed at younger drinkers.

S&N’s profit before tax in the first six months of 2003 was 217m, including 43m from its 50 per cent owned Baltic Beverages Holding, where S&N sees good volume and profit growth in 2004.

The firm said, however, that comparisons of the second half would be more difficult as summer trading was very strong in 2003.

After selling 1,400 British pubs last year to focus on brewing, S&N announced recently it would close breweries in Newcastle and Edinburgh, and said beer prices were suffering from competitive take home trade from supermarkets.

S&N said that conditions in the market to supply beer to pubs and bars was slightly better than expected, but shop prices were still under pressure.

The brewer said it anticipated 2004 operating profit in UK beer to be slightly ahead of the 167m in 2003, and was well positioned for further growth in 2005.

S&N’s shares rose 2.25p to 441.75p.