Aggressive ad spending has paid off for the UK’s largest brewer Scottish & Newcastle, which saw a 10% boost in net sales of top brands John Smith’s, Kronenbourg, Strongbow and Foster’s in the UK in the first half.
The gains, boosted by a 12% increase in marketing spend on these brands over the period, helped drive its UK beer volumes up 3.5% - just ahead of the 2.5% growth in the beer market overall.
However, continuing pricing pressure from the supermarkets and a focus on larger packs contributed to a 4.2% decline in prices in the off-trade.
Further job losses could also be on the cards if the company was to make savings of £60m by the end of 2006 - up from the £45m it had earlier promised. The bulk of the savings would come from a supply chain revamp, the closure of breweries in Newcastle and Edinburgh and synergies from integrating Bulmer’s cider business, said the company.
“The supply chain continued to perform well with survey scores indicating that S& N has among the highest service levels in the UK.”
Pre-tax profit was down from £187m to £39m in the six months to June 30, dented by goodwill amortisation and restructuring charges which followed the sale of S&N’s managed pub estate.
On a comparable basis, excluding currency movements, acquisitions and disposals, turnover had increased by 4.2% to £2.4bn.