The link with Danone turns S&N into a player with global potential and one likely to give its predator rivals brown trousers says Tony Brown Sid the Sexist became the epitome of a beer drinking lout when he first appeared in student cult magazine Viz in the 1980s. A poorly educated, big bellied slob, he was never without a bottle of Newcastle Brown Ale in one hand, fag in the other. The lesson was that beer drinkers were hopeless slobs. Students loved it and bought Newcastle Brown Ale by the crate. Such marketing doesn't normally come free, but brand owner Scottish & Newcastle was prepared to look the gift horse in the mouth. This week S&N announced a partnership deal including a complicated tie up with French group Danone that will create a marketing strategy with more fizz than a bottle of beer. The focus of the deal is the combination of brands and combined marketing nous to drive the fortunes of the businesses to a higher level. S&N group chief executive and deputy chairman Brian Stewart said: "The combined business will have a wealth of talent and the brands and assets to drive its growth. "Most important among the shared talents of the two companies is the proven ability to use effective marketing to build great brands." Success in its first big brewing venture outside the UK could overnight turn S&N into one of Europe's biggest brewers. It follows on from the announcement by Bass and Whitbread that they are considering selling their UK brewing divisions. Foreign brewing companies including Heineken, South African Breweries and Anheuser-Busch are all believed to be circling the companies with a view to overseas expansion. A foreign predator with global ambitions moving on to UK shores could seriously shake up the market hegemony established by S&N in the trade. As well as owning some of the top selling beers in the country with brand names such as John Smith's, McEwan's, Courage and Theakston's, S&N brews and sells licensed lager brands including Foster's, Kronenbourg, Becks, Miller Pilsner and Miller Genuine Draft. The Grocer correctly predicted in February that the most obvious move was for S&N to boost its European strategy by buying Kronenbourg. The brand owner, Danone already has an established working relationship with S&N. Chairman and ceo of Danone Franck Riboud said: "Our long relationship with S&N through Kronenbourg makes it possible to create a partnership and will ensure that our beer businesses come within a group committed to growth. The two companies share the same ambition of achieving strong market positions through the development of outstanding brands." Danone also owns Maes Pils, which is the second largest brewer in Belgium, and Peroni, second largest brewer in Italy. But alcohol is not Danone's main interest ­ it has food interests such as Jacob's, HP Sauce and water company Evian. While the S&N and Danone deal is described as a partnership, in reality S&N will have management control, although Riboud will become a non executive director of S&N. The partnership deal is a complicated exercise that is taking place in stages. The first phase this week saw S&N pay £470m for a stake in Danone's beer interests. At any point from December 31 this year to April 30 2003, Danone may sell the rest of its business to S&N for £1.22bn. If Danone decides not to sell the remainder of the company by this time, it will consolidate its remaining business into a joint venture with S&N, of which it will own no more than 25%. The deal depends on the sale of S&N's leisure division, which includes Center Parcs holiday villages and Pontin's holiday camps, which is close to completion. However, the success of the newly combined beer business will be down to the efforts of the marketing teams and how well they can capitalise on the rapidly expanding global markets. S&N predicts the net earnings of the global beer industry could grow from $18bn to $28bn between 1999 and 2010. The distribution network of both Scottish Courage and Kronenbourg provides an opportunity for sales growth of the premium brands, for example, Fosters into France. Both Danone and S&N boast successful records in brand building. In the UK volume sales of Kronenbourg have more than doubled since the formation of Scottish Courage in 1995 and total sales of Kronenbourg and Kronenbourg 1665 brands across Europe now reach nearly eight million hectolitres. Scottish Courage's efforts in the current financial year have seen a sales increase of 1.3% in a market estimated to have been static. Premium brands have continued to exhibit accelerating volume growth with Foster's up 14%, Kronenbourg by 13% and John Smith's by 5%. No figures have been released by either company to say how marketing spend will change or grow. The only thing we can be sure of is that S&N will no longer be a parochial UK company, but one with true European and even worldwide aspirations. {{NEWS }}