Blog: Premium froth
Chris Brook-Carter | 3 August 2004
Just-drinks was in central London today to hear the UK’s leading brewer Scottish & Newcastle unveil its interim results. Shares in the company as of 11.15am had edged ahead 6-3/4p to 408p as analysts reflected on expectation-beating figures.
Overall, it seems it’s been a good six months for the recently installed CEO Tony Froggart. There are still some concerns in the investment community particularly over pricing in the UK. And, the second half will prove much tougher when compared to last year, when a heat wave sent drinks sales across Europe soaring.
But despite this, the company has earned its day in the limelight by reporting organic growth in beer volumes of 6%, leading to a rise in profits before tax of £158m, an 8.2% increase on a comparable basis. Operating profit reached £202m up 7.4% on a comparable basis.
The company’s disposal of its retail arm has given it a renewed focus on its beer brands and this was reflected in a global marketing spend that was up 15%.
“The good performance in the first half of 2004 gives us confidence that we will meet our financial and commercial objectives for the full year,” S&N said in a statement.
And though it admitted that in Western Europe, comparatives with 2003 are more difficult for the second half of the year, it stated that: it remained “confident that across France, Greater Europe and the USA our premium brands will continue to grow contributing to an increase in operating profit for the year on a comparable basis.”
This focus on its core premium brands should serve S&N well. In a report published this week on our site, just-drinks estimates that global sales of premium beer have grown from US$86 billion in 2000 to US$116 billion by 2003, a rise of nearly 35% - representing an average annual growth rate of 11.6%
Taking account of population trends and the global economic outlook, just-drinks.com forecasts that between 2003 and 2010, the global sales of premium beer will grow by over 72% to reach US$200bn by 2010.
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