Blog: S&N - Une biere, s'il vous plait?
Olly Wehring | 11 August 2006
Scottish & Newcastle this week posted a set of healthy results partly thanks to robust beer sales in the UK - but for all its success domestically, several questions remain across the English Channel.
The brewer has moved to revamp its local on-trade sales force and ramp up marketing investment in France in an attempt to drive sales. However, S&N again saw volumes in the country fall during the first half of the year while fierce price competition again put pressure on revenues.
The strict enforcement of drink-driving laws in France and a weak economy in recent years has hit alcohol consumption in general. However, in a country not renowned for its beer drinking - beer consumption stands at just 35 litres per person - it’s clear that brewers in France suffer acutely when the demand for booze falls.
As you’d expect, as market leader in France, S&N is confident that it can turn things around. It says changes to its sales network servicing France’s bars and restaurants, as well as investment behind its more premium brands, has started to pay off.
Didier Lefèvre, the head of S&N’s French arm, Brasseries Kronenbourg, believes spending more on marketing the company’s premium brands and on innovation will help revitalise sales.
“The beer market in France has not totally developed but, again, the name of the game is segmentation and innovation,” he said in London this week.
To back this up, Lefèvre pointed to rising sales of “super-premium” brand Grimbergen and the initial success in France of innovations that have proved popular with UK drinkers - the fruity Kronenbourg 1664 Blanc and the Super Chilled fonts (dubbed in Super Fresh in France).
S&N chief executive Tony Froggatt was even more bullish about the prospect of turning around the business in France. Low beer consumption, he said, was an “opportunity” to grow attract French drinkers back to the market “with the right concept”.
“Ultimately, there are a lot of people in France who are lax users of beer or have never tried beer - we see it as an opportunity,” Froggatt insisted.
But for all the talk, it’s clear that tough challenges lie ahead. The brewer has already started talks to sell its Champigneulles brewery and last year laid off around 70 workers at its Obernai site, but getting costs down in a mature market is a relatively straight-forward business compared to driving sales.
While S&N has managed to turn around its UK business, encouraging the historically reluctant French to drink beer is another matter entirely.
S&N has a strong domestic business, a buoyant position in Russia and has carved out shrewd positions in India and China. But, if the French would only drink more beer, then the brewer would really be able to compete with the big beer boys.
PepsiCo created a stir last week with the news it is testing a product called Caleb's Kola, with some in the media claiming it was the beginning of a new “craft soda” category....
SABMiller's bid to widen the appeal of beer is very much in evidence at its latest 'House of Peroni' - with beer cocktails and a bigger bottle for the Italian lager brand on offer. ...
Here's a round-up of the big stories on just-drinks last week, featuring PepsiCo, SABMiller, the Scotch whisky category and the US wine market....
Heineken has stepped up its focus on stay-at-home drinkers with the roll out of its latest 'draught beer at home' concept - The Sub - to its domestic market. ...
- SABMiller's troubles fuel M&A rumours
- Diageo's future brighter than present suggests
- Diageo's Q1 Results by Region
- Focus - Remy Cointreau's H1 Performance by Brand
- Three Questions for the Drinks Industry
- Moët Hennessy unveils first Travel Retail outlet
- Diageo puts Beckham centre stage in Haig Club ad
- Moet Hennessy sales falter in YTD
- Diageo Q1 sales dip "in line with expectations"
- Diageo to appeal Parrot Bay UK TV ad ban