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News
Scottish & Newcastle boosts profits
Scottish & Newcastle saw its profits rise by 12% in the first half of the year thanks to a combination of good weather, The World Cup and new product development.
The group, which witnessed an increase in sales of 6%, reported positive figures despite an oil explosion near the main Waverley TBS warehouse, which led to temporary supply issues resulting in a £4m loss for the group.
Beer and cider continued to perform well with volume and net sales up by 4.8% and 7.3% respectively. As a result of The World Cup, the group gained market share in the on-trade and off-trade but saw no big volume uplifts outside the UK.
Since Scottish & Newcastle acquired Bulmers in July 2003, Strongbow has grown by 40% and, according to John Dunsmore, Chairman & MD of the UK business, the popularity of cider is set to continue. This explains the group’s decision to launch Strongbow Sirrus, Bulmers Original and Jacques earlier on this year.
Dunsmore commented, "We are working hard to build high-value cider brands and move away from ‘functional alcohol’ such as White Lightning. The category is a classic example of a virtuous market catching a wave and accounted for approximately 20% of our total sales".
Tony Frogatt, CEO, attributed the group’s growth to innovation, particulary new products. He explained, "You have to offer something new and exciting to consumers". The acquisition of the Foster’s trademark earlier on in the year acted as a springboard for the launch of Foster’s Twist. He said, "We could n’t have got Fosters Twist to market as quickly if it had n’t been for the deal". According to Frogatt, the group is on track to report mid-teen sales on new product development next February.
The only cloud on the horizon for the group is France, which is still unprofitable. The group admitted that its loss of market share in France is problematic but reported growth at the premium end of the French market. Froggatt said there were early but encouraging signs of recovery in France and that he he hoped the sale of the Champigneulles brewery would help to address the group’s problems in the country.
© db 9th August 2006