US sales cheer for S&N

Feb 20 2008 by Andrew Mernin, The Journal

WHILE brewer Scottish and Newcastle yesterday revealed flat UK sales for 2007, it also toasted the growing number of Americans engaging in the North East tradition of ‘walking the dog’.

The firm, which employs 80 people at the former Federation Brewery site in Dunston, Gateshead, said the wet summer and the impact of the smoking ban contributed to an 8% fall in UK profits last year.

The drop in operating profits to £213m reflected a 3.9% decline in the overall UK beer market during a challenging year for the industry.

However, in the US market, sales of Newcastle Brown Ale – often called ‘dog’ on Tyneside from the euphemism “I’m going to walk the dog” or “go to the pub” – soared by 10% or the equivalent of 10 million bottles. The results are likely to be S&N’s last as an independent company, following its support for a £7.8bn takeover by rivals Heineken and Carlsberg.

The bright spot in the UK came from the cider market, with the company’s portfolio, including Strongbow, seeing volume growth of 15.1% last year. Earlier this month S&N announced plans to close its brewery in Reading, blaming over-capacity in the UK beer market.

Yesterday the firm re-iterated that it has no intention of off-loading its remaining UK sites at Dunston, Tadcaster and Manchester. Company spokesman Nigel Pollard said: “We were very pleased with operations at the Dunston site last year and we have made huge inroads into making it more efficient in terms of making a contribution to the business.”

Shares in S&N showed little movement yesterday, dropping two points to 787p.

Analyst Gary Fawcett, assistant director of Wise Speke in Newcastle, said: “The brewer’s last set of full-year results as an independent company were solid with an expected strong performance from Eastern Europe and Asia. However, time will be called on the North East brewer in the summer when shareholders can expect to receive the 800p cash per share offer.”