Beerage set for shake-up as S&N eyes Courage

BY JOHN SHEPHERD

The brewing industry is on course for a big shake-up with Scottish & Newcastle yesterday confirming that it was negotiating to buy all, or part, of Courage. At the same time, Whitbread provided a taster for the radical changes ahead in the pub market by announcing the planned opening of 50 "super-sized" Brewers Fayre outlets.

S&N declined to comment further, although sources said that there were still many loose ends to tie up before a deal could be struck. Several involve complications over ownership and production of beer brands, such as Courage's current agreement to brew Budweiser in Britain for Anheuser Busch, the US-based and largest brewer in the world.

A complete takeover of Courage could cost upwards of £500m, and would make S&N the biggest operator in the domestic market. Courage is second- largest with a 19 per cent market share and S&N is fifth with about 12 per cent.

Industry analysts said S&N was unlikely to be allowed to buy all of Courage because the joint market shares exceeded the monopoly benchmark of 25 per cent. They believe S&N will acquire most of Courage's breweries, some of its beer brands, but not its 50 per share in Inntrepreneur, the 4,350- strong chain of pubs owned jointly with Grand Metropolitan.

Talks between S&N and Foster's, the Australian owner of Courage, have been taking place for at least 18 months. A big hurdle in S&N's long takeover path was cleared earlier this month when Whitbread, the fourth-biggest UK brewer, dropped a separate bid for Courage.

Few in the brewing industry believe that the purchase of a large part of Courage by S&N would be bad news for other brewers. The industry is lumbering along with a large overcapacity problem, and at the same time beer consumption continues to decline.

Britain's brewers can now produce an extra pint for every four they can sell. Consumption has dropped to levels last seen in the 1960s, and continues to fall as a consequence of the decline in heavy industry, rising beer prices, and changing lifestyles. The industry has also been hit by the surge in personal imports of cheap beer from France, last estimated at 1 million pints a day and rising.

All the big brewers have cut back on capacity by closing at least two breweries each in recent years. However, there are no signs that any of the big five brewers will break ranks and unilaterally take further capacity out of the system. The over-capacity problem also continues to be exacerbated as the regional and other smaller brewers catch up with advances in technology.

Amid this, the beerage is adapting to rapidly changing consumer needs. The traditional male haunt of the boozer is steadily being replaced by pubs, driven by food sales and targeted increasingly at the family. A multitude of leisure concepts is also being rolled out. Typically, they comprise pubs with adjoining bowling alleys and small, low- tariff hotel facilities.

All of this is putting pressure on the small independent publicans, who are finding it increasingly difficult to compete with the financial muscle of brewing groups and big pub chains. Too many pubs are chasing too little business. One in seven of the UK's 70,000 pubs will close in the next few years.

Outlook, page 25

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Recruitment Genius: Mortgage Administrator

£20000 - £25000 per annum: Recruitment Genius: We are a vibrant and establishe...

Day In a Page

Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent
Markus Persson: If being that rich is so bad, why not just give it all away?

That's a bit rich

The billionaire inventor of computer game Minecraft says he is bored, lonely and isolated by his vast wealth. If it’s that bad, says Simon Kelner, why not just give it all away?
Euro 2016: Chris Coleman on course to end half a century of hurt for Wales

Coleman on course to end half a century of hurt for Wales

Wales last qualified for major tournament in 1958 but after several near misses the current crop can book place at Euro 2016 and end all the indifference
Rugby World Cup 2015: The tournament's forgotten XV

Forgotten XV of the rugby World Cup

Now the squads are out, Chris Hewett picks a side of stars who missed the cut
A groundbreaking study of 'Britain's Atlantis' long buried at the bottom of the North Sea could revolutionise how we see our prehistoric past

Britain's Atlantis

Scientific study beneath North Sea could revolutionise how we see the past
The Queen has 'done and said nothing that anybody will remember,' says Starkey

The Queen has 'done and said nothing that anybody will remember'

David Starkey's assessment
Oliver Sacks said his life has been 'an enormous privilege and adventure'

'An enormous privilege and adventure'

Oliver Sacks writing about his life
'Gibraltar is British, and it is going to stay British forever'

'Gibraltar is British, and it is going to stay British forever'

The Rock's Chief Minister hits back at Spanish government's 'lies'
Britain is still addicted to 'dirty coal'

Britain still addicted to 'dirty' coal

Biggest energy suppliers are more dependent on fossil fuel than a decade ago
Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests