Courage a matter of shelf space

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The Independent Online
AFTER several months of intense negotiations, a fresh obstacle is holding up a formal bid by Scottish & Newcastle for Courage, the £600m UK brewing operation owned by Australian-based Fosters.

It is proving nearly impossible even for the resourceful Brian Stewart, S&N's chief executive, to allay the fears of the owners of the six foreign beer brands - Beck's, Coors, Miller, Budweiser, Fosters and Holsten - that will come under the Edinburgh group's umbrella if the deal goes through.

While last week's deal for Annheuser Busch, the giant US owner of Budweiser, to buy a 50 per cent stake in the historic Stag Brewery at Mortlake, south London, will give the Americans their first UK production base, it has little bearing on the brand owners' haggling with S&N.

The row is all about distribution and who will take prime positions on pub and off-licence shelves. It was easy for S&N to satisfy its two existing franchisors, Beck's and Coors. But keeping six sweet is taxing the most ingenious negotiators. The franchises are granted under detailed contracts, which specify that the brands in question must be guaranteed a certain prominence. Inspectors regularly make snap checks .

"The brand negotiation is turning out to be one of the trickier parts of the discussions," said a source close to the marathon series of meetings between S&N, Courage and their teams of advisers.

"If you have that many premium brands, the brand managers are simply not all going to have their label at the front of the shelves, at eye level."