Beer wars take fizz out of SABMiller

SABMiller unveiled an 18 per cent rise in profits yesterday, driven by emerging markets such as China and eastern Europe, but its shares fell after the brewing giant warned of rising aluminium costs and a fierce price war with the Budweiser owner Anheuser-Busch. SAB shares dropped 3.3 per cent, off 33p at 1,061p.

The world's second-largest brewer, known for its Miller, Peroni and Pilsner Urquell brands, announced a 19 per cent rise in revenues to $15.3bn (£8.1bn) in the year to 31 March after gaining a new growth platform in South America through its acquisition of the Colombian brewer Bavaria in October. Underlying pre-tax profits rose to $2.6bn.

Europe turned in a good performance, coupled with market share gains, fuelled by demand in Poland, Romania and Russia, while sales in South Africa were hit by poor weather and a shift in consumer spending towards durable goods such as cars.

SABMiller has tried to boost Peroni sales in Europe with a $50m advertising campaign featuring black-and-white images from the 1960 Italian film La Dolce Vita. The campaign is now being rolled out in South Africa and the US, starting with New York.

In the US, Miller Lite sales have been hit by an aggressive price war waged by Anheuser-Busch since last summer, which shows few signs of abating and makes it virtually impossible for SABMiller to pass on surging commodity costs to consumers. That means the soaring cost of aluminium used to make beer cans - about half of American lager volumes are sold in cans - and higher energy bills are eating into profits.

A spokesman said: "We're going to see further skirmishing over the summer. But we believe Anheuser-Busch is 'renting' volumes - when they put prices back up, the people who were drinking [Budweiser] because it was cheap will go back to drinking discount beer brands."