Bass in joint venture with Grolsch for distribution

BASS, the UK's biggest brewer, is strengthening its position in the growing premium lager market through a joint venture with Grolsch, the Dutch company, writes John Shepherd.

Grolsch is one of the top three premium lager brands in the UK. Nearly 30 million pints of Grolsch were drunk last year.

Tony Portno, chairman of Bass Brewers, said: 'Grolsch is a well established, high-quality beer brand which gives us immediate access to significant volumes of the important premium lager sector.'

Bass will have a 49 per cent stake in a new joint venture company, and Grolsch will hold 51 per cent. The company will be the sole distributor for Grolsch in the UK in place of Grolsch Ruddles Brewing Company.

Paul Snoep, chairman of Grolsch, said: 'The joint venture fits perfectly in our strategy towards forming alliances with partners with strong distribution lines in non- Dutch markets.'

Brewing industry analysts said the deal held benefits for both parties. Kevin Feeny at Henderson Crosthwaite said that with the weight of the Bass distribution network behind it the Grolsch brand should see a substantial improvement on its sales volume.

One of the main benefits for Grolsch is that the deal gives it direct access to the vast pub estate owned by Bass and its advanced brewing facilities. The UK draught lager market accounts for about 70 per cent of beer sales.

Premium lagers are one of the few growth sectors of the UK beer market, particularly in the take- home trade. More than 6 million barrels, equal to 1.7 billion pints, are sold in the UK each year. Bass already has two premium lagers, Tennent's Extra and Tag.

Profit margins are high. Wholesale prices for standard lager are pitched at about pounds 210 for a 36-gallon barrel, while the premium products fetch up to another pounds 60.

Bass has also agreed to take on Ruddles County, the bitter brand owned by Grolsch, as a guest ale.