Foster's threat to sponsorship of British Grand Prix

Foster's lengthy association with the British Grand Prix could be under threat.

The brand, owned in the UK by the drinks giant Scottish & Newcastle, is currently the title sponsor of the British Formula One race, a deal which is due to run until 2010. However, the contract includes break clauses - meaning that it could be curtailed before then. It is thought that the company is now considering moving away from sponsoring individual grands prixs.

Foster's, which is also the sport's official beer partner following an agreement signed in March this year, said it remained committed to Formula One and had no immediate plans to back out of the deal. It has associations with the sport going back nearly 20 years, and also sponsors the Australian Grand Prix.

However, John Dunsmore, UK chairman and managing director of S&N, was recently reported as saying at a conference that the sponsorship no longer fitted in with the brand's core strategy.

A source close to the company said: "The sponsorship has worked extremely well on the global level but the issue has been how to get leverage out of it at the local level."

Formula One attracts some of the world's biggest brands, including Vodafone, which sponsors Ferrari. Traditionally it was a stronghold of tobacco companies, including British American Tobacco (a partner of BAR Honda) and Gallaher, which sponsors Jordan. Philip Morris, the world's biggest tobacco company, is also involved with the sport.

But in recent years, drinks companies have been filling the sponsorship gaps created as new advertising laws have restricted the marketing activities of cigarette businesses around the world. Earlier this year, Diageo announced that its Johnnie Walker whisky brand was to become a sponsor of McLaren Mercedes-Benz. Soft drinks have also got in on the act, with the caffeine drink Red Bull now behind two teams after buying the Minardi outfit earlier this month.

Formula One, controlled by the billionaire Bernie Ecclestone, has always been one of the most expensive sports to sponsor. But it is now facing competition for the first time, with the launch of the alternative A1 Grand Prix.