Threat to Courage contract brings fear of new price war

COURAGE is set to lose the bulk of its contract to supply nearly 500,000 barrels of beer a year to Chef & Brewer pubs, sparking fears of another price war among the big brewers.

Scottish & Newcastle is already introducing its own beers into the pubs, which it bought in a pounds 703m deal with Grand Metropolitan last September, ahead of the expiry of the Courage contract next March.

Brian Stewart, S&N chief executive, said yesterday that the amount of Courage beer it would take next year would depend on the amount of Courage products sold through the C&B estate between now and March.

Scottish yesterday announced results for the year to 1 May and confirmed that wholesale beer prices had stabilised. At the height of the fighting, mainly between Bass and Courage, brewers were offering discounts of more than pounds 80 on a 36-gallon barrel of beer.

Mr Stewart added: 'It is a tough market. We competed on price. We held the line, but we were not dragged into the worst areas.'

Profits before tax at Scottish rose 21.5 per cent to pounds 222m in the year to 1 May. Most of the rise was due to a six-month, pounds 32m operating profit contribution from C&B and improved results from pub retailing and leisure operations.

Operating profits from the beer division, however, dropped 10.6 per cent to pounds 86m on sales down 2.1 per cent to pounds 871m.

'Our desire to grow volume and market share has had to be balanced against some very agressive discounting practices,' Sir Alick Rankin, chairman, said.

Center Parcs, the upmarket holiday villages, were largely behind an 8 per cent profits rise to pounds 83.1m in leisure. Occupancies remained above 90 per cent and the latest parc at Longleat, Wiltshire, is 90 per cent pre-booked for its first month of opening in August.

Shareholders are seeing the final dividend raised 5.5 per cent to 11.26p, making a total payout of 17.04p, up from 16.22p.

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