InBev buys back Becks UK distribution rights

InBev has bought back the UK rights to distribute Beck's from Scottish & Newcastle.

InBev, which bought the Beck's brewery in 2001, will pay S&N royalties totalling £77m in annual instalments until May 2012, when the UK company's distribution deal was due to have expired.

S&N has been the exclusive UK importer/distributor of the German beer since 1987 and will continue to sell Beck's to its free trade customers for the remainder of the term of the original agreement. Annual UK sales of Beck's are around the 60m litre mark.

"We firmly believe that Beck's, one of our flagship brands, will enhance InBev's portfolio of brands in the UK and will further strengthen our position in this key market for InBev," said Stewart Gilliland, InBev manager for western Europe.

InBev said the deal would contribute to earnings from 2006, while S&N said that the new arrangement will be earnings enhancing, particularly in the early years.

According to S&N the first three years of the agreement will see a £6m surplus per annum over and above the lost income. The company says this will be invested in incremental advertising and promotion.

S&N added the deal would allow its UK operation to "follow its stated strategy of increasing focus and marketing investment on the key brands of Foster's, Kronenburg 1664, John Smith's and Strongbow".