City Comment: Hamish Champ

By Hamish Champ

- Last updated on GMT

Related tags: Competition commission, Supermarket, Asda, Alcoholic beverage

Recently the brewer had written to the Competition Commission - currently investigating the trading practices of the supermarket giants - to suggest...

Recently the brewer had written to the Competition Commission - currently investigating the trading practices of the supermarket giants - to suggest that the major food and drink retailers were selling its beer and cider products in a manner that was not exactly conducive to the ongoing battle to persuade Joe and Josephine Public to drink responsibly.

It all sounded pretty good stuff; major brewer gets stuck into the supermarkets over piling cases of lager high and selling them cheap. Record companies similarly harangued the likes of Asda and Sainsbury's a few years ago for what they saw as using CDs as loss-leaders and undermining the market, etc, ad nauseum.

But when pressed last week on whether it would impose sanctions on those supermarkets which persistently sold its products too cheaply, S&N backed off quicker than a competitor leading a 100m backwards-running race, the tone becoming significantly more appeasing. Highlighting S&N's own contribution to furthering responsible drinking the group's UK head cheese, John Dunsmore, said it was engaged in a "multi-pronged strategy" of which "price was only a part". S&N's chief executive Tony Froggatt chipped in, noting it "would be wrong to blame any one particular party" for the irresponsible drinking situation.

Wrong maybe, but surely S&N had just used its Competition Commission submission to make such a point. But what action can the brewer take, given that 40 per cent of the group's UK sales - and nearly as much as this in profits - comes from supermarkets? No mention was made of raising wholesale prices to discourage such loss-leading practices, but then it would have been surprising if there had.

Meanwhile, the City didn't exactly warm to S&N's results' revelation, with the shares heading south to the tune of 13.5 p (2.6 per cent) at the close. The feeling seems to be that while the brewer's Eastern Europe joint venture, BBH, was surging ahead, the more mature markets, such as the UK and France, need working on.

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