Smoke ban will cost S&N '£10m in profit'

Brewer Scottish & Newcastle has forecast that the smoking ban will cost it £10m in profit as the on-trade beer market declines by 5% in 2007.

That on-trade decline will only be partially offset by increased business in the off-trade, said the company. "The smoking ban will have a negative impact on UK market volumes. Our current projection is that the UK on-trade market will decline by about 5% during the course of 2007, of which 2.5% is the six-month impact of the ban."

The brewer's comments on the effect of the smoking ban in the UK came as it reported an increase in its share of the UK beer market. Its main beer brands, Foster's, Kronenbourg 1664 and John Smith's, "gained share without sacrificing unit prices".

S&N also indicated it had enjoyed "strong volume growth in cider", where it is a "clear market leader". It said: "While we have lost some volume share at the low-value end of the portfolio following our complete withdrawal from extra-fill, we have seen strong growth at the premium end, driving positive mix for us, as well as the sector."

On the smoking ban, it added: "This development will reinforce the importance of ongoing investment in new product development and application of lessons learned from Ireland and Scotland. Given our track record, we are well positioned to support the trade as they work to manage this change."

Chief executive Tony Froggatt said: "Across the group we achieved branded sales growth of 8.9%. In the UK, our four lead brands achieved share growth in their respective segments." Revenue was up 7.0% at £4.16bn and profit before tax rose 13.9% to £452m for the 12 months to 31 December 2006.