Scottish & Newcastle sees "encouraging" start to year

Scottish & Newcastle (S&N) has described the start to its current financial year as "encouraging", with its core UK beer brands outperforming a sluggish market.

Speaking at the group's annual general meeting yesterday, S&N chairman Brian Stewart said the group's brands and innovation "continue to be strong drivers for growth, with successes in individual markets now being applied to other countries".

The UK beer market had a slow start in the first quarter, Stewart said, with an upturn in March "due to favourable weather", he added.

"Our three main beer brands - Foster's, Kronenbourg 1664 and John Smith's - continue to outperform the market, taking share. However, the smoking ban in England, which starts in July, remains a challenge."

Stewart said the group's cider brands were performing well, with its Bulmers Original, Strongbow Sirrus and Jacques taking share of the 'over-ice' segment.

S&N remained committed to cutting £50m-worth of costs across both the UK and international businesses as outlined earlier this year, but Stewart warned the group was "not immune to cost pressures associated with input price inflation".

S&N's chief executive Tony Foggatt meanwhile dismissed talk of a rival bidding for the brewer. He said the group was not in talks with a potential bidder and that "background noise in the market was no distraction".

The group's shares leapt last month on rumours that rivals were eyeing up the brewer, while the Financial Times ​has recently reported that SABMiller and Diageo were in talks to mount a bid, the likelihood of which has divided City analysts.