Protz: S&N - the global microcosm

Beer expert Roger Protz considers the consequences of Carlsberg & Heineken's bid for S&N

Back in the 1980s, a South American writer compared the Falklands War to "two bald men fighting over a comb".

The same striking image comes to mind as Carlsberg and Heineken battle for control of Scottish and Newcastle.

Seen through the narrow prism of the British beer market, you wonder why the Danish and Dutch brewers would want to touch S&N with the proverbial barge pole.

Are such brands as Foster's, Kronenbourg, John Smith's and Newcastle Brown doing well?

No, they are suffering from the problem of consumer fatigue with global brands that has had a major impact on sales for all the giant brewers operating in Britain.

If the Carlsberg/Heineken bid is successful, it seems the Danes plan to run S&N's Kronenbourg business in France, while the Dutch will concentrate on the British end.

That is odd - Carlsberg has brewed in Britain for years and knows the market well.

Heineken, on the other hand, is a recent arrival. It was one of the first lager beers to be brewed in Britain but this was done for decades on a contract basis by Whitbread until the Dutch company ended the arrangement and began to import genuine Heineken beer from the Netherlands a few years ago.

Its experience of the British beer market is very limited and does not bode well for the S&N breweries and brands.

But as the declared aim of Carlsberg and Heineken is to break up S&N, it may not matter much which company is in control of the British part of the business.

S&N deserves little sympathy for the plight in which it finds itself.

It has made a complete pig's ear of its British operation. In spite of its name, it no longer has breweries in either Scotland or Newcastle.

Kronenbourg was too late an entrant into the crowded premium-lager sector to make great inroads. Foster's has lost its Aussie sparkle, while the nitro-keg version of John Smith's Bitter plods along and no longer receives any great promotional support.

Even Newcastle Brown, once the giant of the bottled-beer sector, has been downgraded to such an extent that the packaged versions of Greene King's Old Speckled Hen and Wells Bombardier are breathing down its neck.

Clear-out

There will be a big clear-out if Heineken is in charge. It is unlikely that all the current S&N plants in Reading, Manchester, Tadcaster and Gateshead will survive.

And could Tetley live under the same roof as John Smith's? As the Leeds brewery has to move from its city-centre site, new owners could decide to pull the plug on the entire Tetley brewing operation.

Let us hope the company could be offered for sale, as it would a tragedy if we lost the cask versions of the Tetley beers.

But the battle for control of S&N has never been about its British brands and breweries. S&N, in a consortium with Carlsberg, is a major player in Russia and the East. Their joint company, Baltic Beverages Holding (BBH), owns the Baltika breweries in Russia and the Baltic States, where it is far and away the biggest player.

Battle for the East

While beer sales decline in western Europe, they are positively booming in post-Soviet countries. S&N's relations with Carlsberg in BBH have been rocky for some time and the Danes would be happier to work with Heineken.

The Dutch have been slow to take advantage of the Russian market. The company recently bought a large St Petersburg brewery but can see the advantages of working alongside Carlsberg in BBH, whose Baltika brands dominate the market.

The long, protracted struggle for control of S&N leaves a nasty taste. It has nothing do with consumers' interests and new owners will close breweries and axe brands if the mood takes them.

It is all about global market domination. Late Tory prime minister Ted Heath once described activities of the giant Anglo-African firm Lonrho as "the unpleasant and unacceptable face of capitalism".

The same words more than adequately sum up the battle to own and asset-strip S&N.