Heineken to control S&N
The dust has settled on the Carlsberg and Heineken takeover of Scottish & Newcastle and the picture becomes clear. S&N's British business will not be divided between the Danes and the Dutch but will be wholly controlled by Heineken. This means the Dutch group will be in competition with Carlsberg in the British market and Tetley brands will not be moved to John Smith's brewery in Tadcaster. However, the long-term future of Tetley must be in doubt as it has to vacate its Leeds city centre site.
Heineken is delighted by its stake in Britain. The Dutch group at present accounts for only 1% of the British market but this will grow considerably as a result of the takeover. The chief executive of Heineken, Jean-Francois van Boxmeer, will sell both Heineken and Kronenbourg in Britain (as well as Foster's) and believes there is growth in the British lager market. Most observers -- including this writer -- think this is ill-conceived. The demand for premium lagers produced by global brewers is in sharp decline. Van Boxmeer is viewing the British lager sector through the prism of his imported Heineken, which is doing well in Britain but only because it replaced the risible 3.5% version brewed under licence here for decades.
Van Boxmeer is excited by the potential of the cider sector -- he will own Bulmer's -- but after an explosion of sales in recent years there are signs that demand for Bulmer's and Magner's "over ice" is beginning to slow.
There are still many questions hanging over the deal. All the John Smith's Bitter brewed at Tadcaster is keg. The cask version is now contract brewed. Will Heineken have any interest in cask beer, of which it has no experience? The knock-on from this is the future of S&N distribution company, Waverley TBS, which is a major wholesaler of cask beers. Without the company, many smaller cask beer brewers would find it hard to get their beers to market.
Heineken will now pick up S&N's 30% stake in the Caledonian Brewing Company in Edinburgh, which makes the successful cask beer Deuchars IPA. Already, there are City rumours that Heineken will off-load its ale brands, including John Smith's, which might be of interest to Greene King and Marstons. The situation will be of concern to Theakston's in North Yorkshire: its Best Bitter is brewed by John Smith's.
The big winner in the takeover is Carlsberg. It now owns the Kronenbourg end of the business in France, where the lager is the biggest brand in the market, and is now the sole owner of Baltic Beverages Holding, the biggest brewer in Russia and the Baltic States.