SCOTTISH & Newcastle's most upmarket competitor in Scotland has defended its rival's recently-announced decision to pass on "substantial" price rises to its customers in 2008.
Miller Brands UK, part of the SABMiller brewing empire, also said it was "right" for top-of-the-range lagers and beers to maintain "premium pricing" despite increasing consumer gloom.
Gary Whitlie, group managing director of MBUK, which brews Pero
ni, Miller Genuine Draft and Pilsner Urquell in this country – all of which sell at premium prices – said: "S&N has made this announcement, but it is an industry-wide issue.
"They have absorbed the pain (of rising input costs] and the industry now, understandably, wants to pass some of it on."
John Dunsmore, S&N's outgoing boss following the Scottish brewer's expected takeover by Heineken and Carlsberg next month, recently signalled price rises of 2-3 per cent this year.
This follows a near-9 per cent jump in S&N's input costs in 2007, mainly stemming from increased malt and apple costs.
If the takeover of S&N goes through as expected, Heineken will take over its UK brewing operations, becoming overnight the biggest brewer in Britain, with brands such as Bulmers cider, Kronenbourg lager and John Smith's bitter.
Whitlie said any S&N-Heineken repricing upwards would not affect the strategy of MBUK, which set up for business in manufacturing higher-priced lagers the UK in the summer of 2005. He argued Heineken was more likely to target beers such as Kronenbourg and Stella Artois, owned by AmBev. He added: "We play in a (pricing] niche above that. Peroni, for instance, costs on average 40p more a pint than Stella or Kronenbourg.
"We may even get some advantage from S&N's likely takeover … for instance, there can be difficulty in getting as rapid decision-making (when management] is focused on integration issues."
Whitlie's firmness on pricing in a consumer downturn came despite the fact that the drinks industry is seen as being under intense pressure. The British Beer and Pub Association said beer volumes in the UK fell 3 per cent last year. He conceded: "Last year the weather was horrible. Summer didn't happen and that masked the impact of the smoking ban. But this year, it is an uncertain rather than guaranteed bad environment.
"If what comes to pass is a bad economic environment, with people tightening their belts, we won't be immune. Nobody will escape the pain. But premium-priced drinks will still benefit from the long-term trend that people want to treat themselves across a variety of fast-moving consumer goods, including drink. They just might do it a bit less."
He cited the fact that MBUK, which sells about 50 million litres of its three premium brands a year, saw its highest-priced drink, Peroni, increase volumes 30 per cent last year. It is drunk mainly in the on-trade.
The full article contains 491 words and appears in The Scotsman newspaper.
