Pierce Brosnan`s Bond unable to save Portuguese beer company

When Pierce Brosnan appeared on television screens at Scottish & Newcastle's annual meeting in Edinburgh last month, investors were a little confused.

Brosnan, the Irish actor who has played 007 in four James Bond films, is the star of S&N's new advertisement for its Portuguese beer, Sagres Bohemia.

"I'm sure you'll recognise the Sagres man," Tony Froggatt, S&N's chief executive, told the meeting. But some shareholders did not. "Some of us have no idea who this chap is," one elderly investor complained - reports The Australian.

The lack of familiarity by some of S&N's investor base with the most recent incarnation of 007 is one of the hurdles faced by Froggatt, a former spirits industry executive, as he tries to adapt the 257-year-old brewer to the modern world.

It also illustrates why S&N is under pressure as traditional customers change drinks and leave it vulnerable to being swallowed up.

The question of when S&N will participate in a merger or succumb to a takeover is perhaps the one most frequently posed to Froggatt.

The company's open share register and medium size - it has a market capitalisation of pound stg. 4.7 billion ($11.3 billion) - makes it a prime takeover target.

"I know there's a lot of conjecture about whether we're up for sale, it's being going on ever since I've been here."

A deal with "a larger partner" will be considered, as long as it creates value for shareholders, Froggatt says.

SABMiller is among the brewers that has looked at S&N in the past. Analysts believe that S&N could also merge with Carlsberg, if it could come to some kind of deal with the Carlsberg Foundation, which controls the Danish brewer.

"We get along with Carlsberg, I'd say we're very friendly with their management. But at the end of the day, it comes down to practicalities and whether or not it makes sense strategically and financially."

Mr Froggatt admits that, inevitably, S&N is likely to look quite different in 10 years' time.

"The way the (industry) dynamics are going, we will be in a changed format," he says.

S&N, like many other brewers, has lagged behind its peers in the spirits industry in marketing and innovation. While spirits companies have been gaining drinkers in the US and western Europe, brewers have been losing them.

Last year, the British beer market declined 2 per cent.

An Australian who joined the Scottish brewer as chief executive three years ago, Froggatt is blunt about the issues confronting S&N. "We've got to be bloody good about being brand marketers."

His passion for marketing is very much in evidence at S&N's new headquarters at St Andrews Square. Meeting rooms are themed - there is the Foster's Room and the Kronenbourg Room - and glossy photographs of the brands hang on office walls.

"I want more, to the point of being gauche," he says.

Froggatt admires Reckitt Benckiser, the Anglo-Dutch company that has found a profitable niche in household cleaning products.

"They're a prime example to me of a company that's really built itself up through brand building," he says. "I'd like to think that if we were half as successful as them, I'd be very happy."

Froggatt, 57, always wanted an international life. He studied law at London's Queen Mary College, which he found great for "discipline and logical thinking", but decided he was not cut out to become a barrister.

So he went to New York and did an MBA at Columbia University, specialising in marketing.

His first job was with Gillette. "In those days it was very much an innovative company." This was followed by a stint at Heinz before he moved into the drinks industry by joining Australian liquor distributor Swift & Moore.

Froggatt's first chief executive role was with Cinzano Group Worldwide in the 1990s and he went on to hold executive positions at International Distillers & Vintners and, most recently, Seagram.

S&N has been trying to be more innovative, launching "super-chilled" versions of its Foster's beer taps, a concept that it is also taking outside Britain.

It has noted the success that C&C Group has had with the Magners cider brand in Britain and last year released an extension to Strongbow cider, Sirrus.

Up until the 1990s, S&N was a regional brewer, owning brands like Tartan Special and Newcastle Brown. Its history dates back to 1749, when the William Younger Brewery was established in Leith.

It acquired the Foster's brand in Britain with the acquisition of Scottish Courage in 1995 and, in 2000, acquired Brasseries Kronenbourg with a series of international acquisitions and partnerships since. Froggatt says S&N must continue to face outwards in future.

"We're proud of our roots but at the end of the day if we're going to be able to compete successfully we've got to be seen as international," Froggatt says.

"We've also got to acknowledge the fact that in six years we've acquired or merged with a huge number of different companies with different cultural backgrounds, a different heritage and we've got to accept the fact that we've got to take advantage of those in different markets and not bury them under what was the original S&N heritage and culture."

In France, S&N operates through Kronenbourg Brasseries, which is the market leader.

"Scottish and Newcastle means nothing to the French consumer," Froggatt says. He says S&N can "do better" in France, where it lost market share last year. Still, S&N has not developed the kind of international exposure held by the leaders in the brewing industry, InBev and SABMiller, both of which have been aggressive in making large acquisitions in emerging markets in recent years.

In the meantime, Froggatt is setting aside any patriotic feelings he has towards Australia in the upcoming World Cup in the hope that a good performance by England will boost beer sales in Britain.

"I'm really fighting against myself to wish the English well."

Thanks to `Kyvan` for the alert.

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