Baltic beers bring good cheer to S&N.

Regional brewer Scottish & Newcastle is toasting a sparkling performance at its Eastern European joint venture operation.

Beer volume sales at Baltic Beverages Holding (BBH), which S&N owns on a 50-50 basis with Danish brewer Carlsberg, increased by 23.1pc in the fourth quarter on the back of strong demand.

BBH, whose key asset is a majority stake in Russia's biggest brewer Baltika, said its fourth-quarter performance was strong, it remained confident in its prospects and was well placed for further growth.

The brewer said the Russian beer market grew by 11pc in 2004 with BBH's annual Russian sales growing 15pc by volume and overall sales increasing by 18pc.

The company said: "In our other markets, we expect continued good progress in the Baltics and Kazakhstan, but we are cautious for the prospects for Ukraine in 2005 following a difficult period over the last couple of years."

BBH lost some share of the Russian market in the first half of 2004, but stronger second-half sales pushed its share to 34.2pc for the year, up by 1.2pc on 2003.

S&N, which acquired its stake in BBH after it bought Finnish-based brewer Hartwall in 2002, will receive a 50m euro (pounds 34.3m) dividend from the company.