SABMiller's Snow lager, which it sells through a joint venture in China, is set to become the world's second largest beer brand by volume before the end of the year.

More Snow lager is now sold in China than in the whole of the French, Spain and Portugese lager markets combined, the brewing giant revealed today as it reported pre-tax profits up 14 per cent to $1.6 billion in the first half of the year.

Extremely strong growth in the emerging lager markets of China, where volumes are up 22 per cent, and India, up 29 per cent, has helped the maker of Miller Lite and Peroni in the first half of the year. However, the company gave warning that it was operating in a challenging environment with rising costs for glass, grain, aluminium and energy.

The brewer, which has admitted that it is keeping an eye on the bid battle for Scottish & Newcastle, said that investment in product development, marketing and productivity gains had helped it offset rising input costs.

The group has seen a strong performance from its European business, with earnings growth of 17 per cent, and a much-hoped for return to growth in its Miller Lite brand that will help improve the company's confidence on the world stage.

“We have delivered another excellent performance in Europe, a pleasing return to growth in North America, and our Asian businesses have continued their momentum and made market share gains,” Graham Mackay, chief executive, said in a statement.

“We are continuing to invest in our businesses to drive revenues, which, together with ongoing productivity gains, are offsetting industry wide cost pressures. We expect to make progress in the balance of the year but face a more challenging environment,” he said.

Group lager volumes rose by 15 per cent to 135 million hectolitres, with organic growth of 11 per cent.

The company raised its interim dividend by 14 per cent to 16 cents a share.

In the UK, where brewers are battling to take market share from a collapsing Stella Artois brand, SAB Miller has seen its volumes grow by 42 per cent, in a market where overall volumes are declining.

"The well-documented decline of Stella is creating a vacuum, but no single brand is taking its place. Instead, we are seeing a propensity for customers to try a whole range of world beers. We have a Peruvian beer that is selling very well in London," a spokesman for the company said.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax