S&N calls time on brewery in bid to address 'over-capacity'

Published on Wednesday 13 February 2008 09:10

SCOTTISH & Newcastle has continued its brewery closure strategy with plans to axe its beermaking facility in Reading within two years.

The Edinburgh-headquartered maker of Fosters, Kronenbourg and Newcastle Brown said the move would help address what it described as a "general over-capacity" in the UK brewing sector, while also helping trim costs by around 13 million a year at a one-off cost of 22m.

However, unions reacted angrily to the announcement of the closure of the Courage brewery, which threatens 362 jobs.

Union officials also accused Edinburgh's 25th-biggest employer – which has agreed a 7.8 billion takeover by Carlsberg and Heineken – of axing the brewery to head off a union campaign aimed at halting an outsourcing agreement.

But S&N insisted that shutting the brewery was the "most viable option going forward".

The blow came as Dutch beermaker Grolsch warned the British market was in sharp decline.

Stephen Glancey, S&N's group operations director, said: "The nature of the Reading site, the amount of investment required to make it competitive and its relative cost compared to other UK facilities means that there is a strong business case for closure.

"We will, of course, do all we can to mitigate the effects of the closure on the people affected."

The group, which will still employ around 3000 staff in the UK after the move, also said that the plans had been shared with the Heineken and Carlsberg consortium as part of the takeover.

Britain's biggest brewer has in recent years closed breweries in Edinburgh and Newcastle in its cost-cutting drive. But the unions are furious that Reading has been hit again just four months after S&N decided to close a bottling plant at the site, costing 250 jobs.

The beermaker said it would start talks with unions over the coming days.

"S&N will work closely with local agencies to ensure that the impact on the local economy and community is minimised," the group said.

It plans to transfer brewing and packaging operations at Reading, which produces mainly Foster's and Kronenbourg 1664, to other existing sites including Tadcaster in North Yorkshire, the Royal Brewery in Manchester and Dunston in Gateshead.

Around 15m would be spent upgrading facilities at sites taking on work from Reading.

Iain MacLean, national officer of union Unite, said: "There seems to be absolutely no rational reason for closing this brewery. At this point we cannot rule out industrial action."

He insisted S&N had offered no "rational business case" for the closure. "We believe that the decision was a pre-emptive strike to prevent the union from campaigning to persuade the new owner, Heineken, to end the outsourcing agreement with Coors," Mr MacLean added.

Iain Loe, research and information manager at the Campaign for Real Ale, said the closure was "the end of an era".