The Fountainbridge site is set to close in December this year and in a statement released today the company has said that there a number of factors that have led to the decision.
The factory's high fixed operating costs, low capacity utilisation and its location in the city centre has lead the group to believe that the site is no longer commercially viable.
The company has said that it will enter full consultations with unions and employee representatives and will offer retraining and relocation opportunities as well as redundancy compensation for those employees that could lose their jobs.
It is predicted that 170 from the 200 employees will be made redundant as a result of the site closure. The plant can produce 1.9 million hectolitres per annum and the main brands it produces at the Scottish plant include Younger's Tartan Special, McEwan's Lager and Younger's Light Ale. Proportionally, the site has the lowest production capacity per employee compared with the company's other sites.
John Dunsmore, chairman and managing director of Scottish Courage said: "As part of the ongoing review of the UK business, we investigated a range of options to allow us to keep the Fountainbridge Brewery open. Unfortunately, none of these options proved viable and it is with regret that we announce our intention to close the brewery at the end of this year."
The Scottish based site, which the company takes half of its name from will be replaced by Caledonian Brewery in Edinburgh. S&N has announced that it will acquire the brewery for the production of ale, while larger production will be transferred to other Scottish Courage breweries in the UK.
The company is to take a stake in the Calonian Brewing Company. The partnership will provide Caledonian beers with routes to wider markets whilst maintaining their independence. It is anticipated that Caledonian Brewery's existing employees will transfer to the new company.
"The acquisition of the Caledonian brewry site and its enlarged future as a dedicated Scottish ale brewery is good news for McEwan's and Caledonian," said Dunsmore.
"It will enable the Caledonian Brewing Company to concentrate on developing the huge market potential. Scottish Courage's distribution power will help our ales to enter new markets in the off-trade and internationally," said Stephen Crawley, managing director of Caledonian Brewery.
S&N is the largest beer producer in the UK and has a 27 per cent share on the market. The Fountainbridge Brewery was set up in 1856. It is the first time in the company's history that it will not have a Scottish plant. It is predicted that the company could make up to £60 million with the plant closure. Edinburgh Central MP Alistair Darling said he would be pressing company chief today for answers.