S&N consolidates Tyneside brewing
to close its Tyne Brewery in Newcastle and acquire Federation
Brewery from Northern Clubs Federation Brewery (NCFB). Both plants
have been operating below industry efficiency levels, the groups
claim, and the reorganisation will allow the company to focus on
its key brands, writes Danny Vincent.
S&N said that it will close its Tyne Brewery at Newcastle by the spring of 2005. The company said that the plant's low capacity, coupled with the competitive climate of the UK beer market, meant that the brewery was no longer commercially viable.
John Dunsmore, chairman and managing director of the group, explained: "The economic reality of the UK beer market is such that Tyneside can no longer sustain two significant brewing operations, both of which are operating well below capacity."
S&N said it will acquire NCFB's Dunston brewery for £7.2 million and consolidate its beer production into the Dunston site. It has been reported that S&N has made a bid for the remaining assets of the financially struggling company.
"We welcome this deal with Scottish Courage [the English arm of S&N]," said NCFB chairman, Jon Copponger. "Because of our uncertain financial outlook, we carried out a strategic review of our business, which highlighted the need for us to secure more work for the brewery in order to fill our spare capacity. While the end of our independence is a sad day, I am delighted that we have a purchaser who will help us to realise our goals",he added.
The group said that the transfer of Newcastle Ales from Tyne to Dunston will commence later in 2004. The new brewing business will employ 170 people, which will mean that 110 jobs will be lost at the Tyne Brewery. The company said that it was relying on voluntary redundancies in the plant to make the job cuts.
Scottish and Newcastle said the move will leave the company in a better competitive position. By taking these measures, the group claims, it will be able to invest in key-brands and improve the long-term competitiveness and success of the business in the UK.
The group said that the production of its world-famous brand Newcastle Brown Ale would remain on Tyneside, while the production of other Scottish Courage brands would transfer to Tadcaster. Scottish and Newcastle would have to apply for the revocation of the drink's Protective Geographic Indicator (PGI) in order to move Newcastle Brown Ale production to Dunston. The PGI was enforced in 1996 to prevent the imitation of the brand.
The Dunston Brewery has in fact been kegging all ales brewed at Tyne since November 2003. Brands such as Newcastle Exhibition, McEwan.s Best Scotch and Newcastle Brown Ale will join Federation ale and larger brands, which include LCL Pils, Federation Special Ale and Northumbrian Smooth.
