Scottish & Newcastle Calls Time

Submitted by edg on Mon, 28 Jan '08 8.28am

Britain's biggest brewer Scottish & Newcastle, which has its international head office in Edinburgh, is to be taken over by foreign rivals Carlsberg and Heineken. The £7.8 billion deal, agreed by brewery bosses on Friday, throws into question the future for some 1,000 S&N employees, in particular, around 100 who work at S&N's international head office at St. Andrew Square.

S&N traces its roots back to 1749, when the William Younger Brewery was established in Leith, brewing beer for thirsty workers who were building Edinburgh's New Town. The business continued to grow over the years, with landmarks in 1856, when William McEwan established his Fountain Brewery in the village of Fountainbridge and, in 1931, the amalgamation of William Younger and William McEwan into Scottish Brewers.

Scottish Brewers and Newcastle Breweries merged in 1961 to form Scottish & Newcastle.

In recent decades the company has spread its reach through international acquisitions to countries as diverse as France, Finland, China, India, Russia, USA, and Kazakhstan, among others.

However, in the city of Edinburgh there has been a steady decline in the company's home-grown brewing activities from around 40 breweries in the 1800s to just one today, the Caledonian Brewery, in Edinburgh's Slateford area.

The ending of an era was most memorably marked with the closure by S&N's Scottish Courage
division of the iconic Fountain Brewery in 2004.
In a linked transaction, Scottish Courage acquired the smaller Caledonian Brewery.

We're here for the beer

With S&N absorbed into their company, the super-brewers stand to benefit from the economies of scale at a time of inflating prices in grain markets, rising alcohol duties, and uncertainty about non-smoking laws on pub business.

Costs will be cut. Jobs too, probably. Real ale drinkers fear that some of S&N's smaller, traditional brands are also threatened.

Mike Benner, Chief Executive of the Campaign For Real Ale (CAMRA), believes the deal is bad for the industry as a whole.

“The relentless obsession with pushing global lager brands is a failing
strategy in the UK beer market and this is fueling consolidation and hitting profits hard. The inevitable result of
consolidation is brewery closures, brand losses and less choice for Britain's consumers,” says Benner.

“The lager-led approach of the global brewers has been flawed for years and consumers demand
choice, quality and provenance. Fortunately the increasing number of small and independent real ale breweries in the UK are
rising up to fill the void in the market where demand for local and regional beer continues to grow.”

CAMRA is concerned about WaverleyTBS, a major
distributor of real ales; the contract brewing of Theakston's Best
Bitter; and the partnership with the Caledonian Brewing Company, which
makes the ubiquitious (in Edinburgh, at least) Caley 80 and
award-winning Deuchars IPA, among others. S&N owns 30% of Caledonian's brands.

S&N's main real ale brand is John Smith's cask and it brews Theakston's Best Bitter on behalf of T&R Theakston.

The take-over is expected to be completed in the second quarter of 2008,
subject to approval by competition authorities and shareholders.