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Britain's biggest brewer Scottish & Newcastle Plc is merging its two UK supply arms Waverley and the Beer Seller to create the nation's biggest drinks wholesaler, leading to cost savings and job cuts, Reuters revealed on March 25. The brewer of Kronenbourg, Foster's and John Smith's beers said on March 25 the merger would create a 450 million pound ($818 million) annual turnover business and would yield cost savings of at least five million pounds per year by 2006.

S&N's original wine-led Waverley business will merge with the Beer Seller, which S&N acquired with the purchase of cider company Bulmers in mid-2003, to create a wholesaler of beer, cider, wines, spirits and soft drinks. The merger benefits are included in the brewer's overall plan to cut its UK supply cost base by one-quarter, or 45 million pounds. After a number of costly delays, the target date for this restructuring had to be pushed out to 2006.

John Dunsmore, managing director of UK beer unit Scottish Courage, said he was determined to put the streamlining of this supply line back on track now that he had a different management team in place, adding it was in line to meet the cost target. "We believe we will get the 45 million pound cost savings on time without closing another brewery," he said in an interview.

Last month, the brewer announced the closure of its Edinburgh brewery by the end of 2004 to save 10 million pounds a year by 2005, but there was speculation one of its four English breweries, such as Newcastle in northeast England, may close.

The new business, to be called Waverley TBS, will merge the Waverley business, which owns the Moondarra range of Australian wines, with the Beer Seller, which focuses on San Miguel beer and traditional UK cask beers such as Fuller's and local brews.

It will leapfrog above Matthew Clark, owned by Constellation Brands, to become Britain's largest drinks wholesaler to on-trade outlets such as pubs, clubs and hotels.

The merger is expected to lead to revenue enhancement of at least five million pounds a year, while job cuts are seen as inevitable with around 100 jobs going out of a combined workforce of 1,500, industry sources added. The new head of the merged business will be Beer Seller chief and former French rugby international Jeff Jamet, while Waverley head Simon Brown will return to S&N's beer business.


26 March, 2004