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UK, Newcastle: Scottish Courage, the UK’s leading brewer, announced on April 22 the closure of the Tyne Brewery in Newcastle and the acquisition of Federation Brewery from Northern Clubs Federation Brewery (NCFB). Scottish Courage will combine the two brewing operations at the NCFB site, two miles away at Dunston. Scottish Courage has also today made an offer to acquire the remaining assets of NCFB.

John Dunsmore, Chairman and Managing Director of Scottish Courage, commented: “Both breweries have been operating below industry standards of capacity and efficiency. By joining forces, Scottish Courage and The Federation are able to preserve a home on Tyneside for the continuation of two long and enduring brewing traditions.”

Scottish Courage intends to close the Tyne Brewery at Newcastle with effect from Spring 2005. Tyne Brewery’s low capacity utilisation and City centre location mean that continued production from the site is no longer commercially viable. As market leader in the UK, Scottish Courage needs to reduce excess capacity and improve the company’s efficiency and competitive position. By taking these measures, Scottish Courage will be able to increase investment in key brands to improve the long-term competitiveness and success of the business in the UK.

The new combined brewing business at the Dunston site will employ 170 people. There are currently 150 brewing employees at Tyne and 130 brewing employees at The Federation. Scottish Courage will seek volunteers for redundancy from both sets of employees. It is hoped that the required number of job reductions can be achieved through voluntary means. Brewing employees at both sites will be fully supported through this change and Scottish Courage will enter into full consultation with unions and employee representatives from April 22.

Production of the Newcastle ale brands, including the world-famous Newcastle Brown Ale, will remain on Tyneside, while production of other Scottish Courage brands will transfer to Tadcaster.

Scottish Courage has today acquired the brewing assets of the Northern Clubs Federation Brewery (NCFB) situated in Dunston, two miles from the Tyne brewery. The Dunston Brewery, built in 1979, is a modern plant, which has the facilities to brew both lager and ale, extensive packaging capabilities and greater opportunity for development. The combined volumes of Federation and Newcastle ales will ensure that the brewery will operate more efficiently and close to full capacity.

John Coppinger, Chairman of NCFB commented: “We welcome this deal with Scottish Courage. Because of our uncertain financial outlook we carried out a strategic review of our business. It 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, in Scottish Courage, I am delighted that we have a purchaser who will help us to realise our goals and together, secure the future for the brewery.

“The Brewery’s Committee of Management is unanimous in recommending this deal to our member clubs. It provides an excellent solution to our pensions deficit and debt as well as a cash injection to members.”

The transfer of Newcastle ales from Tyne to Dunston will commence later in 2004 and is expected to complete during the Spring of 2005. The Dunston Brewery has 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 the famous Federation ale and lager brands, which include LCL Pils, Federation Special Ale and Northumbrian Smooth.

In order to facilitate the transfer of brewing of Newcastle Brown Ale from Tyne to Dunston, a distance of less than 2 miles, Scottish Courage will apply for the revocation of Newcastle Brown Ale’s Protective Geographic Indicator (PGI). The PGI, which was initiated by S&N and has been in force since 1996, relates to the production of Newcastle Brown Ale at the Tyne Brewery. Newcastle Brown Ale remains fully protected by its trademarks, owned by Scottish Courage, which prevents any imitation of this unique beer brand.

In addition to the agreed acquisition of Federation Brewery, Scottish Courage has today made a separate offer to acquire the brands, wholesale business, loan book, tied estate and distribution assets of NCFB. This offer is fully supported by the NCFB Board but is subject to members’ approval.

John Dunsmore, Chairman and Managing Director of Scottish Courage Ltd, commented: “The closure of the Tyne brewery with associated job losses is a difficult decision and one that we have taken only after careful consideration of all the options. Our decision is in no way a reflection of the high level of commitment and dedication of our colleagues at Tyne and we will support affected colleagues fully over the coming months.

“However, 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.

“The purchase of the Dunston brewery and the offer to purchase the remaining Northern Clubs Federation Brewery assets will secure an efficient and cost effective manufacturing site for the continued brewing of famous Newcastle and Federation ales on Tyneside. Both breweries have been operating below industry standards of efficiency. By joining forces, Scottish Courage and NCFB are able to preserve a home on Tyneside for the continuation of two long and enduring brewing traditions.”

Over the last six months, Scottish Courage has announced other major business initiatives: March 04 Waverley / The Beer Seller merger; February 04 Fountain Brewery closure, Edinburgh; January 04 New technical services venture with Carlsberg UK; December 03 New packaging facility at Tadcaster Brewery; November 03 Theakston Brewery sale.

In addition there has been a dramatic improvement in the service and cost levels achieved within Scottish Courage’s distribution activities through a process of continuous improvement, as announced in January 2004.

Scottish Courage is the UK operation of Scottish & Newcastle plc. S&N is one of Europe’s leading brewers with strong positions in 14 countries, including leadership in three of Europe’s top six markets, Russia, the UK and France. Scottish Courage is the leading brewer in the UK with a 27% market share. The company supplies licensed pubs, clubs, restaurants & hotels and the take-home market. Following its acquisition by S&N in 2003, the Bulmer cider business including the UK’s leading cider brand, Strongbow, has been added to Scottish Courage’s business.

Scottish Courage markets an extensive portfolio of famous brand names including Foster’s, John Smith’s, Kronenbourg 1664, Strongbow, McEwan’s, Courage, Newcastle Brown Ale, Miller and Beck’s.

Federation brewery was established at the end of the First World War as a co-operative of the Northern Working Men clubs and Army clubs. Initially the Brewery was located in close proximity to Tyne’s current site in Newcastle but in 1979 a new facility was built across the Tyne in Dunston. As a co-operative the business is owned by the Northern Clubs Federation and the business is managed on their behalf by a small executive team. The committee (Board of Management) has a large non-executive directorship, made up of senior club personnel and they play a significant role in the day-to-day management of the business. There are three components to the business: the brewery, wholesale business and a small tied estate of 36 mainly tenanted pubs.

Newcastle Brown Ale, the 'One and Only' is exported to 40 countries worldwide. The brand's biggest markets are the UK and the USA. In the UK, Newcastle Brown is the biggest selling premium bottled ale and in the US, the brand is one of the fastest growing imported beers with annual growth in excess of 12%.


23 April, 2004