Smiles moves brewing out of Bristol

The venture capital owner of Bristol brewer Smiles has outsourced beer production in a drive to keep the business profitable.

Close Venture Management, the VC arm of merchant bank Close Brothers, has made the move in order to focus resources on Smiles' two successful pubs in Bristol, including the historic Brewery Tap. However, the future looks grim for the neighbouring Colston Street brewery site.

Will Fraser-Allen, a director of Close Venture, said: "We have a very good brand and a very loyal customer base. The economics of brewing, especially in a city centre, is something that has caused problems for a succession of managements at Smiles."

Brewing of Smiles beers, including Original, Best and Bristol IPA, has been transferred to Highgate Brewery in Walsall. The beers will continue to be supplied to the brewery's network of free trade and pubco customers.

Close, which manages funds on behalf of investors who bought into Smiles in January, has split the business into two companies, one which supplies the beers and the other running the pubs.

Mr Fraser-Allen said the plan was for a microbrewery to be established at the Brewery Tap. "In the medium term, we'd want to return brewing to the Bristol area, but not at the city center site."

Smiles sold most of its pubs to London brewer Young's in 2002.