S&N plots cost-cutting defence
Scottish & Newcastle (S&N) has agreed to outsource 3m hectolitres of on-trade brewing to Coors.
The brewer, which has been at the centre of two unsuccessful takeover bids from rivals Carlsberg and Heineken, said the move would realise "significant cost savings".
It is one of four announcements relevant to the UK market made by the brewer this morning as it fights to remain independent.
S&N is also to build a new cider mill in Herefordshire which will see production increase by 25% or 1m hectolitres. It has entered into a joint agreement with Herefordshire-based Q-Group to construct the new mill. The new company will be supported with an initial ten-year contract from S&N.
Thirdly, S&N is consulting over the closure of its bottling plant at its Berkshire brewery as the line is "under-utilised". Bottling would move to its Tadcaster facility.
Cost savings linked to these changes are estimated at £20m.
Finally, the company has launched a new joint venture, Heritage Drinks Ltd, to support its heritage ale brands and second tier cider brands.
The brewer also confirmed the sale of its French wholesale business for £85m and confirmed its rejection of Carlsberg and Heineken's 750p a share offer for the company.
It will continue to seek an alternative partner to Carlsberg in Baltic Beverage Holdings.
"The value driven asset management approach to managing the business has proved its worth in the UK where S&N is the leader in one of the most competitive and valuable beer markets in the world - and where we have leveraged a 26% beer market share to grow our share of the UK major brewers profit pool from 46% to 60% in the last three years," said chief executive John Dunsmore.
"I believe that this entrepreneurial model can be extended to deliver further success in our other European markets.
"In addition, S&N's portfolio of brands is a unique selling proposition in world beer, and is also particularly well adapted to growing partnerships in developing markets."
