S&N succumbs to a giant takeover
succumbs to a giant takeover?
Scottish & Newcastle, the only remaining British-owned national brewer, has fallen to a takeover bid worth £7.8bn from a consortium of Carlsberg and Heineken. What is the future for the S&N breweries in Britain? The Danes and the Dutch said at the outset of their bid that they would breakup S&N's British operation, so the future is bleak for breweries in Gateshead, Manchester, Reading and Tadcaster. The fact that Carlsberg, which has long experience of the British beer market, has opted to run S&N's French Kronenbourg operation, does not augur well for the British breweries. They will be run by Heineken, which has never brewed in Britain. Its beer was brewed under contract by Whitbread and now all Heineken sold in Britain is imported from the Netherlands.
Surely not all the lager brands owned by S&N -- including Foster's, Kronenbourg and McEwan's -- can survive at a time when sales of premium lagers are in decline. Of particular interest will be the fate of the Tetley brewery in Leeds. Tetley will now join a group that includes John Smith's, which means Heineken will control the two leading British keg beer brands. As Tetley has to leave its Leeds city centre site it could mean either the end of the brands or the ignominy of being brewed at John Smith's in Tadcaster.
But the takeover was never really about the British market. S&N has been a major player in the rapidly expanding Russian and Baltic States markets. In a consortium with Carlsberg, it owns Baltic Beverages Holding (BBH), which produces the top-selling Baltika beers. Heineken has been slow to move into Russia, which is why it has been keen to force through the takeover in order to outst S&N from BBH.
The takeover is a victory for global brewing, with scant regard for the interests of consumers, who are likely to see a sharp fall in the number of beer brands brewed by S&N in Britain.
Of immediate concern will the future of two independents with strong links to S&N. Theakston's in Yorkshire was owned by S&N for many years but was sold back to the Theakston family in 2003. It has flourished since then but, due to lack of capacity, the brewery's main brand, Theakston Best Bitter, is brewed under licence at John Smith's plant in Tadcaster. If Heineken consolidates ale brewing and even moves Tetley brands to Tadcaster, Theakston may have to look for a new home.
In Scotland, while the Caledonian Brewing Company owns such brands as Deuchars IPA and Caledonian 80 Shilling, the buildings and plant in Slateford Road, Edinburgh, are owned by S&N. Heineken might be keen to cash in on the potential of a site on the road to Edinburgh airport. Caledonian also owns the Harviestoun brewery near Dollar and may need to expand that site if Slateford Road falls to property developers.