S&N to close Dunston brewery

Scottish & Newcastle has announced its intention to close its Dunston brewing operations in Gateshead, by mid 2010.

The company proposes to transfer the current brewing operations at Dunston to the historic John Smith's Brewery in Tadcaster. These proposals will affect 63 employees on the site, where the company will continue its consultation process and offer full support to all those affected.

The Dunston brewery was acquired by S&N in 2004, with the purchase of the assets of the Northern Clubs Federation Brewery. All beer production - including Newcastle Brown Ale - transferred to Dunston from the former Tyne brewery when it finally closed in 2005.

At the time of the acquisition, it was hoped that the amalgamation of the two sites would provide a sustainable, long term future for Dunston, but a significant downturn in the economy and the UK beer market has resulted in a surplus in brewing capacity in the industry.

S&N has carried out a detailed review of all its brewing sites and concluded that, for Dunston, closure is the most viable option going forward. As part of the review, the company is proposing changes on other production sites, including Hereford, Tadcaster and Royal Brewery in Manchester.

If fully implemented, the net effect of these network changes would result in significant savings from S&N's cost base, which will help the company to remain competitive within the UK market.

Every effort will be made to seek alternative employment for those affected including outplacement support, re-training and/or redeployment where suitable alternative employment exists. S&N will seek opportunities to work with local agencies to ensure that the impact of the closure on the local economy and community is minimised.

Paul Hoffman, S&N Operations Director, commented: "Clearly this is a sad day, but the proposal to close Dunston is not a decision we have taken lightly. Nor is it a reflection on the employees at the site who have done an excellent job over the last few years in a very challenging market.

"Falling beer sales have created general over capacity in the UK brewing sector; and rising input costs have put unprecedented pressure on our business. These proposals we are announcing today are designed to address these challenges and to ensure that we remain competitive in the future. The Dunston site is currently running at around 60% capacity and our ability to consolidate beer production onto other sites presents a strong case for closure.

"We will, of course, do all we can to mitigate the effects of the closure on the people affected over the coming months."

Briefings with affected employees began this morning and talks with union representatives will continue over the next few days. In the meantime, it remains business as usual at the site.

Further updates will be issued as the consultation process progresses.