UK brewer sets out cost reduction plan

Takeover target Scottish & Newcastle unveiled plans for a leaner business today as the brewer wards off an unwanted £7.3bn (€10.2bn) approach from European rivals Carlsberg and Heineken.

The Foster’s and Kronenbourg 1664 maker announced proposals to save £20m (€27.9m) in the UK, and the sale of its loss-making French wholesale business.

Chief executive John Dunsmore said “nothing was sacred” to improve the Edinburgh-based brewer as he reaffirmed his opposition to the “wholly inadequate” bid approach.

Despite poor summer weather and weaker markets in Western Europe S&N said it was “confident” of progress during next year.

The group plans to offset rising raw material prices with “material” price hikes and its cost-saving plans.

In the UK, the company announced the closure of the bottling plant at its Reading brewery as part of the cost-saving plans.

S&N refused to comment on how many jobs were at risk although up 600 people are employed in Reading out of a total UK workforce of 3,300.

The company has also struck a production and packaging agreement with rival Coors UK for the brewer to produce up to three million hectolitres of alcohol a year – which is also likely to affect jobs.

Mr Dunsmore said: “In a market overall where volumes are not going up it is important that we do not spend large amounts on capacity.”