UK: Carlsberg to hold talks on Tetley brewery

Denmark's Carlsberg it is to hold talks over the future of one of its breweries with Leeds City Council, which analysts say may lead to the closure of its Tetley brewery in the centre of the city, Reuters reported June 4.

Carlsberg, the smallest of Britain's four big brewers, is under pressure to cut costs ahead of the expiry of a lucrative pub supply contract and a pub smoking ban, and one way will be the closure of the brewery in Leeds, analysts added.

The Copenhagen-based maker of Carlsberg and Tuborg beers employs around 2,210 staff in Britain, some 200 at Leeds and 600 at its main brewery in Northampton, and the rest in distribution, marketing and other related areas.

"No formal plans or decisions have been made. If any proposals are developed to change the current brewery structure, our employees and other key stakeholders will be the first to know," Carlsberg UK said in a statement.

Carlsberg says Leeds City Council's Area Action Plan for the development of the city centre says the brewery is "out of place" among office and residential buildings on its site near the River Aire.

Analysts say the site could be worth up to 100 million pounds, and Tetley brewing may be shifted to Northampton or made by a smaller rival under licence.

Carlsberg is facing the expiry of a key 10-year beer supply contract with Punch Taverns but also including some Mitchells and Butlers outlets in November, and analysts say its end could wipe out Carlsberg's annual UK operating profits, which they estimated at 15 million pounds in 2006.

The brewer also faces a smoking ban in pubs at the beginning of July in England which Britain's biggest brewer Scottish and Newcastle has already warned will cut profits by around 10 million pounds in the second half of 2007.

Carlsberg is looking to raise the profitability in its core western European market, which account for two-thirds of group revenue, as it aims for regional operating margin to hit 10-12 percent by 2008-2009, up from 8.9 percent in 2006.

In March, Carlsberg put up for sale one of its Italian breweries to focus its Italian brewing operations on just one site and said this move was "part of the continuous optimisation of the brewery structure in Western Europe".

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .