Breweries to be kept open as Courage axes 700 jobs

COURAGE, Britain's second largest brewer, is cutting 700 jobs but contrary to expectations it is not closing any of its five breweries.

The move comes as brewers struggle against the twin problems of overcapacity in beer production and declining consumer demand. Heightened competition has led to fierce price-cutting.

Courage brews its eponymous Best and Director's bitters, John Smith's, Fosters and Kronenbourg 1664. The 700 redundancies - which represent one in eight employees - will be spread across Courage's 35 installations.

Ian Mchoul, the Courage director responsible for strategy and planning, said: 'People outside the industry get very excited about brewery closures but the cost of running breweries is only about a quarter or a fifth of the whole. It is not as significant as people think.'

But he added: 'We have obviously looked at the breweries, against the backdrop of overcapacity and declining volumes. I cannot say we will never close a brewery but we have done the economics and at the moment closure does not make sense.'

He said that the cost of the redundancies programme has already been provided for in company accounts. Courage is owned by Fosters Brewery, the Australian group. 'It will cost us a substantial chunk of money but the programme will not hit profits,' Mr Mchoul said.

He added that efforts would be made to re-employ workers in different parts of the business and Courage had undertaken to re-train people if necessary. Redundancy pay-offs would be generous.

As a pure brewer, Courage has been handicapped by falling beer prices. It does have beer supply agreements with the 1,500 Chef & Brewer pubs and the 4,500-strong Inntrepreneur chain.

However, the agreements are not permanent and have been struck at prices significantly higher than current market levels. They expire in 1995 and 1998 respectively.

(Graph omitted)

View from City Road, page 20