Cost-cutting threat to S&N breweries

BEER giant Scottish & Newcastle is expected to announce drastic cost-cutting measures next week, threatening the future of two of the group's most historic breweries.

It is thought that efforts by chief executive Tony Froggatt to restore the company's fortunes will include the closure of at least one brewery. Plants at Newcastle and Edinburgh are thought most at risk. Other breweries are at Reading, Manchester and Tadcaster, North Yorkshire.

Closure of Newcastle or Edinburgh or both would have huge symbolic importance as they are the plants from which the company takes its name. Each has a workforce of 200.

The volume of beer produced by each brewery is less than half that of either S&N's John Smith's plant in Tadcaster or its Royal brewery in Manchester. By far the largest brewery in the group is Reading's former Courage plant - its output is four times that of Newcastle.

S&N is due to publish full-year results on February 23. Investors expect pre-tax profits of about £465 million for 2003.

The company's share price has tumbled over the past two years as a plan to reshape S&N's UK distribution went wrong. But over the past few weeks, the price has rallied. Having been below 370p in January, it closed on Friday at 416p.