The C&C group, which yesterday announced plans to buy Tennent’s in an £180m deal, warned that it may move its packaging operation from Glasgow to Ireland if it proved to be "economically viable".
The fears emerged on the day that Diageo, which plans to close its Kilmarnock packaging plant with the loss of 700 Scottish jobs, announced £2bn profits for the last year.
Tennent’s staff will transfer to C&C once the deal is finalised next month. Though analysts said the move is likely to benefit the company overall, the restructuring may result in some redundancies at the firm’s Wellpark Brewery in the east end of the city.
Unions have given the plans a cautious welcome, but said they would seek guarantees of job security.
C&C has transformed Magners from a little-known Irish curiosity to one of the UK’s best-selling brands.
Magners has revolutionised consumers’ approach to cider, repopularising it as an alternative to beers and lagers, and Tennents’ new owners may inject a fresh lease of life in the flagging lager market.
John Dunsmore, C&C chief executive, said the deal, which also includes the rights to distribute Stella Artois, would greatly strengthen his company and the Tennent’s brand.
Though he could give no cast-iron guarantees on the future of Tennents’ long-running sponsorship deals with the Scottish football team and T in the Park music festival, Mr Dunsmore added: "We’re quite heavily into similar sponsorships in Ireland, so sports and music are things we’re very comfortable with. We do understand the links (between the events) with the brand, and we hope to grow the brand."
Chief operating officer Stephen Glancey said the firm would continue to brew at the Wellpark site, where Tennent’s has been made since 1777, but he suggested that bottling operations could be transferred overseas.
He said: "We can’t make beer in Ireland, but certainly we’d look at packaging in Glasgow, and we’d look at packaging the product made in Scotland in Ireland. We’ll also look at packaging in Glasgow, if that’s economically viable."
However, the possibility that Magners cider production could be brought to Glasgow was dismissed by Mr Dunsmore.
He said: "Magners is absolutely synonymous as an Irish cider, so the production of that would continue to take place under any circumstances in County Tipperary."
He added that cider and beer naturally complemented each other, which meant that the two drinks could be effectively marketed together.
Mr Dunsmore said: "We probably get 15-20% of our UK sales of Magners in Scotland and we think we can increase that because of the grip Tennent’s has on the Scottish market."
Wellpark produces around 2.1 million hectolitres of lager each year, and operates on a far larger scale than C&C’s existing Magners plant in Ireland.
It will be the biggest brand in the C&C portfolio, which the new owners said would allow Tennent’s more attention than it received from current owners Anheuser-Busch InBev, the world’s largest brewing firm.
"Tennent’s is an iconic brand, and in a sense by putting Tennent’s into our business it’s a big fish in a much smaller pond, which creates opportunities for that brand," said Mr Dunsmore.
Tennent’s accounts for one in every three pints of beer drunk in Scotland, 55% of lager sold in pubs and clubs and 30% of total lager off-sales.
GMB Scotland Organiser, Richard Leonard, said he would "broadly welcome" the acquisition, but was concerned about the long-term commitments of the new owners.
"GMB of course want to discuss where the projected savings of £10m per annum by 2012 is expected to come from. Specifically, we are looking for a firm undertaking that the jobs and terms and conditions of our members including
their occupational pensions will be honoured and protected," he said.
Billy Parker, a negotiator with Unite, said the move could work to quell worries among workers afraid that the brewery could have been forced to close.
COMMENT
Roy Beers
This is probably a good result for Tennent’s.
Look at what C&C did for Magners -- they turned a rather flat brand into a phenomenon, and revitalised the whole quality cider industry.
Tennent’s is a bit different, though, because it’s a long-standing and successful lager in Scotland. I see absolutely no reason why they would try to meddle with the brand.
The current owners, InBev, are a massive global operation, and not averse to bumping off regional breweries that don’t suit them.
C&C have acquired something new and they want to make something of it. All beer sales are slipping, but I don’t think Tennent’s has been too badly affected. They have kept pace with consumer tastes, and launched lines like Tennent’s Ice Cold. Young people want it so cold that their fingers are just about sticking to the glass.
C&C also get the license to brew Stella Artois, which often appears with Tennent’s alongside Belhaven Best in pubs. Greene King, who own Belhaven, see them as natural partners, and this may cement that relationship in the Irish market.
Tennent’s is not a brand like Tartan Special, which was allowed to wither and die until Scottish & Newcastle pulled the plug. I don’t see that happening to Tennent’s.
I cannot see it losing its touch. It is a really big thing, and it’s as Scottish as Irn Bru.
Roy Beers, Scottish drinks writer with The Publican magazine.
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