Carlsberg-Tetley blames 1,500 job losses on Beckett

Carlsberg-Tetley, the troubled brewer, stunned its workforce yesterday by announcing it was planning to close three of its five breweries with the loss of 1,500 jobs. The news coincided with a warning from Wolverhampton and Dudley, one of the largest regional brewers, that many British pubs faced an uphill struggle to survive. Andrew Yates reports.

Ebe Dinesen, chief executive of Carlsberg-Tetley, yesterday blamed the sacking of 1,500 workers on the recent decision by Margaret Beckett, President of the Board of Trade, to block the company's merger with Bass.

He said: "If we had merged with Bass there would have inevitably been some redundancies but nowhere near to the same extent. Now we have to cut very deep."

Mr Dinesen went on to launch a stinging attack on the Goverment's competition policy. "I am critical of the whole competition law system. The merger process is not objective, it is a political decision. It is difficult to do business under these circumstances."

However, Mrs Beckett defended her decision: "It was clear that job losses were inevitable whether or not the proposed merger with Bass went through."

C-T is sacking 40 per cent of its 3,700 workers and closing its breweries in Burton-On-Trent in Staffordshire, Wrexham in North Wales and Alloa, in Scotland. It will be left with just two breweries in Northampton and Leeds.

The group will not sell any of its beer brands but it may be the end of Burton Ale. The group will concentrate on its best-selling beers including Carlsberg lager, Tetley bitter and Calders Cream Ale.

However, there is a chance that 550 jobs at the Burton brewery may be saved. Bass yesterday expressed an interest in buying the business.

C-T's move sent shock waves around the industry. Mr Dinesen said: "More job losses throughout the industry are inevitable. Other big brewers will have to cut capacity. Wholesale beer prices have fallen to such a low level," he said.

Brewers should be booming with the economy growing strongly. But the industry's problems stem from the fact that the man in the street is drinking less beer and the market is dogged by overcapacity. The growing dominance of the large pub groups mean they have been able to squeeze lower prices out of the brewers.

C-T plans to pump pounds 40m into its remaining breweries but analysts believe it will struggle to make a profit.

The company has been forced to overhaul its business due to the pending renegotiation of a supply agreement with Allied Domecq, its main customer and former joint venture partner.

Analysts believe that Allied will demand pounds 20m worth of extra discounts. Even then C-T could end up losing more than 10 per cent of its business as Allied signs up with other brewers.

Wolverhampton and Dudley, the Midlands brewer and pub group, added to the gloom hanging over the drinks industry. It shocked investors by warning that profits would be flat this year, sending its own share price tumbling 37p to 520p and wiping millions of pounds off the value of rivals in the drinks sector.

The warning comes just 24 hours after Greenalls admitted that it pubs estate was performing poorly.

David Thompson, managing director of Wolverhampton and Dudley said: "I have been around the industry and trading is not vibrant at the moment.

"If some pubs can't make a decent return at this stage in the economic cycle then God help us. There is still room for some community pubs but supply is outpacing demand and returns are bound to fall."

The group has sold off some of its worst tenanted pubs and is planning to buy back up to 20 per cent of its own shares and cut its capital expenditure program to stem its falling share price.