UK: Shepherd Neame plans distribution shake-up, restructure

By | 25 July 2013

Shepherd Neame is looking expansion in international markets

Shepherd Neame is looking expansion in international markets

UK brewer Shepherd Neame is eyeing expansion in its domestic and international markets after signing a new logistics deal which will lead to a restructure, but also includes some redundancies.

In a trading update today (25 July), the Kent-based group, said its has agreed a ten-year contract with Kuehne + Nagel Drinkflow Logistics (KNDL). Under the deal, KNDL and Shepherd Neame will combine their existing operations, but KNDL will take over responsibility for the brewer's local and national drinks distribution. Both currently operate out of the brewer's distribution centre in Faversham, Kent.

Due to the tie-up, the brewer, which produces Asahi and Samuel Adams' beers in the UK under licence, is splitting its business into two trading divisions: 'Brewing and Brands' and 'Retail and Tenanted'.  

The company is in consultation with 57 staff whose roles will transfer across to KNDL, but expected a “very limited” number of redundancies. Tom Falcon, currently production and distribution director, will leave the group at the end of this year, while three senor directors will change role.

Jonathan Neame, Shepherd Neame's chief executive said: “This agreement enables us to exploit the national growth opportunities arising in our portfolio for brands such as Spitfire, Whitstable Bay, Asahi and Samuel Adams and also seek out international opportunities as we expand our exports following the completion of a recent distribution agreement into North America.”

The transfer of operations is expected to complete by October. A one-off cost of GBP1.7m (US$2.6m) is due from the changes, but annual savings of GBP2m are forecast after the initial charge.

On its current performance, Shepherd Neame, which claims to be the UK's oldest brewer, said its underlying trading has been “satisfactory in difficult market conditions”. Total beer volumes for the year to the end of June fell by 1.3% but underlying own beer volumes, adjusted to exclude contract brewing, were up by 0.9%.

Expert analysis

Beer in the United Kingdom

In 2011 beer sales remained weak due to the ongoing and growing consumer concern about government spending cuts on jobs and incomes, which continues to constrain consumer spending. Total volume sales of beer declined by 5%, a more dramatic decline compared to the previous year and slightly sharper than the review period total volume CAGR. This was due to ongoing beer tax increases in March, with beer seeing excise duty increased two percentage points above the level of inflation at 5%. This tax...

Sectors: Beer & cider, Company results, HR – personnel

Companies: Asahi

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