Caledonian's sales rise as S&N helps Deuchars flow south

EDINBURGH'S sole remaining brewery is bucking the industry downturn after a sustained push south of the Border.

Sales at the Caledonian brewery, maker of Deuchars IPA and Caledonian 80/-, rose by 1 per cent in the first three months of the year, the firm's commercial director revealed yesterday.

The rise compares with recent UK-wide falls of about 10 per cent as the industry battles cheap supermarket promotions and the economic downturn.

Martyn Gray said Deuchars IPA was benefiting from access to parent company Scottish & Newcastle's (S&N's) pubs network. He said Deuchars – which accounts for about 85 per cent of sales – is now being sold at pubs in urban centres, such as London, Newcastle and Liverpool.

Gray also trumpeted the success of Caley's guest ales series, under which a different beer is marketed each month.

Gray told The Scotsman: "From January through to March, we're about 1 per cent up on last year, against the on-trade market that saw a 9 per cent decline last year. That's quite a good performance.

"With the ownership of the business now being through S&N and ultimately Heineken, we have access to the whole of the S&N supply chain.

"In the past, Caledonian developed and supplied its own customers and S&N didn't sell much of the product. But now we're seeing huge potential in using the S&N pubs and their contacts. This is a real growth opportunity."

Gray was quick to defend the independence of Caledonian – which has 65 full-time staff – maintaining Heineken's takeover of S&N's UK business still left Caley's directors with power over the firm.

He said: "We're run as a standalone business – we have our own management structure and sales team. Everything is controlled through the Caledonian brewery.

"It's useful to have the support of the mothership for developing business but if it's going to work under Heineken then it's got to be run independently. That's the great thing S&N has done with the business, allowing it to trade as it was but to use the skills of S&N in other areas to develop the business."

Last month, details emerged of Caledonian's plans to cut back on its workers' hours instead of making redundancies. Gray said yesterday: "We're still in talks – nothing has been decided.

"Obviously we'd like to avoid making redundancies and that's part of the discussions with unions at the moment.

"I think everyone realises that Caledonian is a great business – the only brewery left in Edinburgh – but it's an expensive place to brew beer.

"What we have to do as a business is create a reason for customers to want to pay a bit extra for these quality products."

The Caledonian brewery was founded by George Lorimer in 1869 and sold to Vaux Breweries in 1919. A management buyout in 1987 took Caley independent again, with S&N taking a 30 per cent stake in the business in 2004, as part of a deal that closed its Fountain brewery.

S&N bought the remaining 70 per cent of the firm last year and was itself broken up by Denmark's Carlsberg and Dutch giant Heineken, which took the UK parts of the company.