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Scottish & Newcastle forms JV to take up distribution functions

LONDON: British brewing company Scottish & Newcastle Plc. has formed a joint venture with Swiss logistics firm Kuehne & Nagel AG to undertake distribution of its products in Britain.

The joint venture will take up all of its primary and secondary distribution in the U.K. for an initial period of 10 years.

Scottish & Newcastle’s operations director Stephen Gleancey said by handing over the distribution functions to the new joint venture, the company “becomes free of constraints to grow”. The company expected annual cost savings of 5 million pounds in 2007 and would receive 30 million pounds from the joint venture.

The joint venture will come into being by consolidating the relevant U.K. distribution assets of both the companies. It will be the “biggest and best-invested” drinks logistics business in the country, the company said. It will also be free to expand through new distribution contracts.

Kuehne & Nagel will form a new division, KN Drinks Logistics, for the purpose. It will absorb some 1,000 staff currently working for Kuehne & Nagel in primary distribution and 1,900 working for S&N; in secondary distribution.

The British brewer’s unions have not taken kindly to the joint venture.

The unions reacted to move, describing it a “slap in the face” to 1,500 drivers, warehouse workers and others.

Brian Revell, national organiser for T&G; said the company has presented the union with a fait accompli by signing the contract without meeting the fundamental obligation of allowing it to explore alternative solutions through meaningful consultations.

“Our 1500 drivers, draymen and warehouse workers at Scottish and Newcastle whose jobs are now threatened with outsourcing are bitterly disappointed.”

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