Update to Brewery News Special article "Cains Plan £50 million Brewery Village" in MerseyAle Spring 2013 edition pages 12 and 13
At the beginning of May Cains stopped brewing beer at the Stanhope Street brewery and closed down their canning line and the production of beers for supermarkets. The supermarket beer operation has been loss making and Cains state that the size of their brew plant makes smaller brewing runs uneconomic.
The news came as a shock as few had expected Cains to cease brewing so quickly after announcing their Brewery Village plans which include replacement of the existing brewing plant with a small micro brewery to produce Cains beers. Cains Chef Executive Sudaghara Dusanj said "we anticipate increasing production of traditional ales by as much as 300% as a result of this scheme."
Cains say they are in discussions with third parties to have Cains branded beers brewed on contract at other breweries. CAMRA experience shows this is a process which rarely results in a true match of a beer, Higsons being a case in point when it was brewed at Sheffield and then at Castle Eden.
Workers Left Without Redundancy Pay
Cains have made 38 workers redundant leaving just 18 left at the brewery. The Unite union had urgent talks with workers and management about the redundancies. Unite criticised the company for sacking its workers by by phone and not offering any redundancy pay or back pay. Instead a subsequent letter from MD Sudarghara Dusanj referred them to apply to the Government scheme the Redundancy Payment Scheme is which is usually used in cases where companies have gone bust. He wrote;
"You will be aware that over recent weeks RC Brewery has been facing increasing financial difficulties.
"While the board have been actively exploring all possible options in order to preserve and safeguard the future of the business, it has become apparent that the company is no longer economically viable or sustainable.
"Unfortunately, given the circumstances, your employment cannot be sustained."
It added: "We very much regret having to take this step, but in light of the company's financial situation, there simply is no other option available.
"The company is not in a position to make any payment to you in connection with your employment to date, nor in relation to the termination of your employment. However, you may be able to claim certain payments such as pay arrears, notice pay, holiday pay and redundancy pay via the Redundancy Payment Service."
"What the Company Have Done is Disgraceful" says Unite – Legal Action a Possibility
Franny Joyce, regional officer for Unite, said: "What this company has done is disgraceful.
"They have sacked workers with over 20 years' service over the phone. Workers were informed on the phone on Friday that their services were no longer required, don't come to work."
Mr Joyce said workers were considering legal action to recoup money they are owed.
Major Contracts Lost
The Liverpool Post revealed that Cains had lost two major contracts, one in October and then at the start of the year its biggest customer halved its order for beer.
The Liverpool Echo reported that a Cains spokesperson had said:
"Brewing at the site has been suspended while we progress our Brewery Village scheme and we are in negotiations to sub-contract the brewing of Cains products to a third party brewery during this interim period.
"The nature of our brewery is such that its operation cannot be scaled down in a simple fashion and it would be financial madness to continue with such huge overheads for a relatively small brewing operation."
It had planned to cease the supermarket brewing and canning business as part of the re-development, although yesterday's announcement was much earlier than expected.
The spokesman added: "We have said all along that the brewery is at the heart of our plans for the Brewery Village scheme and this remains the case. The existing brewery will be redesigned during the anticipated redevelopment so that it is more efficient and better suited for future use.
"We are continuing to discuss matters with our advisors about how we best manage winding up the current canning and brewery side of the business. Cains is alive and kicking and we are extremely positive about our future plans, which will secure a brewing in the city for decades to come."
Cains Managing director Sudarghara Dusanj said: "The own label brewing and canning business for the supermarket industry has been deteriorating for some time because of competition from modern, purpose-built operations, many of them overseas. We have been working with our professional advisors in an attempt to restructure and continue this part of the business but it has not been possible.
"It is with regret, therefore, that all own label brewing and canning business for supermarkets has ceased with immediate effect. We would like to thank our staff for their dedication and hard work over the years and to wish them the very best for the future.
"Our plans to redevelop the site are progressing in a very positive manner and are unaffected by this move."
Cains had announced in April that they would apply for planning permission for the Village scheme in July.
The closure of the Stanhope Street brewery would appear to leave Cains without any cash flow apart from income from its three remaining pubs; the Brewery Tap, Dr Duncan's and the Dispensary. The failure to pay redundancy also raises questions about the financial state of the company.