Scottish & Newcastle hands over U.K. distribution to Kuehne + Nagel
Scottish & Newcastle UK (S&N UK), one of the largest brewers in the United Kingdom, has awarded a 10 year contract to Kuehne + Nagel to handle its distribution activities in the country.
Under terms of the contract, Kuehne + Nagel will establish a wholly owned subsidiary, KN Drinks Logistics, to provide all Scottish & Newcastle’s primary (bulk movements from production sites to warehouses and multiple retail customers) and secondary (delivery from warehouses and regional depots to public houses and licensed premises) distribution activities in the United Kingdom.
Since 1991 Kuehne + Nagel has provided S&N UK with primary distribution and warehouse operations services, including five major regional distribution centers across Britain, and employing around 1,000 people. KN Drinks Logistics will absorb the existing Kuehne + Nagel contracts with S&N UK and will take over responsibility for secondary distribution activity. All staff employed in the current Kuehne + Nagel primary operations on behalf of S&N UK, and all current S&N UK secondary distribution staff will transfer into KN Drinks Logistics, which will have a combined staff of 2,900 people.
A 50-50 joint venture between S&N UK and Kuehne + Nagel, KN Drinks Flow Logistics, will own the assets of both companies in the country including about 850 vehicles and 22 distribution depots.
“This is a true win-win deal for all parties. Kuehne + Nagel will add value by using its logistics expertise. The independent KN Drinks Logistics business will represent a new and compelling offer to pub companies and beverage suppliers throughout the U.K.,” said Peter Ulber, chief executive for Kuehne + Nagel U.K. and Ireland.
“By placing our distribution business with the new venture, we have created the biggest and best invested drinks logistics business in the U.K. It becomes free of constraints to grow and will be able to seek new contracts outside S&N. This specialist business will help provide our current distribution employees with enhanced job prospects and stability,” said Stephen Glancey, Scottish & Newcastle’s group operations director. “Furthermore, S&N UK is now free to concentrate on its core businesses of developing and selling great drinks brands and contract pub management. The deal will free up further cash to be reinvested in these areas.”
Subject to regulatory approvals, KN Drinks Logistics is expected to become operational July 3.