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Punch-up in a brewery as Tennent’s faces legal challenge from “Nordic” beer minnow

By Ian Fraser

Published: Sunday Herald

Date: 11 October 2015

Adcept_350x428London-based drinks business Kolson has accused Glasgow-based Tennent Caledonian Breweries of damaging its business after a contract-brewing deal between the two firms turned sour. Tennent’s owner C&C Group, though, counter claims that Kolson’s actions are simply a “smokescreen” designed to avoid payment to Tennent’s.

The war of words was spurred by an incident two years ago, when Tennent Caledonian, brewed and packaged 50,000 cases of Kolson’s newly launched Kolson Export lager on a “white label” basis. Kolson Export is based on a Nordic lager recipe and is 5 per cent alcohol by volume (ABV).

However Kolson claimed the stock failed to meet its specifications. The London company says that, while the product was acceptable, the packaging was not, as it differed from a pre-agreed design. Kolson says it therefore refused to accept the cans and Tennent’s never invoiced Kolson for this product.

According to Kolson, it responded by stipulating that these cans should not be distributed to the on-trade or the off-trade anywhere in the UK or Europe.

Kolson alleges that last May, after it gained a listing in the off-licence chain Bargain Booze – a subsidiary of UK off licence giant Conviviality Retail, which also owns Wine Rack and has opened several Bargain Booze outlets open in Scotland since June – Tennent’s failed to supply the required quantity of beer.

Kolson claims that by the middle of May, after nearly 14,000 cases of the correct version of Kolson Export had been supplied to Bargain Booze, Kolson was told by Tennent’s that the Glasgow brewer was unable to produce any further beer for Kolson until after July.

Tennent’s claims it ceased production because it had not received payment from Kolson, but Kolson claims the C&C subsidiary gave other reasons at the time, including large orders from other contract brewing customers such as Molson Coors and the 2014 Fifa World Cup.

Kolson director Marie Johnson alleges that Tennent Caledonian then supplied some of the previously rejected cans to Bargain Booze – even though they were approaching the end of their shelf life – and that their presence in store was damaging to the Kolson brand.

A spokesperson for C&C told the Sunday Herald that “Tennent’s eventually sold some stock, to mitigate its losses, direct to a wholesaler in line with the terms of the brewing contract; and with Kolson’s permission.”

“This is a smokescreen from Kolson in order for them to avoid paying Tennent’s what is owed. It is consistent with their practice over many months and we look forward to court proceedings.”

Kolson says its lawyers immediately notified Tennent Caledonian it had no further authority to sell Kolson beer, claiming breach of intellectual property rights. Last December Tennent Caledonian served a writ on Kolson seeking payment for beer that had been delivered to Bargain Booze.

The C&C Group spokesman said: “This is a debt recovery action raised by Tennent’s against Kolson for over £200,000 for beer which was brewed for Kolson and delivered to a wholesaler on their behalf. Tennent’s has not been paid by Kolson for the stock provided, though it is understood Kolson has been paid direct by the wholesaler.”

Kolson, whose claim against Kolson amounts to £1m, disputes this writ, claiming that Tennent’s was ignoring retrospective payments owed to Kolson as well as credit notes agreed in March 2014.

Kolson’s lawyers, the Glasgow office of Pinsent Masons, have sought documentation relating to the underlying “contract brewing agreement” between Kolson and Tennent Caledonian. The Glasgow-based brewing giant claimed no such agreement exists, as Kolson was “an order-by-order client”. In July, Tennent Caledonian provided two ring-binders which contained mainly emails but Kolson is seeking recovery of further documentation.

Kolson is now considering appointing a Commissioner – a QC or junior counsel or lawyer independent of either party – to recover further documents which it believes exists.

In such a scenario senior executives of Tennent’s and Magners GB could be obliged to appear before the Commissioner under oath and answer questions in relation to the existence and location of documentation.

Legal sources confirmed the “record is not closed” – which means the two sparring parties are still able to adjust their pleadings.

In July, C&C Group issued a profit warning, blaming weaker sales on tougher drink drive laws, introduced in Scotland last December. Analysts are expecting C&C Group’s full year pre-tax profit of €102 million (£75.6 million) on sales of €696 million (£516 million).

Short URL: https://www.ianfraser.org/?p=11440

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