Shepherd Neame will spend £15 million on a smaller brewery in Faversham

Shepherd Neame said on Thursday, October 29 that it will invest £15 million over three years in a smaller, modern brewery in Faversham and stop pursuing large third-party brewing contracts, a shift that will narrow its production focus to its own beer brands while it keeps its full existing portfolio.

The Kent brewer and pub operator announced the plan in a trading statement before its annual general meeting on Friday, October 30. The company said the project is intended to improve efficiency, cut complexity, strengthen sustainability and raise returns, while keeping brewing in Faversham, where the business has operated for more than three centuries.

The new operation will be built on Shepherd Neame’s town center site and will be housed in the existing Bottling Hall, which is due to close in mid-2027 so it can be converted for the new purpose. The company said the brewery will use some existing infrastructure, including water drawn from its artesian well. Brewing will continue at the current site during the construction period, which Shepherd Neame said is expected to take two years once work starts, with completion targeted by the end of 2029.

The company said it will move to a new production model that combines brewing in-house with outsourced functions, including some small-packaging work. It said the change will allow it to maintain the range of beers it already sells, including Spitfire, Bishops Finger and Whitstable Bay, while giving it more flexibility to develop new products in what it described as a fast-changing beer market.

A key part of the strategy is a retreat from large contract brewing for other companies. Shepherd Neame said it will focus only on brewing its own beers and will no longer enter into large third-party brewing agreements. Its exclusive license to brew and distribute Singha Lager will end at the close of April 2027. The company said that contract currently accounts for £10.3 million in revenue.

That decision is significant beyond the company’s own operations. In Britain’s beer market, where brewers are reworking capacity, packaging and brand agreements, Shepherd Neame’s move could affect suppliers, contract customers and international licensing partners. The end of the Singha arrangement also points to the pressures and trade-offs involved when regional brewers decide whether to use capacity for outside brands or reserve it for their own portfolios.

Shepherd Neame said the brewery investment is expected to be self-funded through sales of non-core property. As part of the wider plan, it will reduce its town center footprint to what it calls its Heritage Core, a retained cluster of buildings behind Court Street. The company also said it will bring forward a 10-year development vision for that site, including offices, retail space, a pub, events and hospitality space, an expanded visitor offer and a new open public area called Brewery Square.

The strategy links the brewery overhaul with the company’s property and pub estate. Shepherd Neame said it will continue its existing investment program in pubs, which is now focused on London and is expected to shift more toward coastal inns and hotels. It also said it will increase attention on its best-performing sites, sell outlets with limited potential and reinvest the proceeds.

The company’s trading update pointed to mixed performance in the opening months of its financial year. Shepherd Neame said like-for-like retail sales in its pubs rose 6.4% in the 17 weeks to Saturday, October 24, while like-for-like income in its tenanted estate increased 1.1% in the period to Saturday, September 26. Over the same 17-week period to October 24, total beer volume fell 0.6% and own-beer volume declined 2.2%.

Despite the lower beer volumes, the company said it does not expect any change to market expectations for fiscal 2027.

Chief Executive Jonathan Neame said the plan would modernize the brewery, adapt it to future needs and create what he described as a brand home centered on brewing. He also said the company sees the investment as a long-term commitment to beer production in Faversham and to improving shareholder returns alongside continued spending on pubs.

The statement suggests Shepherd Neame is trying to protect margins and sharpen capital allocation rather than chase scale in brewing. Running a smaller brewery, outsourcing selected packaging work and withdrawing from large external contracts should lower fixed operating demands, but the strategy also means giving up revenue tied to third-party production, including the Singha license. How quickly the new model offsets that lost turnover is likely to be watched closely by investors and by others in the drinks sector facing similar decisions on brewing capacity and brand mix.

Shepherd Neame said a broader review of strategy in other parts of its Brewing and Brands business is still under way and that more information will follow. The company employs about 1,600 people and, at the date of the announcement, operated 280 pubs, including 221 tenanted or leased sites and 57 retail pubs, with 86% of the estate held freehold.