The closure of the Fountain Brewer brings a new role for Caledonian

Under a partnership deal with Scottish and Newcastle's Scottish Courage division, the brewery has been bought by the larger company.

Scottish Courage has also bought a minority stake in the Caledonian Brewing Company.

Beer enthusiasts have said they are now concerned about the independence of the Caledonian Brewery.

The agreement between Scottish Courage and the Caledonian Brewing Company was announced as Scottish Courage confirmed the closure of its Fountain Brewery in Edinburgh.

Increased profits

That brings to an end a history of brewing at Fountainbridge which was started by William McEwan in Victorian times.

This partnership with Scottish Courage underpins our strategy for growth Stephen Crawley Caledonian Brewing Company

Although the Fountain Brewery has been modernised and expanded over the years, it remains small by comparison with many modern facilities producing beer.

An independent analyst had suggested that closing smaller centres would increase profits for the company.

The site, close to Edinburgh city centre, has a potential value to housing developers of many millions of pounds.

Confirming that beer production will end at Fountainbridge, Scottish and Newcastle said that its McEwan's ales will in future be produced at Caledonian.

In a complex deal, four directors have acquired control of Caledonian Brewery from its existing shareholders.

They said they were acting in collaboration with Scottish Courage, which will have a minority stake in the company.

Those behind the deal have insisted that it will strengthen the position of Caledonian.

Beer enthusiasts worry about the long-term future of Scottish brewing

Managing Director Stephen Crawley said: "This partnership with Scottish Courage underpins our strategy for growth and safeguards our future as an independent Scottish company.

"Our focus on our UK trade customers will be enhanced and we will have Scottish Courage's distribution power to help our beers enter new markets in the off trade and internationally."

Takeover target

But real ale group Camra, which agreed that the deal appears to be good for Caledonian Brewery in the short term, also warned that the long-term outcome could be that more of the Scottish beer industry is swallowed up by a multinational company.

If Scottish Courage's closure plans succeed in boosting profits, it would make its parent company Scottish and Newcastle more attractive to potential buyers.

Colin Valentine, Camra's national vice-chairman, said: "What this means is that Scottish and Newcastle is more of a takeover target than it was yesterday.

"If a large international company does take control of Scottish and Newcastle, it may have no interest in a small brewery like Caledonian and its brands."