It may produce “probably the best lager in the world”, but Carlsberg’s less-than-sparkling performance in the UK has forced the Danish brewer to consider closing its Tetley brewery in Yorkshire.

The group is believed to be reviewing the future of the Leeds facility as part of a restructuring of its British operations, which is aimed at reducing its cost base and stemming the steady decline in sales volumes.

Carlsberg, which sells beer in 150 countries, admitted two years ago that some of its 29 breweries in Western Europe would be closed or sold as part of an assault on costs. Since then it has announced disposals in Germany and Italy and job cuts in other countries.

At the end of 2005 the company announced 70 job losses in the UK, in areas such as production, logistics and administration, although to date it has held back from a sale of either of its two breweries, in Northampton and Leeds.

Yet recent comments have convinced observers that a restructuring in Britain is imminent. The company has declared openly plans to review production facilities in countries where it has more than one brewery, setting its sights on city centre facilities with high alternate-use value.

Carlsberg UK’s accounts for 2005 value its land and buildings at £136.2 million, although as they have not been revalued since 1993 analysts believe that the Tetley brewery site alone could be worth up to £100 million, given its position in the middle of Leeds.

The brewery site forms part of a wide-ranging review by Leeds City Council, published in April, into the development potential of the whole city centre over the next ten to twenty years, dubbed the Leeds City Centre Action Plan.

The plan, which has been put out to public consultation, says: “The current manufacturing use on the site has now become somewhat out of place with surrounding office and residential uses. The brewery may, during the plan period, consider relocating, which would free up the site for redevelopment.”

The document says that the site would be suitable for office, leisure, hotel and conference use, as well as for “large-format retailing”.

It has been suggested that the company could shift production of Tetley bitter from Leeds to its lager plant in Northampton, but analysts believe that it could follow the example of Scottish & Newcastle in handing the beer to a smaller rival, while retaining a minority stake and the rights to the brand.

Some observers have suggested that Carlsberg should consider following the lead of Heineken in halting all production in the UK and importing its beer from its home base in the Netherlands. Nils Andersen, the Danish group’s chief executive, has dismissed the idea as “a pretty dumb suggestion”, asking: “Why would we do that?”

The comments appear to at least safeguard the future of the group’s main lager brewery in Northampton, but Mr Andersen has always refused to comment on whether the Tetley brewery has a future.

Northern soul

1822: Joshua Tetley, from a family of maltsters, buys his first brewery in Leeds for £400

1839: makes his son a partner and creates Joshua Tetley and Son

1960: Merges with the Warrington-based Walker Cain, becoming Tetley Walker

1961: Part of three-way merger with Ind Coope, of Burton-on-Trent, and Ansells, of Birmingham, to create Allied Breweries

1993: Carlsberg buys 50 per cent of Allied Breweries, creating Carlsberg-Tetley

1997: Proposed merger with Bass is blocked by competition authorities. Carlsberg buys other 50 per cent to take full control

2004: Carlsberg-Tetley changes name to Carlsberg UK

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive