Northern Ireland's only brewery is to close with the loss of up to 85 jobs after failing to find a buyer. The Bass Ireland Ulster Brewery, which is owned by Belgian group Interbrew, will close in January.

The plant has been brewing beer at the site in Andersonstown, in west Belfast, for 107 years, but its future has been in doubt since it lost a profitable bottling contract with Lucozade sports drink earlier this year.

"The conclusion of the bottling contract in December (2004) and the resulting increased costs to the remaining brewery and kegging operations, along with a general overcapacity within the industry, meant that a viable manufacturing operation would no longer be sustainable," Interbrew UK supply chain director Mr David Randall said in a statement. "That situation and the lack of a suitable purchaser have resulted in today's announcement," he said.

It is understood that the company had intended to make the announcement early next month, but brought it forward to yesterday when it became clear that there were no takers. Four parties are understood to have expressed an interest in the plant when it was announced parent Interbrew was looking to sell last month.

The plant makes Bass ale and Tennent's lager for the all-Ireland market and kegs Stella Artois. It was believed to be operating at 25-30 per cent of capacity. It is the largest private employer in west Belfast, an area of high unemployment. Around 20 of the 85 staff will be redeployed.

Interbrew is believed to have been trying to sell the firm as a going concern, whereby the new owner would retain staff on their existing packages. Interbrew had also promised to give the new owner a five-year brewing contract. "There would have been the foundations of a good business, but it would have had to have been further developed and expanded," a source said.

He said what was happening in Belfast was symptomatic of the brewing industry, where there was overcapacity.

Interbrew's Mr Randall said the decision did not reflect on the quality of output from the manufacturing team "which has been of the highest order throughout".

Interbrew's other operations in Ireland will not be affected. The company employs almost 100 people in Belfast and 10 in Omagh in sales, marketing, technical support and distribution. A further 85 are employed in the Republic, carrying out similar functions.