Diageo to build €153M brewery in Dublin for its Guinness brand; facility expected to be able to produce more than 1.2 billion pints/year; company closing two other Irish breweries, eliminating 100 jobs
January 12, 2012
– Guinness parent Diageo PLC will build a new Dublin base for brewing Ireland's famed stout but its two other Irish breweries making other brands will close at a cost of about 100 jobs, the British drinks giant announced Thursday.
Diageo said the new €153 million ($195 million) brewery on the sprawling Guinness site at St. James' Gate, Dublin, would be able to produce more than 1.2 billion pints a year, 40 percent more than the current maximum capacity.
The company hopes to have the new facility running by the end of 2013, by which time its three existing Irish breweries at St. James' Gate and two other towns, Dundalk and Kilkenny, would close.
Those latter two breweries make several other beers including Irish brands Smithwicks ale and Harp lager, but not Guinness. The plan calls for production of all brands to move under one Dublin roof.
Thursday's move represents a long-expected climbdown from Diageo's more ambitious 2008 plan to cut back production at St. James' Gate in favor of a new mega-brewery on the ancestral lands of the Guinness clan west of Dublin.
Diageo dropped that €650 million plan in 2009 after Ireland's long-booming property market plunged into reverse, destroying the company's hopes to cash in its lucrative property chips.
More than half of the riverside St. James' Gate site would have been sold under that plan, but now it will become the new brewing base instead and the land will stay in Guinness family hands.
David Gosnell, president of the Diageo Global Supply division, said building a more efficient unified brewery, as well as a new grain intake building and silos, "is fundamental to delivering the competitiveness necessary for the long-term sustainability of our brewing in Ireland."
Ireland's government, which is struggling to reduce unemployment hovering near a two-decade high of 14.5 percent, welcomed the Diageo decision partly because it is expected to create 300 construction job on site by mid-2012.
Jobs minister Richard Bruton said the plan "secures Diageo's brewing operations in Ireland for decades."
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The new plan means that Diageo's only Irish brewing facility outside Dublin after 2013 will be a small plant in Waterford producing the secret-recipe "essence" extract that Diageo ships to its nearly 50 Guinness breweries worldwide.
Diageo faces pressure to compete with lower-cost breweries in Eastern Europe, Russia and China.
The move won't affect the tourist side of the St. James' Gate brewery called the Guinness Storehouse. That cavernous facility, with slick tours concluding in a pint at a panoramic rooftop bar, attracted more than 1 million visitors in 2011, making it the No. 1 visitor attraction in Ireland. Dublin Zoo came second.
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