Diageo to spend €650m on new brewery

09 May, 2008

Diageo plans to spend €650m to build a new state-of-the-art brewery near Dublin and upgrade Guinness production.

Diageo plans to spend €650m to build a new state-of-the-art brewery in Ireland, but will close two others in the country.

Diageo will use some of the money (£520m) to upgrade its historic Guinness brewery St James’s Gate, dispelling speculation the facility may close.

It is the largest investment in facilities announced by Diageo in its 10-year history, and is intended to reduce costs as well as secure the firm’s standing in international beer markets.

The move follows a 12 month internal review of Diageo’s brewing operations in Ireland.

The group plans to close its breweries at Kilkenny and Dundalk, as well as “streamline” operations at its Waterford site, once the new Dublin brewery is complete in 2013. It anticipates 250 job losses.

Up to €500m (£400m) of the €650m investment could be regained through selling the Kilkenny and Dundalk sites, as well as surplus land at St James's Gate, the firm believes.

Diageo chief executive Paul Walsh said: “This proposal will support the long-term success and growth of Guinness around the world, as well as the other beers we brew for Ireland, Great Britain and international markets. Our ambition is to create a brewing hub, which will meet the highest standards of technology, efficiency and environmental management.”

In light of the proposed closures, Walsh added that Diageo “valued enormously the contribution of our staff to our business”.

St James’s Gate, where Guinness has been brewed since 1759, will be upgraded to predominantly serve the UK and Irish markets.

Extra costs of €150m (£120m) are expected as part of the restructuring operation that will accompany the new Dublin brewery.

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