Diageo brews Guinness overhaul
DUBLIN, Ireland–Guinness beer owner Diageo PLC rattled an Irish icon yesterday, announcing plans to lay off more than half of its brewery workers, close two breweries and shift most beer production to a new, high-tech plant in the Dublin suburbs by 2013.
The British beverage company decided not to close the landmark Guinness brewery, one of Dublin’s oldest businesses and a top tourist attraction, after concluding that would do too much damage to its brand image and customer sentiment.
Diageo expects to lay off about 250 people, or 58 per cent of its current brewery workforce in Ireland, over the next five years. Brewing staff at the flagship Guinness brewery at St. James’ Gate in west Dublin will be slashed from 230 to just 65.
Half of the riverside St. James’ Gate site will be sold for private development, and the volume of Guinness brewed there will be cut by about a third – to about 500 million pints annually.
This will exclusively supply the Irish and British markets, where demand has slipped over the past decade in line with pub goers’ diversifying tastes.
David Gosnell, Diageo’s managing director of global supply, said the move to a new suburban mega-brewery was necessary to compete with the rise of lower-cost breweries in Eastern Europe, Russia and China.
"The business is hugely competitive. … Smaller breweries are consolidating and closing in Western Europe," Gosnell said.
Gerry O’Hagan, supply director for Diageo in Ireland, said the current production capacity of the Dublin, Dundalk and Kilkenny breweries was less than 1.25 billion pint glasses of beer annually, while the new plant will produce more than two-thirds of that on its own.
Diageo executives said they planned to spend 800 million euros, or about $1.25 billion (Canadian), on the plan cash till payday.
About 100 million euros has been earmarked to build a new brewhouse and refurbish other facilities at the St. James’ Gate brewery, where English entrepreneur Arthur Guinness began brewing Ireland’s hallmark dark brown, creamy stout in 1759.
Brian Duffy, who travels the world promoting Guinness as its global brand director, said Arthur Guinness was a visionary but unsentimental businessman who negotiated a bargain 9,000-year lease on the St. James’ Gate site. He noted that Arthur Guinness had moved there in search of better profits.
The company estimates that much of the cost of the project can be reclaimed by selling land at the Dundalk, Kilkenny and Dublin sites valued at an estimated 500 million euros.
Officials in the two towns losing breweries expressed shock at the news.
Associated Press