Guinness might redevelop its Dublin brewery
After its plans to move the Dublin brewery to a greenfield site had fallen through following the collapse of real estate prices, Diageo, the parent of Guinness had to think anew. On 5 July 2011 Irish media reported that Diageo is in talks with Dublin City Council with a view to redeveloping part of its historic St James’s Gate brewery site.
Diageo is said to have started preliminary talks with the council and aims to submit a planning application for a EUR 100 million redevelopment of the site. The improvements would focus on modernising the brewery and see Diageo consolidate its European brewing processes at St James’s Gate.
As part of the application process, Diageo will be required to submit a masterplan for the area. Once that is approved, a formal planning application will follow.
If that application is successful then Diageo will decide whether or not to proceed with the redevelopment. The drinks giant is expected to make a final decision on whether to carry out the work within the year.
Observers say that the redeveloped site will lead to much improved efficiency at the brewery. Where that would leave Guinness’ other operations at Kilkenny and Dundalk remains to be seen, however.
As BRAUWELT International reported, Diageo had intended to close those plants and consolidate its brewing at a greenfield site in Leixlip in 2008. That project was put on hold a year later after the Irish economy collapsed and real estate prices went south. It is understood that Diageo had hoped to use some of the proceeds from the sale of the St James’s Gate site to finance its new brewery.
While the future of the Leixlip site has not been formally decided since the project was postponed, a redevelopment of St James’s Gate would likely be the end of any development there.
The move to redevelop the Dublin brewery comes at a difficult time for Diageo in Ireland.
In June 2011 the Irish Brewers Association reported that the share of beer sold in Irish pubs fell significantly in 2010. Despite the fact that the Irish beer market showed signs of stabilisation in 2010, following a decade of falling consumption (from 169 litres per capita in 2002 to under 100 litres in 2010), there was a marked shift in volumes from the on-trade to supermarkets. 33 percent of beer was sold in the off-trade in 2010, up from 29 percent in 2009.
The pub trade has lost a quarter of its business in the last few years, while beer’s share of the alcohol market has fallen below 50 percent.
The general market decline has forced Diageo to cut costs.
The drinks company was heavily criticised in May this year when it announced it was planning to cut jobs in Dublin – only a day after photos of U.S. President Barack Obama drinking Guinness were shown all over the world.
The Obama photos, combined with Queen Elizabeth’s visit to the Guinness Storehouse, were said to have given the company EUR 23 million worth of free publicity.
The Irish understandably felt bitter and not in the mood for another Guinness.
