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Diageo, the world’s biggest drinks company, will review a EUR 650 million scheme to build a new state-of-the-art Guinness brewery in Ireland because of the economic downturn. Ireland’s GDP is expected to contract by 5 percent and the unemployment rate is to rise to over 9 percent this year.

Although the property crisis had already been in the making for several months, Diageo, in May last year, bravely announced plans to build a new brewery and close its two breweries Kilkenny and Dundalk with the loss of 250 staff.

The new Arthur Guinness Brewery was to be built in Leixlip, west of Dublin, on land purchased from the Guinness family and the local council. This brewery, which would have been Diageo’s biggest globally, was scheduled to be opened in 2013.

However, the current economic crisis, which has led to a slump in Ireland’s property market, has made the company do a U-turn on its plans. The scheme had relied on Diageo cashing in on Ireland’s decade-long property boom by selling off brewing property in urban locations.

With its financing suddenly in total disarray, Diageo looked hard at the figures and decided that it was best to wait.

Irish demand for Guinness and other dark-brown stout beers also has waned in recent years as younger consumers switch to wine, spirits, cider and imported beer.