Diageo does NOT do the unthinkable …
… namely cease production at its St. James’ Gate brewery in Dublin. However, it will lay off more than half of its brewery workers, close two breweries and shift most production to a new, high-tech plant in the Dublin suburbs by 2013.
What many feared did not materialise in the end: the closure of Guinness’ landmark brewery in Dublin. But even without this move, Diageo’s plans for Guinness’ brewing operations in Ireland are drastic. As announced in May, the British beverage maker decided not to close the Dublin brewery, one of the city’s oldest businesses and a top tourist attraction, after concluding this would do too much damage to its brand image and customer sentiment. Still, Diageo plans to lay off about 250 people, or 58 percent of its current brewery work force in Ireland, over the next five years. Brewing staff at the Guinness brewery at St. James’ Gate will be slashed to 65 from 230.
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. The old St. James’ Gate brewery which also houses Guinness’ visitor centre, the Storehouse, will exclusively supply the Irish and British markets, where demand for the eponymous stout has declined over the past decade.
As part of the restructuring plan, Diageo will close its breweries at Kilkenny and Dundalk, which says Diageo do not have the scale necessary for sustained success in increasingly competitive market conditions, and build a new brewery on the outskirts of Dublin.
The St James’s Gate site it proposes to sell and the Kilkenny and Dundalk sites have an estimated value of EUR 510 million.
Diageo said it will invest EUR 650 million between 2009 and 2013 in the restructuring.
The renovation of the St James’s Gate brewing operations is expected to cost around EUR 70 million. About 65 staff will remain in brewing operations at St James’s Gate with about 100 others due to transfer to the new Dublin plant.
Although the company has yet to announce the exact location of its new brewery, the company says it will have a capacity of around nine million hl, or around three times that of the refurbished St James’s Gate site. This new brewery will produce Guinness for export and ales and lagers for the Irish market.
The company employs 800 people in its brewing operation and a total of 2,500 in the Republic and Northern Ireland.
Diageo’s smallest beer-related facility in Ireland, in the city of Waterford, will continue to produce the Guinness extract. But staff there will be cut to 18 from 27, it was reported.
Production of the company’s two world-recognised local spirits - Bailey’s Irish Cream and Bushmills Whiskey - will not be impacted by the brewery shakeup. Or Diageo would face a popular uprising in Ireland.
