Diageo to invest €650 million in Irish operations

Diageo are to spend €650 million (£520m) on improving its Irish brewing operations. The company is planning to build a modern Guinness brewery close to Dublin and rejuvenate the historic St James’s Gate facility. When the new brewery begins production in 2013, existing breweries in Kilkenny and Dundalk will close, and 250 jobs will be lost.

“This will be the single biggest capital investment made by Diageo in its supply infrastructure since the company’s creation 10 years ago and will enhance the cost competitiveness of our global beer operations,” said Paul Walsh, Diageo’s chief executive.

“Our ambition is to create a brewing hub, which will meet the highest standards of technology, efficiency and environmental management,” he added.

Under the investment proposal:

• The world famous St. James’s Gate brewery will be upgraded and consolidated to produce Guinness primarily for the Irish and British markets. When the programme is completed the brewery will be the second largest in the country. The Guinness Storehouse will continue its development programme to accommodate growing visitor numbers.
• A new brewery will be built on a suitable site close to Dublin. On completion in 2013 it will be Diageo’s biggest brewery and the largest in Ireland. It will produce Guinness as well as ales and lagers.
• When the new brewery is commissioned in 2013, all production from existing breweries in Kilkenny and Dundalk will be transferred, resulting in the closure of these facilities.
• Operations at Diageo’s Waterford Brewery will be streamlined as part of the re-organisation, resulting in some reduction in output. The Belfast packaging facility is unaffected by these developments.
• When the new breweries are operational from 2013 onwards, Diageo anticipates a loss of approximately 250 employees.
• Following the completion and successful commissioning of the new breweries, surplus land on parts of the St. James’s Gate site as well as in Dundalk and Kilkenny will be available for redevelopment. This surplus land is estimated to have a current value of approximately €500 million (£400 million).
• Additional estimated one-off cash costs of €150 million (£120 million) are expected relating to the proposed restructuring of the brewing operations.

Patrick Schmitt, 14/05/08