[IBU] Guinness To Overhaul Brewing Operations In Ireland

[Becker, Steven]

http://www.manufacturing.net/News-Guinness-To-Consolidate-Brewing-Ops-In
-Ireland.aspx?menuid=36
 
Guinness To Overhaul Brewing Operations In Ireland
By Shawn Pogatchnik, Associated Press Writer
Manufacturing.Net - May 09, 2008



DUBLIN, Ireland (AP) -- Guinness beer owner Diageo PLC rattled an Irish
icon Friday, 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 this would do too much damage to its brand image and
customer sentiment.

Diageo expects 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 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 pubgoers' 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 told a news
conference inside Guinness' panoramic Gravity Bar, which offered a
360-degree view of a mist-shrouded Dublin.

The new plant is expected to employ about 100 people, many of whom could
come from the central Dublin brewery. Two other breweries employing more
than 170 in the towns of Dundalk, north of Dublin, and Kilkenny to the
south would close by 2013, and few of those workers would be expected to
relocate.

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 would be able to produce more than two-thirds of that on its own.

Diageo executives said they planned to spend 800 million euros ($1.25
billion) on the plan. Nearly three-quarters would go on building the new
plant at an as-yet-undisclosed location, most of the rest on the costs
of closing the two breweries and paying off staff.

About 100 million euros ($150 million) 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 from another
location in search of better profits.

''I firmly believe if Arthur was here today, he would tell us to hurry
up and get on with it, and would endorse it as the right thing to do,''
Duffy said of Diageo's plan.

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 ($775 million). Property prices
in Ireland have soared over the past decade as the economy has grown,
but have dropped this year in line with the global credit crisis.

Officials in the two towns losing breweries expressed shock at the news.

The Great Northern Brewery in Dundalk mainly produces Guinness' sister
beers -- Harp lager and Smithwick ale -- as well as continental European
lagers under license, including Denmark's Carlsberg and Germany's
Warsteiner.

The St. Francis Abbey Brewery in Kilkenny produces Irish-brand ales and
U.S. brand Budweiser for the Irish market, where lighter beers, ciders,
wines and vodka-based drinks have made steady inroads versus Guinness
over the past decade.

The new suburban Dublin brewery would absorb all of the beer production
currently carried in Dundalk and Kilkenny. It also would produce
Guinness for continental European and global export, as well as the
secret-recipe ''essence'' extract that Guinness ships to its nearly 50
breweries worldwide.

Diageo's smallest beer-related facility in Ireland, in the city of
Waterford, also will continue to produce the ''essence'' extract. But
supply director O'Hagan said staff there would be cut from 27 to 18.

Production of the company's two world-recognized local spirits --
Bailey's Irish Cream in the Irish Republic and Bushmills whiskey in the
British territory of Northern Ireland -- will not be impacted by the
brewery shakeup.

Diageo shares slipped 0.5 percent at 1,023 pence ($19.99) on the London
Stock Exchange.

 

Thank you.  

Steven Becker 

Pioneer Hi-Bred International 

A DuPont Company 

7200 NW 62nd Ave.

P.O. Box 184

Johnston, IA 50131-0184

515-270-3425 

steven.becker at pioneer.com 

www.pioneer.com <http://www.pioneer.com/>  

 

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