DIAGEO’S PLAN to invest €650 million in new brewery operations in Ireland has been put on ice due to the sharp deterioration in the economy in recent months.
The global drinks group said yesterday that it planned to carry out a strategic review of its investment plans here. The review is expected to last for “several months” and comes against a backdrop of declining beer sales in the licensed trade here and the closure of many pubs.
In a statement, Diageo said: “As a result of the current difficult global economic situation . . . Diageo has decided to conduct a re-evaluation of this brewing investment programme in order to ensure its scope remains appropriate in the changed economic environment.”
A spokeswoman for Diageo said the drinks group remained committed to the Irish market. “We want to make sure the assumptions we made are still the right ones but there is no doubting our commitment to the Irish market.”
In September, Diageo announced plans to build a new super-brewery on a 73-acre greenfield site in Leixlip, Co Kildare, close to where Arthur Guinness established his first operation in 1755. It planned to buy 50 acres from the Guinness family and 23 acres from Kildare Country Council.
It is understood that the purchase of the land from the Guinness family has still not been concluded and Diageo said yesterday that it had “paused” its application to Kildare County Council for planning permission.
The new brewery, which was to be named after Arthur Guinness, was intended to brew five million hectolitres of beer annually for export markets. Diageo’s plan to close breweries in Dundalk and Kilkenny and to scale back its brewing activities at its iconic St James’s Gate plant in Dublin have also been shelved for now.
Around 450 Guinness workers were due to be made redundant as a result of the brewery closures.
Diageo declined to comment on this yesterday, saying only that the decision would form part of its review and that the breweries are not due to close until 2013.
Diageo announced its massive investment plan in May 2008. The company said it would sell surplus land at its Dundalk, Kilkenny and St James’s Gate breweries, which it estimated would net the group about €500 million.
These land sales would have helped fund the investment in new brewing activities. The collapse in the Irish property market is thought to have played a significant part in Diageo’s decision to put its plans on hold.
Guinness staff were briefed yesterday by managers at the various plants around the State. They were said to be “stunned”.
One source said the company was “at the point of no return” with its investment plan. “They had to take a decision to proceed or not and they decided to step back for now,” the source added.
Trade unions representing the 1,500 staff had been engaged in talks with Diageo for several months on severance terms and staffing issues for the new brewery.
