Diageo to sell half of St. James Brewery Killenny and Dundalk to Close
On the 9th May 2008, Diageo announced that it is to close its breweries at Kilkenny and Dundalk, significantly reduce its brewing capacity at St James's Gate and build a new brewery on the outskirts of Dublin under a plan announced today.
The company said it would invest €650 million (£520 million) between 2009 and 2013 in the restructuring.
The renovation of the St James's Gate brewing operations is expected to cost around €70 million and will see the volume of Guinness brewed there fall from around one billion pints a year, to just over 500 million. The drinks giant was considering closing the Guinness brewery at St James's Gate, on the banks of the Liffey in Dublin and moving production to a new site outside the city.
The future of the plant, once the biggest brewery in the world, is tied up with a review of Diageo's total operations in Ireland, where it has four breweries and employs 2,200.
Guinness and St James's have been synonymous since 1759 but with the plant showing its age and the surrounding area reserved for development, Diageo sees the opportunity to finance the construction of a modern plant on a greenfield site, possibly close to the planned new planned new Dublin port at Bremore.
The St. James Brewery site has a potential price tag of around €3bn (£2bn), if it were sold on the open market.
Diageo is wrestling with falling Guinness business - down 7pc in Europe in the six months to the end of December.
Diageo said the project’s cost could be minimized by selling land at the Dundalk, Kilkenny and Dublin sites valued at an estimated 500 million euros ($775 million).
This plant will serve the Irish and British markets and will be based on the Thomas St side of the site. The company said this would ensure that every pint of Guinness sold in Ireland would be brewed here. Approximately half of the 55 acre site will then be sold if and when the five-year project is complete.
Around 65 staff will remain in brewing operations at St James's Gate with about 100 others due to transfer to the new Dublin plant. 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 could take over the workload of both closing plants. 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.
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 hectolitres, 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.
Diageo said when the two Dublin breweries are fully operational in five years time it will transfer brewing out of the Kilkenny and Dundalk breweries and close these plants. This move will result in “a net reduction in staff of around 250”, the company said.
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 "essence" extract. But supply director O’Hagan said staff there would be cut to 18 from 27.
Operations at its Waterford brewery will be "streamlined" as part of the re-organisation leading to "some reduction in output". the current workforce of 27 in Waterford would be reduced to “around 18” but Diageo was unable to confirm the extent of the output reduction.
The company says the St James's Gate site it proposes to sell and the Kilkenny and Dundalk sites have an estimated value of €510 million.
Diageo shares rose 1.3 percent to 1,041 pence ($20.27) on Friday in London.
Sources:
http://www.bostonherald.com/business/general/view.bg?articleid=1092912&format=&page=2&listingType=biz
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/06/19/cnguinness119.xml
http://www.ireland.com/newspaper/breaking/2008/0509/breaking2.html?via=mr
The company said it would invest €650 million (£520 million) between 2009 and 2013 in the restructuring.
The renovation of the St James's Gate brewing operations is expected to cost around €70 million and will see the volume of Guinness brewed there fall from around one billion pints a year, to just over 500 million. The drinks giant was considering closing the Guinness brewery at St James's Gate, on the banks of the Liffey in Dublin and moving production to a new site outside the city.
The future of the plant, once the biggest brewery in the world, is tied up with a review of Diageo's total operations in Ireland, where it has four breweries and employs 2,200.
Guinness and St James's have been synonymous since 1759 but with the plant showing its age and the surrounding area reserved for development, Diageo sees the opportunity to finance the construction of a modern plant on a greenfield site, possibly close to the planned new planned new Dublin port at Bremore.
The St. James Brewery site has a potential price tag of around €3bn (£2bn), if it were sold on the open market.
Diageo is wrestling with falling Guinness business - down 7pc in Europe in the six months to the end of December.
Diageo said the project’s cost could be minimized by selling land at the Dundalk, Kilkenny and Dublin sites valued at an estimated 500 million euros ($775 million).
This plant will serve the Irish and British markets and will be based on the Thomas St side of the site. The company said this would ensure that every pint of Guinness sold in Ireland would be brewed here. Approximately half of the 55 acre site will then be sold if and when the five-year project is complete.
Around 65 staff will remain in brewing operations at St James's Gate with about 100 others due to transfer to the new Dublin plant. 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 could take over the workload of both closing plants. 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.
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 hectolitres, 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.
Diageo said when the two Dublin breweries are fully operational in five years time it will transfer brewing out of the Kilkenny and Dundalk breweries and close these plants. This move will result in “a net reduction in staff of around 250”, the company said.
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 "essence" extract. But supply director O’Hagan said staff there would be cut to 18 from 27.
Operations at its Waterford brewery will be "streamlined" as part of the re-organisation leading to "some reduction in output". the current workforce of 27 in Waterford would be reduced to “around 18” but Diageo was unable to confirm the extent of the output reduction.
The company says the St James's Gate site it proposes to sell and the Kilkenny and Dundalk sites have an estimated value of €510 million.
Diageo shares rose 1.3 percent to 1,041 pence ($20.27) on Friday in London.
Sources:
http://www.bostonherald.com/business/general/view.bg?articleid=1092912&format=&page=2&listingType=biz
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/06/19/cnguinness119.xml
http://www.ireland.com/newspaper/breaking/2008/0509/breaking2.html?via=mr
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