Diageo mulls Guinness move

By Neil Merrett

- Last updated on GMT

Related tags: Drink, Guinness

The future for Guinness's historic Dublin-based production site
seems as unclear this week as the popular beverage
itself, after Diageo announced that it was reviewing the
effectiveness of its production network in Ireland.

"The Diageo brewing business is considering a number of important investment decisions on upgrading and renewing its brewing facilities in Ireland in the coming years,"​ the company said in a statement. The brewery at St.​ James's Gate has been the spiritual home of the world famous tipple since 1759, as well as a must see for tourists from around the globe, though it is under threat from a company-wide drive for greater cost effectiveness. The proposed move marks a growing trend amongst a number of beverage groups, which have been forced to step up the competitiveness in their operations in the increasingly congested market place for their products. Even Guinness, a product synonymous with Irishness around the world, has undergone some domestic sales slumps over the last couple of years. This has resulted in its image as the nation's signature drink becoming under threat from a shift in consumer interest of ciders and other beverages. These troubles have added to the speculation that the sites significance to the beverage is financially unsustainable, following Diageo's comments that it was to reconsider how it operated in the country. Though conceding that changes were likely to its brewing within the country over the coming years, Diageo added that it still had made no firm strategy for its intentions regarding Guinness and its other brands in the country."No decisions have been made or will be made until the assessment is completed,"​ the statement added. Guinness has been a victim of the government's drive to curb excessive drinking in the country -- Irish consumers are the biggest drinkers in Europe -- and also of competition from other drinks brands, such as Magners cider. The firm sold eight per cent less Guinness in Ireland in the year up to 30 June 2006, compared to the year before. Sales were also down three per cent in Britain. The difficulties with Guinness blighted a nine per cent overall sales rise for Diageo, despite gains for the iconic dark beer in other countries, notably Russia, the US and Japan. Previous measures to boast sales in the key UK and Irish markets have even included using the famous brew within certain brands of bread.

Related topics: Markets, Diageo

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