Diageo holds talks with city council over €100m plan to redevelop Dublin brewery
Published 05/07/2011 | 05:00
DIAGEO is in talks with Dublin City Council with a view to redeveloping part of the historic St James's Gate site.
The owner of Guinness, Smithwicks, and a host of other brands, has started preliminary talks with the council and aims to submit a planning application for a €100m redevelopment of the site.
The improvements would focus on modernising the brewery and see Diageo consolidate its European brewing processes at St James's Gate.
The redevelopment, if it goes ahead, will cover the area between James's Street and Victoria Quay in what will be a "generational" investment.
As part of the application process, Diageo will be required to submit a "masterplan" for the area. Once that is approved, a formal planning application will follow.
If that application is successful then Diageo will decide whether or not to proceed with the redevelopment. It is believed the drinks giant hopes to make a final decision on whether to carry out the work within the year.
The expectation is that the redeveloped site will lead to much improved efficiency at the brewery. Where it would leave its operations at Kilkenny and Dundalk remains to be seen, however.
Diageo had intended to close those plants and consolidate its brewing at a greenfield site in Leixlip in 2008. That project was put on hold a year later, however, after the economy collapsed. The company has long said the two plants need to become more competitive.
While the future of the Leixlip site has not been formally decided since the project was postponed, a redevelopment in St James's Gate would likely be the death knell for any development there.
The move to redevelop the Dublin brewery comes at a difficult time for Diageo, both in Ireland and globally.
The company was criticised in May when it announced it was planning to cut jobs in Dublin a day after photographs of US President Barack Obama drinking Guinness were beamed all over the world.
The Obama photos, combined with the queen's visit to the Guinness Storehouse, were said to have given the company €23m worth of free publicity.
Last march, Diageo's European president Andrew Morgan said the company would be reducing its marketing spend in Ireland, which he described as a "low-growth market". The "on-trade" here is down about a fifth since the peak of the market in 2001.
In February, the company's first-half results missed analysts' estimates, with revenue and profits both coming in under expectations.