Diageo will not decide whether it will continue brewing Guinness at St James's Gate in Dublin until May, the head of its Irish operation said yesterday, as the drinks group announced a turnaround in the stout's popularity in Ireland and Britain. Laura Slatteryreports.
After years of decline, sales of Guinness rose 3 per cent in Ireland in the second half of 2007, allowing it to recapture some market share.
A heavy investment in marketing and poor summer weather helped the iconic Guinness brand to a healthy 1.3 per cent increase in its share of the long-alcoholic drinks market in Ireland's pubs and bars, according to Michael Ioakimides, managing director of Diageo Ireland.
Worldwide, Guinness sales grew 6 per cent, expanding in each of its four largest markets - Britain, Ireland, Nigeria and the US - while global sales of Baileys Original Irish Cream also increased 6 per cent over the same period the previous year.
"Guinness is back in the black is the headline for me," Mr Ioakimides said.
Diageo reported a 7 per cent increase in global net sales and a 9 per cent rise in operating profit.
In Ireland, a €40 million investment on quality assurance coupled with a strong response to its Music Machine and Tipping Point advertisements helped recruit drinkers.
Among Diageo's other brands, consumption of Bud Lite shot up 36 per cent, sales of Smirnoff vodka rose 12 per cent and Bushmills whiskey sales rose 9 per cent. All three gained market share, while its wine business expanded 9 per cent - twice the rate of the market.
Diageo sold three million pints of its Brewhouse series of limited edition Guinness brews over the six months. It now plans to extend pilot testing of Guinness Mid-Strength in Limerick and Dublin to more pub outlets.
The popularity of mid-strength, which contains a third less alcohol than a normal pint, is expected to take a number of years to cement, but Diageo is planning to develop the mid-strength concept to other drinks.
Speculation has mounted that Guinness will move out of its historic home at St James's Gate, where Arthur Guinness first brewed Guinness in 1759. There are logistical difficulties with the 64-acre city centre site as well as potential to use the valuable site as a cash cow.
The Dublin brewhouse is also near the end of the life cycle of a brewery, and Diageo needs either to invest several hundred million euro or shut down production.
But Mr Ioakimides said Diageo, which runs a €2 billion business in Ireland, was "absolutely committed" to keeping a presence in Guinness's country of origin and that no decision has yet been made on St James's Gate's future.
"We are reviewing all brewing operations in Ireland and looking at the five sites we have. But we have been here for 300 years and we will be here for another 300 years," he said.
The Government, industry customers, employees and consumers will all be consulted about its plans, he added. "It is such a sensitive thing."
