Diageo's original plan to spend €650m here has been scrapped as the recession has bitten, writes CIARÁN HANCOCK
IT WAS a day of mixed reactions among Diageo’s brewing staff yesterday.
The elation at the planned €153 million investment in a new brewhouse at its famous St James’s Gate brewery was tempered by the fact its sister facilities in Kilkenny and Dundalk are to close with the loss of up to 99 jobs.
While employment at the two breweries is modest compared to previous years, the breweries have a symbolic status within the towns and their closures next year will represent a major loss to both communities.
The St Francis Abbey Brewery in Kilkenny is the country’s oldest, dating back to 1710.
The skills acquired by the brewing staff are not easily applicable to many other industries, even if the opportunities were available.
Diageo has given no indication as to its plans for either site once they are closed.
The scale of this investment by Diageo is not to be underestimated. It ranks second only to a £225 million spend on brewing facilities in Nigeria.
But it is less than a quarter of what Diageo had originally intended to spend.
In mid-2008, in the death throes of the Celtic Tiger, Diageo unveiled a €650 million investment plan to overhaul its brewing activities here.
It was an astonishing sum of money, even for the boom years, and was to have involved a new super brewery being built on land in Leixlip part-owned by the Guinness family.
Leixlip was where it all started for Arthur Guinness and his pint of plain in 1759.
St James’s Gate was to have been retained as a brewery, albeit on a smaller scale, while Kilkenny and Dundalk were slated to close.
The global financial crisis and the economic crash here scuppered that grand plan.
Consumption of beer has collapsed in the recession, with cash-strapped consumers switching from drinking in pubs to buying cheap booze in supermarkets that they can lash into at home without the smoking police hassling them or the need for a taxi home.
Guinness sales fell by 6 per cent last year.
The Leixlip brewery has been scrapped. Instead, Diageo has decided to move everything to St James’s Gate, where it will build a new brewhouse, grain intake building and silos, and a larger fermentation plant.
It’s good news for Dublin and secures the long-term future of the St James’s Gate brewery.
No new jobs will be created at the brewery. This investment is all about technology.
The company is also investing €10 million over the next three years to upgrade its Storehouse visitor centre at St James’s Gate.
It attracted more than one million visitors in 2011, including Queen Elizabeth II and Prince Philip last May.
Minister for Jobs Richard Bruton described Diageo’s investment as a “vote of confidence in the Irish economy”.
He is right but that will be cold comfort to the workers in Kilkenny and Dundalk who face losing their jobs.