When the Guinness Went Flat

IT tasted like a pint that had been left standing for too long and had lost its bubbles. The news early last week that Diageo, the drinks multi-national that now owns Guinness, was going to make a major announcement left us all feeling a bit flat.

The prediction was that Diageo would announce the closure of the centuries old brewery on the Liffey in the center of Dublin. The rumor was that the company wanted to cash in on its valuable 55-acre site in the heart of the city (the last cherry in the cake, as one developer put it) and move its brewing operation out to a new super-efficient modern plant on the outskirts of the city. One estimate was that the site was worth over *2 billion.

We're getting used to announcements about job losses, but this was like someone chopping your right arm off (the one you lift your pint with). Guinness is so much a part of what we are that it's almost sacred.

Taking it from its historic site beside the Liffey would be a kind of sacrilege. Taking Guinness out of Dublin would be like taking champagne out of Champagne.

The black stuff is synonymous with the city. It's only a few decades since it was being transported down the Liffey on the famous Guinness barges.

So it seemed impossible that the rumor could be true. Even a multi-national could not be that insensitive or commercially stupid . . . could it?

When the official announcement came a couple of days later, the story turned out to be half true. Yes, major changes were on the way.

The company wanted to raise about *500 million by selling less than half of its 55-acre site. And yes, it did want to move a lot of the brewing out to a new greenfield site.

But the Diageo spokesmen with English and French accents assured the press that Guinness would continue to be brewed in the iconic St James's Gate brewery in Dublin which will be upgraded at a cost of *100 million, and will continue to produce the Guinness for the Irish and British markets. This will involve the building of a new brewhouse on the site.

Diageo, which employs 2,500 people at its Irish operations north and south of the Border, said there was no question of severing the historical link with St. James's by closing the Dublin plant. The Diageo bosses, looking a bit spooked at the outrage the rumors had sparked, insisted that the historic brewery on the Liffey was an intrinsic part of Guinness, both the drink and the image. They said they were well aware of the sensitivity of the situation.

However, the fact is that Guinness production at the St. James's Gate site will be cut by a third, to 500 million pints a year, while a new brewery, the company's biggest, is to be built on a site close to Dublin to produce one billion pints of Guinness for export, along with ales and lagers.

The new super brewery will take about five years to build, and because it will be so efficient and automated it will employ only 100 people, a fraction of the existing staff numbers in Ireland. Not only that, but the new plant will also take over the work of the Diageo breweries at Kilkenny (Smithwicks and Budweiser) and Dundalk (Harp and Carlsberg).

The staff at St. James's Gate will be reduced to around 65, with the 100 staff for the new out of town brewery coming from there and from those who lose their jobs in Kilkenny and Dundalk.

The Diageo bosses said repeatedly last week that the St. James's Gate brewery will serve the Irish and British markets into the future, and that this promise would ensure that every pint of Guinness sold in Ireland in the future would be brewed by the Liffey.

That will be some consolation to pint drinkers here. But it was not enough to satisfy the Guinness workers, who said it was "spin" and vowed to fight the brewery closures in Dundalk and Kilkenny and what they called the "running down" of the St. James's Gate brewery.

But there is a certain inevitability about all of this. Sales of Guinness (and other beers) have been falling steadily here over recent years, while wine sales for home drinking are way up.

The traditional Irish pub is a dying business, squeezed out by the smoking ban and the drunk driving laws. Guinness and its parent Diageo have been feeling the pressure.

The 2006/'07 figures show that sales of Guinness fell 7% in Ireland and 3% in Britain over that year, but worldwide sales grew 3%, helped by growth in Africa (Nigeria has overtaken Ireland as the drink's second-biggest market, after the U.K.) and Asia.

Going forward, it is vital that plants be efficient, the company said last week. The Kilkenny plant (Ireland's oldest brewery) and the Dundalk plant "do not have the scale necessary for sustained success in increasingly competitive market conditions."

Workers will be offered jobs at the new super-brewery outside Dublin, and those for whom relocation is not possible will be offered "a severance package alongside career counseling." The same will apply to those who lose their jobs as St. James's Gate is downsized.

Although the company employs a total of 2,500 people in the Republic and Northern Ireland, only 800 people work directly in the brewing operation. This number will be reduced much more as the new plan is implemented over the next five years.

Some of those non-core workers are employed at the famous Guinness Storehouse, and it's success as a tourist attraction is one of the reasons that Guinness is keeping its presence at St James's Gate. The Storehouse has just under one million visitors a year who immerse themselves in the history of the world famous drink, and then immerse themselves in the black stuff itself as they gaze across the city from the 360 degree glass fronted bar at the top of the historic seven story building.

To quote the website: "Located in the heart of the St James's Gate Brewery, Guinness Storehouse is Ireland's number one international visitor attraction. Our staff will be pleased to welcome you and bring alive a real segment of Irish history."

Without the continued brewing of the Guinness for Ireland on the site, that would have been a hollow experience. So the fact that brewing is to stay at James's Gate is something we can all raise a glass to, as one newspaper here put it.

And before Diageo has any more bright ideas, the paper added, it should remember the advice of the great Irish writer Flann O'Brien when times are hard in the future:

"When money's tight and hard to get,

And your horse has also ran,

When all you have is a heap of debt --

A pint of plain is your only man."