Diageo, the owner of Guinness stout, is scaling back plans to construct a €650m ($855m) new brewery on the outskirts of Dublin and may scrap them altogether as global beer sales slump.
Diageo, which announced plans for the new brewery last May as part of a restructuring of its historic St James’s Gate brewery in Dublin, on Monday said it was undertaking a “re-evaluation” of its brewing investments in Ireland.
“The world has changed,” the company said. “We want to pause for breath.”
The review is a blow for Ireland, which needs foreign investment to keep its economy afloat.
Once revered as the “Celtic Tiger”, the country is now battling rising unemployment, a banking crisis and a spiralling budget deficit.
The drinks group, which also brews beer brands such as Carlsberg and Budweiser under licence in Ireland, said the review would take several months. Options under consideration include building a smaller brewery, delaying construction and scrapping the plans.
The move comes as brewers face declining sales as consumers cut alcohol purchases in pubs, bars and supermarkets to save money.
Diageo, which also owns beer brands such as Harp and Kilkenny as well as Guinness, brews a third of its beer in Ireland. As well as supplying Ireland and Great Britain with beer brewed in Ireland, it also ships beer to North America and Europe.
Diageo said Monday markets to be served by the new brewing arrangements had all been affected by the global economic downturn.
Diageo declined to comment on whether plans to close breweries in Kilkenny and Dundalk as part of the St James’s Gate restructuring would be scrapped.
When Diageo announced plans for its new brewing centre last year, Paul Walsh, chief executive said: “It represents a major vote of confidence in our beer business and in Ireland as a global brewing centre.”
The investment would have allowed Diageo to brew 20 per cent more than it does today in Dublin. At the time, Diageo said it expected beer exports to rise by some 8 to 10 per cent each year.
The new brewing centre, which would have been the first large-scale brewery built in either Ireland or the UK in more than 20 years, was scheduled to be completed in 2013.