Is Guinness For Sale?

Posted by Angie Rayfield Aug 11, 2007

For months, rumors have been swirling about that Diageo, the parent company of Guinness Stout (among many others), is considering a sales of the historic St. James’ Gate Brewery, and even rumors that they would sell the Guinness brand itself.

Traditionalists are appalled at the thought. The St. James’ Gate Brewery has been producing Guinness since 1759, and for some, “Guinness” and “stout” are interchangeable terms. A visit to the brewery is virtually a pilgrimage for many beer lovers visiting Ireland – indeed, according to some lists, it’s the most popular tourist attraction in Ireland. Why would Diageo even consider such heresy?

Well, history and tradition are one thing, but no matter how you cut it, business has some demands of its own. Diageo owns a number of brands, in whole or part – Moet Hennessy, Smirnoff, Cuervo, Johnnie Walker, Captain Morgan – and Guinness accounts for only about 13% of the company’s sales.

And while the Guinness mystique is still strong around the world, sales growth isn’t as strong as for some of the premium spirits in their lineup. In fact, domestic sales in Ireland have actually been dropping for Guinness. Changes in liquor laws and drinking habits have helped contribute to a steady decline, and a brand revered around the world for its history and tradition is seen at home as stodgy and old-fashioned.

Earlier this summer, Diageo appeared to lay at least some of the rumors to rest. Late in July, Diageo stated that it was not going to sell off the Guinness brand. But not addressed in that announcement was the fate of the St. James’ Gate Brewery itself. And that 56-acre site in Dublin is now prime real estate, worth possibly upwards of E3 billion (yes, that’s 3 billion Euros). At this point, all that has been publicly announced is that the company is reviewing its operations in Ireland – but bottom line, that kind of money would make it easy to set up a new, modernized brewery with more than a little spare change left over.