Stout defence of brand Guinness
With the majority of the output going for export, the consolidation will also secure the future of St James’s Gate.
It will be the company’s second biggest investment globally in brewing or distilling facilities but is a long way short of the €650 million originally planned in 2008 before the economic crash. That involved the construction of a super brewery in Leixlip, Co Kildare, on lands owned by the Guinness family.
The “cornerstone” of that investment was the release of capital from surplus land at St James’s Gate, which was ripe for development in inner city Dublin during the property bubble.
“We were prepared to reinvest that money in the fabric of the business,” Walsh says. “With the recession, those land prices evaporated. So the whole raison d’être just dissolved and we had to retrench and see what’s next.”
Is the super brewery idea binned forever?
“I don’t think you can say it will never happen. You can say it isn’t going to happen in the foreseeable future.”
The brewhouse will be situated on the north side of the St James’s Gate site, which runs from James’s Street to Victoria Quay.
What about the existing brewery beside the Storehouse visitor centre?
“We’ve still got to finalise our plans for that. Clearly, if we could develop it that would be one option. But we haven’t alighted on any firm plan in that regard.”
One option might be to expand the operations of the Storehouse, which is a big hit with tourists, attracting more than one million visitors a year for the perfect pint of Guinness and views across Dublin from its Gravity Bar.
“It’s been an incredible success story,” Walsh beams. “I think it is now the number one tourist attraction in Ireland. We continue to invest in it to make sure it’s relevant and pristine.
“We will look to see if we can expand that type of tourist attraction. I’m not sure how we could do that but there may be things we can still do with that site to give ourselves a bigger footprint.”
Even Queen Elizabeth II and Prince Philip visited the Storehouse during their trip to Ireland in May 2011.
“It’s a must-see place isn’t it?” says Walsh with a grin. All it needed was for Her Majesty or the prince to taste the pint that had been pulled for them.
“We did try.”
Diageo had rather better luck when US president Barack Obama and his wife Michelle visited Ireland that same month. Millions of television viewers worldwide saw Obama eagerly neck a pint of Guinness in Hayes’s pub in Moneygall, Co Offaly, while the First Lady tried her hand at pulling a pint.
Walsh was “very appreciative” of their patronage.
Not surprisingly, the Englishman likes the odd pint of Guinness himself but with a portfolio of brands as long as a bar counter – Bailey’s, Bushmills, Smirnoff to name a few – in a trendy watering hole, what is his favourite tipple?
“When I go to my pub, it’s Guinness,” he says. “Now you think I would say that. However, in the past some journalists have tested me on that and the landlord of the local pub has borne it out.
“If I pop down there of an evening with my dog, I’ll have a pint of Guinness. Equally, in front of the fire or in my home I like a nice Johnny Walker.
“Summer’s day? I like a nice Tanqueray and tonic. I’ve got a lot of good offerings to choose from, all consumed with appropriate moderation.”
How does the pint of plain in Britain compare with Dublin?
“Well, bear in mind when you drink a pint of Guinness in the Storehouse you are drinking very, very fresh Guinness.
“In fact, if you go around Dublin you are drinking outstandingly good Guinness. But the beer here [in London] is very, very good.”
Guinness represents about half of Diageo’s global beer portfolio.
In the year to the end of June 2012, net sales, which exclude excise duties, rose by 8 per cent in emerging markets and by 2 per cent in developed markets (which included a 9 per cent increase in North America). Overall, the rise was 4 per cent.
It’s a different story in Ireland, where the beer market declined by 5 per cent in that period. Diageo said Guinness draught and Smithwick’s draught grew market share but didn’t publish specific figures.
“Overall, I think Ireland in the foreseeable future will be relatively flat,” Walsh says, no pun intended.