Diageo plans new brewery with old Guinness links

DUBLIN, Sept 11 (Reuters) - British drinks maker Diageo Plc (DGE.L) will build its new Guinness brewery outside Dublin on land with ties to the drink's founder as it seeks to cut costs without harming Guinness's 250 year-old Irish roots.

The new Arthur Guinness Brewery will be built by 2013 in Leixlip, west of Dublin, on land partly purchased from the Guinness family, Diageo said on Thursday.

Diageo said in May it would cut output and sell surplus land at St James's Gate in Dublin, where Arthur Guinness started brewing his stout beer in 1759, but would retain enough capacity to supply British and Irish markets from the city centre site.

The company, which also makes Baileys liqueur and Bushmills Irish whiskey, had considered closing St James's Gate entirely, but decided to renovate and keep it open after coming under pressure to preserve the site's heritage and brand value.

It decided however to shut two smaller breweries making Smithwick's ale and Harp lager in Kilkenny and Dundalk as part of its 520 million pound ($909 million) investment programme to reorganise brewing in Ireland.

The Leixlip plant will produce Guinness for export as well as ales and lagers and will have an annual production capacity of 5 million hectolitres, or about 1 billion pints. The remodelled St James's Gate plant will be Ireland's second largest with a 3 million hectolitre capacity, it said. (Reporting by Andras Gergely; Editing by David Holmes)