Diageo rethinks plan for new Guinness brewery

DUBLIN Jan 19 (Reuters) - British drinks maker Diageo Plc (DGE.L) said on Monday it would review a 650 million euro ($865 million) Irish investment plan, which would have included a new Guinness brewery outside Dublin, due to the economic downturn.

Diageo said last year it would build a new brewery in Leixlip, west of Dublin, while cutting output and selling surplus land at St James's Gate in Dublin, where Arthur Guinness started brewing Guinness stout in 1759.

"As result of the current difficult global economic situation, which affects both Ireland and the main international markets to be served by the new operations, Diageo has decided to conduct a re-evaluation of this brewing investment programme," it said.

The group had been planning to supply British and Irish markets with Guinness from the original Dublin city centre site, while closing two smaller sites by 2013 and cutting its Irish brewery workforce by more than half.

"The evaluation is expected to run for several months, and the outcome will be communicated to staff and other stakeholders as soon as possible," Diageo said.

The government expects Ireland's recession to deepen in 2009 and will be the worst on record, and the country's drinks industry body has said the economic woes have caused a sharp slide in alcohol sales. (Reporting by Andras Gergely, editing by Will Waterman)