Punter remains king as research shows brand's authenticity is crucial

The history of St James's Gate is central to the experience of drinking Guinness, writes Laura Slattery.

The history of St James's Gate is central to the experience of drinking Guinness, writes Laura Slattery.

"NOT EVERYTHING in Black and White Makes Sense" goes the Guinness ad slogan.

Unfortunately for the 250 employees who will lose their jobs at Diageo, the drinks group's review of its Irish brewing operations makes perfect sense - from a hard-nosed business perspective.

If anything, Guinness's parent company has erred on the side of sentiment by retaining two-thirds of current production levels at the St James's Gate site - a sprawling, logistical nightmare of a place, unfit in its current state for a modern brewing operation.

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But it has got history, and it is that history which Guinness has repeatedly mined for marketing purposes, from the labelling of its cans "straight from the Gate" to the TV ads in which long-lost special brews hidden in the brewhouse are discovered.

While the closure of the Kilkenny and Dundalk breweries will undoubtedly leave a bitter aftertaste, Diageo's decision to invest €650 million in Ireland is a less sobering outcome to this review than many had feared.

Diageo had been predicted to shut down production of Guinness at St James's Gate and brew only the flavour extract known as "the essence of Guinness" at the site.

St James's Gate could have become little more than a tourist attraction. Instead, it will remain a functioning brewery, with an upgraded brewhouse on the north side of Thomas Street. Every pint of Guinness consumed in Ireland will still be brewed there.

It is a far cry from last year's industry chatter, which had it that Diageo was not really all that fond of beer, largely because Smirnoff vodka and Johnnie Walker scotch whisky are its biggest sellers. The rumour was that it would exit the beer business completely.

Diageo chief executive Paul Walsh said yesterday that Guinness sales might be growing faster in Africa than elsewhere, but that Dublin would remain the centre of its brewing empire.

Diageo, the world's largest drinks firm, had profits of £2.1 billion (€2.65 billion) in its last financial year. How can it justify axing so many employees?

Brewing is "hugely competitive", Walsh said. Two major global breweries published financial results this week, "and they were not good". Smaller breweries are closing in western Europe as new ones open in eastern Europe, Russia and China.

Walsh, from Manchester, admitted that when he visits the brewery he is reminded of its "amazing historical legacy".

So what would Arthur Guinness say now Guinness is upgrading and scaling back activity at his old stomping ground?

"I think he would tell us to hurry up and get on with it and that it is the right thing to do," said Brian Duffy, chairman of Diageo Ireland, and global brand director for Guinness.

Diageo's consumer research shows drinkers in the Irish, British and North American markets still care about the brand's authenticity. "The brand is the dealmaker in all of the conversations," said Duffy. "When you detach yourself from a piece of history, you can't get it back."