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Diageo pledges green future for the black stuff

By Neil Merrett , 26-Jul-2007

Diageo's Guinness brand received a boost yesterday as its attempt to go green paid off amidst growing uncertainty over the future of the beverage and its famous Dublin-based production plant.

The group said in a statement that it had received accreditation for its work in improving energy and cost efficiency at its St. James's Gate brewery. It has also pledged to expand the product range outside of its traditional markets. Speculation has grown regarding the future of the historic Dublin-based brewery as well as the brand itself in recent months, as changing consumer demands and pressure on margins force brewers to rethink their production methods. Guinness sales in particular have fallen in its native Ireland, where it once reigned supreme as the leading alcohol brand. Diageo therefore revealed last month that it was reviewing the effectiveness of its production plants in the country in a drive for greater profitability. The future of the plant appears to have been boosted though this week, after it became only the second Irish enterprise to be awarded the country's IS393 Energy Management standard. The "smart energy management" scheme is part of the company's ongoing drive to reduce the environmental impact of brewing at the plant. According to the company, over an eight-month period water use at the site had been reduced by 8.5 per cent. It has also cut the use of thermal energy needed for the brewing process by 7.5 per cent, while electric consumption was reduced by about five per cent. Along with addressing increasing concern over emissions, the company said that the move was also geared towards cuting production costs at the site. At the beginning of the year, the company also revealed it had agreed a deal with Bord Gais for the supply of "green energy" to the site. The agreement will mean that all of its brewing sites in Ireland will now be run on renewable sources such as wind turbines, the company said. Along with the green commitment, Diageo's chief executive Paul Walsh revealed the company was looking to emerging markets for the product like Africa, to further offset declining profitability in Ireland, speaking to the Financial Times newspaper yesterday. "We have to continue to grow the brand outside its home market," Walsh was quoted as saying, adding that sales of the product outside of Ireland were up by about five per cent. However, whether the move into new markets can retain Diageo's interest in the brand in the long term could prove to be challenging. The firm sold eight per cent less Guinness in the country in the year up to 30 June 2006, compared to 2005. Sales were also down three per cent in Britain.


The difficulties with Guinness blighted a nine per cent overall sales rise for Diageo, despite gains for the iconic dark beer in other countries, notably Russia, the US and Japan.

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