UK: Diageo makes efforts to revive its Guinness brand

Diageo the world's largest liquor company, is trying to revive fading demand for its Guinness brand. Some pub owners say Brew 39, the first of 10 new versions of the stout to be sold by 2010, won't lure new drinkers and may alienate fans of the traditional drink, Bloomberg reported on October 12.

The sales of Guinness in Ireland fell 3 percent in the year ended in June, after dropping 6 percent in the previous 12 months. A smoking ban introduced in March 2004 deterred people from visiting pubs, and the popularity of wine and lager grew, according to analysts. Guinness accounted for 9 percent of Diageo's sales volume in the year ended June 30, trailing Johnnie Walker and Smirnoff.

Diageo in June closed its Park Royal brewery in northwest London and shifted production of Guinness for the U.K. market back to Dublin after 68 years in the British capital , as a part of its plan to reduce expenses,. Diageo, whose revenue last year was 9.04 billion pounds ($15.9 billion), doesn't provide figures for the brand's income.

As a measure to halt the drop in Guinness sales, the beer will arrive in 300 bars around Dublin on October 19, and will be withdrawn six months later and replaced by a second version in what the company calls the Guinness Brewhouse Series. It will be sold alongside regular Guinness at the same price, around 4 euros .

``There's a variety of reasons,'' for the decline in Guinness consumption, said Jean Doyle, a Dublin-based Guinness spokeswoman in a telephone interview. ``People are traveling more, developing a preference for wine, there's more competition out there and the smoking ban hurt us of course.''

Guinness, developed by Arthur Guinness in 1759, still sells 1 million pints of the stout a day in Ireland, and 5 million around the world, according to the company. The Irish economy is expanding at the fastest pace in the 12 nation euro region. Irish bar sales, which slumped as much as 7 percent after the smoking ban, rose 4.6 percent in July, indicating that pub drinking is gaining popularity again.

Doyle of Guinness says the company won't be deterred by past failures.``Innovation is notoriously difficult, we know that,'' she said. ``We are just trying to offer our customers more choice.''

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