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21 October, 2005



Brewing news UK: The shutting down of London’s Park Royal brewery costs Diageo GBP30 million

Diageo, the drinks giant confirmed on October 18 that closing its ParkRoyal brewery in London, which made Guinness before all production switched to Dublin, cost the company close to GBP30 million, according to the Glasgow Herald. Diageo's finance director NickRose, addressing shareholders at the group's annual meeting in London, said writing down the Park Royal's assets cost around the mid-GBP20m mark.

Another several million pounds was spent on redundancy for 120 workers.Facing questions from private shareholders, chairman Lord Blyth said Diageo was performing in line with guidance.

The chief executive, Paul Walsh said Diageo went on to gain market share in North America, while trading in Europe continued to be difficult with volumes down and the decline in ready-to-drink products continuing to adversely impact net sales growth. He affirmed: "The current oil price has led to higher costs for all consumer goods companies.

The drinks company is not immune to this but our cost structure does reduce our exposure and, therefore, we currently expect to contain these cost pressures within our overall guidance. "Walsh also warned that the impact of the impending smoking ban in Northern Ireland, Scotland and the rest of the UK was not good forDiageo in the short term. However, he added that the company believed new customers would be enticed into pubs and bars to help offset those who had been forced out.

The Irish sales of Diageo have been harder hit than the company expects in the UK, largely due to its business being skewed to the sale of on-trade Guinness in the republic. Sales of J&B whisky have floundered in the key market of Spain and are not expected to pick up in the near future. Walsh specified that Spanish consumers were either trading up to Johnnie Walker Black Label or out of Scotch into premium Latin American rum, both categories that benefit Diageo.





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