New Dublin brewery for Guinness

Drinks giant Diageo has announced plans to invest 650m euros ($1bn; £514.7m) in its Irish beer business - its largest capital investment to date.

The money will be spent on upgrading its Guinness brewery at St James's Gate and building a new brewery near Dublin.

When work is completed in 2013, the firm's existing plants in Kilkenny and Dundalk will close, Diageo said.

With its Waterford operations also affected, about 250 jobs are expected to go as a result.

"Our ambition is to create a brewing hub, which will meet the highest standards of technology, efficiency and environmental management," said Paul Walsh, chief executive.

"It represents a major vote of confidence in our beer business and in Ireland as a global brewing centre of excellence for our company."

Expansion plans

The Guinness storehouse on the St James's Gate site is one of the most popular tourist attractions in the Irish Republic and has huge historical importance to Dublin.

Up to four million pints of the stout are produced there each day.

After its makeover, it will be the second-largest brewer in Ireland, overtaken only by Diageo's new brewery, the company said.

The new site will produce Guinness as well the firm's other ales and lagers, which include Smithwicks, Kilkenny and Harp.

Diageo said its Kilkenny and Dundalk breweries had "played a critical role in the historic success" of Diageo's beer brands in the Republic.

But a lack of scale "necessary for sustained success in increasingly competitive market conditions" meant that new plans had to be made.

Diageo said it would make sure that affected employees were offered relocation opportunities where possible.

Where this is not possible, they will be offered a severance package, alongside career counselling and outplacement support.

Once the restructuring has been completed, Diageo said surplus land on parts of the St James's Gate site, as well as in Dundalk and Kilkenny, "will be available for redevelopment".

The firm hopes to get 500m euros for the land.

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