THERE is growing speculation that Diageo could be considering a sell-off of arguably the world's best-known beer brand, Guinness.

A spokesman for the parent company - which has its production headquarters in Edinburgh - refused to comment on market speculation yesterday, but City rumours have continued since Diageo announced earlier this month it is set to call time at the home of Guinness by considering closing its famous brewery at St James's Gate, on the banks of the Liffey in Dublin and moving to a new site outside the city.

The future of the plant, once the biggest brewery in the world, is tied up with a review of Diageo's total operations in Ireland, where it has four breweries and employs 2,200.

The group says the review, expected to be completed next year, is aimed at producing a sustainable and profitable business in Ireland but there are fears of closures and job cuts.

Diageo is wrestling with falling Guinness business - down 7 per cent in Europe in the six months to the end of December.

The 56-acre St James's Gate site exports Guinness flavour extract to almost 50 breweries. It also brews draft Guinness for Ireland and, since Diageo closed its Park Royal brewery in London in 2005, for Britain.

Diageo recently revealed volumes of the stout fell by 10 per cent in Ireland in the past six months as increasing numbers of older drinkers die off.

"Relocating a brewery is always a risk. We've seen it many times with a brand that is closely associated with a particular location," said Andrew Holland, analyst at Dresdner Kleinwort.

There would be no shortage of buyers for Guinness. Heineken is regarded as the most likely, as it already has a number of brewing joint ventures with Diageo.

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