Guinness buys Pennsylvania facility to produce hot selling 'malternative'

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Guinness NA, a subsidiary of Diageo of Great Britain, paid $29.8 million to buy the Fogelsville brewery in the Lehigh Valley and will spend another $15 million to prepare the facility for Smirnoff Ice production.

"Smirnoff Ice has been a stunning success," said Paul Clinton, president and chief executive of Guinness North America. "This plant will help Guinness meet the ever-rising consumer demand and will expand our ability to deliver Smirnoff Ice more efficiently and conveniently to our customers across North America."

Schaefer spent $46.5 million to build the brewery on 149 acres of farmland in 1972. Stroh Brewery of Detroit acquired Schaefer in 1981. Then in 1999, Stroh sold the facility to Pabst. Pabst closed the plant in September.

The brewery employed 380 people before it was shut down. Guinness expects to employ 250 when the facility reopens. Former members of Brewery Workers Local 12, a Teamster's local at the Pabst plant, were unavailable for immediate comment.

Guinness will be looking at every job applicant, including the union members, said company spokesman Gary Galanis. "They will be considered equally," he said.

"We're beginning to retrofit the plant now, and we should have our first line of Smirnoff Ice in early February to keep up with demand."

Since its launch in the United States in January, Smirnoff Ice has captured 1.8% of the 200 million barrel annual beer market, said Benj Steinman of Beer Marketer Insights, an industry newsletter.

It's the leading drink in a category called "malternatives" - alternatives to malt drinks such as beer. Smirnoff Ice is a vodka-based drink in other countries. But in the United States, it contains no vodka. It is one of the most successful product launches in beverage alcohol history and is particularly popular with young people and women. Smirnoff Ice outsells well-known beers such as Heineken and Corona, the company said.

In addition to buying the brewery near Fogelsville, Guinness is expanding a plant in Plainfield, Ill., to produce more Smirnoff Ice. Brewing Smirnoff Ice under contract has significantly boosted business for City Brewery in LaCrosse, Wis., and High Falls Brewing Co. in Rochester, N.Y.

"Before this, their production was a hodgepodge, with several different contracts across the country," Steinman said. "It has been their plan to ramp up production quickly at a site like this."

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