Toasting an Export Idea: Irish Pubs : Restaurants: With free advice from Guinness Brewing, publicans are opening 'authentic' saloons outside Ireland.

From Bloomberg Business News

With its foot-stomping Irish music, traditional "fayre" and creamy pints of Guinness stout, the Kilkenny Pub is packed every night--with Germans.

That's not surprising, since this Irish pub isn't in Cork or Tipperary; it's in Berlin. It's one of hundreds of Irish-style pubs that in recent years have sprung up outside Eire to offer slow-pulled pints of Guinness stout and "halves" of Harp lager.

Like Rosie O'Grady's pub next to the Lenin Library in Moscow and Molly Malone's on Manuela Malasana in Madrid, the Kilkenny in Berlin is brewing up profits for its publican, or owner, by selling a bit of the blarney abroad.

At the bottom of each pint glass is the London-based brewer Guinness Plc and its Irish Pub Concept, a program that gives free advice on how to start up a realistic Irish saloon in hopes it will sell Guinness beer, the world's No. 1 stout.

More than 800 aspiring publicans have taken advantage of the program so far, and Guinness sales are booming.

"To have an Irish pub without Guinness is like having a library without books," said Stephen Lombard, retail development controller at Guinness Brewing Worldwide. "This is a highly profitable business. People will expect to see Guinness."

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Pints pulled in pubs, not cans sold in supermarkets, account for the majority of Guinness' beer sales. Accordingly, the brewer has found export sales fueled by exported Irish pubs, which have been opened abroad by expatriates and entrepreneurs exploiting the growing popularity of Irish-themed bars.

To broaden its sales base, Guinness has developed its own "Irish Pub Concept" to assist prospective publicans who wish to open an "authentic" Irish pub anywhere from Montreal to the Middle East.

"The message was loud and clear," Lombard said. "Irish pubs were going to be a major conduit for sales. If we made it easier for people to open pubs, it would accelerate the process."

Guinness employs a staff of 20 people across the globe to help publicans choose local real estate, secure liquor licenses, market their pubs and arrange food and beverage distribution contracts, typically with local suppliers of Guinness beers.

The company doesn't offer the service in the U.S. because laws there forbid brewers from participating in retailing their products.

The publican chooses from one of five basic pub designs and waits for the furniture and fittings to be shipped from Ireland. The publican pays the tab, which ranges from a minimum of 100,000 to as much as 2 million, depending on pub size and specifications.

"Our interest obviously is in selling beer," Lombard said. "What we are not talking about here is a franchise operation."

Guinness gives its advice free of charge because it's a cheap way to build sales. It has spent 5 million on the 3-year-old program; that pales compared with the millions spent by rival U.K. brewers that have built pub chains to ensure sales of their brands.

"If it is a minimum investment and Guinness gets a high return, then why not?" said Jonathan Goble, a brewery analyst at Barclays de Zoete Wedd. "I'd call it innovative. It's leveraging off of someone else's capital."

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Since the program began, sales in continental Europe, where Guinness has sponsored 600 pubs, have more than doubled, the brewer said. Guinness will not provide specific sales figures by region, but said European sales rose 25% last year, led by growth in Germany, Italy, Eastern Europe and Scandinavia.

"There is no doubt that it's the Irish Pub Concept which is driving our volume increase," Lombard said.

Guinness has become the world's ninth-largest brewer by volume and holds an 80% share of the global stout market. Guinness stout, first brewed 268 years ago at St. James's Gate in Dublin, is now available in 150 countries and brewed locally in about a third of those markets.

The popularity of Guinness is rising hand-in-hand with the worldwide demand for stout beer, a dark ale indigenous to Ireland and until recently exported chiefly to Britain and other parts of the former colonial empire, such as Africa. Stout now accounts for 1% of the world's lager-dominated beer market.

"People around the world are looking for new-flavored beers," said Jonathan Miller, a spokesman for Guinness Brewing Worldwide. "Guinness with its heritage is an obvious candidate. It has worldwide appeal and it's seen as a premium product."

BZW's Goble said the Irish Pub Concept and the string of independent Irish pubs sprouting up in competition are boosting Guinness' brand recognition. From the prefab pubs shipped from Ireland to the local bar disguised with plastic green shamrocks, Guinness is the beer of choice.

"It's succeeding in gradually building the brand," Goble said. "It's acorns from which grow oak trees. Irish bars tend to be quite good places to drink, and if they get a good atmosphere, the main thing drunk is Guinness."

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Guinness suggests that publicans match the distinguished character of the brand with an authentic Irish atmosphere created by an Irish design firm, hiring Irish bar staff, playing Irish folk music and serving traditional ale and fayre.

The advice is heeded loosely, at best. Publicans, who pay the price tag, can pick and choose from Guinness' services and often prefer to add a bit of local custom and culture to the prescribed Eire atmosphere.

At the Quiet Man pub, tucked away on a back street off Madrid's Gran Via, the music is Russian, the food Indian and the conversation Spanish. Only the $4.40 pints of Guinness are unmistakably Irish.

At Rosy O'Grady's in Moscow, Irish music consists of the latest from such Irish bands as U2 and The Cranberries. At its competitor, The Shamrock, only manager Charlie Donovan can boast of an Irish heritage. He said cheap Russian labor makes Irish bar staff as hard to find in Moscow as a traditional Irish ballad.

"At the end of the day, while these are Irish pubs, they are going to bring elements of their own culture in," Lombard said. "If that is a winning combination, then that is superb."

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