The Boston Beer Company is to buy a brewery from Diageo in the US.

The brewer said today (2 August) that it will spend US$55m on buying the facility, located near Philadelphia, from Diageo North America. The purchase would close by the spring of next year, and would see Boston Beer abandon plans to build a new brewery in Massachusetts. Boston Beer will look to start brewing on the site in the second half of next year.

The company's annual capacity would initially rise by around 1.6m barrels, increasing to over 2m barrels after investment in the site.

While Boston Beer said it is aware that the brewery will require "substantial investment and renovation", although the actual amount needed to bring the brewery up to speed is "impossible to evaluate".

As part of the deal, Diageo and Boston Beer have agreed that the latter will continue to produce Diageo's products on Diageo's request after the sale is final. Boston Beer's purchase of the brewery includes retaining approximately 194 jobs.

"Our decision to purchase this brewery, rather than build a new brewery in Freetown, was a difficult and complex one," said Martin Roper, Boston Beer's president and CEO. "A combination of rapidly escalating steel and copper costs, increased costs of European brewing equipment caused by the reduced value of the dollar, as well as other construction and production costs and our own growth, recently led us to look again at other existing breweries that we might be able to buy. Comparing the projected construction costs of a new brewery against the price of buying and renovating the Pennsylvania brewery, leads us to believe that this is the better long-term strategic decision for the company.

"We are able to secure twice the brewing capacity for less than half the cost of building the Freetown, Massachusetts brewery. If our due diligence in Pennsylvania and discussions with local government and infrastructure suppliers proceeds acceptably, we will not be proceeding with the Freetown project."

Earlier this year, Boston Beer signed an agreement with a subsidiary of City Brewing to brew its Samuel Adams beers at the former Rolling ROck brewery in Latrobe, Pennsylvania. City Brewing purchased the brewery from InBev in September last year.