Diageo is to invest €38m in its Guinness operations in Ireland. The money will be spent on its breweries in Waterford and Dundalk as demand for the Stout increases worldwide.

The bulk of the investment will be made in Waterford where €34m is to be spent on a new production facility that would produce the concentrate used to make the stout at 50 breweries around the world.

The Irish government is backing the deal and the deputy prime minister Mary Harney said: "I am pleased this level of investment has been secured for the original home of Guinness."

The rest of the money will be spent on the transfer of ale production to the group's brewery in Dundalk, near the border with British-ruled Northern Ireland.

Guinness Stout export volumes have grown significantly by 9% each year for the past three years and Diageo is anticipating that this growth pattern will continue.