Stage one of the work will result in production of the Maltexo brand returning to the city from where it originated.
Once construction is completed next year, the majority of brewing giant Lion's tap beer in South Island pubs should be coming from Dunedin.
For the moment, that includes Canterbury Draught, which is being brewed in Dunedin and Auckland.
Brewing is expected to increase 250% in Dunedin, with Speight's Gold Medal Ale and Summit beers and Mac's Gold the main brews.
What was originally a $20 million redevelopment boost from Speight's owner, Lion, was announced last year.
The project would replace lost brewing capacity in Christchurch, boosting jobs at the Dunedin plant from 11 to 27.
That site is to be sold.
The project is part of a major reinvestment package across three New Zealand sites.
Lion communications manager Judy Walter said the price of the Dunedin project had risen to $29 million as its full scope was realised.
Naylor Love would be the contractor.
"It's great for Dunedin," Ms Walter said.
Stage one of the project is under way, and a large crane is this week lifting old machinery out of the plant. An "evaporator" to manufacture Maltexo will be lifted in.
Project manager Dave Butel said brewing at Speight's had moved from about five brews a week to 25 after the Christchurch quake. Staff numbers had increased, recently rising to 32, in part to deal with transitions during the redevelopment period.
They would drop back to a long-term figure of 27 when the redevelopment was complete.
Stage one would cost about $800,000, and after completion of the work in mid-May, cans of Maltexo would be rolling out of the factory, he said.
The Maltexo brand originated in Dunedin at the turn of the 20th century and the product was used by the postwar government as a health supplement for soldiers.
Mr Butel said Maltexo had been made at the Christchurch plant, and the machinery had to be moved to Dunedin.
The malt is used in home-brew kits sold globally, and in baking.
Ms Walter said there had been 11 months of planning to get the project under way: "It's like a very large jigsaw puzzle."
The whole project had a September 2013 deadline.
It was too early to say how many people would be working on stage two, a major redevelopment of brewing operations, due to begin this year.
"We're in the final stages of planning on that."
There was no intention to return bottling to Dunedin.
The skills at the Dunedin plant were tailored to producing keg beer and special brews.
Speight's factory tours would not be affected.
