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New 80m distillery for Speyside

Published:  23 July, 2008

Diageo has announced plans to invest 100 million to increase its production of Scotch whisky.

Chief executive Paul Walsh said the extra capacity was required to meet the anticipated growth in demand, especially from fast-growing markets such as Brazil, Russia, India, China and Mexico.

The investment will take place over the next two years and will see 80m spent on extra malt and grain distilling capacity, while 20m will be spent on packaging and warehousing. Diageo, the biggest producer of Scotch, with brands such as Johnnie Walker, J&B, Talisker and Bell's, says this will be its single-largest investment in Scotland for almost 20 years'.

Walsh said that whisky accounts for almost 50% of Diageo's total business and that at present it was a net buyer of bulk Scotch. The new facilities will add about 10m litres of extra output to boost the existing 100m-litre base. They will also allow Diageo to mature spirits for longer to meet the burgeoning demand for premium and super-premium whiskies it is enjoying. Up to 200 extra jobs will be created in Scotland.

A new malt distillery is planned at Roseisle on Speyside, an area where it already has 27 distilleries. Negotiations for planning permission have already begun with the local council. In addition, Diageo will expand its Cameronbridge grain distillery in Fife, which is already the largest in the UK.

With its half-year results, Diageo revealed that in the six months to 31 December its net sales of Scotch to the developing world rose by 20%, while in its biggest market, the US, they rose by 4%. We are ramping up output wherever we can,' Walsh said. He also predicted that the market would continue to expand rapidly, even more so if India opens up'.

He hinted that World Trade Organisation negotiations with India on its high duties on Scotch might bear fruit sooner than some have predicted'. Once those barriers were lowered, India would become a huge' market for Scotch, he said.