Diageo commits to Scotland and to whisky

Diageo, the world’s biggest drinks company has just announced it is to invest £1bn in its Scotch whisky production over the next five years. A major new malt distillery will be built as part of the investment, alongside a programme of major expansion at a number of Diageo’s existing distilleries. Detailed plans will also be developed for a second new distillery which will be built if global demand for Scotch is sustained at expected levels.
The plans will create, say the company “hundreds of jobs.” Announcing the investment Diageo Chief Executive, Paul Walsh said, “This is a pivotal moment in the development of the Scotch whisky category for Diageo. Over recent years our brands have achieved remarkable, sustained global growth. Scotch whisky is Scotland’s most celebrated manufactured export, led by brands like Johnnie Walker, resonating with consumers from Boston to Beijing.
“We expect that success to continue, particularly in the high growth markets around the world, which is why we are announcing this major investment in Scotch whisky production, committing over £1bn in the next five years, to seize that opportunity for global growth. This builds on the foundations we have already laid down over recent years through sustained investment in both production assets and in maturing Scotch inventories.
“Scotch whisky is a significant manufacturing export industry in the United Kingdom, driving domestic investment and job creation through our success in exporting to high growth markets around the world. We look forward to working with both the UK and Scottish Governments to realise the full potential of our investment plan, and to continue growing global Scotch exports.”
Across Scotland the investment will create over a hundred new Diageo jobs, largely high value jobs in rural areas of Scotland. It is also expected the investment will create an average of 250 construction jobs for each year of the investment period and in wider Scottish economy there will be a knock on effect which will generate around 500 further jobs. Diageo also intends to make its contribution to efforts to tackle youth unemployment by taking on around one hundred apprentices and graduate trainees over the term of the investment, and the company will also encourage its suppliers and construction contractors to focus on youth job creation and apprenticeships.
Mr Walsh added: “I’m particularly pleased our investment will generate significant numbers of new Diageo jobs, as well as boosting the local construction sector and stimulating job creation throughout the Scottish economy. We are determined to use this investment to make a contribution towards helping people into training and work through our apprentice and graduate placement scheme and by using the opportunity to encourage suppliers to take on apprentices to work on the investment projects.”
In the last five years Diageo has reported 50% growth in net sales of its Scotch brands with total net sales approaching £3bn this financial year. Scotch represented 23% of Diageo’s volume, 27% of net sales and a third of gross profit in the financial year 2011. In the first half of the financial year 2012, Diageo’s Scotch category saw 8% volume growth and 14% net sales growth.
Over the five year period Diageo plans to invest over £500m in the construction of the distillation and warehousing capacity. This increased production capacity also requires Diageo to commit £500m in working capital for the maturing spirit which will be laid down over the next five years. The exact total investment figures may vary over time depending on the progress of specific projects, but the overall commitment is expected to total over £1bn over the five years.

Category: News
Tags: Diageo, dram, SCOTLAND, Whisky