Demand for Scotch expected to keep growing - Diageo

Demand for Scotch expected to keep growing - Diageo

Diageo could build another major Scotch whisky distillery within the next few years if demand for its brands continues to rise in Latin America and Asia.

Diageo's global category director for whisky, David Gates, has said that it is "absolutely feasible" that the Johnnie Walker distiller will have to "build up capacity" in the near future.

Speaking to just-drinks following a tour of the firm's new GBP40m distillery in Roseisle, Gates said: "If I'm doing my job right then we'll be building another one of these in a few years' time."

The Roseisle distillery, one of the industry's largest with an annual capacity of 10m litres of alcohol, reflects Diageo's confidence that consumers' thirst for the likes of Johnnie Walker, J&B and Buchanan's, will continue to grow. The company accounts for nearly a third of Scotch whisky production.

Demand in Asia and Latin America helped Johnnie Walker to increase sales by 7% in value and 11% in volume during Diageo's most recent fiscal year, to the end of June 2010. Global Scotch whisky sales rose by 3% in value and 4% in volume in 2009 and are expected to show another increase in the first half of 2010, although official figures have yet to be released.

Gates said that, while Diageo has "built in assumptions" on future economic dips in its Scotch whisky sales model, rising disposable incomes from Beijing to Rio de Janeiro will enable the sector to achieve "sustainable long-term growth".

However, there is some disagreement between Diageo and its main rival, Pernod Ricard, on how to build Scotch whisky's reputation around the world. Gates said that he was "slightly surprised" by Pernod's decision to launch a major campaign entitled "The Age Matters", which focuses on the importance of the age statement on whiskies such as Pernod's Chivas brand.

Gates said that Diageo has no plans to put age statements on Johnnie Walker and that age "is not the only factor" when it comes to choosing a quality bottle of Scotch.