Diageo is to invest heavily in its Scotch whisky operations, as well as build a new distillery in the country.

The move comes as Scotch Whisky demand is rising for the company in markets such as Brazil, Russia, India, China and Mexico.

The drinks giant, which posted an 8% rise in operating profit for the last six months of 2006 today (15 February), has said that it will spend GBP100m (US$195m) on expanding its operations in Scotland.

The investment is, according to Diageo "one of the biggest ever in the industry". Of the GBP100m, around GBP80m will be spent on expanding capacity in malt distilling and grain distilling, with the remaining GBP20m going towards packaging and warehousing.

Diageo said it will build a new malt distillery in the north of Scotland, with Roseisle on Speyside being the preferred location.

The company will also expand its Cameronbridge grain distillery in Fife. Bottling capacity at the company's Shieldhall packaging plant in Glasgow will be increased and warehousing capacity will be extended in central Scotland.

This is a significant investment," said Bryan Donaghey, managing director of Diageo Scotland. "It underpins our commitment to Scotland and the long term growth and sustainability of our Scotch whisky business. We see very encouraging growth in our Scotch whisky brands. Expanding our capacity now will help us meet demand well into the future."

Subject to planning consents, Diageo hopes to begin construction on the new distillery later this year with the facility opening in early 2009. The first mature spirit from the distillery would subsequently be available from 2012.