Diageo meets whisky boom with new distillery

LONDON Wed Sep 24, 2008 5:36pm BST

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LONDON (Reuters) - Diageo will start making spirit in January at Scotland's first malt whisky distillery to open in over 30 years as its new 40 million pound plant seeks to meet the booming global demand for scotch whisky.

The world's biggest whisky maker will fire up the stills at its Roseilse distillery in north-east Scotland early in the new year, moving to full capacity by April which will make it the joint-largest individual malt whisky distillery in Scotland.

"We have seen three to four years of sustained significant growth of the entire whisky category. There is growth going forward, now is the time to go forward in production," Diageo's malt distilling director Brian Higgs said in an interview.

This upturn in growth has come across many regions including developed markets such as the United States and also emerging ones like Brazil, Russia, India and China, and comes after years of more pedestrian growth through much of the 1990's.

Diageo owns the world's best-selling whisky Johnnie Walker which saw sales soar 12 percent last year to top 1 billion pounds for the first time, while its high-priced whiskies have grown 15 percent annually over the last three years.

Now the world's No 1 alcoholic drinks group which generates a third of its profit from scotch is building its 28th malt distillery in Scotland producing whiskies which by 2012 may be included in blends like Johnnie Walker Red, J&B and Bell's.

Set to produce 10 million litres of spirit a year at full production, the new distillery will match the biggest in the industry such as privately-owned Glenfiddich and Pernod Ricard's plan to double the size of its Glenlivet distillery.

Diageo's Higgs stressed there is no reason why the Roseilse malt could not be use in all of Diageo's blends but as it will be need to be aged three years before being called scotch whisky, the first blends will not be available until 2012.

Diageo chose Roseilse, near Elgin on the Moray Firth coast, as it was already the site of one of its four Scottish malting plants, and combining the two plants would create big energy efficiencies.

Project manager Mike Jappy said it was close to reaching its aim of building the new distillery so that the combined distillery and malting plant used no more fossil fuels than the malting plant alone. Hot water from distilling will be re-used in the malting plant while waste barley grains will be burnt in a bio-mass plant to provide energy.

Diageo said the 14 stills at Roseilse will give it the flexibility to produce two types of malt whisky by altering fermentation times and contact time with copper in the stills -- a light Speyside type similar to Diageo's best-selling Cardhu malt and a second heavier Speyside type, similar to Cragganmore.

(Reporting by David Jones; editing by Mike Elliott)

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