Drinks giant Diageo is to construct the first large distillery to be built in Scotland for 30 years as part of a £100m investment programme aimed at boosting whisky production north of the border.
The UK-based producer of Johnnie Walker and Bell's has earmarked a site at Roseisle on Speyside for the £40m malt distillery, where it already has a maltings operation.
Diageo is spending a further £40m on expanding its grain distillery in Cameron Bridge, Fife, where Johnnie Walker, J&B and Bell's are made, and an extra £20m will fund the expansion of bottling capacity at the firm's Shieldhall packaging plant in Glasgow and extra warehousing space in central Scotland.
About 200 new jobs are expected to be generated by the £100m programme, which will be staged over the next three years. Construction is expected to begin this year, subject to planning consents, with completion expected in 2009.
Chancellor Gordon Brown, a renowned supporter of the Scotch whisky industry, said last night: "This is great news for Scotland and the Scotch whisky industry. This is serious long-term investment by Diageo, confident about the stability which Scotland enjoys as part of the UK. It is a prosperity and stability we cannot afford to put at risk."
The new distillery will help Diageo, whose single malts include Talisker, Lagavulin and Dalwhinnie, meet soaring demand for its whisky brands, and in particular premium whiskies, in large developing economies such as those of India and China.
Charlie MacLean, one of Scotland's leading authorities on whisky and a writer on the subject, said although sales of Scotch have steadily declined in the UK they are going "ballistic" in other parts of the world, particularly in China, Korea and Taiwan. Russia and India are also very big potential markets, he said.
"This is fantastic news. It reflects the global interest and the potential demand for Scotch whisky. Diageo is a massive player on the world market. The fact that it is making this dramatic investment suggests the company, and its analysts, recognise the demand for Scotch whisky is going to be so enormous for the foreseeable future that it needs to build another distillery."
Dominic Roskrow, consultant editor to Whisky magazine, said: "The demand for single malt Scotch whisky is rising and supply is limited. The only way you can meet supply is to expand. Diageo's investment is very good news. It is going to create jobs and reflects that the group has a long-term belief in the future of Scotch whisky."
The importance of Scotland's whisky industry to the nation's economy was writ large in export figures released last month. Spirits alone accounted for £3bn of £18.6bn of total exports during 2005, excluding oil and gas.
Campbell Evans, director of the Scotch Whisky Association, said: "This is a huge boost of confidence in the Scotch whisky industry. The fact that Diageo is investing both in malt and grain whisky shows that there is a strong future for not just single malts but also for blended Scotch."
Diageo is the world's largest alcoholic drinks company with brands including Guinness, Smirnoff and Baileys liqueur. The company already employs more than 4000 in Scotland and operates 27 malt distilleries and two grain distilleries.
The Scottish business produces nearly 50million cases of leading brands of whisky and white spirit, 90% of which is exported.
Bryan Donaghey, managing director of Diageo Scotland, said the programme constitutes the biggest investment by Diageo or its legacy businesses in Scotland for 20 years. He added: "This investment underpins our commitment to Scotland and the long-term growth and sustainability of our Scotch whisky business."
In the final six months of 2006, net sales of Diageo's whisky brands grew 11%, fuelling a 17% rise in operating profit in the company's international division.
The company's underlying operating profit for the period climbed 4% to £1.31bn.
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