Diageo Pulls Back On Scotch Expansions

By Richard Thomas

Citing a drop in demand for its products, drinks giant Diageo has either postponed or canceled a slate of expansion projects.

This news follows reports that sales for scotch whisky have slumped in the key future market of China, this blamed on a government clamp-down on consumption of luxury imports. Sales have also slowed in the industry’s other key market of the United States, and are down in several other markets as well. In 2013 overall scotch exports fell by 30% according to the Scotch Whisky Association, and they continued to fall in the first half of 2014.

Only two years ago, Diageo announced they would invest £1 billion in expanding their scotch holdings, this after years of talk that world demand had far out-stripped supply. Now the company has halted construction on their £50 million “super distillery in Alness, with a planned production capacity of 13 million liters of spirit per year. Also postponed, frozen or scrapped were planned expansions of three othere Diageo distilleries: Teaninich and Clynelish in the Highlands, and  Mortlach in Speyside.