Diageo back in the whiskey business

Diageo has re-entered the burgeoning global whiskey market with a €25m investment in Dublin.

Three years after it sold off the Bushmills whiskey brand to fellow drinks giant Jose Cuervo in exchange for Don Julio tequila, the producer of Guinness said it was investing in a whiskey distillery at St James’s Gate to produce a new brand.

Irish whiskey has seen a spectacular resurgence over the past decade, experiencing double digit growth and record exports of €400m in 2015. Global sales of Irish whiskey have increased by over 300% in the last 10 years and have been growing by double-digits since the mid-1990s.

Pernod Ricard leads the way with its Jameson brand accounting for 67% of global volumes of the world’s fastest growing spirit.

Diageo will launch a new premium-blended Irish whiskey, Roe & Co, following the €25m investment. The new St James’s Gate distillery will be near the old George Roe and Co distillery and will begin production in the first half of 2019 if planning is approved.

A bottle of Roe & Co will retail at €35 (around €13 more than a bottle of Bushmills) and will be available in major European cities from March 1.

It marks a turnaround for the company in whiskey production. In 2014, Diageo sold Bushmills, with chief executive Ivan Menezes saying that despite investment and marketing, the company could not get sales to accelerate.

Diageo’s new brand, which was created after 100 trials under master blender Caroline Martin, will compete with the likes of Pernod Ricard’s Redbreast and Midleton, as well as Jameson.

Pernod Ricard has invested more than €225m in its Cork facilities in the past five years, including €10m this month at Midleton Distillery to increase its single pot still Irish whiskey production capacity by over 30%.

Pernod Ricard affiliate NBV Investments yesterday announced the acquisition of a majority share of Smooth Ambler, the award-winning West-Virginia based distiller and producer of Smooth Ambler Contradiction Bourbon, Old Scout Single Barrel Bourbon and other high-end spirits.

Despite yesterday’s announcement, Diageo’s share price remained largely unchanged in London, around £22.15 (€25.82) for much of the day.

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