Diageo to Spend $1.54B to Boost Scotch Whisky Capacity

by Christopher Freeburn | June 6, 2012 2:00 pm

Diageo to Spend $1.54B to Boost Scotch Whisky Capacity

Premium liquor distiller Diageo (NYSE:DEO[1]) has announced that it will invest $1.54 billion to boost its production of Scotch Whiskey over the next five years[2].

The investment comes as the distiller attempts to meet growing global demand for its brands, which include Smirnoff, Johnnie Walker, Crown Royal, JeB, Buchanan’s, Bushmills and Ketel One.

Diageo shares rose almost 4% in Wednesday afternoon trading in New York, rising above $97 a share.

The company has posted a 50% increase in Scotch sales — which accounted for 27% of company sales and 33% of earnings last year — since 2007. It anticipates sales of almost three billion pounds in the current fiscal year, RTTNews noted.

Roughly half of the company’s planned spending will fund the construction of a new malt distillery and renovations and expansion of other distilleries and warehouse operations, creating about 100 new jobs in Scotland.

The remainder will be spent on creating inventories of scotch whisky that will remain in storage for several years while it matures.

Scotch sales are expected to see continuing growth in emerging markets, especially in Asia.

Endnotes:
  1. DEO: http://studio-5.financialcontent.com/investplace/quote?Symbol=DEO
  2. over the next five years: http://www.nasdaq.com/article/diageo-to-invest-15-bln-in-scotch-whisky-production-to-meet-growing-demand-20120606-00067

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