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Whisky makers spend $800 mn to age Scotch for China, India

Whisky makers spend $800 mn to age Scotch for China, India
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First Published: Thu, Dec 03 2009. 01 15 AM IST

 Growing consumption: A liquor shop in New Delhi. More money is being invested in whisky than at any time since the late 1960s. Ramesh Pathania / Mint
Growing consumption: A liquor shop in New Delhi. More money is being invested in whisky than at any time since the late 1960s. Ramesh Pathania / Mint
Updated: Thu, Dec 03 2009. 06 26 PM IST
Edinburgh: Ninety years after Johnnie Walker stopped making Scotch in Annandale, David Thomson wants to put the distillery back on the whisky map of the world.
Growing consumption: A liquor shop in New Delhi. More money is being invested in whisky than at any time since the late 1960s. Ramesh Pathania / Mint
The plant, 12 miles (19.31km) from where he grew up in southern Scotland, closed in 1921. With £5 million (around Rs38.5 crore) in cash, Thomson plans to open it up again in 2011. “We can make so much more of malt whisky as an industry,” said Thomson, 54, who submitted plans for local government approval on 12 November. “We haven’t even begun to tap into the potential interest.”
More money is being invested in whisky than at any time since the late 1960s, according to the Scotch Whisky Association in Edinburgh. The reason, producers such as Diageo Plc. say, is to make sure they have enough of it to serve China and India, as well as to cater to the growing demand among malt buffs.
“The Chinese have bought into Scotch whisky,” Gavin Hewitt, chief executive officer of the association, said at his office in the Scottish capital. “There’s a huge new middle class and they want to make a statement about themselves.”
Companies announced expansion plans during the past two years costing at least ­£500 million, according to the industry group. Whisky is Scotland’s biggest export, excluding oil and gas, it said.
The liquor being distilled today can’t be called Scotch whisky until it’s three years old and then often has to age for at least another seven before it’s bottled as a single malt. It also has to be made in Scotland.
The largest single investment during the past two years was by London-based Diageo, the world’s largest liquor maker and biggest producer of Scotch. Its net revenue from whisky, including top brand Johnnie Walker, rose 7% to £2.42 billion for the year ended 30 June, the company said.
Diageo, whose best-selling malt is Talisker, spent £40 million on a plant at Roseisle in northern Scotland, part of £100 million of investment.
“It’s about growth over the next two or three decades,” said Ken Robertson, Diageo’s head of corporate relations for whisky. “You have to lay products down well in advance.”
Glenmorangie, which Paris-based LVMH Moet Hennessy Louis Vuitton SA bought in 2005 for £300 million, is increasing capacity at its plant at Tain in the Highlands by 50%. Along with new bottling and warehousing, the investment over two years amounts to £45 million, Glenmorangie said.
Thomson said he first had the idea to go into the whisky business in the late 1980s and early 1990s when 25 distilleries closed as more liquor was produced than the world could drink.
There are currently seven new distilleries being planned, including Thomson’s, the association said. Since 1995, 18 plants that were dormant have been revived.
Exports totalled a record £3.1 billion last year. Total sales this year in volume terms are up around 2%, while the value of bottles sold declined around 4%, Hewitt said.
The risk for new producers is how they fund themselves before their whisky makes it into the bottle and how they differentiate themselves from existing malts, Robertson said.
Andrew Cleary in London and Peter Woodifield in Edinburgh contributed to this story.
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First Published: Thu, Dec 03 2009. 01 15 AM IST