Diageo to build $115m distillery in Kentucky

Diageo has announced its intention to invest an estimated US$115 million to build a 1.8m proof gallon (750,000 9-litre cases) distillery and six barrel storage warehouses in Shelby county, Kentucky.

The proposed facility, which will take over three years to build, will distil a number of current and future Diageo bourbon and North American whiskey brands.

The plans are subject to approval by local government but, the company says, the project represents a significant investment in the Kentucky bourbon industry.

Diageo says momentum in American whiskey has accelerated with both flagship and new-to-world brands. Fuelled by flavour innovations and consumer demand for premium brands with authenticity, bourbon is the fastest growing spirits category in the US, enjoying 14% value growth for the latest 52 weeks (Nielsen). This popularity is said to be mirrored globally, with the total category growing 13% over the last three years, and within this, the super-premium price segment growing 24% (IWSR).

The announcement coincides with the expiration of the contract with Four Roses to make whiskey for Diageo’s Bulleit brand. It is believed Four Roses needs the capacity to meet demand for its own brands.

Diageo North America president Larry Schwartz said: “This proposed investment in Shelby county, in the heart of Kentucky bourbon country, will cement our commitment to expanding our share of the American whiskey category.

“Diageo has a long tradition within the craft of whiskey-making and we look forward to bringing this artisanship to the new distillery. The distillery will build on our presence in Kentucky and we are committed to being a productive member of the local community,” said Schwartz.

Diageo says it will purchase approximately 300 acres of property located on Benson Pike in Shelby County. The company expects that the construction project will provide a significant number of jobs and anticipates employing approximately 30 people for whiskey distillation and maturation.

Kentucky Distillers’ Association president Eric Gregory said: “We couldn’t be more thrilled for the company and the Shelby County community, as this major distilling centre will bring jobs and increased investment to the region. “We applaud Diageo for its continued commitment to Kentucky and our signature Bourbon industry, and look forward to toasting this incredible landmark at its opening,” said Gregory.

The proposed distillery will be designed to fit in with the surrounding countryside and during construction, Diageo will take measures to conserve the natural landscape in the area. Approximately 100 acres of land around the property line will act as a natural barrier to site operations. Diageo North America has a strong record of achieving zero waste to landfill in its operations, and the company aims to achieve the same in Kentucky. Diageo also plans to collaborate with the local community for the recycling and reuse of materials generated from the proposed facility.

Diageo hopes to receive approvals and to break ground in the coming months with the goal of having the distillery operational in late 2016.