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Diageo plans $115m spend on Kentucky bourbon distillery

By Ben Bouckley+

29-May-2014
Last updated on 29-May-2014 at 17:49 GMT

Diageo plans $115m spend on Kentucky bourbon distillery

Diageo plans to spend $115m on new Kentucky bourbon distillery and warehouses to distill the company current brands and future products, as it seeks to expand its share in the American whiskey category.

The company's only established bourbon brand sold in the States is Bulleit Bourbon (pictured), but Diageo plans to launch two new brands at the ultra-premium end this year - Orphan Barrel (launched in Q1) and Blade & Bow (later in the year).

Diageo CEO Ivan Menezes said in November that the company planned to expand Bulleit's distribution into new countries following strong growth, and predicted case sales of 600,000 to 1m in the US in 2013.

Phased over three years, the planned $115m investment on a 300-acre site is subject to local government approval, but involves building a 1.8m proof gallon (750,000 nine-liter case) distillery and six barrel storage warehouses in Shelby County. It would create jobs in whiskey distillation and maturation for around 30 people.

Subject to approvals, Diageo hopes to start building in the coming months and open the distillery in late 2016.

Bourbon growth fueled by flavor innovation, demand for premium authenticity

The spirits giant described bourbon as the fastest growing spirits category in the US, with 14% value growth in the 52 weeks ending April 26 (Nielsen data) "fueled by flavor innovations and consumer demand for premium brands with authenticity".

"This popularity is mirrored globally, with the total category growing 13% over the last three years, and within this, the super-premium price segment is growing 24%," Diageo added, citing IWSR CAGR figures for 2009 to 2012.

Larry Schwartz, president of Diageo North America, said the investment showed Diageo's commitment to growing its share within American whiskey.

"The distillery will build on our presence in Kentucky and we are committed to being a productive member of the local community. We are very thankful for the support we have received thus far from state and local officials and look forward to a long and fruitful working relationship," Schwartz added.