Diageo’s ‘buy Scottish’ pledge

Scottish barley growers were yesterday given assurance by Diageo, the biggest buyer of grain in the country, that – where possible – it would be buying from within Scotland.

But it was obvious from what Andy Roberts, Diageo’s procurement director, told members of the Scottish Agronomy co-operative, which provides husbandry advice to the majority of growers in Scotland, that producing sufficient whisky for a growing world market was paramount in his company’s plans.

Diageo is already the biggest operator in the whisky market as well as being the world’s leader in premium drinks. While the European market for whisky has taken a knock from the economic downturn, other markets for whisky, in India, China and South America, are booming.

Diageo owns some 28 distilleries in Scotland and with a growing world market for this iconic drink, Roberts said the current company plans were to build another two major distilleries as part of a five-year £1 billion investment programme.

“We are looking at between 5 and 10 per cent annual growth in the whisky market and if Scotland can supply malting barley for that then we shall be buying.”

But Roberts also admitted they would be buying malt from a third party in order to ensure sufficient whisky was made for the market and this raised concerns for one Scottish Agronomy member.

While there might be a shortage of malting capacity in Scotland, he pointed out that English maltsters faced a downturn in demand for beer and had spare capacity. He asked Roberts if Scotch whisky could be made with malt bought in England using English-grown grain?

Roberts said that his fear was the whisky industry could outgrow the ability of Scottish cereal growers to supply the necessary grain but, on receiving assurance that barley production could, and most definitely would this year, be well ahead of malting demand, he confirmed that Diageo would be buying in Scotland “as far as possible”.

Also speaking at the meeting in Perth was Andy Hindhaugh of McCreath Simpson & Prentice who have recently expanded their malting capacity at Berwick on Tweed. He predicted that this coming year it was quite possible the premium for malting barley over feed samples would be narrower.

He did not want to be more definitive, saying that it would be May before matters became clearer. By that time, the crop would be in the ground and an assessment could be made on how they looked and what the actual sown acreage was.

He stressed that his company was now offering a range of contracts for growers to cater for their differing needs. Some might be growing spring barley this year for the first time for a number of years and might want a one-crop agreement while others would be happier with a three-year deal.

“For growers, it is all about how best to manage volatility and we are trying to provide a selection of management tools to help them manage the situation,” he said