£100m will help quench the world's thirst for Scottish whisky

SCOTLAND's £2 billion-a-year whisky industry was given another boost yesterday when the global drinks behemoth Diageo unveiled plans for the country's first new single-malt distillery for more than a decade and the creation of 200 jobs.

The maker of Johnnie Walker whisky said the 100 million investment - including a new plant on Speyside - came at a time of sustained growth in the worldwide whisky business.

The industry has already been buoyed by recent good news, including soaring worldwide exports, trade deals with China and the prospect of an end to India's punitive import tariffs.

Diageo, which employs 4,000 people in Scotland, is to spend 40 million on expanding its grain distillery in Cameronbridge, Fife, where Johnnie Walker, J&B and Bell's are made.

It is also investing 40 million on a new malt distillery to increase production capacity for its single malts, which include Talisker, Lagavulin and Dalwhinnie. Its preferred site for the scheme is at Roseisle in Moray.

An extra 20 million will fund the expansion of bottling capacity at the Shieldhall packaging plant in Glasgow and warehousing space in central Scotland.

Jack McConnell, the First Minister, said the move was "one of the biggest investments in decades in one of Scotland's most important industries".

He added: "The growing global market for Diageo's products is bringing expansions to a number of locations throughout Scotland."

The announcement marks a resurgence for Scotch whisky. Figures from the Scotch Whisky Association (SWA) show that, in 2005, exports of both malt and blended Scotch rose by 4 per cent, reaching a combined 2.36 billion, the industry's third-best annual export performance after 1997 and 2002.

The growth has been particularly strong in Asia. Exports to China soared by 86 per cent in 2005. Since China joined the World Trade Organisation in 2001, the import tariff on Scottish whisky has fallen from 65 to 10 per cent.

Closer to home, there are plans to build the first whisky distillery in the Borders and last year Scotland's first "private club" whisky distillery began construction at Ladybank, Fife.

Bob Wilson, chairman of Moray Council's environmental services committee, said: "I have been involved with almost every distillery in Moray as an excise man for 40 years and have been saddened by the closure of some of the finest in Speyside. This announcement signals a resurgence that is marvellous to see."

David Williamson, of the SWA, said: "What we have seen in recent months has shown the real confidence of the industry."

Gordon Brown, the Chancellor, said: "This is great news for Scotland and the Scotch whisky industry. This is serious, long-term investment by Diageo, confident about the stability which Scotland enjoys as part of the UK."

INDIA SET TO ANSWER DUTY CALL

A SURGE in sales to India could bring further good news for the Scotch whisky industry later this year, with hopes that the country's punitive import duties could be reduced.

Industry sources expect the Indian government to announce a cut in next month's budget to comply with World Trade Organisation (WTO) rules.

India is under international pressure to reform the system which subjects all imported spirits to an additional duty of between 25 per cent and 550 per cent. Recently both the United States and Australia have added their weight to the WTO consultations.

Publicly, the industry is still adopting a wait-and-see approach, but privately many are now preparing for reductions in February's budget with a view towards complete access by 2012.

The latest export figures from the Scotch Whisky Association show that, in 2004, only 700,000 cases were shipped to China, 600,000 to Russia and Turkey and 200,000 to Poland. This is in comparison with the one million cases sent to India.