Diageo to invest £1bn in scotch as Asia drives sales

A taste for expensive whisky from rich Chinese businessmen, as well as Latin America, India and Africa's growing middle classes, has helped seal a £1bn investment in Scotland.

Drinks giant Diageo has committed to spending that money on new distilleries and warehouses across Scotland to step up production of the tipple.

Diageo, which makes a number of scotch brands including Johnnie Walker — its best-selling scotch brand — and Bell's, will seek planning permission for a new distillery at one of three potential sites in Scotland at either Teaninich in Ross-shire and Inchgower and Glendullan in Speyside – locations where it already has facilities. It will also expand facilities at nearly half its 28 Scottish locations. It is also looking at a second new distillery in the next two to three years.

Following the investment, production will increase by up to 40 per cent.

Paul Walsh, the chief executive of Diageo, said that over the next four years if demand continues it could even look at building a third new distillery.

But the £1bn boost will leave a sour taste in the mouth of former Diageo staff in Kilmarnock. In 2009 Diageo ended a 192-year history of Johnnie Walker with the Ayrshire town when it announced the closure of a bottling plant. The facility closed in March with 500 job losses. However, 200 of the staff have found other employment at Diageo, in Glasgow and Fife.

Mr Walsh justified the closure and said Kilmarnock was "not economic" and said that redundancy packages were generous. Despite the cuts announced in 2009, the drinks giant that also owns Smirnoff vodka and Tanqueray gin, said the investment will create more than 100 jobs and it will hire 100 apprentices and graduate trainees over the next five years.

The £1bn plan follows £40m spent in Roseisle, Moray, in 2010.