Scotch Whisky – Recovery Position

Scotch moved from recession to renaissance with ease, but the split between mature and emerging markets has never been clearer, says Spiros Malandrakis of Euromonitor International

TRIUMPHANT SHIPMENT announcements and boisterous production plans have been setting the tone throughout the resurgent Scotch industry for a while now. According to the Scotch Whisky Association’s latest announcement in April 2011, exports rose by 10% in value in 2010 to set a new record of £3.45 billion. Right on cue, key players unveiled plans to expand production capacity in a series of defiant statements hinting at expectations that the industry will not only survive the prolonged slump relatively unscathed, but is also bracing itself for consistent and rising gains moving forward.

For example, Diageo has lined up a capacity investment for its Caol lla distillery in Scotland. The spirits behemoth announced that it will spend £3.5 million (US$5.6m) expanding and upgrading the facility which is located on the western island of Islay, with the distillery seeing its production capacity increased by 700,000 litres of pure alcohol (LPA) per year from 5.7m litres to 6.4m litres.

Bacardi was not left behind. Having bought 100 acres of land in central Scotland and in the process of developing a second maturation facility for Dewar’s, the company is focusing on renovating three ageing warehouses, while a blending facility will be built during 2011. The group has also redeveloped its site in Glasgow, where it has built five maturation warehouses and a blend centre, as well as installed bottling lines and packing equipment.  Bacardi plans to invest US$250m in stages up to 2017 in anticipation of rising global demand for its flagship Dewar’s brand.

Meanwhile, Pernod Ricard has expanded production of The Glenlivet, having increased capacity by 75%, while The Edrington Group, distiller of The Famous Grouse, announced that it will invest £10m in installing 33 new whisky vats and a high-speed bottling line at the company’s Glasgow site.

So, the question remains, was the recession-induced slowdown merely a blip that has now been left behind?

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