Whisky stimulates the economy

Thursday 7 June 2012

An investment of £1 billion, creating hundreds of new jobs in the process, would be welcome at any time.

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But, in the grip of recession and with unemployment rising, Diageo's plans to build at least one new distillery, expand a number of its existing ones and possibly open a second are a solid indication of long-term confidence that should provide a fillip to the Scottish economy.

Yesterday's announcement by the maker of Johnnie Walker, JB and Bells follows the £40 million investment programme in Scotch whisky distilleries unveiled last week by Pernod Ricard, whose brands include Chivas Regal, Ballantine's and Glenlivet.Some may regard it as sacrilege that the Chinese drink it with iced green tea and the Trinidadians with coconut water but, as a status symbol in the growing markets of Brazil, Russia, India and China, Scotch whisky is proving the lifeblood of the Scottish economy.Much as we might lament the transfer of ownership from indigenous Scottish companies to giant drinks conglomerates, their global marketing reach has vastly increased exports. With net sales growth of 14% last year, whisky was the most profitable part of Diageo's spirits business.Chief executive Paul Walsh can take pride in his claim that premium labels such as Johnnie Walker "resonate from Boston to Beijing". But that has a hollow ring in Kilmarnock. The breaking of the 192-year-old link with the home of the grocer whose whisky became an international brand is not easily forgotten or forgiven in a town which has suffered an exodus of manufacturing firms. The closure of the bottling plant meant the loss of another 700 jobs. Only 194 of the Kilmarnock employees transferred to other posts in Diageo. Over the next five years, however, the £1bn investment will create 100 new jobs, which is significant in rural areas with few employment opportunities. Plans to take on 100 apprentices and graduate trainees are also particularly welcome at a time when record numbers of young people are unemployed. The construction of the new distillery and warehouses are expected to provide about 250 jobs a year but these will be temporary so, significant as this investment is, it will still leave a deficit of around 300 below the numbers once employed in Kilmarnock.It is entirely understandable that the industry was opposed to minimum pricing for alcohol and its arguments rightly contributed to the debate. Now that the legislation has been passed, however, it is a misjudgment to continue to criticise a measure enacted for public health reasons, as Mr Walsh did yesterday. Scotch whisky has a bright future but that lies in being an upmarket, high quality drink in expanding overseas markets, not in haggling over a penny or two on the cost of a nip at home.It is to the great credit of all the major distillers that exports of Scotch whisky have increased for seven years running. The marketing of whisky as a distinctively Scottish premium product also paves the way for other quality Scottish produce. Salmon, beef and lamb are the obvious candidates but the cachet of something produced from high quality material by traditional craft methods also applies to textiles such as Harris tweed. So it is good news for all that whisky, a pivotal part of the Scottish economy employing more than 10,000 people across the country, is in such robust health. Slainte.

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Whisky stimulates the economy

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