Diageo is one of those corporate identities dreamt up in the exuberant 1990s which tells us little or nothing about what the business actually does.

Diageo is one of those corporate identities dreamt up in the exuberant 1990s which tells us little or nothing about what the business actually does. The two roots conjoined in its name hint at time and place. At any time of day, all over this world, lots of people are consuming Diageo's brands. That's what makes it the world's leading premium drinks producer.

But after the group's latest restructuring announcement yesterday, lots of people in places that have featured in the group's heritage over centuries have been left with nothing to celebrate. In 1820, in Kilmarnock, John Walker opened a grocery shop. He was just 15. But soon he was applying the art of tea blending to mixing malt whiskies. The iconic Johnnie Walker blend was born.

The red and black label versions were introduced in 1909. More recently blue and gold were added to the range. Two years ago total Johnnie Walker sales topped 15 million cases a year, making it the third best-selling premium spirit on the planet. But in two years' time, when Diageo closes the local packaging plant with the loss of some 700 jobs, Johnnie Walker's historic links to Ayrshire will cease.

Glasgow takes a smaller, but still-significant hit with the closure of the Port Dundas grain distillery and associated cooperage. Up to 140 jobs will go there and another 80 office staff will be relocated. The great chimney that marks the North Glasgow skyline will smoke no more. Regeneration efforts around the canal basin will doubtless become an even bigger challenge.

Diageo's senior executive in Scotland, Bryan Donaghey, says the changes "will help secure the sustainability of our business in Scotland". In truth, the core of that business - distilling the individual malts and the added grain whisky for blends - cannot be sustained anywhere else. Not if the resultant spirit is to be marketed as Scotch, it can't. But the really labour-intensive parts of the process - blending, bottling, packaging and distribution - could go elsewhere, to lower-cost locations or closer to the big consumer markets for whisky.

Not so long ago there were unspoken fears that was where top-level Diageo thinking was heading. Global businesses develop a global mindset. National obligations can quickly become an executive irritant. To be fair to Diageo, it appears to have rejected that nuclear option.

Kilmarnock and Glasgow's loss is Fife's gain - not China's or India's - with a major expansion planned for the Leven packaging plant and an even brighter future for the Cameronbridge grain distillery, near Methil, which also pumps out Smirnoff vodka, Gordon's and Tanqueray gin and Pimm's.

Diageo is about to open its first custom-built new malt distillery in many a year, on the Moray coast near Burghead. Roseisle, like Cameronbridge, is embracing a much greener future, backed by significant cash investment. And all this rationalisation isn't confined to Scotland.

Guinness, another major strand of the Diageo story, is closing breweries in Kilkenny and Dundalk, and building a new production plant on a greenfield site at Leixlip, in County Kildare. The historic St James's Gate brewery, in central Dublin, which many feared would also fall victim to rationalisation, is to be remodelled and will continue to supply stout to the Irish and British markets.

"Only Diageo, with its sense of heritage and tradition, would do (this)," claimed Brian Duffy, the group's Guinness Global Brand director, when that plan was announced last September. But cherishing heritage does not always sit easily with the commercial imperatives that come with running a drinks business of global scale.

That name change came in 1997 when Guinness and Grand Metropolitan merged and then disposed of most of their non-drinks businesses, like Burger King. But the Scotch whisky part of the Diageo story was woven even earlier, in much more acrimonious circumstances, in the first half of the 1980s.

Guinness had lost its way under generations of aristocratic family ownership. The family brought in a smooth-talking marketing man, Ernest Saunders, who advocated expansion and set his sights on whisky. First Arthur Bell and then Distillers fell in hotly-contested, hostile takeovers. Having snatched Bells away from its existing management and the Perthshire establishment, Saunders posed as the white knight when Jimmy Gulliver's Argyll supermarket group laid siege, in turn, to Distillers, the whisky king-pin.

It was one of the darker chapters in Scottish corporate history. Guinness prevailed. But some of the tactics deployed led to Saunders and some of the other principal players finding themselves in court and later in prison. Any pretence that indigenous Scottish businesses could keep their independence by playing a tartan defence was exposed as wishful thinking.

For a time Guinness retained a visible and powerful corporate presence in Scotland. But with the Grand Met merger and the creation of Diageo, that corporate profile began to wane. Power was more and more concentrated in London. Key functions migrated to other centres, like Amsterdam. There is a European Technical Centre at Menstrie, near Stirling, and a Scottish headquarters tucked away in a corner of Edinburgh Park, on the outskirts of the city.

However, that HQ now houses share registration, payroll and pensions administration for Diageo, hardly the beating heart of corporate decision making.

Whisky has been enjoying a good run in recent years. The industry certainly isn't in a battle for survival. But it is dominated by vast multinationals which are always looking for ways to rationalise their operations and boost competitiveness and the bottom line.

That's the real back-drop to these latest job losses. And, in the process, a little more legacy and tradition is being shredded. But then Scotland lost control of the commercial destiny of its national drink a long time ago.