Multimillion-pound plans to boost whisky production in the north are review and could be put on hold, it has emerged.
Drink giant Diageo told the Press and Journal yesterday a slowdown in demand around the world for Scotland’s biggest export meant it may have to “adjust” the timing of the next phase of its production investment programme.
In January, national and local politicians toasted Diageo as a £30million upgrade of Clynelish Distillery, near Brora, was announced to help meet the world’s appetite for whisky.
The plans for Clynelish were unveiled as six huge new copper stills were delivered to Diageo’s Glen Ord Distillery at Muir of Ord as part of its separate £25million expansion.
These two projects were expected to double total output at the distilleries to more than 4million gallons a year.
The firm also has £62million plans for its Teaninich site at Alness, including a doubling of capacity at the existing plant and a new distillery and renewable-energy facility nearby as part of Highland investments worth a total of £150million.
Other whisky-makers have also been looking to grow production after a long spell of soaring overseas sales.
But figures unveiled just last month by industry body the Scotch Whisky Association (SWA) revealed a worrying slump in global demand during the first half of this year.
SWA said the total value of whisky sold overseas during the six months to June 30 was £1.77billion, an 11% decline from the same period in 2013.
The total volume shipped overseas was down by 5.5% to 532million standard 70cl bottles.
Exports to the US – the top market for overseas whisky sales in terms of revenue – were down by 12% in volume to 54.7million bottles and 16% by value to £327.7million.
Explaining Diageo’s concerns yesterday, a spokesman said: “Diageo’s investment in expanding our Scotch whisky production business in Scotland began in 2007 and reflects the long-term potential we continue to see in the Scotch whisky category around the world.
“Since then we have successfully completed major expansions across a number of our distilleries, packaging sites, maturation warehousing and support operations.
“Our long-term investments are naturally planned in phases to give us the ability to adjust to fluctuations in demand and to ensure the right balance between supply and demand.
“The weaker global economic environment has impacted the growth of Scotch in certain markets and, therefore, Diageo will continue to review and adjust the timing of the next phase of our investment programme to manage our Scotch whisky inventory and to retain the alignment between growth in production volumes and growth in demand.”