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Another round of whisky for the world

ALLOA, Scotland — The noise is deafening at Diageo PLC's Abercrombie coppersmiths as skilled workers hammer away, molding 14 large bell-shaped stills destined for Scotland's first new whisky distillery in more than three decades.

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A few miles down the road at Carsebridge, coopers are teaching the backbreaking traditional art of making oak casks to the first batch of apprentices in years as the company ramps up production to meet increasing demand from emerging markets such as China and India. And there is a renewed appetite for the higher quality single-malt whisky from mature markets such as the United States.

Industry experts say strong growth continued through 2007 and into 2008, reversing a downturn in the drink's popularity at the end of the last century when its reputation as a tipple for the older gent saw it lose ground to white spirits like vodka.

Diageo is so sure demand will continue to grow that it has unveiled plans to build a $80-million distillery at Roseisle in northeast Scotland, part of a $200-million expansion program that will see roughly $160.5-million spent on expanding capacity in distilling with the remainder dedicated to packaging and warehousing.

Other producers are making similar moves — some $1-billion of capital expenditure has been invested across the industry for 2008-09, according to the Scotch Whisky Association.

That funding is spread across Scotland, which has more than 60 old stone distilleries, such as Diageo's 200-year old Blair Athol stillhouse in the town of Pitlochry, dotted across its Highlands and rolling southern hills.

As domestic sales of Scotch whisky stagnate, 90 percent is exported with state-of-the-art bottling plants feeding the product directly overseas from the eastern Scotland port of Grangemouth.

Emerging markets such as China and India are generating the most buzz.

"It is certainly advantageous that in two of the world's largest and fastest growing economies, whisky consumption is either a well-established tradition — India — or a marker of sophistication — China," said Jason Holway, an independent analyst at Zenith International.

"An aspiration to 'trading up' and drinking scotch whisky in each culture should bode well for the future of the industry," he added.

Scotch whisky

To classify for the prestigious label of Scotch, whisky must made at a distillery in Scotland and matured in an oak cask for at least three years. That means an expensive and long startup process for new entrants like the tiny Kilchoman Distillery on Islay, an island off the west coast of the Scottish mainland. Overseas sales of Scotch whisky rose 4 percent to a record $5-billion in 2006, the latest available figures — equal to 25 percent of Britain's food and drink exports.

Single malt

A single malt is distilled from just one malt, or grain that's been moistened and allowed to sprout — in the case of Scotch whisky, barley — from a single distillery. Malt exports exceeded the general sales rise for whisky in 2006, lifting 7 percent, compared to a

4 percent rise for blended Scotch sales. The push to sell single malts is part of the industry's marketing focus on "premiumisation" in mature markets. Pernod Ricard SA last year launched Chivas Regal 25, a luxury blend that sells for around $300 a bottle, while Diageo introduced its Johnnie Walker Blue Label King George V, which sells for $500.

Blended whisky

A blended whisky is the product of mixing one or more single malt whiskies with whisky made from other grains.

Scotch whisky

To classify for the prestigious label of Scotch, whisky must made at a distillery in Scotland and matured in an oak cask for at least three years. That means an expensive and long startup process for new entrants like the tiny Kilchoman Distillery on Islay, an island off the west coast of the Scottish mainland. Overseas sales of Scotch whisky rose 4 percent to an all-time high of $5- billion in 2006, the latest available figures — equal to 25 percent of Britain's food and drink exports.

Single malt

A single malt is distilled from just one malt, or grain that's been moistened and allowed to sprout — in the case of Scotch whisky, barley — from a single distillery. Malt exports exceeded the general sales rise for whisky in 2006, lifting 7 percent, compared to a 4 percent rise for blended Scotch sales. The push to sell single malts is part of the industry's marketing focus on "premiumisation" in mature markets. Pernod Ricard SA last year launched Chivas Regal 25, a luxury blend that sells for around $300 a bottle, while Diageo introduced its Johnnie Walker Blue Label King George V, which sells for $500.

Blended whisky

A blended whisky is the product of mixing one or more single malt whiskies with whisky made from other grains.

Another round of whisky for the world 04/08/08 [Last modified: Tuesday, April 8, 2008 2:36pm]

    

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