Diageo to build $415M alcohol plant in Alabama

Dive Brief:

• Diageo North America is spending about $415 million to build a 360,000-square-foot manufacturing and warehousing facility in Alabama for its leading alcohol brands. The building is expected to create approximately 100 jobs when fully operational.
• The facility is expected to create approximately 100 jobs and will manufacture alcoholic beverages from Diageo’s portfolio. The plant brings Diageo closer to its distributors in the South, allowing the company to reduce transportation times and water usage. 
• The Guinness maker said the investment is part of a broader effort to boost the strength of its global supply chain by cutting down on production costs and improving sustainability.

Dive Insight:

Diageo is expanding its manufacturing footprint as it aims to increase its U.S. market ​​​​​​presence, particularly in the southern part of the country. 

“The new facility will not only bring our business closer to our customers and distributors in the south, but also enable our broader supply network to operate more efficiently and sustainably,” Marsha McIntosh, the president of North America supply chain at Diageo, said in a statement. “This investment underscores our commitment to building greater resiliency into our supply chain across North America.”

During the past year, the maker of Guinness and Johnnie Walker invested heavily into offerings beyond its traditional beer and whiskey. Last fall, the company purchased the nonalcoholic spirits brand Ritual and opened a business unit dedicated to premium spirits.

It also recently pushed back on rumors it plans to sell parts of its business. Diageo last month denied it plans to sell Guinness, an outlier in its spirit-heavy portfolio, or its share in Moët Hennessy, LVMH’s beverage unit.

Major beverage alcohol companies are changing their manufacturing footprints to better align them with consumer demand for alcohol. 

In recent months, Molson Coors completed upgrades to its Colorado brewery, while also shuttering a facility in Wisconsin. Bud Light brewer Anheuser-Busch announced a $16 million investment last September that will expand its Los Angeles plant. The facility will produce products outside of beer.

Diageo will hold its next biannual earnings call with investors this Tuesday, Feb. 4. In its most recent earnings report released last July, the spirits maker reported a 2.5% decline in organic net sales in North America. On the accompanying call with investors, the company’s president and CEO Debra Crew attributed the sales dip in the region to a “cautious consumer environment, retailer inventory adjustments, and the impact of lapping inventory replenishment in the prior year.”