Diageo to Build $115-Million Distillery in Kentucky


May 29, 2014

Diageo announced a new $115-milllion distillery in Kentucky and signals its intentions to the growing American Whiskey category.

The company said over three years it intends to build a 1.8-million proof gallon (750,000 9-liter cases) distillery and six barrel storage warehouses in Shelby County, Kentucky.  Details are not final, but Diageo will purchase approximately 300 acres of property located on Benson Pike in Shelby County, the company said.
Proposed Distillery 5-21-14This likely scraps Diageo’s distilling plans for the Stitzel-Weller plant, which is currently a whiskey-aging facility and visitor center. During the Bourbon Affair tour, Diageo officials said there was still white dog left in the lines from the 1990s, so the plant was not properly mothballed before it was shut down. This new distillery also indicates that the world’s largest spirits company indeed has a plan for American whiskey.

And that’s a plan the governor of Kentucky apparently likes.

“Today marks another feather in the cap for Kentucky’s bourbon industry,” said Governor Steve Beshear, in a prepared statement. “Distilled spirits remain a marquee industry in the Commonwealth, and Diageo’s new distillery will ensure that even more Kentucky bourbon is enjoyed around the globe. I want to thank Diageo for investing in Shelby County, and I look forward to seeing the distillery in action.”

I will say the timing of this announcement is interesting. On Tuesday, whiskey blogger and Bourbon-Hall-of-Famer Chuck Cowdery scathed Diageo for its American whiskey business practices. After Cowdery’s May 27 post, Diageo’s stock price slightly dropped. Did he have anything to do with the announcement’s timing? Or is it coincidence? I don’t know, but I do believe Diageo’s move will reinvigorate investment in Kentucky’s distillery community. Yes, money is flowing in right now, but more will come. With the passing of a barrel tax credit and politicians showing up to every distillery opening, Kentucky’s in a bourbon frame of mind.

What does this mean for American whiskey? Well, it means if you’re a drinker, buy some bourbon and rest assured there’ll be plenty of Bulleit Bourbon (Diageo’s mainstay bourbon brand) coming down the pipeline. And if you’re an investor, you might want to buy now while stocks are relatively low.

This whiskey investment trend isn’t going away; it’s just getting started.

But bourbon is not without its enemies. Perhaps the greatest threat against all bourbon distillers is the class-action whiskey fungus lawsuit.

It appears, Diageo is even thinking about the environmental consequences of its new plant, saying  the company has a strong record of achieving zero waste to landfill in its operations, and the company aims to achieve the same in Kentucky. Diageo says it also plans to collaborate with the local community for the recycling and reuse of materials generated from the proposed facility. Diageo says the proposed distillery will be designed to fit in with the surrounding countryside and during construction. It will take measures to conserve the 100 acres of land around the property line that will act as a natural barrier to site operations, the company said. Knowing Diageo, they’ll likely have security guards posted throughout the natural barrier just so we binocular-toting journalists can’t see behind the curtain.