Diageo is building a new $130m distillery in Kentucky

Drinks giant Diageo is planning to build a new distillery in Kentucky as demand for American whiskeys ramps up worldwide.

The rye variation of Diageo’s Bulleit Bourbon has tapped into the growth of the category (Photo: Diageo)

The project, which will cost an estimated $130 million (£106 million) to complete, includes a new distillery and warehouse based on a 144-acre site in Lebanon,Kentucky, USA, and is set to be up and running by 2021.

The distillery will have the capacity to produce 3.8 million 9lr cases per year, and will be used to distill Diageo’s current bourbon brands, as well as ranges the drinks giant will launch in the future. It supplements the company’s American whiskey production that currently takes place at its still houses in Louisville and Shelbyville.

The plans come as both sales and production of American and Irish whiskeys have started to pick up pace. Americans bought $2.08 billion (£1.7 billion) worth of whiskey last year, according to data from Nielsen; up 4.6% since 2016. Its market share has also grown by 0.43% to make up almost 35% of spirits bought in the US.

“Bourbon and American whiskey are vibrant and growing categories, Barry Becton, senior executive in Diageo’s North American business, told the Daily Journal, “and we are excited to expand Diageo’s footprint in Kentucky to support our ambitions in this space.”

Diageo’s bourbon whiskey brand Bulleit experienced double-digit growth in the US in the past year, the company said. The new Kentucky distillery will also employ 30 people in the local area.

Kentucky Governor, Matt Bevin, said: “We are proud to further our relationship with Diageo, and of the job growth associated with these announcements.”

Though it owns a handful of American whiskey labels, Diageo is better known for Scotch, with its portfolio including brands like Johnnie Walker, Royal Lochnagar, Haig Club and Bell’s whiskies.