Diageo to invest $80m to scale up RTD production

Diageo North America is to invest US$80 million to scale up production of its RTD products, including Smirnoff seltzers and canned cocktail brands Crown Royal and Ketel One Botanicals.

Diageo is investing in the ready-to-drink (RTD) market, and has plans to expand is production capability by installing high-speed canning lines at a new facility in Planfield, Illinois.

The move will give Diageo the ability to produce more than 25 million cases of its RTD products every year. The 225,000 sqft site will be equipped with two canning lines, one capable of producing 500 cans per minute, while the other can make 1,200.

Diageo hopes to have the site ready for commercial production by this summer.

President of Diageo North America, Debra Crew, said: “As the ready-to-drink category continues to grow rapidly in the United States, this expansion is very exciting as it will support our plans to meet increased consumer demand in line with emerging trends for convenient formats that are ideal for casual and at-home occasions. The new operation will supplement our existing ready-to-drink production across North America and strengthen our path to continue building our RTD offering.”

According to data from IWSR, the RTD category in the US, which includes hard seltzers, flavoured alcoholic drinks and pre-mixed cocktails, is expected to achieve volume growth of 35.3% compound annual growth rate (CAGR) from 2019-2024. Globally, the analyst predicted that RTDs had grown 43% last year, and was the only alcoholic beverage category to experience volume growth.

Credit Suisse estimates that 200 million cases of hard seltzer and spirit-based RTD drinks were produced in the US last year, with volumes expected to reach 350m cases this year. The analyst estimates that Diageo’s investment will present a US$800m net sales opportunity, worth some 15% of its total US sales.

Perry Jones, president of North America supply for Diageo, added: “The strategic location of the new site, near our warehouse and Plainfield bottling operation, will allow Diageo to create synergies and the flexibility to expand and carry other market-leading brands in the future. We are thrilled to expand our manufacturing footprint and further deepen our relationship with the Village of Plainfield.”

The site will create around 50 full-time jobs. Diageo opened its first operation in Plainfield in 1966 and now employs over 600 people in the area.