Diageo plc (LON:DGE) plans to reopen two “lost” Scotch whisky distilleries almost 35 years after production was halted.
The drinks giant said it will spend £35mln in reviving the whisky distilleries in Port Ellen, on the island of Islay, and Brora, on the remote eastern coast of Sutherland.
The whiskies from the two distilleries have developed cult status since production was stopped during a slump in popularity for the drink.
Diageo, which owns Johnnie Walker and Smirnoff vodka, said its decision to reopen the distilleries follows a strong recovery in demand for single malt Scotches -- whiskies that are distilled in a single distiller.
Single malt Scotches are highly sought after by whisky drinkers and priced higher than Scotches that combine whiskies from multiple distilleries.
Last year, the value of single malt Scotch exports topped £1bn for the first time and sales rose to 67 million bottles from 47 million in 2002, according to industry group the Scotch Whisky Association.
Port Ellen Scotches are priced about £1,000 per litre and Brora are listed around £2,000 a litre on specialist retailer, The Whisky Exchange.
“For many years whisky fans around the world have called on Diageo to reopen these closed distilleries,” Diageo said.
“The decision is partly a response to those demands from existing enthusiasts but it also reflects the strong growth in the single malt Scotch market and the opportunity to create new generations of whisky consumers.”
Diageo will need planning permission for the work, though David Mundell, the Secretary of State for Scotland, has shown his support for the move . Mundell said the move would boost tourism, create jobs and produce premium products to be exported around the world.
David Cutter, Diageo’s president of global supply and procurement, said the distilleries should be in operation by 2020 with the first whisky available for sale in 2032 following the ageing process.