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The new distillery, which will create up to 20 new Diageo jobs, will be adjacent to the company’s existing Teaninich distillery but will have its own name and identity. It involves an investment in the region of £50million and will have the capacity to produce around 13 million litres of spirit per annum (mla) from 16 copper stills. An on-site bio-energy plant will also be constructed to convert co-products into green energy to power the distillery.At the same time Diageo, also plans to invest £12million in expanding the existing Teaninich distillery to almost double its capacity. The single malt whisky produced at the new distillery and at the expanded Teaninich distillery will be used in a range of Diageo’s world-leading blended Scotch whisky brands. Full planning applications will be submitted to Highland Council and the company hopes to be in a position to begin work on the new distillery in 2014. Diageo also announced plans to invest around £30million in new production facilities in Speyside, including a project to substantially increase the capacity of the Mortlach distillery at Dufftown. This will involve the building of a new stillhouse, which will replicate the unusual partial-triple distillation process which makes Mortlach unique.

Another element of the investment will be the construction of a new plant at Glendullan to process co-products in an anaerobic digestion process, producing bio-gas which will be used to power the Glendullan distillery. This new plant is an important element of future distillery expansion plans on Speyside as it creates the capacity to process the extra co-products which will result from increased Scotch whisky production.

These developments build on recent Diageo investments in Speyside totalling in excess of £40m, including distillery expansion and upgrade projects at Linkwood, Mannochmore, Glendullan, Dailuaine, Benrinnes, Inchgower, Cragganmore, Glen Elgin and new bio-energy plants at Dailuaine & Glenlossie. Elsewhere in Scotland, as part of the £1bn investment programme, the company is progressing plans for a major expansion of Glen Ord Distillery, near Muir of Ord and is progressing with construction of new warehousing at Cluny near Kirkcaldy.

Brian Higgs, Diageo Malt Distilling Director, said: “We are delighted to announce the next phase of investment in expanding our Scotch whisky production capacity in Scotland.

“All three sites we considered for the new malt distillery were excellent potential locations but after detailed investigations Teaninich came out just ahead in terms of the many complex logistics required when planning such a development.

“It is a significant investment for the local economy around Alness and we look forward to working positively with Highland Council and the local community as we progress our plans.”

In relation to the latest Speyside investment Brian Higgs added: “Mortlach is one of Diageo’s most important malt whisky distilleries, producing the finest quality single malt used in our world-leading blended Scotch whiskies. We are delighted to be able to develop and expand this distillery.

“Along with the plans for the new bio-plant, our financial investment in Speyside is the equivalent to building a new distillery and with other expansion work already underway, the Moray economy is benefiting significantly from Diageo’s investment in Scotch whisky distillation.”

Bryan Donaghey, Managing Director, Diageo Scotland, said: “This announcement is a significant milestone in our £1billion investment programme in Scotland to support the global growth of our Scotch whisky brands. The plans also demonstrate Diageo’s commitment to building a sustainable business through investment in energy efficiency and renewable energy technologies.”

Last year Diageo submitted Proposal of Application Notices (PANs) in relation to three possible sites for a new distillery at Teaninich and at Glendullan and Inchgower, both on Speyside. Full planning applications will now be submitted to Highland Council and Moray Council for the projects announced.