Dive Brief:
- Diageo, citing a drop in global demand for its products, has canceled a number of projects aimed at increasing whisky production.
- Among the projects now on hold are the construction of a new distillery in the Scottish Highlands, expansion of two existing distilleries, and construction of a bioenergy plant.
- Diageo, the world's largest distiller, said political unrest and currency woes in Eastern Europe, China's anti-corruption efforts, a recession in Brazil, and a host of other problems influenced its decision.
Dive Insight:
Just two years ago, the world looked quite different to Diageo. That's when the maker of Johnnie Walker, J&B, Bushmills, and a host of other brands said it expected to spend $1.6 billion over five years to boost production capacity.
Now, as the company's earnings report just two weeks ago made clear, the market for whisky is in serious trouble. It seems wise to pull the plug on the expansions.