), is geared to increase its presence in the whiskey category. In
fiscal 2012 it announced plans to invest £1 billion ($1.64 billion)
to increase Scotch whisky production. As a part of this strategy,
Diageo recently declared that it further intends to strengthen the
category by building a 1.8 million proof gallon distillery and six
barrel storage warehouses in Shelby County, KY. The finalization of
the $115 million construction project, however, is subject to
approval by the local government.
The new facility, spread over 330 acres of land, will facilitate
the distillation of several current and future Diageo bourbon and
North American Whiskey brands. Diageo remains on track to increase
its presence in the fast growing North American whiskey sector
armed with its leading flagship and new-to-world brands. Moreover,
per Nielsen market research company, bourbon is currently the
fastest growing spirits category in the U.S.
In addition to the construction of the new distillery, Diageo
announced its plans to invest £30 million ($49 million) to expand
the Clynelish Scotch Distillery located in Sutherland town of
Brora, Highland Council, in the beginning of calendar 2014.
Moreover, it has undertaken a £25 million ($41 million) expansion
plan in the Glen Ord Distillery, to increase its production
capacity. Diageo also plans to increase the capacity at Teaninich
Distilleries by two-fold and build a distillery at Alness in the
In the third quarter of fiscal 2014, Diageo's North American
segment's organic sales climbed 1.2% backed by strong business of
the reserve brands. However, growth rate was slower than the
previous quarter as organic sales growth was very high in the
comparable quarter of the previous year. U.S. spirits delivered
another good quarter with strong growth from super and
ultra-premium brands and new innovation launches.
London-based Diageo owns brands such as Johnnie Walker, Smirnoff
and Guinness and has been exploring opportunities to expand
geographically through acquisitions. The Zacks Rank #4 (Sell)
company has been witnessing declining total volume and organic
sales for the past few quarters due to unfavorable foreign
Other stocks in the consumer staples sector worth considering
The Hain Celestial Group Inc.
B&G Foods Inc.
Inventure Foods Inc
). All the stocks carry a Zacks Rank #2 (Buy).
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DIAGEO PLC-ADR (DEO): Free Stock Analysis
HAIN CELESTIAL (HAIN): Free Stock Analysis
B&G FOODS CL-A (BGS): Free Stock Analysis
INVENTURE FOODS (SNAK): Free Stock Analysis
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