Diageo takes on Jameson by creating Irish whiskey brand Roe & Co

[LONDON] Diageo Plc is getting back into Irish whiskey, taking on Pernod Ricard SA's Jameson and Red Breast labels by investing US$25 million in a Dublin distillery that will produce a premium-priced new brand called Roe & Co.

The maker of Smirnoff vodka and Johnnie Walker scotch will begin selling the first cases of Roe & Co next month in major European cities, Colin O'Brien, director of UK and Ireland operations, said Tuesday on a call with reporters. Priced at about £30 (S$53.95) a bottle, the brand will join the company's high-end Reserve division, Diageo said.

"We were always interested in Irish whiskey," said Tanya Clarke, general manager of the Reserve unit in Europe, confirming a Bloomberg report.

"What we decided to do was innovate in the premium segment, which accounts for only six percent of the category."

Diageo, the world's largest distiller, exited the Irish whiskey category two years ago when it traded the Bushmills brand to Jose Cuervo for Don Julio tequila. Since then, Irish whiskey sales have continued to surge, leaving Diageo out of a thriving market.

The London-based company will build the new facility at Diageo's Guinness stout headquarters in Dublin, Mr O'Brien said. It will begin production in 2019, subject to planning approval. Until then, Roe & Co will be blended from whiskeys of undisclosed existing distilleries.

While Irish whiskey is booming, growth has been driven by Jameson, which makes up about 60 per cent of the category's sales, said Trevor Stirling, an analyst at Sanford C Bernstein. Smaller brands like Grant's Tullamore Dew have also been doing well, but Roe & Co will enter an increasingly crowded market.

"It makes sense for Diageo to re-enter the category, although what you now have is a fairly high number of players jostling for space," Mr Stirling said by phone.

Roe & Co is a blend of fruity malt whiskeys and smooth grain whiskeys from different parts of Ireland, aged in bourbon casks, Diageo said.

Irish whiskey is the fastest-growing spirit category in the US, according to industry tracker IWSR. It accounts for a total of about four per cent of the spirits market, but that could grow to 12 per cent by 2030, according to the Irish Whiskey Association. Brown-Forman Corp, which owns Jack Daniels whiskey and Woodford Reserve bourbon, acquired Slane Castle in Ireland's County Meath for US$50 million in 2015 to distill new whiskeys.

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