Global spirit giant Diageo Plc. (DEO) has decided to invest $9.6 million for building a bioenergy plant that will recycle draff and reuse it for generating energy. The multinational has decided to set up the plant near Elgin, Scotland in Glenlossie distillery complex at Speyside.
Draff is a byproduct of the grain that is used for making whisky. After distilling 12 million liters of whiskey the bioenergy plant will have almost 30,000 tones of draff at its disposal. This large amount of draff will be supplied by 17 malt whisky distilleries – situated around the biomass plant in Speyside.
Energy produced will help power operations on site, including Glenlossie and Mannochmore distilleries and the onsite dark grains plant, which makes animal feed. The bioenergy plant will make an important contribution to Diageo’s global environmental targets by reducing annual carbon dioxide emissions by approximately 6,000 tones.
Diageo is set to expand its business in Speyside, Scotland. Recently Diageo was part of an industry consortium that constructed a biomass combined heat and power plant, which was hailed as a major breakthrough for Scotland's renowned alcohol industry.
The spirit maker is also investing for increasing capacity at the Glen Ord distillery near Inverness and at its Caol Ila distillery in Islay. It also announced a huge investment for expanding its malt whisky distillation capacity in Speyside over the next two-to-three years. The expansion in distillation will allow Diageo’s Speyside distilleries to produce an extra 10 million liters of alcohol per year.
Diageo Plc.’s fiscal 2011 net income from continuing operations grew 16.1% to £2.02 billion ($3.3 billion) from £1.74 billion in the year-ago period. Earnings per share came in at 76 pence ($1.24 per ADR), compared to £0.65 per share in the year-ago quarter.
The recent economic downturn has left Diageo shaken. Besides, the stiff competition from Pernod Ricard and Fortune Brands Inc. (FO) in the spirits business and Anheuser-Busch InBev (BUD) and Molson Coors Brewing Company’s (TAP) beer business undermines Diageo’s value in the eyes of the investors.
Diageo holds a Zacks #2 Rank, which translates into a short-term Buy rating.
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