Diageo to close Korean plant
Drinks giant Diageo will close its whisky plant in Icheon, South Korea, next year due to “low” utilisation and “cost competitiveness”.
Blended whisky Windsor is Korea’s best-selling Scotch brand
The facility, located in Icheon, Gyeonggi Province, will close in June 2020.
A statement from Robert Rhee, managing director of Diageo Korea, said: “We regularly review all aspects of our operations to ensure that we are working in the most productive and efficient way.
“As part of this process we have reviewed our operations in Korea. Regrettably, the Diageo plant located in Icheon-si, Gyeonggi Province will cease operations in June 2020.
Rhee said that a “number of factors” led to the decision.
“The current utilisation of the site is low and changes in commercial arrangements in a number of markets that the site exports to alongside unfavourable foreign exchange rates have impacted cost competitiveness,” added Rhee.
“The vast majority of Icheon’s production is for export and production will therefore be moved closer to demand markets in Asia Pacific, including Japan and Vietnam.
“We’re proud of the skill and commitment of our people in Korea. My management team and I will work with employees and union representatives and will do everything we can to support employees through this process.”
In Diageo’s fiscal 2019 results, net sales in north Asia declined 6%. In Korea, net sales dropped 11%, due to blended whisky Windsor – the country’s best-selling Scotch brand.
Johnnie Walker owner Diageo said the Scotch sector “continued to contract as consumers switched to lower-alcohol content alternatives”.
The decline in Korea was partially offset by growth in its low-ABV W range by Windsor, which delivered double-digit gains.
Diageo Korea launched W Signature 12, a spirit drink made with a blend of 12-year-old Scotch whiskies, in October 2017. Diageo sold 100,000 bottles of W Signature 12 in its first month.
W Signature 12 followed the launch of W Ice in 2015 and W Signature 17 in November 2016.