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Diageo pours £1bn into production of Scotch and Tequila

Diageo, the owner of popular brands such as Johnnie Walker and Don Julio, is set to launch two regenerative agriculture programs aimed at bolstering sustainability efforts in the production of Scotch and Tequila. This move is part of Diageo’s substantial £1 billion investment commitment into carbon reduction, forming a pivotal component of their 10-year environmental, social, and corporate governance (ESG) plan, Society 2030: Spirit of Progress.

These initiatives will focus on enhancing biodiversity, water stewardship, carbon reduction, and soil health management in both Scotland and Mexico, the key production regions for Scotch and Tequila. Localized agricultural practices, including cover crops, reduced cultivations, and crop rotations, will play a central role in achieving these sustainability goals.

Ewan Andrew, Diageo’s President of Global Supply Chain and Procurement, and Chief Sustainability Officer, stated, “As we commit to continued investment in long-term business growth, we’re excited to expand our regenerative farming work more formally beyond our current Guinness program in Ireland. The Scotch whisky and Tequila brands have such a strong connection to their local communities, and as we build increased resilience and productivity across our end-to-end supply chains, we are building broader partnerships to enhance the impact of regenerative farming practices at scale.”

Key to these initiatives is the reduction of carbon emissions in the farming of barley, wheat, and agave, all vital ingredients for Diageo’s portfolio of alcoholic beverages. Currently, agriculture contributes to one-third of Diageo’s supply-chain emissions.

The Tequila regenerative agriculture pilot program, spanning Diageo-managed farms and its network of agave producers, will focus on understanding agave regenerative practices and assessing how the plant holds carbon over its six- to seven-year growth cycle. This program will directly impact Diageo’s Tequila brands, including Don Julio, Casamigos, and DeLeón.

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For the Scotch program, the first phase will center around approximately 20 farms in three barley and wheat regions in Scotland, providing essential ingredients for brands like Johnnie Walker, Talisker, and The Singleton. In addition to reducing carbon emissions, the program aims to improve soil health, thereby enhancing supply-chain resilience, a crucial factor in regions like Jalisco, Mexico, which are particularly susceptible to climate risks.

Both programs will not only focus on sustainable agricultural practices but also educate farmers on adapting their methods in response to the challenges posed by climate change.

To ensure the success of these regenerative agriculture initiatives, Diageo is partnering with agriculture and soil carbon experts, including Agricarbon and James Hutton Limited. Agricarbon will evaluate existing soil carbon levels and monitor changes over time, while James Hutton Limited will specifically investigate regenerative farming practices for the Scotch program.

Annie Leeson, CEO, and co-founder of Agricarbon, emphasized the importance of these assessments, saying, “Building our knowledge and understanding of the different raw materials across Diageo’s supply chain is key to reducing emissions and monitoring carbon changes in soils in different farming systems. Working with Diageo, we are pioneering large-scale assessments of soil carbon stocks.”

In August, Diageo reported a notable increase in net sales, up by 10.7% in fiscal 2023, largely driven by the popularity of its Scotch and Tequila brands. Earlier this year, the company also unveiled its innovative use of drones to enhance farming efficiency and environmental benefits in Jalisco, Mexico, exemplifying its dedication to sustainable practices in the spirits industry.

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