Diageo to spend $80 million to expand U.S. ready-to-drink beverage production

Signage is seen on the outside of Diageo offices in west London

(Reuters) – Spirits group Diageo said on Thursday it would spend $80 million to install two can-filling lines at a new plant in Illinois, to boost production of fast growing ready-to-drink beverages.

The new facility in Plainfield, Illinois will make more than 25 million cases of ready-to-drink beverages every year, including Smirnoff seltzers and spirits-based cocktails from Crown Royal and Ketel One Botanicals.

Commercial production is expected to start by the summer of 2021, the company said in a statement.

Sales of ready-to-drink beverages rose 26% in North America in the second half of 2020, the fastest growing category for Diageo in the region during the COVID-19 pandemic, the company said in January.

Competition has been heating up for hard seltzers – flavoured sparkling water infused with alcohol – as liquor companies move to take advantage of a category where sales have doubled every year since 2016 in the United States.

Earlier this year, Diageo said it would buy the maker of hard seltzer brand Lone River Ranch Water, while rival Anheuser-Busch InBev announced a more than $1 billion investment in its U.S. manufacturing facilities to ramp up production of hard seltzers.

(Reporting by Siddharth Cavale in Bengaluru; Editing by Shounak Dasgupta)