The company has confirmed aims to move supply of bottles for various brands from the Owens-Illinois (O-I) Glasshouse Loan site at Alloa to rival Ardagh Group's plants at Doncaster, Yorkshire, and Irvine, Scotland.
O-I's five-year contract at Alloa with Diageo will expire in December and Ardagh Group has swooped in to snap up much of the business. FoodManufacture.co.uk understands the two firms represent the vast bulk of Diageo's glass bottle supply, with O-I handling the majority.
This has fuelled concerns that the Alloa facility, which employs more than 500 people, will suffer the same fate as Diageo's bottling plant in Kilmarnock, the closure of which affected 700 jobs. But Diageo and O-I insist measures are being taken to minimise the impact of the lost business.
Ian Smith, head of media and government affairs for Diageo Scotland, told Foodmanufacture.co.uk: “We reviewed supply last year and having gone through the procurement process, we took a decision based on the best option that came back from that.”
However, he said the company still planned to do business with O-I.
Clackmannanshire deputy council leader Craig Holden has sounded an upbeat note: “Our talks with O-I have been positive and they have assured us that other work can be brought in to replace what is being lost from Diageo.
“I am hopeful that there will be no job losses as a result of this.”
And while initial reports suggested the decision would also affect the bottling process for brands such as Johnnie Walker, Diageo said OI only supplied bottles. Bottling occurred separately at Diageo sites, such as Fife in Scotland, it stressed.
In addition, it is understood that global glass packaging giant O-I is making progress on plans to switch contracts from overseas plants to Alloa and secure other business.
'Investing in technology'
A spokesman for O-I said: “O-I’s business relationship with Diageo will continue as usual throughout 2013. O-I keeps on investing in technology advancements such as light-weighting capabilities while continuing to upgrade design and decoration capabilities to support growing customer needs to differentiate brands and packaging.
“Alloa has been recently accredited to the British Retail Consortium (BRC) Standard meeting UK’s highest quality standards and was recently awarded with the prestigious Green Apple Award for outstanding sustainability efforts.
“With more than 260 years of heritage, O-I remains committed to the local community by offering almost 600 jobs in Alloa and through local raw material and energy sourcing. O-I sees many opportunities to produce glass packaging for different Scottish spirits, soft drinks, water and beer brands.”
In a statement, Diageo added: “A sustainable supply of high quality glass is crucial to our business and we went through a fair and proper process with our suppliers.
“We remain a major customer of O-I in Alloa and plan to continue to source significant volumes from them. The contract with Ardagh also creates a new guarantee of 10 years of glass supply from their plant in Irvine, securing Scottish jobs.”
“We have a responsibility to our 4,000 employees in Scotland to make the right decision for the future growth and success of our business as this underpins the £1bn investment we are making in expanding Scotch Whisky production in Scotland.”