Diageo Plc, the British spirits producer covering a wide range of alcohol categories including Scotch whisky, gin and beer, will invest $75 million to build its first malt whisky distillery in China, a senior executive said.

Located in Eryuan, Yunnan province, the company believes the area is one of the best locations to produce whisky in China with natural surroundings that will allow the facility to craft a world-class single malt whisky. The construction work for this distillery is expected to begin in early 2022.

"We looked at the macro trends in our industry and in the whisky category and how consumer preferences are shifting. We know China is the largest alcoholic beverage market in the world by both volume and value," said Sam Fischer, president for Asia-Pacific and global travel at Diageo.

The Chinese market is a highly competitive one and the company knows succeeding requires an investment in critical enablers that will grow its core business and support new participation choices, Fischer said, adding the group's latest investment in Eryuan is an important part of its long-term commitment to invest and grow in China.

At more than 2,100 meters above sea level, the site of the 66,000 square meter distillery was carefully selected for its temperate climate, rich natural biodiversity and access to natural spring water that is a source of the second-largest highland lake in Yunnan.

"We will continue to focus on premium whisky as part of our core business, and now we will also add a world class China-origin whisky to the portfolio," he added.

Apart from investing in a new regional logistics hub in Shenzhen, Guangdong province earlier this year, the London-headquartered company will put a new research and development center into operation in Shanghai in 2021. The center is designed to help Diageo gain deeper consumer insights on areas like ingredients, service, and sensory perceptions across its key categories.

The company saw strong recovery and progress in its business in China, with net sales increasing 38 percent on a yearly basis according to its financial report for the 2021 fiscal year.