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“It really took me by surprise,” said Agar. 鈥淚 was excited because I thought they were going to be talking about the project, maybe putting shovels into the ground. It definitely would have been a boost to the economy.鈥�

A spokesperson for Diageo said the company had made the decision to put the project on hold as part of an emphasis on “productivity.”

“Given the dynamic nature of our broader business and our emphasis on productivity, we have decided to pause the development of our facility in Lambton County鈥檚 St. Clair Township,” the spokesperson said. “We will be revisiting plans and timeline at a later date, as part of our regular review of investments and priorities across our supply-chain footprint.”

Diageo already has three distilleries in Canada, including one in Amherstburg, Ont., another in Salaberry-de-Valleyfield,聽Que., and a mammoth facility in Gimli, Man., which produces roughly 100 million bottles of whisky a year.聽

The company also said the pause had nothing to do with a lawsuit against the LCBO by several major spirits producers, including Diageo. The lawsuit聽accuses the provincial liquor monopoly of unfairly fining suppliers over a contractual clause promising to charge it the lowest price in Canada.

Eventually, roughly 100 people were expected to work at the St. Clair complex, which was designed to produce more than 66 million bottles of whisky聽鈥� mostly Crown Royal聽鈥� per year. It would have also meant construction jobs for 400 to 500 people while it was getting built, Agar estimated.

Diageo owns and produces some of the world’s best-known alcohol brands, including聽Johnnie Walker Scotch, Captain Morgan Rum, Don Julio Tequila and Guinness Stout. It also owns some of the most highly regarded single malt scotch brands, including Lagavulin, Talisker and Oban.

But the centrepiece of its Canadian portfolio is still Crown Royal.

While Crown Royal is still holding on to its market share, the market for spirits consumption is shrinking, said beer and spirits educator and author Stephen Beaumont.

The decision to put the St. Clair project on hold, argued Beaumont, is likely being driven by a sea-change among younger drinkers.

鈥淓very single bit of data that鈥檚 out there is pointing to gen Z just not drinking as much. This is a generational shift,” said Beaumont. 鈥淭his isn鈥檛 just a Diageo story. This is an industry story.鈥�

found that younger Canadians were less likely to drink regularly than other generations.

鈥淚n 2023, a higher proportion of younger Canadians aged 18 to 22 reported not drinking any alcoholic beverages in the past seven days, compared with those in all other age groups,” the study said.聽

Building that much extra capacity when the market is treading water wouldn’t have been a particularly wise use of the millions of dollars Diageo had planned to spend, Beaumont said.

鈥淭hey were planning for growth that just isn鈥檛 panning out,” Beaumont said. 鈥淪pirits as a category are basically flat, unless you鈥檙e in tequila or Irish whiskey.鈥�

Still, said Beaumont, the relatively small amount of money Diageo paid for land in St. Clair Township聽鈥� including a 98-acre plot purchased for $5.3 million in January 2022, means the company doesn’t have an urgent need to sell it off immediately.聽

鈥淭hey could hold onto it for a year or two and see if the market picks up again,” said Beaumont.

That’s something that Agar聽鈥� who said Diageo has been “excellent” to work with聽鈥� is still holding out hope for.

鈥淚 still think it will be done,” said Agar. “I鈥檓 disappointed, but I鈥檓 hopeful they鈥檒l do it eventually.鈥�