Diageo's star rises in the East "It was ecstatic," Mr Walsh says although he promptly adds: "I'm by no means an expert on this." The 57 year-old, who has been at the helm of Diageo for 12 years, may like to give the impression he has humble tastes, but he certainly is an expert at one thing: growing the FTSE giant's Scotch whisky sales, which have rocketed by 50pc to £3bn over the past five years owing to booming demand in emerging markets. They may not take it the way purists would like, but a growing class of young, middle class drinkers in developing nations, from Colombia to Kenya, is driving what analysts believe will be a "golden age" in whisky demand. Diageo, already the market leader in Scotch, is certainly not about to let that opportunity pass it by. On Wednesday Mr Walsh announced the company would be investing £1bn over the next five years to boost whisky production by some 30pc to 40pc. He has one, possibly two, new distilleries in his sights and half of the group's existing 28 distilleries in Scotland will be expanded to meet the spike in demand. Vast new warehouses will also have to be constructed to store the extra millions of litres of Scotch that will flow around Speyside, the Scottish Highlands and Fife as part of the expansion. Although the alcohol produced will not be ready for drinking for at least eight years - potentially long after Mr Walsh has vacated the helm of Diageo - he insists the demand will still be there in a decade's time. "Over the next 15 to 20 years there will be two billion new consumers coming into legal drinking age who have the economic wherewithal to access brands such as Johnnie Walker," he says, rattling off examples of booming populations in sub-Saharan Africa, Asia and Latin America. It is a very exciting time for the industry and bearing in mind that already, Scotch whisky represents £134 a second in export revenues for the UK. The latest figures on the global spirits market from IWSR, the wine and spirit research group, appear to support Mr Walsh's enthusiasm. Global Scotch volumes grew 3.9pc last year to 93.3m nine-litre cases. Analysts at Redburn predict that the industry is entering a new "super-cycle." But history dictates that ramping up production and having more people drink or wear more of your product is not always a good thing. As companies such as Burberry have found out to their peril, a boom in popularity can also result in the dilution of a brand's appeal. Mr Walsh is aware of those dangers - not least because he faced a storm in 2003 when Diageo decided to relaunch the single malt from its Cardhu distillery in Speyside as a "pure malt." The blend used a mixture of malts from several distilleries owing to stocks running short of the Cardhu single malt. Diageo backed down a year later and reinstated the single malt following a backlash from both Scottish politicians and rival distillers over the new "pure malt" category. Mr Walsh recognises concerns that a surge in whisky could lead to an oversupply of the market, But he insists: "If the extrapolations [about market growth] are correct, what we are putting in place will not be enough to supply the new consumers in 20 years" time anyway. That tension between supply and demand will be maintained even after this investment. Over the next five to 10 years, he believes Diageo can "assume" 40pc to 50pc growth in net sales value of Scotch. While all of the talk recently has been of whisky, the £1bn investment announced this week has not been the only money Mr Walsh has been throwing about over the past 18 months. A fortnight ago he bowled the industry a curve ball when he spent £300m on a "Brazilian rum" brand, Ypioca, which is used in caipirinha cocktails. Then there was the $225m (£145m) deal for the Ethiopian Meta Abo brewery in January. Last February Mr Walsh unveiled the company's biggest acquisition for a decade, the $2.1bn (£1.4bn) deal for Turkish spirits group Mey Icki. Diageo also bagged a controlling stake in the Sichuan Chengdu Quanxing Group, giving it control of ShuiJingFang, a leading producer of China's popular "baiju" spirit. Analysts have interpreted the war of attrition on the acquisitions front as a sign of Mr Walsh laying down his legacy before he prepares to hand over the baton, expected to be in 2015. Mr Walsh claims he is giving his departure date no thought. He says he cannot even remember how he celebrated his 57th birthday last month: "I was probably on a plane." Nevertheless, his actions signal that legacy is clearly at the forefront of his mind. In March, Ivan Menezes, who ran Diageo's North America business for eight years, received the tap on the shoulder all ambitious senior executives want and was promoted to the spot of chief operating officer - the corporate equivalent of head boy. It is also a position Mr Walsh occupied himself before graduating to chief executive in 2000. For now, however, Mr Walsh has unfinished business and he admits there are several other brands he would like to add to Diageo's vast liquor cabinet before he hands over the keys. He will not name his prized targets but it is easy to guess that cognac brand Hennessy, which Diageo currently distributes on behalf of Moët Hennessy - and in which Diageo has a 34pc stake - is one of them, particularly given that cognac is growing at a much faster rate even than Scotch. The odds on Mr Walsh persuading LVMH chairman and chief executive, Bernard Arnault, to give up that particular prize seem too long at the moment for most of the City's money. But there is another horse that is pulling in the big money: Jose Cuervo. As revealed by The Sunday Telegraph in March, Diageo has instructed its advisers at Goldman Sachs to close long-running talks with Mexico's Beckmann family about taking a stake in the world's biggest tequila maker. Pablo Zuanic, analyst at Liberum Capital, has valued Cuervo at £2bn to £2.3bn and believes Diageo could pay for half of the group with shares and launch a "one-time" share buyback to prevent any dilution. In return, the Beckmanns would receive a 3pc stake in the FTSE 100 giant. But Mr Zuanic believes Diageo may also have to make another major concession: potentially changing the company's name. Mr Zuanic moots the "Johnnie Cuervo Walker Co" but his point is serious. "Diageo should not delay this [deal]," he says. Mr Walsh is, unsurprisingly, nervous about discussing the Cuervo deal, but he does impart a willingness to be flexible in negotiations over the 217-year-old brand. "This is a brand that would fit very nicely in our portfolio," he says. We could offer it more global distribution than it enjoys. However, it is not seismic in its scale. If Signor Beckmann [Juan Beckmann, head of the controlling family] wishes to continue in the industry through some sort of equity stake, we would consider that. We know him very well and if there is something to be done, we would like to be accommodating to the level and extent that it makes sense for our shareholders. On one point he is absolutely clear, though. If there is no deal, an arrangement that currently sees Diageo distribute Cuervo outside Mexico and which comes to an end next year will be ripped up definitively: "We are getting far too little return on what is a pristine global distribution network." Whether the drinks boss will be able to snaffle Cuervo before he heads for the door remains to be seen, but one goal he is assured of reaching is generating 50pc of revenues from emerging markets by 2015. The group will hit the 40pc milestone by the end of its current financial year but Mr Walsh says he will be "disappointed" if the target, set last year, is not reached ahead of time. He will not publicly revise his ambition but admits he likes nothing better than the thrill of the chase. I'm a competitive animal and I always want to beat any target we have. Could that 50pc be 2014? I would hope so.