Diageo fails to reach pay deal with Scottish unions, faces strikes

By Siddharth Cavale

LONDON (Reuters) - Talks over pay between Diageo Plc <DGE.L> and two of its biggest Scottish unions fell apart on Wednesday, threatening the production of some the region's most popular whiskies.

Members of Scotland's Unite and GMB unions, who make up more than half of Diageo's 3,500 Scottish workforce, will ballot workers for strike action after rejecting on Wednesday an offer to increase pay by 2.8%. Last week, the unions rejected a 2.5% pay raise.

Diageo is the maker of whiskies including Johnnie Walker, Black & White, Lagavulin and Talisker. It has 29 distilleries in Scotland and most of the whisky it produces there is exported to 180 countries around the world.

"During these talks it soon became clear that no progress would be made because the company have attempted to repackage the pay offer making it appear more generous," Unite's regional industrial officer, Bob McGregor, said.

"The reality is that the latest offer is just as insulting as the previous one, and our members won’t be conned or denied what they deserve," he said in an email.

Unite said that 500 of its workers at Diageo's Cameron Bridge, Leven and Shieldhall sites would be balloted to take strike actions from next week. The union also warned of "discontinuous strike action" likely to last from late August to November.

GMB was not immediately available for comment.

"Despite improving our offer, the unions did not move from their position to enable meaningful discussions to take place," a Diageo spokeswoman said.

"We remain committed to seeking a resolution and ensuring our employees receive an increase on their pay ... we have well developed contingency plans in place in the event of any strike action,” she said.

Shares of Diageo closed down 1.6% at 3,353.50 pence on Wednesday. The company is expected to report half-year earnings on Thursday.

(Reporting by Siddharth Cavale in London; Editing by Matthew Lewis)