Diageo is, without a doubt, the biggest spirits company in the world. While they have their fingers in many pies (Smirnoff, Bailey's, Guinness, Tanqueray, Captain Morgan, Crown Royal, Bushmills, etc.), I'm going to focus on their scotch whisky holdings right now.
Diageo owns over a quarter of all the active malt whisky distilleries in Scotland as well as two of the six active grain whisky distilleries (they used to own three, but shut one down recently). Additionally, they own the majority of the whisky from a number of distilleries that they closed back in the 1980s. Which is all to say that they exert an enormously powerful influence over the whisky industry.
However, Diageo has a rather peculiar relationship with their malt whisky distilleries in particular. Representatives of the company have made clear that they really don't care about malt whisky - it seems likely that they would do away with single malt bottlings if they could. Why? Because the money makers for Diageo are their blended whiskies - primarily Johnnie Walker, but including quite a number of other lesser known brands. Grain whisky is significantly cheaper to produce that malt whisky. This means that every bottle being made into single malt could conceivably provide them with greater margins by being diluted into a blended whisky.
This can be clearly seen in the recent shifts in the Johnnie Walker lineup. Basically, the one blended malt (made up of single malt whiskies with no grain whisky) - JW Green - is getting the axe, along with one of their age dated blends - JW Gold (which seems to be going downhill anyway). Replacing their previous offerings are the NAS Gold Label Reserve (gotta love that marketing department confusion) and Platinum Label - which will have the same age date as the old Gold Label, but for $30+ more. From Diageo's perspective, this is nothing but win. They get more flexibility for their mid-range blend (Black Label will still have a 12 YO age date and the Platinum will be 18 YO) and charge more for their 18 YO whisky.
But wait a minute - this doesn't entirely square with their actual actions. Most glaring, Oban is allowed to allocate all of their production to single malts - famously not a drop goes into blends. Secondly, Diageo has actually been expanding their single malt offerings, at least at the margins, in recent years. Admittedly most are presented as limited edition/premium offerings - unpeated malt and several varieties of cask strength whisky from Caol Ila, younger cask strength Lagavulin, Talisker Storm, and a regular stream of Distiller's Editions (extra maturation in various types of ex-sherry casks) from a broad range of their distilleries. While the company does seem to be trying to squeeze every dollar they can out of the single malt whisky market, both by increasing prices on their premium bottles (the latest allocation of Talisker 18 jumped from $90 to $150 recently) and putting out more NAS whiskies (the aformentioned cask strength offerings from Caol Ila), they still seem strangely willing to put out new single malts instead of funneling every single drop towards blends. If Diageo really has so much antipathy about their single malts, why bother at all?
The best theory I can come up with is that when you end up with a company as big as Diageo, not every part of the business will be moving in lock-step. A lot of the people involved with the malt whisky distilleries probably have a lot of fondness for the business and would like to see it survive. They will fight to keep those distilleries alive.
The problem is that there's no guarantee those people will continue to keep Diageo's single malt whisky production going. As a publicly traded company, Diageo's first duty is to its shareholders - blends make them more money and they care most about the bottom line. If the whisky bubble ever pops, where will their single malts stand? The mass closures of the early 1980s suggest that Diageo has no compunctions about taking sweeping decisions when it comes to their distilleries. Which is all to say that my greatest feeling about them is uncertainty. Their public statements leave me with zero confidence that their single malt whiskies will be around for the long haul, which is an incredible shame given that they own some of the finest distilleries in Scotland. Only time will tell.
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