Diageo returns to Irish whiskey market with Roe & Co

Jan 31 (Reuters) - Diageo (LSE: DGE.L - news) will launch a new blended Irish whiskey called Roe & Co, the world's largest distiller said on Tuesday.

The maker of Johnnie Walker Scotch and Smirnoff vodka said it would invest 25 million euros ($26.76 million) over three year to build a distillery in Dublin, nearly two years after it pulled out of the Irish whiskey market.

It expects production to begin in the first half of 2019.

In 2015, Diageo swapped its Bushmills Irish whiskey brand for Cuervo's 50 percent stake in their Don Julio premium tequila joint venture to regain its leading position in tequila.

Demand for Irish whiskey has been growing, particularly in the United States, and has driven sales of France's Pernod Ricard, which sells Jameson Irish whiskey.

Diageo recently reported half-year sales which topped expectations helped by improvements in its U.S. business.

It has been working to reinvigorate the business after years of tepid performance, with management changes and a greater focus on sales to retailers rather than wholesalers.

($1 = 0.9341 euros) (Reporting by Rahul B in Bengaluru)