Drinks giant Diageo said it will pump €25m (£18.6m) to develop a fresh Irish whiskey and build a new distillery in Dublin.

The FTSE 100 firm said it will launch Roe & Co, a premium blended Irish whiskey, taking advantage of the growth in popularity of whiskey from Ireland.

Diageo it will convert an old Guinness power station in the Irish capital into a whiskey distillery, which will begin production in 2019.

However, it will start selling Roe & Co from March this year by buying liquids from existing Irish distilleries and blending them.

The group said 70cl bottle will cost around £30, putting it in the premium category, above French rival Pernod Ricard's Jameson Irish whiskey, which retails for around £22 a bottle in the UK.

Diageo's other brands include Johnnie Walker Scottish whisky, Smirnoff vodka and Guinness stout.

Irish whiskey has racked up exports of €400m and grown by 300% over the last 10 years, according to the Irish Whiskey Association.

Colin O'Brien operations director of Diageo said: "The planned distillery will provide employment in the coming years – both at construction and operation stages."

Irish minister for jobs, enterprise and innovations, Mary Mitchell O'Connor added: "Irish produced whiskey has never been as popular, garnering international acclaim and recognition.

"Diageo's decision to move into the premium Irish whiskey category and its plans to invest in a new distillery will further enhance Ireland's reputation as one of the finest premium whiskey producers in the world."

Diageo has been absent from the market since 2014 after it sold its Bushmills brand, based in County Antrim, to Mexico's Jose Cuervo in exchange for full ownership of Don Julio, the premium tequila brand in which it held a 50% stake.

Roe & Co is named after George Roe, the whiskey maker who helped build the golden era of Irish whiskey in the 19th century. His distillery, George Roe and Co covered 17 acres on Thomas Street in Dublin and was once Ireland's largest distillery.