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Archive for Sunday, December 3, 2006

Chinese increase imports of new status symbol Scotch whisky

December 3, 2006

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— Already possessed of all the tea in China, the Chinese are making a serious run at all the whiskey in Scotland, and they do not seem averse to mixing the two.

Chinese imports of Scotch whisky have zoomed from $2.9 million in 2001 to more than $90 million in 2005.

Last year the value of whiskey imports grew 84 percent. This year, China is expected to crack the top 10 of whiskey-guzzling nations, according to David Williamson, public affairs manager for the Scotch Whisky Association in Edinburgh.

While all of this is good news for Scottish distillers, it is making some Scottish tipplers a wee bit anxious.

According to a recent editorial in The Scotsman newspaper, "Skyrocketing Chinese demand has created relative shortages of whiskey and so pushed up the global price. Even in Scotland, drinkers will soon have to pay a pound ($1.98) a bottle more for their tipple."

Increasing output is one solution, but as the newspaper noted, whiskey takes time, a minimum of eight years for a good-quality blended whiskey and 12 to 18 years for some of the more expensive single-malt brands.

Not to panic, says Williamson: "About 18.5 million casks are currently maturing. Supply is not an immediate concern."

Status symbol

In China, Scotch whisky and French cognac have long been the preferred beverages of ascendant businessmen and senior government officials who subsist on a constant rotation of banquets and ribbon-cuttings.

"Western brands were offered to demonstrate that the person who was the host had money and prestige," said Martin Reimann, Asia Pacific managing director for The Edrington Group, whose brands include The Famous Grouse and The Macallan.

But a more recent phenomenon - one that has Scottish distillers flocking to China - is the emergence of Scotch whisky as a status symbol among the country's growing middle class, a group equivalent to the population of the entire United States.

As middle-class incomes have increased, so has the appetite for consumer goods, and with more Chinese traveling abroad, their knowledge of and thirst for Western luxury products also have grown.

Yan Xi, a 31-year-old public-relations worker in Beijing, said he first tried whiskey with friends a few years ago and now considers it a regular habit.

"I think whiskey will get more popular in China. It's a new choice. It also represents Western culture. The new generation is more willing to try new things. White-collar or high-income earners are more likely to drink whiskey. It's a way to show your status," Yan said.

The long journey

Distilled spirits are not new to China. The traditional favorite is baijiu, a grain alcohol with the kick of a donkey. Starting at 112 proof and going up from there, it is available at most roadside stands to help wash down noodles or salted peanuts. Small bottles, fit for a lunch hour, sell for about 40 cents.

Scotch whisky began making inroads after China embarked on reforms in 1979. In 2000, China's accession to the World Trade Organization resulted in the gradual reduction of import tariffs from 65 percent to 10 percent, Williamson said.

These days, Chivas Regal, the top-selling imported spirit in China, is available even in the countryside.

Martin Riley, international marketing director for London-based Chivas Brothers, points out that there are historical precedents to the Chinese experience.

He noted that Chivas Regal became an iconic brand in the U.S. in the 1950s during the postwar economic boom that greatly expanded the American middle class.

"The Chivas brand has always been associated with success. People like to flaunt it, to show in some way that they've made it," he said. "It was true in the U.S. in the '50s and '60s, and we are seeing it in China today."

America remains the most lucrative export market for Scotch whisky, but China has become an object of desire for Scottish distillers not only because of its size but because Chinese whiskey drinkers tend to be in their late 20s and early 30s - a more desirable target market than British or American drinkers who generally are older.

Scotch the Chinese way

In recent years the Chinese have developed a drinking culture of their own. Most imbibing is done outside the home, usually in a restaurant, bar or nightclub. A group of drinkers will normally buy a bottle to share.

"I drink it once or twice a month," said Li Gang, 30, a Beijing businessman. "I always drink with friends. Three people are all you need to finish a bottle."

A premium single-malt whiskey such as The Macallan will sell for $100 to $150 a bottle. A bottle of 10-year Macallan sells for about $55 in the U.S. Among city drinkers, the more expensive the better, but variety is limited.

In Beijing, an establishment that offers a 30-year-old single malt by Laphroaig guards it carefully. The bar refuses to sell it by the bottle, on the principle that it is too fine to be consumed so quickly.

One cultural difference that strikes some Western connoisseurs of single malts as peculiar, even slightly sacrilegious, is the Chinese habit of mixing their whiskey with sweet green tea.

"Everybody drinks it this way. It tastes good, and you can drink a lot," said Li, the Beijing businessman. "If you drink pure whiskey, it is too strong."

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