Whisky galore as Chinese get the taste for Scotch
Russell Lynch discovers Diageo is spreading the word about Johnnie Walker in the world’s second-biggest economy
Saturday 20 April 2013
I’m sitting in Shanghai rolling around a glass of Johnnie Walker King George V whisky, blended to celebrate the first warrant granted to John Walker & Sons to supply Scotch to the royal household way back in 1934. Take a sip and after the burn, the flavour of the light gold liquor fills your mouth with the smoky aroma of bonfires.
It’s a smooth tipple but an expensive one: a bottle of King George V will set you back £400 a bottle and the price is going up. Scotland’s Port Ellen distillery, which provided one of the signature malts, closed in 1983. Drinks giant Diageo, owner of the Johnnie Walker brand, owns the dwindling stockpiles, so every drop drunk is a drop closer to extinction.
Here at the company’s Johnnie Walker house – an invitation-only private members club adorned with pictures of guests from Jude Law to Jenson Button – the company’s mission is to educate an emerging Chinese consumer with money to spend and a hankering for heritage luxury brands about Scotch whisky culture. In Sinan Mansions, one-time home to the Communist founders of modern China, a new breed of influentials are being courted at the club, which opened two years ago and has played host to 4,000 guests so far. Visitors walk in past a display of whisky’s essential ingredients – water, peat and barley.
In December, the Shanghai house was followed by another whisky embassy in Beijing, but further bases are planned including a Johnnie Walker house in South Korea due to open by the end of the year, according to Mark Edwards, marketing director of Moët Hennessy Diageo.
“We are considering more but it won’t be like a Tesco – we will maintain exclusivity and be very selective with the locations we choose. We are currently under construction in Seoul, and we are considering other locations around the world as well, including in South America, parts of Asia and the US,” he says.
At the luxury end, China is the biggest market in the world. An even pricer blend than the King George V, the 1910 collection, was put on sale two years ago to mark the year that the whisky was first drunk in China. Half of the limited edition of 1,000 bottles sold immediately and there are fewer than 100 bottles left. The price has risen from £1,300 to £2,000 since it went on sale as whisky makers simply failed to foresee the surge in demand accompanying rapid economic development.
Whisky has to be laid down for a minimum of three years by law, but the best stuff takes 12 to 15 years or even longer.
Mr Edwards says: “These are extremely rare whiskies. Globally demand for scotch is exceeding supply. It is not like working for Procter & Gamble or Unilever where you just produce it in a factory today, and sell it tomorrow. You have got to lay down stock, in some cases even 30 years previously. At that time as an industry we didn’t anticipate the level of demand from some of the emerging economies of the world.”
The market’s potential is huge. Western spirits account for less than 2 per cent of a total Chinese drinks beverage market worth £42bn and currently dominated by baiju, or rice wine, which accounts for £24bn. With growing wealth and urbanisation that £42bn pie will also get bigger. Diageo now owns 53 per cent of the company behind China’s upmarket baiju brand, Shui Jing Fang, and has high hopes for the sector, but whisky has seen stellar growth. In China there were 200,000 cases of Scotch sold in 2001. By 2011, this had risen to 2 million. Sales of super-deluxe brands are up 60 per cent, albeit from a smaller base. In Scotch, Diageo is number two to Pernod Ricard’s Chivas Regal because it started slightly later in China, but is catching up fast.
Mr Edwards says in China the “whole speed of progress is completely different”. “In the early stages of economic growth and wealth creation, people were less concerned with having heritage, depth and provenance. They were happy to have the badge. But what is happening over time is that people are seeking real experiences. Until recently the Chinese haven’t been travelling internationally and it’s part of this desire to seek out and find out what else is in the world.”
In China, Scotch is seen as the drink for successful people. They tend to drink in a group sitting around the table and share in the occasion, be it for business entertainment or relationship building. There’s a huge element of “face” in putting a bottle of the good stuff on the table and demonstrating that you’re a good host or business partner, which is why they lean toward more expensive drinks. The houses thus lend themselves to the company’s efforts to premiumise the brand, while recruiting a new generation of drinkers from China’s smaller but faster- growing cities as beer drinkers trade up to spirits, buying Johnnie Walker Black Label and Red Label.
With an urban population expected to expand by a mind-boggling 250 million by 2020, Chinese drinkers look ripe for the picking, but Diageo is not complacent about success.
“The consumer is becoming much more sophisticated and demanding,” Mr Edwards adds.
But Johnnie Walker’s “keep walking” campaign certainly struck a cord with an aspirational target market constantly looking to improve and trade up. The breakneck pace of growth of the world’s second-biggest economy may be cooling but there’s little sign of Chinese drinkers slaking their thirst.
- 1 Finland schools: Subjects scrapped and replaced with 'topics' as country reforms its education system
- 2 The West has it totally wrong on Lee Kuan Yew
- 3 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 4 Scientists have discovered a simple way to cook rice that dramatically cuts the calories
- 5 Zayn Malik quits One Direction: Hundreds of workers request compassionate leave following band member's exit
Germanwings captain Patrick Sondenheimer tried to break into locked cockpit door 'with an axe' as plane was descending
Amanda Knox murder conviction: Italian court overturns verdict for US student and Raffaele Sollecito in the killing of Meredith Kercher
Saudi Arabia says it won't rule out building nuclear weapons
The battle for the Middle East's future begins in Yemen as Saudi Arabia jumps into the abyss
#FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Germanwings plane crash: Co-pilot Andreas Lubitz wanted to 'do something people would remember him for'
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...