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

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.

Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Test Analyst - UAT - Credit Risk

£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little