Chinese develop their taste for scotch whisky

Clear opportunities

While premium baijiu dominates the Chinese market for high-end spirits, Hartmann said there are clear opportunities for Scotch whisky－particularly single malt, which took market share from blended whiskies in 2020.

The two basic types of Scotch whisky are single malt and single grain. While single malts exclusively use malted barley, grain whisky is typically produced from maize, wheat or rye. All Scotch whisky must be matured in oak barrels for a minimum of three years.

Blended Scotch, which contains malt whisky and grain whisky, accounts for about 90 percent of all Scotch output. According to analysts, without blended whisky the industry would not exist on its present scale.

Whisky is a rapidly growing area of the high-end spirits market in China. Demand continues to rise among urban and high-income consumers, especially the younger generation. Chinese view Scotch as the peak of sophistication and are attracted to its heritage and history.

Sebastien Borda, marketing director for business acceleration at blended whisky company Chivas Brothers, said, "Demand for Scotch is rapidly growing among affluent Chinese who drink spirits.

"The growth of disposable income among the wealthy and the millennial spirit drinkers, together with their desire to discover new products with authentic provenance and heritage, are two of the reasons behind the success of Scotch in China," he added.

Borda said China continues to be a priority for Chivas Brothers, evidenced by the company's July-December financial results, which saw 30 percent growth in this market as more consumers sought authentic products with strong brand heritage.

He added that changing demographics in China, such as the rise of the middle class, are also stimulating consumption growth for the company's whiskies.

Chivas Brothers is the Scotch whisky business of Pernod Ricard. In a move to cement its position at the forefront of the Chinese whisky market, the French alcoholic beverages giant unveiled The Chuan Malt Whisky Distillery in November, which is set to produce the first Chinese malt whisky. The distillery is located in the forested foothills of Mount Emei in Sichuan province.

Diageo, the multinational alcoholic beverages company headquartered in London, controls about 55 percent of the Scotch whisky market with Pernod Ricard. Diageo has also made great strides in China during the pandemic, especially in e-commerce sales.

Ian Smith, the company's head of corporate relations for Scotland, said: "E-commerce is a growing channel where we are expanding our presence and visibility. China is the world's largest and most mature e-commerce alcohol market. In 2021, we maintained our leadership on (Chinese online retail platform) Tmall with a 24 percent share of whisky retail sales."

He added that whisky is widening its reach in China－not just in bars and karaoke lounges, but in homes and restaurants, and also as a gift.

Last year, the brand's Johnnie Walker Super Deluxe and Scotch malt whisky achieved double-digit growth, driven by focused investment, innovation and market expansion, including increased urban coverage and new distribution channels, Smith said.

He believes that China is one of the most exciting global markets for spirits producers. "The potential has always been clear, but it has been fantastic to see how consumers in China are increasingly embracing luxurious, international-style spirits－particularly Scotch whisky, which is proving especially popular with younger consumers," he added.

Smith said the growing appreciation for Scotch among Chinese consumers can be seen with the emergence of whisky bars and boutiques across the country, the growing popularity of whisky auctions, and the successes of "whisky summits" and similar events.