Chinese develop whisky connoisseurship

December 6, 2013 9:00 pm

Chinese develop whisky connoisseurship

By Ben Marino

As dusk settles on a smoggy Beijing Sunday evening, Kamiwase Satoshi quietly prepares to open his tiny whisky bar, hidden in an office building near the capital’s diplomatic area.The Japanese expatriate, who has been running his upmarket outlet for the past four years, is part of a close-knit community of independent bar owners who have been selling ­premium whiskies to the capital’s well-heeled drinkers for almost a decade.

While whisky remains a luxury product in a domestic spirits market worth $42bn in 2012 – according to MarketLine, a research firm – Chinese drinkers are slowly learning to distinguish single malts from blended whiskies.

“At the start, customers were unable to tell the ­difference between single malts and blends, but now they often ask for limited edition single malts,” says Mr Kamiwase.

Today, whisky is marketed as an upmarket product by both global drinks brands and smaller Scottish distillers, as they try to capitalise on years of booming luxury sales in China.

Nonetheless, the Chinese spirits market remains dominated by local white spirits and imported cognac. In 2012, sales of speciality spirits accounted for 85.7 per cent of the market, compared with 3.1 per cent for whisky, according to data compiled by MarketLine.

While selling Scotch whisky to drinkers more accustomed to local spirits may sound like a Herculean task, the overall picture remains positive, according to industry insiders.

Recent figures reveal exports to China stand at £140m – up from just £1m in 1992. Yet, as Scottish distilleries invest millions promoting their brands in China, the recentslowdown in the Chinese economy has had a notable impact.

Faltering exports have been hit by the new leadership’s aggressive campaign against corruption and lavish spending by government officials.

Sales of all spirits have been hit as gift-giving, often used as a way to grease the wheels of business, and entertainment budgets have been slashed by state-owned companies and local governments falling in line with Beijing’s edicts.

In late November, Rémy Cointreau, the French drinks group, warned that its full-year operating profits are expected to drop by 20 per cent at least.

The drinks group blamed continued European uncertainty and a “sharp” slowdown in the sales in China for its warning. Sales of Rémy Martin cognac during the first six months of its business year fell 10.4 per cent compared with the same period in 2012, to €327.2m.

Whisky sales have also been affected, falling by 20 per cent to £25m in terms of direct shipments to China in the first six months of 2013. According to Alex Salmond, Scotland’s first minister, however, this year’s slowdown is just a blip.

Speaking in Beijing in October, Mr Salmond said: “The slowdown … is actually a slowdown in the rate of expansion and I suspect that every other product in the world would like to have a slowdown which resulted in a substantial rate of expansion.”

Overall, the Chinese spirits market is expected to grow 17 per cent to $53bn by 2017, according to MarketLine.

A stone’s throw from the Forbidden City and the hordes of Chinese tourists lining up to see Mao’s remains resting in state is the capital’s historic legation quarter, once home to foreign diplomatic missions in the 1920-30s.

Johnnie Walker House, once part of the US diplomatic mission, now serves as a private club, whisky bar and educational space.

Inside, new drinkers are introduced to the complex flavours that make up the blended whisky’s signature coloured label bottles. And the new customers are all different, stresses Siew Ting Foo, a brand manager for Johnnie Walker. “You can’t use one lens and apply it to all” drinkers in China, she says.