{"id":14047,"date":"2024-05-14T12:00:05","date_gmt":"2024-05-14T12:00:05","guid":{"rendered":"https:\/\/focus.cbbc.org\/?p=14047"},"modified":"2025-05-08T09:48:35","modified_gmt":"2025-05-08T09:48:35","slug":"the-long-read-the-rise-and-rise-of-whisky-in-china","status":"publish","type":"post","link":"https:\/\/focus.cbbc.org\/the-long-read-the-rise-and-rise-of-whisky-in-china\/","title":{"rendered":"The long read: The rise and rise of whisky in China"},"content":{"rendered":"

A rapidly growing demand for whisky in China has seen UK exports rise substantially, but the big players are not just looking to bolster their selling power to China … now the race is on to create the first Chinese whisky, reports Tom Pattinson<\/h2>\n

The heavy bass of the music bounces off the walls of the club, arms wave in the air, and waiters deftly dart around the cavernous nightclub, buckets of ice packed with bottles carried over their heads. They bring trays of glasses to VIP tables where jugs of chilled green tea are used as mixers for the bottles of Chivas Regal whisky that are dotted on nearly every table. In one of the many VIP rooms, I sit on a sofa and watch as a bottle of Chivas so big it has to be lifted by a pulley system fills jugs mixed with green tea over ice.<\/p>\n

It\u2019s 2006, Beijing, and I\u2019m in Mix, one of a number of huge nightclubs where the newly emerging middle class are coming to let their hair down, dance to techno and show off their wealth. They are doing this by buying enormous quantities of a new Western drink \u2013 whisky.<\/p>\n

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When I first landed in China, I thought Chivas Regal was a chain of nightclubs, such was the vast amount of branding inside and outside nearly every nightclub in the country in those heady days.<\/p>\n

In the first decade of the 21st<\/sup> century, all kinds of brands were trying to crack the lucrative China market and spirits brands were no exception. But Pernod Ricard had decided to push Chivas Regal, which they purchased in 2001, into the market and for a few years at the end of that decade, \u2018Chivas and Green Tea\u2019 was the go-to drink for clubbers around the country. It revived the Chivas brand, increased Pernod Ricard\u2019s revenues significantly and helped introduce whisky to a market entirely dominated by the white spirit baijiu<\/em><\/a>.<\/p>\n

That year, 2006, China leapt into the top 10 whisky-drinking countries for the first time ever, in no small part thanks to Pernod Ricard\u2019s sustained promotion drive that involved not just sponsoring clubs but fashion shows, international DJs, and even opening their own bar. In 2006, \u00a390 million was spent on whisky in China, according to the Scotch Whisky Association (SWA). Today, that number has increased tenfold, with the value of whisky sales in China reaching nearly a billion pounds.<\/p>\n

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Growth and expansion: The Chinese whisky market gains influence<\/strong><\/h4>\n

China\u2019s national spirit, baijiu<\/em> \u2013 a pungent white liquor made from sorghum that is toasted at banquets, weddings and business meetings \u2013 makes up 96% of the country\u2019s spirits market. Whisky absorbs just 1%, with brandy being the dominant imported spirit and vodkas, gins and rums comprising the rest.<\/p>\n

Still, a single percent of China\u2019s staggering \u00a3120 billion annual spirits sales amounts to a big chunk of revenue. China became the world\u2019s fourth largest whisky market by value in 2023 \u2013 up from sixth in 2022. And according to Euromonitor International, China\u2019s whisky sales are expected to double from \u00a3920 million in 2023 to \u00a31.8 billion by the end of 2025, which will make China\u2019s whisky market greater than Germany\u2019s. Euromonitor predicts whisky \u2013 including Scotch whisky \u2013 will be the fastest-growing spirit in China in the coming years, booming by 88% between 2023-2026, and the whisky market in China is expected to grow at around five times the rate seen globally.<\/p>\n

In 2022, the Asia-Pacific region overtook the EU in Scotch whisky sales to become the industry\u2019s largest market, and exports of Scotch whisky rose a whopping 37% in 2022 according to the SWA \u2013 in no small part due to double-digit growth from China.<\/p>\n

For brands, China is becoming increasingly important. China is now Pernod Ricard\u2019s second-largest market, and businesses, both international and domestic, are fully aware that there\u2019s a lot of room for further growth.<\/p>\n

Moreover, imports are only part of this picture. There are currently around 48 whisky distilleries either in production or under construction in China as local and international players look to diversify their offerings with Chinese origin whisky.\"\"<\/p>\n

The rise of the single malt aficionado: A snapshot of the Chinese whisky drinker<\/strong><\/h4>\n

Kelvin Tam, the Scotch Malt Whisky Society Brand Ambassador and Development Manager for Hong Kong and Macau, said recently that the number of whisky enthusiasts in China is currently estimated to be between 500,000 and a million. By comparison, 20 years ago, there were a mere 300 whisky drinkers in the whole country.<\/p>\n

As well as the rapidly rising number of Chinese whisky drinkers, it\u2019s the demographic of that drinker that is catching the eye of global marketeers. Whilst in the West, whisky has traditionally been preferred by an older audience, in China, it is the young who are drinking more of it. It is estimated that 47% of Chinese whisky drinkers belong to Gen Z (born between 1997 and 2012), and according to a report released by Morgan Stanley, in China, whisky represents more than 50% of the volume of alcohol consumed by the young urban population born after 1990, ahead of brandy and baijiu<\/em>.<\/p>\n

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Often well-educated and wealthy, these urban youngsters are buying into a lifestyle that represents culture, class and history. Chinese consumers are more adventurous and willing to experiment with new products, brands and experiences.<\/p>\n

The big international whisky brands have realised that the scattergun approach of heavily branding nightclubs and selling cheap whisky to novice punters might have worked a couple of decades ago but is no longer the primary route. In 2023, the volume of imports rose by 6.4%, but their value soared by 23% as buyers looked towards premium products.<\/p>\n

The whisky market in Asia \u201cstarted very much with blends and big brands, trying to do big plays,\u201d says Pedro Mendon\u00e7a, Global Reserve Managing Director at British drinks company Diageo<\/a>. \u201cOver the last decade, single malt has taken off, and people are discovering and finding their own way in and appreciating the different flavours and the different characteristics.\u201d<\/p>\n

\"\"Chivas Regal was still making up nearly 29% of China\u2019s whisky consumption by volume in 2019, but young Chinese consumers, who have their own tastes and preferences, have driven the rise in popularity of higher value, lower volume products. Single Malt Scotch such as Glenfiddich and The Macallan have tripled and doubled their market share respectively in China since then, according to Euromonitor.<\/p>\n

In a bid to educate and engage with China\u2019s first generation of whisky aficionados, Diageo has organised 13 whisky summits across China since 2017 and claims to have reached over 12,000 potential Chinese whisky lovers through a \u201cwhisky culture education\u201d institution called Diageo Whisky Academy.<\/p>\n

Homegrown: The era of the Chinese distillery<\/strong><\/h4>\n

Now that an established audience is emerging, the race is on to create a whisky in China for a Chinese audience. French company Pernod Ricard was the first international spirits company to release a Chinese whisky, made at its own distillery in China\u2019s western Sichuan province. The company said it will invest \u00a3110 million over a decade in the project, and when its first release \u2018The Chuan\u2019 hit the shelves in December 2023, it led to a lot of global headlines.<\/p>\n

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Pernod Ricard\u2019s The Chuan is the first China-origin whisky created by an international drinks brand<\/p><\/div>\n

\u201cThis first-ever product of The Chuan celebrates the vision of Pernod Ricard to create a prestige malt whisky made in China,\u201d said Jerome Cottin-Bizonne, CEO of Pernod Ricard China, in a press release about the distillery. \u201cWe are proud to put China on the world map of whisky by presenting this exceptional malt whisky of The Chuan.\u201d<\/p>\n

Diageo has invested over \u00a355 million in its own Eryuan Distillery<\/a> in Yunnan Province. Chinese brewery Qingdao Beer and Chinese winery Grace Vineyards both have distilleries in the works, whilst baijiu<\/em> manufacturers Gaolong and Daiking have diversified into whisky production. Gaolong has been producing a range of Chinese-made whiskies for some time; its \u2018Gaolong Blended Chinese Whiskey\u2019 and \u20185 Year Old Bourbon Cask Single Malt\u2019 are for sale on the UK-based retail site The Whisky Exchange.<\/p>\n

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Diageo\u2019s Eryuan Distillery in Yunnan<\/p><\/div>\n

Cognac company Camus has partnered with baijiu<\/em> producer Gujinggong\u00a0<\/strong>to create the \u00a324 million Guqi distillery in Bozhou; and another well-established baijiu<\/em> producer Yanghe has also moved into whisky making.<\/p>\n

Perhaps most astonishing of all has been a major project funded by the MengTai Group that saw the wholesale relocation of stills and equipment shipped in from Scotland by Forsyths to the Ordos region of Inner Mongolia to create a \u00a320 million distillery. The Rothes-based company prefabricated a modular distillery including a two-ton mash tun, copper stills, condensers and stainless-steel tanks. This was shipped over to Inner Mongolia and reassembled, with the aim of producing \u201cworld-class whisky\u201d after the two years of maturation in casks that the Chinese national standards require. Like many other Chinese distillery owners, the MengTai Group has engaged experienced managers and head distillers from Scotland to lead the project in a bid to ensure quality and authenticity are retained.<\/p>\n

Angus Dundee Distillers \u2013 makers of Tomintoul and Glencadam, among others \u2013 has also opened its own distillery near Hangzhou. \u201cWe\u2019ve been in China since 2005 and decided China was a market for the future,\u201d says Brian Megson, the Director of Angus Dundee Distillers. Megson says that Chun\u2019an Distillery will be finished in two to three years, before then requiring a further four to five years to produce whisky.<\/p>\n

The race is on to create a whisky in China for a Chinese audience<\/p><\/blockquote>\n

Megson explains that the company had plenty of options when looking for the optimal site. \u201cWe wanted to find somewhere that\u2019s not just good for whisky production but also good for the visitor centre. This area is great for tourism, and the numbers are mind-boggling. Hangzhou is a big city, and Shanghai is not far away. We found somewhere that was suitable and found a plot and have had a good amount of support from the local authorities.\u201d<\/p>\n

Further south, a large consortium of mainly Western investors has opened the Nine Rivers distillery near Xiamen in eastern China. Led by former drinks importer Jay Robertson, the project was developed after the cost of importing drinks \u201cwent through the roof\u201d.<\/p>\n

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Nine Rivers undergoing construction with grand ambitions<\/p><\/div>\n

Robertson explains that Nine Rivers is sustained through crowdfunding. Sixty-two percent of the investment comes from the board, composed mostly of expats and international investors, and 38% from micro investors, with the entry amount dropping as low as USD $1,000.<\/p>\n

Robertson believes Nine Rivers will become China\u2019s single biggest single malt whisky. \u201cWe have had interest from corporate money and engagement from big baijiu<\/em> companies and one big scotch whisky producer, but we\u2019re not interested in that,\u201d he says. \u201cOur strategy is to have lots of people with skin in the game. China is an influencer-led country<\/a>. Everything has always been a word-of-mouth culture where recommendations from friends and family trump advertising spending.\u201d<\/p>\n

Robertson says that Nine Rivers aims to make 1.31 million LPA (Litres of Pure Alcohol) at launch, which would be more than the 1 million LPA Pernod Ricard produces from its two-still set-up, but less than the four stills that give Diageo the capacity for 2 million LPA. However, Nine Rivers has the ability to expand up to 7.5 million LPA as and when the demand requires, he argues, which would make it the largest distillery in the country.<\/p>\n