Whisky is a rapidly growing segment of the higher-end spirits market in China. Demand continues to increase among the urbanized and high-income consumers, especially young adults. The Chinese perceive whisky as a dynamic, international and sophisticated drink. According to Diageo more than 200 whisky bars opened throughout China in 2018. China is an important emerging market for the Scotch whisky industry. From 2000 to 2018, the value of direct exports to China has grown from under £10 million (US$12.5 million) to around £76 million (US$95.5 million) in 2019. The lowered tariff of 5% from 10% was a further boost to the industry, which was already benefiting from soaring sales.
Significantly in 2018, China renewed its trademark protection for Scotch whisky, valid until 2028. This is to protect the category from local counterfeit products (since 2008, the Scotch Whisky Association (SWA) has fought more than 100 trademarks cases). The SWA remains confident that Scotch whisky would be given special recognition in the Chinese market as a product of Scotland. The protection means that any bottle of spirit sold in China labelled "Scotch whisky", or bearing a Chinese translation with the same meaning, must have been produced in Scotland using methods that distillers have perfected over centuries.
Rather than compete on price at the lower end of the market, distilleries and sellers prefer to focus on educating the Chinese consumers on the different types of whiskies and Premium brands. The high prices of Scotch whisky speak of prestige and quality that the brand-conscious consumers of China like. Whiskies sold in China typically cost around 300 RMB - 550RMB (US$45-US$85) per bottle. Target customers are the younger, upper-middle class with a hankering for heritage luxury brands.
Popular Brands of Scotch Whisky in China
Top Blended brands: Chivas Regal, Johnnie Walker Red/Black, Ballantine’s Finest & Dewer’s
Top Malt brands: The Macallan, Glenmorangie, Glenfiddich
And the major Groups in China
Edrington is one of the biggest exporters of Scotch whisky to China. In 2003, the company decided to open a representative office in the country to better cater to its growing customers. The Shanghai office also serves as Edrington’s headquarter for its markets in the Asia Pacific region, including Taiwan, Hong Kong, Korea, Japan, Australia and New Zealand. Part of its portfolio are brands like The Macallan, The Famous Grouse, Highland Park and The Glenrothes.
Loch Lomond Group
In 2017, the Loch Lomond Group secured a major distribution deal with one of China’s food and beverage giants, COFCO. The partnership was part of the distillery’s bid to expand its reach in the country. The Loch Lomond Group is one of Scotland’s oldest whisky producers. Its full range of whiskies, which include Loch Lomond, Glen Scotia and Littlemill, are currently available throughout China.
Speyside Distillery recently signed a distribution deal with Luzhou Laojiao International Development to increase the production of its single malt whisky. This is expected to see an output of 1 million liters in a year to meet the surging demand for Scotch whisky in the region. Luzhou Laojiao also distributes the distillery’s Spey and Beinn Dubh brands in duty-free outlets across China.
William Grant and Sons
In 2005, William Grant & Sons set up a distribution and marketing base in Shanghai to tap further into the country’s growing market of malt whisky drinkers. Two of its brands, Glenfiddich and The Balvenie, remain popular among Chinese consumers. The portfolio of the family-owned distillery also includes Girvan, Kininvie and blended whisky brands like Grant’s and Monkey Shoulder.
British multinational alcoholic beverages company Diageo is one of the biggest producers of Scotch whisky, controlling one-third of the total production. Aside from its world popular Johnnie Walker blends, it owns other brands like Lagavulin, Mortlach and Talisker. In 2019, Diageo reported that its organic net sales in China increased by 20%, helped by strong demand for Scotch whisky.
Pernod Ricard, the French alcohol giant, owns a number of distilleries in Scotland. The company, alongside Diageo, controls around 55% of the Scotch whisky market. Some of its massive portfolio includes Chivas Regal blended whiskies, Glenlivet and Aberlour. Pernod Ricard has been aggressively expanding its portfolio in China, recently introducing a new Chivas range, the Chivas Extra 12.