Strength in numbers

It’s been reported this week that China has overtaken Japan as the second biggest economy in the world. Whilst the wealth per person is still much higher in Japan, there’s no doubt that the countries are moving in opposite directions when it comes to economic growth. A manufacturing boom in China has coincided with an aging, decreasing population in Japan, where there has also seen a significant decline in exports. But what’s this got to do with whisky?

Well, the latest forecasts expect China’s alcoholic beverage sector to grow at around 5% CAGR (compound annual growth rate) to 2015. And since entering the WTO, there has been a marked reduction in the import tax on foreign-made alcohol, from 65% to 14%. So you wold expect that global brands like Johnnie Walker (which currently make up only 10% of the alcohol market) will increase their presence in China. Although this is likely to be more noticable in the beer, cide and FAB (flavoured alcoholic beverages) area, which represents 89% of alchol volume, compared to 9% for spirits and only 2% for wine.

3 interesting trends:

1) Women drinking more alcohol. Chinese women are taking advantage of the country’s economic progress and are becoming more financially independent. There is also a shift in social attitudes towards the acceptability of women drinking. Whisky is still perceived as primarily for men, but these financial and social factors mean that female whisky drinking in China should increase steadily over the next few years.

2) Health Conscious Drinkers. Datamonitor predicts that China will become a leader in organic alcoholic drinks. Compared to other markets, the Chinese appear to be more health conscious when it comes to the choice of alcohol – and many people are switching to low alchol and fruit-based drinks. Perhaps non-alcoholic whiskies, like the one Arkay launched in 2009, might even find success.

3) Local Twists. It’s fair to say that the way some people are drinking whisky is not how the master distiller intended. But why not embrace the local style? Like Pernod Ricard have with the revelation that Chivas Regal is being mixed with green tea!

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