China's Middle Class And Robert DeNiro Driving Scotch Sales Upward
No Chinese middle class? Tell that to Diageo, the world's largest multinational beer, wine and spirits company in the world, whose Scotch sales are soaring thanks to Robert DeNiro and to China's allegedly non-existent middle class.
Diageo just announced its half-year performance and, according to Scotsman.com, Scotch whisky stole the show in an otherwise flat set of results. Scotch is on a roll and China, along with the other BRIC nations is playing a huge part in that:
So what has changed? The answer is the growth of the so-called Bric nations - Brazil, Russia, India and China, and in particular the emergence of an aspirational middle class. Suddenly Scotch is cool. Walk into any style bar in New York and the beautiful people will be drinking Scotch. The traditional image of a Scotch whisky drinker as an old man with slippers has been usurped by the likes of Nicholas Cage, Robert De Niro and Emma Thomson.
There has been talk for years within the industry that "the opening up of China and India would reap massive rewards." It is now more than just talk:
In just 10 years, growth in China has risen from 700,000 litres to 5.7 million, fuelled by a burgeoning middle class that have acquired a taste for whisky.
At the moment the market leader [in China] is Pernod Ricard's Chivas Regal. So incensed was Walsh by this that last year he flew to Shanghai with a �20m cheque for his Chinese marketing team. Johnnie Walker Black is now experiencing 85% growth a year.
William Grant's chief executive Roland Van Bommel has also committed a large marketing team on the ground to help grow Glenfiddich, while Edrington, makers of the Macallan, have large sales and marketing teams working in China.
For a very much ground level view of Scotch in China, check out, "Enough Single Malt to Make You See Double."
Comments (4)
Read through and enter the discussion by using the form at the endAlmerindo Portfolio - February 18, 2007 6:52 PM
Well put, Dan. I think, however, the point of the report I wrote about was that despite the growth in the consuming power of the Chinese, government figures on the size of the retail market and other stats that would help retailers design their sales plans are inherently flawed. This has led to a ballooning of the estimation of the "middle class" to upwards of 500 million people, which is certainly inaccurate. My own feeling is that the middle class, if they ought to be labeled as such, number 100 million or less. They might more accurately be termed the upper class, as they are the ones with the economic power in this country. Between poverty and wealth there is a great divide.
boyce - February 18, 2007 8:42 PM
CLB,
Nice post and thanks for the shout. On top of the quantitative data found in that article and in others, here are a few anecdotes from Beijing:
- Simple observation shows Scotch whiskey becoming increasingly popular in Beijing, whether at clubs (where it's usually mixed with green tea) or as a holiday gift -- check out your friendly neighborhood Wal-Mart, Carrefour or Jinkelong to see what I mean.
- Choice is also growing in Beijing's non-hotel bars. The Tree and The Pavillion, among others, have decent whiskey selections. Last night, I popped into 5:19 and found Crown Royal, Canadian Mist, Schenleys (!), Dalwhinnie and Balmore, among others.
- I'm posting this from The Bookworm - known for its 14,000-volume lending library, wireless, seminars, and coffee and food. On the shelf nearby sit 33 (yes, thirty-three!) different Whiskeys, including some rarely seen in Beijing - Glen Elgin Speyside Single Malt, Caol Ila 12-year and Scapa 14-year, along with The Balvenie, Laphroig, etc. I'm noting the Balvenie as though it's fairly commonplace, yet two years ago, the only spot near my apartment that carried it - usually a single bottle - was a tiny bar called First Cafe.
- Several people linked to Scottish distilleries have contacted me recently to find out how to find a distributor in China. Meanwhile, The Kentucky Trade Office is looking to faciliate heavier promotion of Jim Beam (and, one hopes, other Bourbons) in the near future.
Cheers, and Happy Spring Festival, BB
China Law Blog - February 19, 2007 1:48 AM
Almerindo --
Thanks for checking in. I actually agree with the view that the size of China's middle class has been exaggerated and that the bulk of the people among China's spending class are not really middle class, as we Westerners tend to think of the term. In fact, that was why I wanted to link over to your post.
At the same time, though, there obviously are enough people in China ready to fork over big bucks for the hot thing, like scotch.
China Law Blog - February 19, 2007 1:50 AM
Boyce --
I knew I could count on you to add worthwhile info to this post.
Next time I go to China, we have to get together. Not because I'm much of a drinker (I'm not), but because I do want to talk to you about distribution.