Scotch: A New Reality

30 May, 2014
China: A New Reality

Scotch faces new challenges as some ‘emerging’ markets look to actually have emerged and even entered decline. Hamish Smith reports

IF THE PAST YEAR has taught us anything, it is that the emerging markets of the world are no longer the paragons of sales growth we thought they were. As Scotch producers are finding out, many of these seemingly evergreen feeding grounds are starting to lose their colour, even wither. So when exactly have emerging markets emerged, and at what point can we say they are in decline? 

China, emerging markets HQ, is now languishing out of the top 20 of Scotch markets, proving that ‘emerging’ is indeed a temporary status. The SWA’s results for 2013 have also exposed the west as a beacon of Scotch growth, not the economically beleaguered doom-land that it is often still lazily labelled. 

Scotch’s top two markets are bristling with growth and holding things together in the face of Asian disrepair. The US is flying its flag at the top of the Scotch value charts, piling on another year of impressive import growth (+8%, 2013, SWA for all figures henceforth) and France has rebuilt its towering volumes (+15.5%), after a destocking hiatus in 2012. 

But set against Scotch’s recent years’ triumphs and trumpeting, 2013’s overall flattish growth was a scrape with a new reality. A reality in which the new star pupils are starting to play up. So let’s look at those markets hiding behind their ‘emerging’ status. Besides, Spain, Greece and Italy have surely had enough.


After the US and France, Singapore is the next biggest buyer of Scotch in the world. The bare numbers would have us believe this city-country of 5 million people got through £330m of Scotch last year, which seems a dash unlikely. 

This isn’t the entire story; it isn’t half the story. Singapore acts as a gateway to Asia, and a conduit to China, whose 27% drop in volumes and 28% slide in value will likely reverberate back to Singapore in time, which is only currently 3% down on 2012. Next year could be grim for the trading hub.

For a while there, Scotch producers had us believe that China’s gifting clampdown would mainly affect Cognac and high-end baijiu. With the regulation change now really starting to bite a hole in Scotch’s bottom-line – the likes of Chivas Regal, Johnny Walker and Royal Salute have all delivered declines in Asia-Pacific in the recent sales results – this seems like unrecoverable ground, especially at the super-premium and above segment. Laws tend to stay made in China. 

Here’s John Burke, global category director for Scotch at Bacardi, which owns Dewar’s and William Lawson’s: “China is going through turmoil at the moment. The market will come out the other side, but will look different when it does.”

What is clear is that Asia is not consuming as much Scotch as it once was. Political instability in emerging market Thailand saw volume drops of 30% while the once-emerging, now-emerged and possibly declining trio of Taiwan (-15%), South Korea (-15%) and Japan (-15%) all saw value declines on top of a disappointing few years.  

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