Scotch: A New Reality

30 May, 2014
China: A New Reality

Taiwan is in transition from blended scotch to single malts, which is likely to mean fewer bottles and less revenue overall. Single malts now make up 19% of Scotch sales globally and Diageo’s head of Whisky Outreach Nick Morgan, says the market is split between the two segments. 

“Taiwan is an anomaly. The change was led by Macallan, which has been very successful. Diageo’s big focus in Taiwan is to develop single malts there.” 

In South Korea Diageo’s Windsor and Pernod Ricard’s Ballantine’s do battle over a dwindling stock of consumers who have been peeling away to white spirits and beer. Pernod Ricard has gone on the record to say there is a “marked decline” in its Imperial and 100 Pipers brands due to their “significant exposure to South Korea and Thailand”. 

But there are those still finding room in the market. “South east Asia and South Korea in particular continue to present positive opportunities for our brands,” says William Grant & Sons chief marketing officer Maurice Doyle.

“Early signals indicate opportunities shifting from blends to malt whisky, although we still see plenty of headroom for blended Scotch and the region offers a diverse range of opportunities dependent on stability of distribution and legislative context.”  

Japan, which is a traditional Asian market for Scotch, has its ‘grey market’, in which savvy dealers import Scotch through unofficial channels from other countries and sell domestically at discounted rates. This presents pricing issues for Scotch companies.

The bright spot of Asia and one of the few worthy of the ‘emerging market’ tag, is India. The probable election of Narendra Modi this month, a pro-business politician from Gujarat, is unlikely to harm the chances of the proposed abolishment of the country’s punitive duty regime. Either way, climbing sales of Scotch in recent years (11% in value to £69m, 4% volume) adds weight to the view that India is a heavyweight Scotch market, with or without the 150% tax levee. 

Diageo strengthened its grip on United Spirits’ distribution last month (it grew its share to 54% of the business) so is in prime position, if not yet the driving seat in India. Pernod Ricard has its hands on that particular wheel, with Blenders Pride, Imperial Blue, Royal Stag and 100 Pipers helping it lead the category. The latter is growing at 22% in the country, thanks to 30 to 40-year-old professional males trading up from local spirits, some of which are probably now owned by Diageo. 

If those are the front seats covered, William Grant is clambering into the back. “Big Scotch brands establishing themselves in India have driven greater interest in the category, which is benefitting all Scotch brands,” says Doyle. “We’re seeing the benefits of the category expanding. More Scotch blends on the market offer the Indian consumer more choice and opportunity to trade up.” 

Probably the category behemoth Johnnie Walker, which now stands at 20.1m cases after adding on another 6% of growth in 2012/2013, is a good weather vane for overall Asian sales. Despite its world domination in Asia Pacific in H1 2013/2014 it declined 10%. 

Latin America

Latin America, is a mix of good and bad news. Mexico – one of the MINTS forecasted to follow the BRICs to economic prosperity – has delivered back-to-back bumper years of Scotch growth: 19.8% to £110m last year and 14% in 2012. 


Dominic Roskrow

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