Cask and Still Magazine | 39 >>>
which of course meant prices would rise as a result. Later, I read the press release which stated: ‘We have been forced globally to allocate products to markets where profi tability is maximized. This is especially important to delivering our commitments to our shareholders.’
I wasn’t too bothered at
that point because I didn’t drink those whiskies. However, within a year, it became impossible to get
some of the whiskies I did love: Talisker, Oban and Lagavulin. And it soon became
apparent they were not coming back. There it was in black and white – at the height of the Scotch revival, China and other countries, such as Russia and Brazil, had forced the hand of the whisky producers. I certainly didn’t see that coming; I would have never thought entire portfolios would be pulled out of Canada to satisfy burgeoning demand in emerging markets. How did this happen? When Deng Xiaoping created the opening
in 1978 that would bring wealth and power to China, he created the free market institutions that led to China becoming the world’s largest trading nation. Millions of Chinese citizens were lifted from poverty into the comfortable middle class – generation X’ers with plenty of disposable income whose new-found status demanded high- end expensive brands such as Louis Vuitton, Rolex and Gucci, as well as premium cognacs and whiskies. By 2011, China’s top three imported
brands (Hennessy, Martell and Chivas) dominated the imported spirits category, with a 43% share; in addition, the trio’s total sales had increased the following year by 250% (since 2001).
Diageo was quick to jump on the bandwagon
and tried to win over Chinese consumers, opening the Johnnie Walker House in Shanghai on May 19, 2011, effectively creating a niche market, where the masses could fl aunt their wealth while it introduced its products to thousands of prosperous clients. So successful was the initial campaign that six of these houses now exist in China. Special batches of rare Johnnie Walker are sold exclusively at these venues.
By 2013 the affl uence associated with this social status, coupled with the desire to own expensive brands, was infl ating prices. Intense speculation that premium spirits
were being purchased using government money led to the current regime instilling harsh laws. President Xi Jinping enforced the new regulation and by the end of 2013 a record 182,000 offi cials were either detained or fi red, including former Politburo Standing Committee member Zhou Yongkang, who once sat on the highest decision- making body in China. It was a clear message – corruption through extravagance and displays of extreme wealth would be openly shamed and punished. This was a disaster for many of the industry’s
big players. From being ranked 11th in 2010, China’s Scotch import market dropped to 26th in 2014. The biggest drop of 27% in overall volume sales was registered in December 2013. By the fi rst quarter of 2014 the Scotch Whisky Association (SWA) announced that
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