As we explored in a recent whisky market update, Scotch is showing promising recovery from the twin tailwinds of COVID-19 and the US’s 25% tariffs. Market analysts are closely watching consumer activity in China and other Asia-Pacific nations where appetite for Scotch seems largely unaffected by the pandemic.
According to Market Data Forecast, the Asia-Pacific whisky market was worth £1.36 billion in 2021 and is expected to hit £1.77 billion by 2025 with a CAGR of 5.25%.Focusing in on Scotch in particular, exports have skyrocketed from £10 million in 2000 to £89 million in 2019.
Chinese Appetite For Premium Whisky
According to the Hurun Research Institute’s China HNWIs Whiskey Consumption Behavior Report, whisky is the third most popular alcoholic beverage among Chinese people. Unlike other markets, Chinese consumers are embracing premium whiskies with 30% of buyers willing to spend over 1,000 RMB or approximately £115 on a bottle.
“[China] is a more premium market and sells higher-end products like XO and VSOP for cognac, whereas the U.S. primarily sells cognac that is at the VS level,” said Hasumi Ozawa, the spokesperson of Suntory Holdings. An impressive 98% of Chinese consumers rank single malts as their favourite whiskies, with 90% believing single malts to be of superior quality.
Asia’s Rising Middle Classes
This growing appetite for premium whisky is closely related to the rapid expansion of middle-class households in China and in the wider Asia-Pacific region. According to a study by McKinsey & Company, 76% of the Chinese population is projected to achieve a salary equivalent to US$34,000 by 2022. This threshold indicates a middle-class lifestyle and level of disposable income. This is especially remarkable when you consider that just 4% of the population met this criteria in 2000!
The Hurun report notes that interest is particularly strong amongst the young and wealthy who are curious about Western culture and open to trying new things. Brands have moved swiftly to respond to China’s changing demographics; earlier this year Diageo debuted their Johnnie Walker Blue Label Forbidden City Edition as well as a limited edition Chinese New Year bottle celebrating the Year of the Ox which quickly sold out.
As demand slowly stabilises across the rest of the world, all eyes are on China to lead growth into the next decade.