The progress bar for 2021 has reached 99.7%, which seems like a long year, but it is only a blink of an eye. Have you achieved your little goals this year? What kind of whiskey did you drink? This year's whisky circle is really a heroic journey of perseverance in the storm, let's take a look back.
First, the development of the whisky industry in 2021
In the difficult environment of multiple attacks such as the epidemic raging in the world and natural climate disasters, the global whisky industry represented by Scotch whisky has a steady rise in product sales and quality, business rectification, and new product listings.
According to the Scotch Whisky Association (SWA), Scotch whisky is the world's number one international trade spirits, with an annual export value of nearly £4 billion. 36 bottles of Scotch whisky are shipped to approximately 166 global markets per second, totaling equivalent to 1.14 billion bottles (70cl @40% ABV) by 2020. That's down from 42 bottles per second (total 1.3 billion bottles) in 2019.
This year, due to the repeated outbreak of the new crown epidemic around the world, most of the wineries have been affected by many factors such as labor, logistics, capital, raw material prices, etc., and have chosen to reduce production, stop production, or even shut down.
Scotland has entered a new round of lockdown since 4 January this year, the third time it has imposed a nationwide lockdown. As of December 24, UK epidemic data showed that the number of confirmed cases exceeded 120,000, the highest record since the outbreak of the epidemic. About 1 in every 65 people in Scotland are infected.
There are more than 130 Scotch whisky distilleries in Scotland, delivering more than 1.3 billion bottles of whisky to 175 markets. During the first lockdown phase, the wineries were also closed for tourists, which seriously affected Scotland's tourism industry. The Scotch Whisky Association (SWA) also said in a statement on May 14 that "87% of wineries are either cutting production or have closed completely." One-third of employees continue to work in the company and the workplace, while others work remotely from home. ”
A large backlog of goods caused the global supply of whisky to fall. At least more than 60 countries have entered a state of emergency, all countries have implemented measures to strictly control logistics, and many civil aviation flights and cargo ships have been cancelled, which means that a large number of goods will be backlogged at airports and ports.
The consumer market is a long-term shortage of whiskies, rising prices and short supply. This situation is already a common phenomenon in the whole industry of whisky, including Suwei, Meiwei, Riwei, etc. With the gradual improvement of epidemic control efforts and the unremitting efforts of many medical workers, we believe that this dilemma will gradually return to normal, and it is expected to usher in large-scale production, winery restart and explosive sales growth after inventory backlog.
Second, the current situation and development trend of Suwei and Riwei in the Chinese market
1. Scotch whisky
The main markets for Scotch whisky are the European Union, China, India, Brazil, South Africa and so on. Among them, China is the world's largest spirits market and an important emerging market for the Scotch whisky industry. The value of direct exports has grown from less than £10 million in the early 2000s to around £107 million in 2020; when this year's data is complete, 2021 is bound to be another staggering new record.
The Liquor Importers and Exporters Branch of the China Chamber of Commerce for Import and Export of Food, Soil and Livestock (hereinafter referred to as the Liquor Importers and Exporters Branch) released a statistical analysis of domestic liquor imports from January to September 2021.
As one of the top spirits, whisky has shown a very positive trend in the first three quarters of this year. And this is only the case of domestic imports. Looking around the world, China is undoubtedly a fertile land on earth.
2. Japanese whiskey
In recent years, Japan's exports of whisky and sake, in particular, have increased significantly. Statistics for 2020 show that the export volume of whisky and sake by category increased significantly, by 27.12% and 24.14% year-on-year, respectively. It is expected that the data in 2021 will be even more dazzling.
The Regional Comprehensive Economic Partnership (RCEP), signed by 15 countries, including China, Japan, South Korea, Australia and 10 ASEAN countries, will enter into force in 2022, which means that China and Japan, the world's second and third largest economies, have established direct free trade relations for the first time.
Since then, the tariffs on Chinese sake, whiskey and other products imported from Japan will be reduced to zero year by year. China currently has a tariff rate of 40% on sake and 5% on whisky. Under the agreement, the whisky tax rate will be reduced by 0.9% year on year to zero in the 11th year. How will this tariff change the market?
The tax cut is undoubtedly positive news for consumers and importers. The Chinese market demand for Japanese whisky is huge, in recent years, the proportion of Japanese whisky in the total import of alcohol is getting higher and higher, the consumer population is getting younger and younger, tax cuts will further stimulate the domestic market consumption of Japanese whisky, will also drive the development of the industry.
In the past, the Chinese market's perception of Japanese whisky has always stayed in the impression of the "Big Three". Affected by the tax reduction policy, consumers will see more Japanese whisky brands emerge in the future, which will inevitably intensify the competition between brands. It's a good thing for consumers to be able to search for a more diverse range of Japanese whiskies without having to go abroad.
Whisky only accounts for less than 2% of the Chinese liquor market, and Riwei's share here is about 4.85%, and the market space to be developed is huge. I believe that in the next time, all Riwei brands will do their best to compete and form a new brand force. Overall, the prospects for Japanese whisky in the Chinese market will be on the rise in the future. The recent frequent news of the general rise in the price of Riwei indicates that the reduction of the tax rate will bring about the future direction of the future change of the Riwei market.
Third, the development of the domestic whisky industry in 2021
With the blessing of consumption upgrading and the rise of young consumers, the whisky market has ushered in rapid development, and domestic whisky brands have gradually emerged. As an imported product, the domestic market is still dominated by imported brands, and imported whisky brands are constantly deepening the Chinese market.
In November this year, Diageo invested 500 million yuan in Yunnan, China, to establish the Eryuan Malt Whisky Distillery to produce malt whisky originating in China. This is Diageo's first single malt whisky distillery in China, which is expected to be completed in 2023. The relevant person in charge of Diageo told Xiaobian that the continuous growth of China's whisky market has provided development opportunities for Diageo. The long-term growth momentum of the Chinese market is rapid and the future can be expected. In the future, the company will expand its business scope in China to meet the growing demand of Chinese consumers by supporting the development of China's alcohol industry and service industry.
Eryuan Distillery
For imported brands, whisky is an important product that penetrates the Chinese market. It is reported that in fiscal 2021, Diageo's net sales in Greater China increased by 38%, and all of its categories increased, especially the whisky category.
It is worth noting that Diageo currently ranks first in retail sales in the whisky field in the Chinese market, accounting for 1/3 of the Chinese whisky market, and is expected to continue to grow at a double-digit rate in the future. In the face of a super high market share and rising consumer demand, foreign brands try to reduce production costs by building factories in China, thereby obtaining higher profits.
Industry insiders believe that although whisky is currently only a niche category in China, on the other hand, this also means that the whisky market has great potential. With the upgrading of consumption, coupled with the gradual rise of the young consumer market, the domestic whisky market will enter a stage of rapid development in the future.
Diechuan Distillery
In fact, Diageo is not the first brand to build a whisky distillery in China. As the first international spirits giant to invest in the production of whisky projects in China, Pernod Ricard invested 1 billion yuan as early as 2019 to build China's first malt whisky distillery in Mount Emei.
In addition, the Whisky Distillery under Bairun Group, The Laizhou Distillery, was also officially unveiled in May this year.
Laozhou Winery
Zhu Danpeng, an analyst in the Chinese food industry, said that as the sales of foreign wines such as whisky continue to rise in China, foreign wines have also entered normal consumption. The localization of foreign brands effectively solves the problem of logistics, and the cost can also be effectively reduced. From the perspective of medium- and long-term strategy, local factory construction is conducive to reducing some costs and improving their own performance.
4. Whisky auction market and collection value in 2021
Due to the impact of the environment, at the auction of 2021, the auction price record of rare whiskies has not been refreshed as in the past, but its collection value is still steadily increasing at a speed visible to the naked eye. After all, rare whiskies have risen to the level of a true work of art. Take a look at some of the highlight moments of this year's rare whiskies:
1. The Grand Mosel Gold Age Whisky Collection, in which the 1951-2000 Whisky Collection sold for HK$8.75 million (RMB7.23 million), was the highest-priced whisky sold by Sotheby's Auctions this year and the highest-priced whisky in Sotheby's Asia's history.
2. Gordon McFair Generation Series Granliwei 1940 80 years of single malt whisky, the oldest single malt Scotch whisky auction record in history, was acquired by a private European collector for HK$1.5 million (1.24 million yuan).
3. Karuizawa 1960, the highest vintage of Japanese whisky, called "Treasure Ship", contains only 41 bottles, each with an independent root payment, and won the highest price of the whisky section at two auctions in December, setting a new world auction record for a single bottle in Karuizawa.
* On the 11th, it was sold at the Pacific Auction House and finally settled for 5.2 million, plus a total commission of 5.98 million.
* On the 13th, it was sold for 4.6 million yuan at the China Guardian auction.
4. The Japanese whiskey Habu poker series was auctioned for 100 million yen (about 7.028 million yuan) at the Japanese auction on October 10, making it the highest price record for Japanese whisky in 2021.
Shut down the winery production and become popular again?
Due to the decline in production capacity in 2021 and the growth of demand, the collection market for rare whiskies cannot be calmed down, and the value of some closed distilleries has begun to rise. With no new inventory available in the primary market and fewer and fewer bottling stocks, shutting down distillery production has become a pure "scarcity value" presence. Just like the Habu Poker series, because it uses the only 400 barrels of original sake left before the Closure of the Habu Distillation Center, after the consumption and sale of a part in the early years, there are currently 58 bottles of Yusheng Poker in the world, no more than 10 people. In this way, it is also inevitable that the auction price will be sky-high.
As inventories have shrunk (and some have even gone to zero), fewer and fewer wineries have been produced from the wineries of Banff, Glenury Royal, Glenugie, Convalmore, Coleburn, Millburn, Glenlochy and Littlemill.
From a pricing perspective, the sought after "Big Three" (Brora, Port Ellen and Rose Bank) have also entered very different territories. They are no longer issued annually on a special basis, but instead release a price that wows consumers. Of course, the revival of these wineries may have some impact, but for the real sense of the old stock will never be copied, and as these stocks dry up, market prices may continue to rise.
Finally, regardless of the prospects for rare whiskies as investments, the pandemic has shown that physical assets are becoming increasingly popular. We have no way of knowing whether this will lead to artificial value inflation, but whisky is a "super speculative" investment, and so is the cycle of "trends" in the market. Whatever changes in investment-grade values are almost irrelevant, because this is basically a symptom of global consumption levels.
The level of rare whisky consumption in the world is at an all-time high, and there is no reason not to be cautiously optimistic about this.
5. New Year's Vision for 2022
The whisky industry has experienced the ups and downs of 2021, has a certain ability to adapt, in the market demand continues to rise, the original big brand new products continue, and began to actively cater to the market taste and design a more attractive theme of whisky products, such as Diageo launched the "Secret Legend" 2021 treasure limited edition, 8 wines each have a very mysterious mythical mythical legend story as a highlight, really eye-catching, interest greatly increased.
Many emerging brands and niche brands of whisky have also actively embraced the wave of diversification in the market and launched their own masterpieces with distinctive characteristics. At the dawn of the new year, whisky distilleries, bottlers, distributors, and consumers are becoming more and more committed, and gradually have the thriving trend of "a hundred contending".
Finally, I hope that in 2022, the global epidemic will recede, the winery will restore production capacity, the world transportation will be smooth, and we will all be able to taste more mellow and wonderful whiskies as desired!
Zhongwei Network, focusing on creating a first-class whisky sales one-stop quality service platform in China, is keen to recommend the most suitable whisky for customers. In 2022, we will continue to accompany you.
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