"Huaxia Wine News" reporter Xu Feiyuan
Benjamin Lancaster, founder and partner of whisky broker and investment firm VCL Vintners, believes that Scotch whisky exports to China have increased by 165% over the past five years, creating a "perfect storm" for further growth in bottled and cask whisky. However, due to the current lack of direct sales and investment channels for cask whisky in China, the Chinese market is mainly biased towards bottled whisky, but the rise of cask whisky investment is a matter of time.
"Historically, whisky has not been popular in Asia." Lancaster said. However, times are changing, and the growth of China's millennial middle class is boosting the market's cultural interest in whisky.
Over the past 5 years, Scotch whisky exports to China have increased by 165%. According to the Scotch Whisky Association (SWA), Scotch whisky exports to the market were £88,794,800 in 2019 and grow to £235,290,854 in 2023; Exports to China also increased, by 80 percent over the same period, but the growth in exports was not as significant as the growth in export value.
"Chinese interest in whisky is mainly focused on the luxury sector." Lancaster explained that this is largely due to the surge in interest in whisky from affluent, younger consumers. "With the development of financial instruments, technology and luxury consumption channels in China, more and more Chinese millennials are better financially savvy than previous generations, and high-end bottled whisky is also benefiting from this."
"There are more than 400 million millennials in China, and they are now more interested in whisky than ever before, and while this may have started with a luxury liquor, cask whisky investment has also benefited from it."
Lancaster believes that the bottled whisky boom will pass on to cask whisky investment. "People are willing to spend more money on bottled whisky, and they will be interested in getting a return on their investment."
Mr Lancaster said the increase in bottled whisky sales indicated a rise in interest in whisky among the general public, which would lead to further consumer curiosity about the history and traditions of Scotch whisky. "Consumer acceptance is the first step to driving passionate investing."
This, he argues, is key to getting investors to choose the whisky class over another similarly performing asset class. "As China's property market continues to be sluggish, retail investors are likely to turn to assets that are not tied to financial markets."
For a broker like VCL vinners, patience is key when it comes to the Chinese market.
Lancaster admits: "The Chinese market is still very bottle-oriented. He blamed the situation on "the current lack of channels to sell and invest in cask whisky directly in China".
He explained that Scottish brokers' operations are usually carried out in localised countries such as the UK, as cask whisky usually cannot leave Scotland.
But he believes it's only a matter of time before the Chinese shift from an interest in bottled whisky to an investment in cask whisky. "As interest in whisky continues to rise in the Chinese market, it has become embedded in Chinese culture, creating a 'hotbed' for investment in cask whisky. Once the first movers step in, the gold rush for cask whiskey investment will begin, and brokers must be prepared. (Translated from The Drinks Business)