Diageo sees growth in whisky market

Premium drinks company expects 5% of its global sales to come from China

Diageo, the world's leading premium drinks company, is looking to become the biggest supplier of whisky by market share in China by the end of 2018, with a long-term goal of realizing 5 percent of its global sales of the brown liquid in the country in the next decade.

Jeff Lin, marketing director of Diageo China, said that Chinese consumers' understanding and interest in whisky is rising. Higher beverage consumption, particularly of liquor and spirits, is also helping Diageo expand quickly in China.

By the end of last year, Diageo was already the largest supplier of premium whisky in China. The company seeks to become number one in the country's overall whisky market by the end of this year.

"Our confidence lies in the fast expansion of whisky consumption across China, which started in coastal cities and is spreading across the rest of the country, from fine dining to casual eateries, from entertainment to dayto-day after-dinner consumption", he said.

Whisky represents some 40 percent of Diageo's total sales in Asia compared to 25 percent of sales globally.

Diageo's latest annual report said (as of July 2017) its net sales in the Asia-Pacific region were 2.419 billion pounds ($3.27 billion), a 3 percent year-on-year growth, with net profit of 498 million pounds, a 4 percent year-on-year growth.

The report did not specify China market's performance by concrete numbers, but said net sales in the country rose 25 percent year-on-year. Net sales growth of Scotch whiskies was up 5 percent, driven by Johnnie Walker, Singleton and other malts.

"In China, consumption of brown liquids such as cognac and whisky are yet to grow. But we think the potential is great. If penetration can grow from currently lower than 1 percent to some 5 percent, the incremental part is significant," said Lin.

China is the world's largest alcohol consumer, but imported spirits are not as popular as local white grain liquor (baijiu) in the country. According to data from IWSR, an international alcohol beverage market data and analysis provider, imported spirits account for less than 2 percent of the overall alcohol beverage consumption in China.

For Diageo, the key markets in the country include Fujian province, Guangdong province, Jiangsu province and Shanghai, but some provincial capitals such as Chengdu in Sichuan and Wuhan in Hubei are also seeing higher consumption.

Since its foundation in 1997, the company has been launching a series of programs to boost whisky consumption, such as the Diageo Whisky Academy set up in 2017, a learning center for trade professionals and whisky lovers.