SHANGHAI: Trouble was brewing in a court in Shanghai yesterday, in a battle between international whisky brand Chivas and a local newspaper.

Earlier this year International Finance News ran a front-page story quoting an anonymous Chivas insider as saying that the whisky sold by the brand in China is sub-standard.

The insider claimed that despite the 12-year guarantee on the label, each bottle cost just 25 yuan (US$3) to produce, as it was in fact a blend of younger, inferior whiskies.

The allegations against the Scottish malt, which retails at around 300 yuan (US$37) per bottle, prompted Chivas Brothers Ltd and Pernod Ricard (China) Trading Co Ltd to sue for defamation. The paper then filed a counter-suit.

The case kicked off yesterday in Shanghai Number 1 Intermediate People's Court, with both sides issuing their opening statements.

Both sides are demanding a full apology, but no financial compensation has been asked for.

According to the January report in the International Finance News, none of the 700,000 cases of Chivas whisky shipped to China each year contain a single bottle of genuine 12-year-old Chivas Regal.

To illustrate the huge profits generated by the whisky, the newspaper also claimed Pernod Ricard had paid for all its Chinese employees to visit Britain.

In response, at a press conference a few days later, Chivas and Pernod Ricard branded the report "groundless."

Representing the whisky manufacturer and its trading partner, lawyers Yang Ming and Peng Xuejun showed the court statements from the European Union, the Scottish Whisky Association, the British Consulate in Shanghai and British Customs, confirming that Chivas Regal sold in China is produced and labelled according to the law.

To display how their clients' brand had been damaged by the newspaper's claims, they also showed screen shots of online discussions about the whisky.

In a survey on Sina.com.cn conducted after the report, 77 per cent of more than 40,000 respondents said they would never buy Chivas again.

Attorney for the newspaper Zhang Yi said the report was true, and the whisky company and its importer had damaged the reputation of the newspaper by labelling its report irresponsible.

He provided 12 pieces of evidence, including the name card of the anonymous insider.

He reiterated that the source worked for Chivas, but would not say whether he or she would be testifying in the case.

Attorney Zhang also presented surveys claiming the Chivas Regal sold in China and Britain smells and tastes different.

"We went to a Shanghai bar with notary officers and talked to about 40 people," he told China Daily.

"More than 20 of the customers who tasted the British and Chinese Chivas said the Chinese Chivas was not as good as the Chivas from Britain."

A hearing is scheduled on June 23.