LONDON/SHANGHAI (Reuters Life!) - Darren Hosie knows all the best bars on Shanghai’s historic Bund.
There’s the Bar Rouge with its flaming drinks, house music and turbocharged hedonism; M on the Bund which channels 1930s sophistication; and Lounge 18 whose expensive wood paneling and wall to ceiling glass windows exude a more modern glamour.
Hosie has lived in China for the past three years and is well accustomed to the tastes and whims of the country’s new business elite — the legions of bankers, entrepreneurs, traders and second-generation wealthy, known as “princelings,” who think nothing of dropping $200 on a bottle of French wine or $1,000 on a bottle of scotch whisky that they’ll then mix with green tea.
Tonight the Scotsman is in the Shanghai Tang bar, watering hole of China’s best known luxury label. Sitting on a straight-backed, wooden chair in front of a tasting audience, Hosie is clean-shaven ahead of an evening of whisky-nosing and tasting sessions.
Born and bred in Glasgow, the 37-year-old has spent the past seven years working for scotch whisky giant Pernod Ricard and since August 2007 he has lived in China as international brand ambassador for the firm’s top whisky brands Chivas Regal, Ballantine’s and The Glenlivet.
In a lilting Scottish accent, Hosie explains the joys of whisky and its sure-footed advance into China. As he describes the different types of whisky that the spellbound audience are about to taste — malty, peaty, smoky — a few give approving responses.
Hosie says that for palates accustomed to baijiu, China’s fiery sorghum- or rice-based spirit, the flavor and smoothness of whisky can have instant appeal. Mix it with what you like — water, ice or green tea — he says. Just remember the care that has gone into aging and blending the best.
Hosie starts his work with bartenders — training them on different tastes and styles of whiskies and organizing tastings so they can tell a blend from a single malt and appreciate the way the drink improves with careful aging.
The key to China’s drinkers, he says, is to understand that respect and status are often expressed through drink. Unlike in the United States or Europe, where partygoers tend to buy their drinks by the glass, Chinese drinkers see the bottle as a status symbol.
“Here it is very much about having the bottle on the table and letting people see what you are drinking,” said Hosie, sipping water on a pit-stop between whisky tasting sessions in a luxury Shanghai restaurant painted bright green.
It’s a message that’s working.
From crowded Shanghai bars to the beaches of the southern Chinese island of Hainan, Scotch whisky is muscling in at the expense of local tipples. Whisky exports to China were up 24 percent in 2010.
“This is the whisky industry’s great opportunity. It has a wide range of products and great growth potential. The growth we have seen in China is sustainable as we have hardly felt any sign of a slowdown,” said Pierre Pringuet, Chief Executive of Paris-based Pernod Ricard.
Scotch whisky is also making huge inroads in other developing nations such as Russia, India, Brazil and Mexico, as the growing middle classes turn away from local drinks such as vodka and rum. Overall exports were up 10 percent in 2010 with eight out of the industry’s top 10 export markets growing and only Spain and Greece, beset by severe economic problems and austerity measures, showing a decline.
Over the last 20 years, whisky markets such as Vietnam, Russia and India have also grown rapidly. While the top two markets — the United States and France — both increased in 2010 other top 10 markets such as Singapore, South Korea, Taiwan and South Africa all showed larger increases.
The industry’s latest priority is improving market access to India which has a vast locally produced whisky market and slaps a 150 percent tariff on imported spirits, compared to just a 10 percent tariff in China. The European Union and India have held trade talks to try and push through free trade agreements for a number of products including scotch whisky and there is optimism that a deal can be reached by the end of the year.
“India could be the next big market. It is a huge potential market because of India’s historic links to Britain. If a tax deal can be agreed then a $50 bottle of Chivas Regal would cost more like the $25-30 seen in Europe and North America,” said Pernod’s head of its Chivas Brothers whisky arm Christian Porta.
To keep up with demand, Scotland’s whisky industry has poured 600 million pounds ($975.7 million) into expanding and building new distilleries over the last three years.
Long-forgotten still houses have been re-opened. Expansion is underway at a handful of big industrial grain whisky plants, bottling halls and cooperages, and also at some of the smaller 102 malt whisky distilleries scattered across the highlands and islands of Scotland.
Growth is shepherded by people like Hosie. A handful of brand ambassadors in China and over 100 more across the planet work to convince newly moneyed consumers that they should be drinking whisky. Call them whisky missionaries.
Hosie’s pupils lap up the arcane details — the use of local peat to fire the malting barley process that imparts a wonderful smoky flavor to whisky, the way a whisky aged in European sherry barrels has rich fruity finish, instead of the crisp vanilla of American bourbon whiskey barrels.
Chinese drinkers, he says, were first attracted by light styled whiskies like Chivas Regal, but now want to try more complex 18 and 25 year olds or challenging single malts from smaller distilleries. “We find the Chinese consumer is very keen to get more information and is very confident to move up to older and more complex whiskies,” he said.
He leads his classes through the malt whisky story, where top quality malted barley is mixed with Scottish spring water, fermented, and the resultant liquid heated in tall handmade copper stills, with the spirit vapor winding its way to the top to be condensed and collected before aging in oak barrels. People like Hosie are important to convince the Chinese that whisky is better than other recent imports, particularly cognac, which took hold in the restaurants of Hong Kong, Shenzhen and Guangzhou in southeastern China during the 1980s and 1990s. Scotch whisky came later, and further north, to the bars of Beijing, Tianjin and China’s biggest city Shanghai.
Whisky now accounts for 45 percent of all foreign-produced spirits sold in China, about the same share as cognac.
Paul Walsh, CEO of the biggest whisky maker Diageo Plc, which makes Johnnie Walker and J&B, argues scotch whisky is more versatile than cognac. The Chairman of the Scottish Whisky Association (SWA), he says the industry has shaken off its conservative view that scotch should only be drunk on its own or with water or ice: industry executives admit they may have missed a trick after seeing the success of American whiskey Jack Daniel’s being mixed with cola around the world.
Though still small, the Chinese whisky market was worth over 300 million pounds in 2010, from just a few million pounds in 2000.
That’s still a drop in the ocean compared to the 24 billion pounds spent on Chinese baijiu every year, but Diageo’s Asia Pacific chief Gilbert Ghostine says the prize is still worth chasing.
“In China there are 20 million new consumers which reach the legal drinking age each year,” he said. “There is a very big aspiration for international spirits.”
Reporting by David Jones