Scotch whisky in China: ‘the spike in demand should not be ignored’

Scotch whisky exports to China have risen by 165% in the last five years, providing the “perfect storm” for further growth of both bottles and casks, whisky broker VCL Vintners tells db.

“Historically, Whisky hasn’t been a popular spirit in Southeast Asia,” says Benjamin Lancaster, founder and partner of whisky broker and cask investment firm VCL Vintners.

However, times are changing; the growth of the Millennial middle class in China is boosting cultural interest in whisky in the market, Lancaster says.

Indeed, Scotch whisky exports to China have increased by 165% in value over the last five years. Scotch Whisky Association (SWA) data shows that the value of Scotch exports to the market in 2019 were £88,794,800, growing to £235,290,854 in 2023.

“China’s interest in whisky predominantly sits in the luxury bracket,” Lancaster says. Volume exports to China have also increased, up 80% in the same five-year period, but the rise in volume is not as significant as in value terms.

Affluent, younger consumers are to thank for the spike in interest. “There is a growing demographic of Chinese Millennials who are more financially literate than previous generations due to the rise in financial instruments, technology and luxury consumer access in China, and high-end bottle whisky is feeling the benefit,” Lancaster explains.

“Millennials, to which there are over 400 million in China, are now drawn to whisky more than ever before, and while this may start with luxury bottles – cask investment is also seeing the benefit.”

The trickle down effect: cask investment

The London firm’s founder hopes that the boom in bottle sales will be passed on to cask investment. “Where there is an appetite to spend more on singular bottles of whisky, there is also an appetite for return on investment,” he argues.

A rise in bottles sales indicates an “organically growing interest in whisky from the general population”, Lancaster says, and this will lead to further curiosity among consumers in the history and legacy of Scotch.

“Consumer adoption is the first step towards fuelling a passion investment,” he says, arguing that this is a vital part of getting investors to opt into the whisky category over “a different, similarly performing asset class”.

He says: “As the Chinese real estate market continues to struggle, retail investors will likely look to assets that do not correlate with the financial markets.”

Patience is key for brokers like VCL Vintners when it comes to a market like China.

“The Chinese market is still very bottle-focused,” Lancaster confesses, blaming a “lack of direct marketing and access to whisky cask investment within China presently”.

Business by Scotch brokers is typically done in localised nations like the UK, he explains, as casks cannot typically leave Scotland.

But it’s only a matter of time before the bottle interest is converted into cask investment. “As whisky appetite continues its upward trend in China – it becomes baked into the culture, which makes it a perfect breeding ground for cask investment. Once a first mover swoops in – the cask investment gold rush will commence, and brokers must be ready for it.”