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Lana Lam

The impact of President Xi Jinping's crackdown on official extravagance is being felt far beyond China: even Scotland's famous whisky distilleries are feeling the heat.
Xi announced an eight-point plan in December 2012 to strictly regulate the lavish, often booze-soaked celebrations and ceremonies for which party cadres were notorious - part of a wider crackdown on corruption.
While makers of China's national liquor mao-tai and famous foreign brands of brandy and cognac have been hardest hit, Scottish distillers say the new rules sent sales in China plunging by more than a quarter last year.
The sales drop was a blow to smaller, niche whisky producers, which had seen a resurgence in interest from newly wealthy Chinese buyers. Scotch sales in Hong Kong also went into reverse last year, albeit by a smaller amount.
The latest sales figures from the Scottish Whisky Association show that 16.7 million bottles of Scotch were sold on the mainland last year, a 27 per cent drop from the 22.9 million bottles sold in 2012.

And Chinese drinkers spent less on the whisky they did buy, spending £51 million (HK$665 million) last year, down 41 per cent from £72 million in 2012. In Hong Kong, sales fell 31 per cent to £16 million, from £21 million in 2012.
"The austerity measures and slowing economic growth are the key factors behind the drop in exports to China last year," said Rosemary Gallagher, a spokeswoman for the association. "However, producers still have confidence in the future of the market."
She added that blended whisky, which accounts for the bulk of the market and is often seen as a cheaper type of whisky, had seen the sharpest drop.
While that may be bad news for large-scale brands such as Johnnie Walker and Chivas Regal, which dominate the mainland market, some more specialised players have a more positive outlook.
Single-malt brand Macallan says it sees many opportunities in China.
"The austerity measures haven't really affected us because Macallan is still at a very early stage of its development in China," said David Cox, director of fine and rare whiskies for Macallan, on a visit to Hong Kong.
"The future for us in China is going to be very strong but we are proceeding cautiously because we have so many demands on stock. Even now we can't supply everything that we should in China but given some of the issues that are going on at the moment, it's probably better to be a bit more conservative."
Single-malt whisky has been growing in popularity since 2000, a trend that began in Taiwan and has spread to the mainland and much of the region.
"We went from doing very little business in Asia-Pacific to it suddenly becoming the most important part of the world for Macallan," Cox said, adding that sales in the region overtook those in the US in 2007.
Cox was in Hong Kong to launch Macallan's latest product, a 62-year-old Scotch that will retail for about HK$194,000 per bottle. His visit will include Taiwan, Singapore and Vietnam, a sign of the brand's growing reach.
"In the past, we used to say that if North America sneezed, we would catch a cold in Europe. But it will be different this time, because single-malt whisky will be much more diversified," Cox said, listing Mexico, Brazil, Venezuela, India and Russia as emerging markets that offered opportunities for the brand.
Still, it will take some time for the industry's spirits to recover from China's corruption crackdown and Xi's directive.
"China is unique in that when the government makes a decision to do something it happens very fast," said Johnny Roberts, regional business director in Asia for UK-based exporter Berry Brothers & Rudd.
The company, responsible for whisky brands including Glenrothes, as well as gin, wine and cognac, said a drop in Asian sales had led the company to post its first loss in 12 years.
"When a directive is received, the impact is felt immediately and this is what has happened in the entertaining and gifting sector in China," he said. "It hurts because the effect is so fast and hard to foresee. However, I still maintain that the long term is more positive."


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As China cracks down on official extravagance, Scotch sales suffer

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News

China

As president fights official extravagance, whisky distilleries feel the pinch in Scotland


The impact of President Xi Jinping's crackdown on official extravagance is being felt far beyond China: even Scotland's famous whisky distilleries are feeling the heat.


As China cracks down on official extravagance, Scotch sales suffer

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}As president fights official extravagance, whisky distilleries feel the pinch in Scotland

As president fights official extravagance, whisky distilleries feel the pinch in Scotland