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Scotch set to blend in with emerging markets – China and India poised for growth

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Among all the emerging markets, a new IWSR/just-drinks report identifies China and India as particularly critical to the future success of the blended Scotch whisky category. The report suggests China offers the greatest opportunity for immediate gains, but in the longer term, it says India could become equally or even more attractive than China. This is due to the unusually high proportion of younger adults coming into the market with a leaning towards Western prestige products. However,the report contends that “much remains to be done before the potential of either market can be fully realised”. While India began the process of economic liberalisation a decade later than China, the report states that India is now “far more advanced in its corporate structure and institutional infrastructure”. This is also reflected in direct foreign investment by liquor companies, which is considerably higher than in China. However, the report goes on to warn that India “remains hamstrung by bureaucracy at all levels”, and that while corruption undoubtedly flourishes in both countries, India has the greater problem in this regard. Another factor which appears to weigh in India’s favour is Indians’ familiarity with Western-style spirits.

 

Meanwhile in China,”there is a big job to be done by foreign investors in educating consumers about Western categories and brands,” as rice spirits and wine are by far the largest drinks categories. The report warns that the Chinese Government also has a history of periodically and arbitrarily singling out companies and individuals as a way of controlling the industry.

 

Both countries suffer from inadequate distribution systems, but China has a growing network of hypermarkets and supermarkets which can sell alcohol, in addition to the traditional channels. India has no supermarkets and in most States there are very few modern liquor outlets, and relatively few bars. Neither country has developed a network of independent importers capable of launching international brands .

 

Overall, the critical difference between the two countries from the industry’s perspective , as is so often the case in the alcohol market , comes down to tax. In China, the import duties and other taxes are comparatively low, at 15% cash-in-freight (CIF). But in India imports are subject to 150% CIF, as well as many State and local taxes. Challenges ahead for both continents.

 

The full report from just-drinks and The IWSR is available via the just-drinks.com market research store. To browse the table of contents and detailed report description visit: http://www.just-drinks.com/market-research/global-market-review-of-blended-scotch-whisky-forecasts-to-2014_id88907.aspx?lk=pr

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About just-drinks.com

Since 1999, just-drinks.com has provided the global beverage industry with the latest news, insight and intelligence. The just-drinks.com research store (http://www.just-drinks.com/market-research) provides the latest market research across industry sectors. Including market reviews, forecast data, market trends, new product developments, latest trends and much more. The team of industry experts, analysts and journalists provide real-time news and comment on the latest industry developments.

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