Pernod Ricard is upping the ante in its 1 billion yuan (US$150 million) investment to convert China’s drinkers from baijiu rice liquor to malt whisky, as it gets ahead of its larger rival Diageo in the world’s biggest market for alcohol beverages.
The company will launch the first Chinese single malt whisky called The Chuan, a tribute to the rivers that cut through Sichuan province in south-western China. The whisky will be released in a limited edition of 100 casks next month to private clients including members of Pernod Ricard’s Le Cercle programme and other high-net-worth collectors.
Bottles are on their way, subject to the outcome of China’s whisky standard, in which Pernod Ricard is playing a part to help establish, said the company’s Asia chairman Philippe Guettat, declining to provide price details.
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“We will first aim to sell to the high-net-worth and middle-class customers in mainland China,” Guettat said in an interview with South China Morning Post. “The first bottles will come to the market in the near future, depending on the master distiller’s decisions about ageing, and the outcome of the Whisky Standard of China. When things go well, we will start to sell to other Asian and international markets.”
The Paris-based company, founded nearly half a century ago around its aniseed-flavoured aperitif Pernod, is the world’s second-largest producer of wine and spirits, with a portfolio of whiskies including the Speyside single malts Glenlivet, Longmorn and Aberlour, as well as the blended whiskies Chivas Regal and Royal Salute.
Pernod Ricard broke ground on The Chuan Malt Whisky Distillery in August 2019, betting US$150 million over 10 years to convert China’s affluent drinkers from baijiu to whisky. Not to be outdone, Diageo announced on November 2 that it would spend US$75 million to build the 66,000-square metre (710,400 square feet) Diageo Eryuan distillery in Yunnan province, using fresh water from the Erhai lake to distil a single malt whisky, according to a Reuters report.
“With an investment of 1 billion yuan over a decade, The Chuan reflects our commitment to China,” Guettat said. “Pernod Ricard has operated for 30 years in China, which is our second-largest market. We want to be the first international firm to bring to life the most iconic malt whisky made in China.”
Single malts, generally considered a premium product, refers to whisky from a single distillery, unlike blended whiskies that combine the distillates of several whiskies.
The Chuan must spend at least two years in an oak barrel, according to the China’s standard for whisky. Pernod Ricard supports a minimum of three years in oak barrels, in its submission to help revise the standard.
“We are hopeful that ambitious quality thresholds on ageing can be maintained to protect the equity and the premium quality of the whisky category in China,” the company said.
Pernod Ricard’s Emeishan Malt Whisky Distillery sits on 18 hectares of land in a mountain range that’s considered one of the four sacred mountains in Chinese Buddhism. Neri&Hu, the Chinese architects behind the New Shanghai Theatre, is the designer of the distillery, featuring a visitor centre that is expected to receive up to 2 million visitors in the first decade from its expected opening date in 2023.
The company’s investment was unaffected by the Covid-19 pandemic, as the business bounced back in both mainland China and Hong Kong this year, Guettat said.
“All the restaurants in Hong Kong are fully booked that help to boost the sales of our wine products, while the younger generation of mainland customers who are in their 25 to 40 years old also like wine and whiskies,” he said.
The French company’s 2021 sales rose 10 per cent to €8.82 billion (US$10.11 billion) in the financial year ended June, with China being its second-largest market after the United States. Sales in China jumped 44 per cent, driven by growth in premium brands, including whiskies, the company said without breaking out financial details.
The bet on China follows the growing popularity and globally acclaimed quality of Japanese and Taiwanese single malts in recent years, which have garnered numerous global awards and won a loyal following by the world’s whisky aficionados.
“We will bring our technology and ingredients from the international markets and combine them with local ingredients and the high-quality water of Sichuan,” Guettat said. “We believe our made-in-China whisky will be able to rival its Asian peers and even international whiskies.”
Besides importing whiskies, cognac and other liquors into China, Pernod Ricard has been growing cabernet sauvignon and merlot grapes to go into its Xiaofeng wine at The Helan Mountain winery in the Ningxia region since the 1980s. Pernod owns the Jacob’s Creek winery in Australia’s Barossa Valley.
The outlook of China’s whisky market is positive even though the country is still dominated by rice-based baijiu, said Mariana Lam, founder of Wineworld in Hong Kong.
“Whisky has become trendy for many young mainland consumers, which has led to a surge in imports,” she said. “International well-known [distillers] with the experience and technique can produce a Chinese whisky of international standards. This is what we saw through the development of Japanese whisky.”