Booze: Who's Drinking What Where

While much of the world consumes local hooch, many of the world's biggest spirits companies have made significant inroads into new markets

By Nick Passmore

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The world consumed 18.3 billion liters of spirits in 2007, with China, whose thirsty citizens drank 3.7 billion liters, leading the way, according to the global market intelligence firm Euromonitor International. But don't expect to have heard of any of these brands—a majority of this tipple is local hooch made and consumed in China.

By far the most popular category of liquor in the world was vodka (3.7 billion liters), thanks to Russia's immense appetite for the stuff, followed by whiskey (2.1 billion liters). But fans of Dewar's or Jack Daniel's will be surprised to learn that most of this is not the familiar Western brands but rather Indian-made whiskeys, with some ersatz Scottish names like Bagpiper and McDowell's. Indians consume nearly 800 million liters of whiskey, both domestic and imported, a year.

But local labels produced purely for local markets aside, which are the global brands that have established the greatest presence behind the bar?

With the opening up of Russia and Eastern Europe, the growing prosperity in Asia and South America, and above all the Westernization of popular culture, Western spirit brands have become the drink of choice for the emerging middle class from Shanghai to São Paulo—and the category that's leading the way is Scotch whisky.

According to Martin Riley, international marketing director for Chivas Brothers (Chivas Regal, Glenlivet, Ballantine's, Royal Salute, Beefeater Gin), a division of Pernod Ricard (PERP): "These are very good times for Scotch whisky. The whole world, with one or two exceptions, is really embracing it in its different forms. We are seeing growth at all levels."

He points out that Scotch whisky is the only spirit you can find in every market where it's legal to sell alcohol, and in most markets of the world it's the imported spirit of choice.

Blended or Single Malt?

Scotch has a major advantage in that it is not really one but three categories of spirit—blends, super-premium blends such as Johnnie Walker Blue and Chivas Regal's Royal Salute, and single malts—so even if one is in decline in a particular market, another might be growing.

An example of this is the U.S. and Britain where sales of blended Scotch are flat or even declining while single malts are growing at double-digit rates. These countries both have a strong history of Scotch drinking and a knowledgeable consumer base that's receptive to the appeal of single malts.

The U.S. is somewhat of an exception to the worldwide Scotch story as it is vodka and rum that are the big growth categories here, largely the result of the current cocktail craze, followed by tequila.

A similar pattern is emerging in Britain, where vodka recently surpassed Scotch as the top-selling spirit, but white spirits are barely significant in the rest of the world—except, of course, Russia, where vodka dominates.

Not including Britain, Europe is still a huge and growing market for both blended and single malt whisky, with France being the world's most avid consumer, importing 13.5 million cases a year, according to the Scotch Whisky Assn.

China Likes Its High-End Scotch

In the more established Asian markets—South Korea, Hong Kong, Singapore—Diageo's (DEO) Chris Parsons, vice-president of the Reserve Brand Group, is seeing a significant shift to higher-end bottlings like Johnnie Walker Blue, which sells for more than $200 a bottle. "A lot of this is due to cultural aspects," he says. "They have a very high degree of gifting, and gifts are a very important aspect of business and the value implied by the price of the gift is reflective of status in a very meaningful way."