The whisky world is full of excitement at news that Pernod Ricard has begun work on a single malt distillery in China. Ian Buxton, however, isn’t so sure this is a good thing for Scotch whisky. In fact, he thinks that this development might sound the death knell for the industry’s global dominance.
As you will have read elsewhere, Pernod Ricard has recently announced that they have begun construction on a new single malt distillery in China. According to its press release, the Emeishan Malt Whisky Distillery represents “a potential investment of one billion RMB (US $150 million)” and the 13-hectare distillery site “will boast a state-of-the-art malt whisky distillation facility, due to begin production in 2021”. Pernod Ricard has not given details of the anticipated production simply replying that “it’s too early to confirm a figure.” Speaking off the record, sources close to the project talk of two pot stills but with scope for expansion.
What are we to make of this news? Most commentators so far have done little more than breathlessly recycle the press release – which, to be fair, is pretty breathtaking. A Chinese single malt distillery, even an initially modest one, is a genuinely new idea and something which could fairly be described as radical, even epoch-making. Except it’s not actually a new idea. Back in 2014 in a book, The Science and Commerce of Whisky, I co-wrote with Professor Paul Hughes, then of Heriot-Watt University, I imagined the future thus:
“There now appears no technical reason why high-quality whisky cannot be produced in the most unfavourable of climates… [and] there would not appear to be any significant technical barrier to entry for new producers.… a new producer might emerge in, say, China utilising the latest technology…[and] enjoy cost advantages in production and shipping, potential protection within tariff walls and, with skilful marketing, patriotic support from a consumer able to purchase a product that looked and tasted like a high quality import at local market prices. …established producers could be faced with significant competition. Why would our hypothetical new distiller not wish to compete for a share of a growing, profitable and fashionable market on their own doorstep?”
Why not indeed? Let’s put to one side the dubious morality of doing business in one of the world’s most repressive regimes. Pernod Ricard certainly has, telling me in response to my enquiry, that “we have a presence in many different markets with many shifting political landscapes and therefore do not provide political commentary.” So sip the shark fin soup with your new partners and look away.
Or, simply weep for Scotch whisky, for what we see here is the first nail in Scotch’s coffin; a Trojan Horse if you will. Oh, don’t be absurd, you say. Stop over-reacting. Well, I don’t believe so. Certainly not next year, probably not for a decade or more, possibly not even in my lifetime, but this marks the beginning of the end of a once-dominant industry.
Once upon a time we built things here in the UK – ships, for example, and televisions and all kinds of consumer goods. More pertinently, once upon a time, the Irish whiskey industry led the world. With the largest stills and the best-selling brands they were the giants of their day. But it took less than fifty years for that hegemony to be utterly destroyed. History suggests that currently well-entrenched and dominant market positions are far from impregnable and Scotch and other ‘traditional’ producers would do well to consider potential challenges, not facilitate them.
I don’t imagine for a moment that Pernod Ricard thinks it will end this way. With a market share of around 20% of global Scotch and substantial investment there, it certainly isn’t looking for a self-inflicted wound. Yet, this I believe is the probable long-term outcome of this spectacular Chinese venture. After all, as Pernod’s Jean-Etienne Gourgues, MD for China says “we’re going to be transferring our world leading whisky-making expertise to China” using “major process equipment [which] is sourced from Forsyths, the best-in-class in the distillation equipment industry.”
The more drinkers are persuaded that great whisky can be made anywhere in the world, the more that Scotch whisky’s premium cachet and exclusivity will fade. This is the start of a very slippery slope and today’s confidence can all too easily be revealed as tomorrow’s complacency.
Perhaps the Bible has a lesson. In 1 Kings 18:44, it reads: “And it came to pass at the seventh time, that he said, Behold, there ariseth a little cloud out of the sea, like a man’s hand. And he said, Go up, say unto Ahab, Prepare thy chariot, and get thee down, that the rain stop thee not.”
Perhaps it’s time for Scotland to buy an umbrella.