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Tuesday, December 05, 2006

Scotch Prices Going Up? Blame the Chinese

The emerging middle class in China and the size of the nation's economy have already been cited as factors in rising crude oil prices. Now consumers from Beijing to Shanghai are being blamed for draining the world's liquor cabinet of Scotch.

Imports of Scotch to China have skyrocketed in just the last few years, up from $2.9 million in 2001 to more than $90 million in 2005. China is expected to join the world's top 10 Scotch consuming nations this year and, with sales up 84 percent last year alone, it appears Chinese consumers have developed a love for the Highlands.

The Scotch Whisky Association notes that distilleries currently have 18.5 million casks maturing so there is no impending shortage of Scotch. However, Scotch prices have crept upward and the demand of a major new market like China places particular pressure on a category of product that has developed its worldwide appeal through the exclusivity of Single Malts and through aging whiskies 12, 18 and 25 years.

While western luxury goods have long been enjoyed by Chinese rulers, the massive middle class now looks at famous brands as status symbols. This is particularly true in urban centers. The pure size of the market cannot be under estimated. The United States has nine cities with 1 million or more residents. China has 34 cities with at least 1 million people.

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