Sector Insight... Competition grows in Taiwan's whisky market

Taiwan is believed to be the second largest market in the world for Johnnie Walker, and a generous advertising budget seems - at least in part - to explain its success. Last year, owner Diageo spent NT$78.3 million, or 23 per cent of the island’s NT$326.7 million whisky advertising, according to Nielsen. Johnnie Walker posted sales of 2.7 million litres, or 24 per cent of the market as measured by Euromonitor.

However, Johnnie Walker’s five coloured labels must increasingly defend their territory from attack at both the low and high ends.

Despite its small size, Taiwan is a top 10 destination for UK whiskies and the second largest Asian market behind South Korea. During the past two years, elite Taiwan drinkers are increasing imbibing single malts, The Macallan being the segment leader.

Meanwhile, two ‘Asian’ whiskies bearing Scottish pedigrees are battling for the number two spot behind Johnnie Walker among the blended scotches. The more successful of the two is Matisse, a brand developed specifically for Taiwan by UEIS, a trading company believed to be owned by Yang Teng-kwei, a businessman with showbusiness ties, and other Taiwan investors. Matisse is blended in Scotland for UEIS by Tomintoul-Speyside Distillery.

The second Asia-owned brand is Prime Blue, created for Suntory by Scotland’s Morrison Bowmore Distillers, which the Japanese firm bought in 1994.

Last year, despite UEIS’ increasing focus on China, Matisse still ranked second in Taiwan sales - 16.9 per cent, according to Euromonitor - and Prime Blue was on 4.4 per cent, outselling the Japanese owner’s namesake Suntory and Suntory Old brands.
Taiwan’s passion for whisky is recent. Local drinkers are famously fickle, and in the 90s their passion was for cognacs. Last year, Taiwan imported five times more whisky than cognac.

“Here there is absolutely no brand loyalty among drinkers,” says Synovate Taiwan project manager Ryan Lin. “Whichever brand has a promotion is the one that everyone follows. This will prove true for whiskies too.”

Launched in 2000, Matisse sales were in the low thousands before UEIS cut a sponsorship deal with Hong Kong singer Jacky Cheung, whose career was in a temporary lull. In the wake of the Sars epidemic, which forced people to stay at home, the brand came up with the slogan ‘hao jyou bu jian’ (‘long time no see’). Sales of Matisse shot up to 4.5 million bottles in 2004.

Price was an equally significant factor in its success - Matisse sells for only NT$580 a bottle, the bottom of the price range for blended Scotch whisky.

Much of its volume was earned at the expense of Johnnie Walker Black Label, according to Ben Chuang, editor of Wine & Spirits Digest, and Diageo launched a counter offensive with Real MacKenzie, but it was too late to be effective. “Matisse filled an unfulfilled need,” says Andrew Do, associate director, TNS Taiwan. “It is a cheap, non-aged whisky that is drinkable.”

Matisse also straddles the cognacs and whiskies. “Matisse is smooth, not harsh like the whiskies the older generation drink,” says Do. “Even its bottle is more like that of a cognac.”. The other ‘soft’ whiskies among Taiwan’s top 10, according to Do, are The Famous Grouse and Prime Blue.

The success of Matisse and Prime Blue has not gone unnoticed. King Car, one of Taiwan’s largest beverage companies, has entered the fray with a domestic whisky, Kavalan, named after an aboriginal tribe in Eastern Taiwan. King Car intends to become the world’s fifth largest whisky maker, and will have a production capacity of 24 million bottles, rivalling Suntory. The company spent NT$500 million on 20,000 used oak barrels to do so.

No one doubts King Car’s ability to make whisky, but there is plenty of doubt about Kavalan’s price - NT$2,200. Aged for three years, Kavalan is priced closer to a 18-year-old import.

That may prove a gamble in a market where consumer preferences can change quickly.

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