Business, Finance & Economics

The 'Whiskey Trail' now runs through China


The gateway to the Whiskey Trail is at George Washington’s Mt. Vernon estate where the founding father in 1799 was the country’s largest whiskey distiller.

The Trail, studded with historic distilleries and sites in Virginia, Pennsylvania, Kentucky, and Tennessee, is well-traveled by tourists, but its end point for today’s distillers now leads to lucrative export markets like China.

Hoping to cash in on the developing tastes of status-conscious Chinese, U.S. companies such as Beam Global Spirits & Wine and Brown-Forman are trying to introduce — with the help of the U.S. government — the distinctive taste of American whiskey and bourbon to the Asian palate.

The Distilled Spirits Council of the United States in Washington, D.C., a trade group representing companies that make and market distilled alcoholic beverages, undertook a 10-day trade journey to Shanghai and Hangzhou to promote more Chinese consumption of whiskey and bourbon. The venture included presentations at a major trade show, tastings, and media dinners.

“The trade mission was very successful. It left a clear understanding of the history and profile of American whiskey and did a very good job of explaining the different styles and regional variations of our product and how to use them in mixed drinks,” said Wayne Batwin, director of the agricultural trade office of the U.S. Consulate in Shanghai.

The trip was designed to compete with Scottish brand whiskys such as Johnnie Walker and China’s own white grain-based spirit, Baijiu. But the real agenda was to push exports of U.S agricultural commodities — and crack new luxury markets that were long closed to American distillers.

It might take a drink or two to make the connection, but the more whiskey and bourbon sold in countries like China, the more American farmers can export corn, rye, barley, wheat and the charred oak barrels that distillers use for the aging process.

For this reason, the trip was financed partially by a $200,000 U.S. Department of Agriculture grant. On the menu was the promotion of brands such as Jack Daniel’s, made in Lynchburg, Tennessee; Jim Beam, distilled in Clermont, Kentucky; Wild Turkey from Lawrenceburg, Kentucky; and Maker’s Mark, Loretto, Kentucky.

The distillers are quick to point out that they provide a 40 percent match to the federal dollars for the program. They also say in the same breath that competing U.S. vintners receive far more federal support for their export ventures.

Overall, the U.S. allocated $234 million in fiscal year 2008 to 70 groups for agricultural export promotion programs under its Market Access Program. Along with the distillers, groups representing industries such as catfish, peanuts, prunes, hops, honey, mohair, and kiwifruit got funding.

“American whiskeys are exploding around the globe,” said Frank Coleman, senior vice president of the Distilled Spirits Council. Coleman said Jack Daniel’s, known traditionally as a Southern drink and a favorite of the Rat Pack, has become a global icon with half of its consumption outside the United States.

Since 2002, exports of U.S. spirits to China increased more than 500 percent to $8.6 million last year, according to U.S. government data. American whiskies accounted for 84 percent of the exports, with retail sales in China reaching $168 million last year.

More important to the companies eyeing the Chinese market, retail sales in 2008 are expected to grow by 95 percent, to $327 million, by 2013 as the drink is consumed in nightclubs, bars and karaoke venues and bought for gifts and home parties.

Adding to the allure of China is the easing of duties on spirits. As part of joining the World Trade Organization in 2002, China agreed to drop tariffs on imported liquor from 65 percent to 10 percent, plus a 17 percent value-added-tax.

The group left the U.S. on May 5 for Shanghai, with veteran New York City mixologist Toby Cecchini (one of his signature Chinese cocktails was The Ginger Mint Cooler) and public relations personnel in tow.

The days in Shanghai were taken up with a dinner with the Chinese media, American trade officials in China, and a cocktail presentation and food pairing with bartender Cecchini.

The big promotional event was the 2009 Whisky Live Shanghai trade show sponsored by Whisky Magazine, a British publication.

The group then headed to Hangzhou’s Jiangnan Club for a seminar with more tastings, cocktail making, and presentations of brands.

“Unlike most other imported alcoholic beverages, American bourbon whiskey has one of the top images among Chinese consumers,” said Batwin.

This isn’t the first time U.S. whiskey makers have tried to raise a glass in the huge China market. Two years ago, they went to Beijing under the federal program. One of the difficulties exporters have encountered is the Chinese distribution system and imposter products.

That hasn’t stopped distillers. The U.S. government also paid for a half-dozen Chinese journalists to travel in the United States in fall of 2008 to hit the Whiskey Trail themselves.

The journalists’ still hopping led to big spreads in the Chinese editions of magazines such as Good Housekeeping, Cosmopolitan, and Food & Wine, which declared in its headline: Bourbon Whiskey, I Have a Dream!

More Dispatches on Whiskey:

The whiskey diaries

Whiskey resists the downturn