1. JAMESON WHISKEY
Assignment Summary
Jameson whisky is the successful Irish whiskey brand that had succeeded in global
markets. Even in the recession times across Europe Jameson is the only brand that has
increase in its sales. We succeeded to launch our product successfully in different
markets globally by successfully positioning our brand. Now the company has decided to
launch Jameson whiskey in Chinese market and this report gives a detailed insight into
the factors that are needed to be considered by the company in launching its brand in
China.
Why China?
China is the highly populated country in the world. It constitutes 22% of the world’s
population. It is the developing country contesting with US in regards to power and
markets. China has a lot of younger population aged between 25-40 (Data monitor 2010).
We can see a huge change in the cultural patterns of drinking in younger generation when
compared to the older generation. The aspects of drinking are highly regarded in Chinese
history. The corporate culture has increased in China because of its growth in markets all
1|Page

2. around the world. During the past decade several social and economic changes have
boosted the sales of alcoholic beverages in China. China’s fast paced economic growth
and high incomes have led to urbanization and lots of people are willing to spend on high
end alcoholic beverages. The Chinese governments are also encouraging foreign
companies by reducing import taxes and VAT on foreign products.
The younger generation is open to changes and this is a very favorable aspect for us to
launch our product.
MARKET DESCRIPTION
As we mentioned earlier China is the highly populated country in the world, as a result it
offers a huge market for launch of our Jameson whiskey. According to a survey on liquor
consumption in China the spirits consumption in China grew by stunning 52% between
2005-2009(BBC 2009). As this an encouraging aspect for us regarding launching our
product there is a prediction that the spirit consumption rate going to increase by
2014(The globe 2010). The international spirits category is relatively low when compared
to the domestic industry, but there is a lot of scope for the global brands to prosper in
China. Alcohol production in China dates back to 12th century and now there are about
100000 alcohol manufactories in China in which 1/3rd is occupied by the spirits
companies. Foreign spirits make up 10% of the markets (business insights 2010). This
offers us a huge market to target. There is an expanding elite consumer segment in China
has boosted sales of foreign spirits. There is a huge market for us to create an impact and
change the drinking habits of the Chinese people.
The east and north east regions dominate overall alcohol consumption rates in
China.Growth opportunities continue to increase for the global brands because of its
younger generation. Foreign spirits are limited to premium end in the spirit industry due
to restricted distribution channel and fierce domestic competition.
2|Page

3. COMPETITION
We are going to face a lot of competition by the domestic brands. Locally produced spirit
called “baijiu” holds the top position in China. It is the most popular and best selling
liquor in terms of volume in the world. Baijiu is the few remaining Chinese spirits
companies in which the foreign capital has very low hand. It is the most consumed spirit
in China.
Foreign competition is dominated by the Scottish group and Chivas brothers owned by
PernodRicard and the Diageo Group. Other foreign spirits in Chinese markets include the
Japanese spirits and Russian vodka. A good understanding of the consumer is important
for the success of foreign brands in China. Foreign brands are perceived as luxury in
China. So it is going to be a task to compete with the domestic brands which are available
at very low prices in China. We may also face competition from counterfeit brands.
These are so prevalent in country that some alcoholic beverages manufacturers are forced
to take special measures to preserve their brand image.
DISTRIBUTION
Retail sales dominate the spirits markets in China mainly in independent food stores,
specialist retailers and supermarkets. Low cost super markets such as Wal-Mart
andCarrefour are providing mostly one stop distribution channels even for the high end
brands (emagazine2009). Specialist retailers act as a gateway mainly between traditional
old buyers and foreign spirits. Spirits are mostly sold via retail outlets than any other
means. Foreign spirits are mainly considered as high end and luxury item which are given
as gifts on Chinese holidays. As China lack national spirit chains the supermarkets and
retail outlets play an important role in distribution. In addition to this local retailers and
night clubs mostly depend on local specialist retailers to supply their needs at discounted
prices.
3|Page

4. MARKETING
Foreign spirits consumption is mainly regarded as luxury or high end in China. To market
our brand in China we need create awareness of spirits among Chinese people. Most of
the people in China do not relate the foreign brands as compared to the local brands. So
the marketing of our brand must be done in such a way that the people can relate to our
brand.Chivas sales in 2006 have been increased by 50% in China all thanks to the “this is
the Chivas life” campaign by the Chivasgroup (Datamonitor 2010). This ad campaign
became successful and the people started to change their drinking habits. An ad campaign
has to be designed in a way that the local people can relate to our brand.
There are certain restrictions in China regarding advertising of spirits. No more than 2
ads are permitted per brand in an hour in the prime time (word press 2009). However
these are not adversely effecting the promotion of foreign brands. The high end spirit
market is extremely brand sensitive. We have to build our brand awareness among the
people of china from ground zero. We have to seek strong relationships with the local
supermarkets and specialist retailers as they are the main supply chain of spirits in China.
LAWS IN CHINA ON SPIRITS
Chinese governments provide a favorable environment for the foreign spirit companies in
china. Recent evidence is that of the Scottish whiskey for which the Chinese government
has agreed to recognize the brand. By this it prevents the fake companies to come in the
markets.
The Chinese government is also encouraging companies by reducing the consumption
taxes and importing taxes which is a good sign for our company to launch our brand in
china. It appears to be a good sign for the competitiveness of the foreign brands.
4|Page

5. COUNTRY RISKS
There is a need to look into Counterfeits in alcohol industry in China. It is not only
restricted to alcohol industry. But there were many legal issues concerned with alcohol
industry regarding counterfeits. Recently there was a legal issue regarding counterfeiting
of Chivas group brands. The governments are supporting the foreign brands and
enforcing strict laws to counter the counterfeits.
China's political situation was stable and the people lived and worked in peace and
contentment, which created necessary social conditions for attracting foreign investment.
So these conditions favors to our company.
The initially established market economy system and the gradually perfected laws and
rules created favorable legal environment for our company. The economic rate of
increase during 1998-2001 was about 7.5%, which was still the highest in the world. The
economic rate of increase of 2002 is 8% and is expected to be about 8% in the years to
come. Meanwhile, the macro-economic environment was fairly stable. The government
has, in recent years, energetically taken positive financial policies to stabilize exchange
rate and reduce deposit interest rate so as to promote the development of economy.
China's economic development level was also improved with a high speed; the per capita
GDP was nearly US$1,000. The Gross Domestic Product in 1997 was RMB7, 446.3
billion Yuan, RMB7, 939.6 billion Yuan in 1998, RMB8.205.4 billion Yuan 1999,
RMB8.940.4 billion Yuan 2000, RMB9, 593.3 billion Yuan in 2001 and RMB10.2398
trillion Yuan in 2002 and become the sixth largest economic entity of the world.
GDP and Population of six Asian countries
GDP in key sectors (%)
Countries Population GDP GDP/capita Agriculture Industry Services
(Million) ($ Billion) ($)
China 1281.00 1237.10 7.262 13.80 52.90 33.30
Japan 127.10 3978.80 3.745 1.30 24.70 74.10
India 1043.30 515.00 3.319 23.60 28.40 48.00
Korea 47.60 476.70 925.1 3.20 40.00 56.30
5|Page

6. Indonesia 211.70 172.90 827.4 14.60 45.00 40.60
Thailand 61.60 126.40 524.8 9.00 44.30 46.70
(Chatterjee&Nankervis 2007, p.4)
Consumer prices in the world's second largest economy rose 6.2% from a year earlier,
down from 6.5% in July.Food prices have been the main reason for the rising costs in the
country.Separately, the Bureau said China's industrial output had risen 13.5% in August
year-on-year, slightly down on growth in July (BBC 2011).
After the global financial crisis in October 2008, the Yuan has largely fluctuated between
6.82 and 6.89 to the U.S. dollar. Lian points out that China, the world’s third largest
economy and one of the fastest growing, is important to a global recovery.
Blaming the RMB rate for the huge U.S. trade deficit is unjustified because the Chinese
currency has gained more than 21 percent against the U.S. dollar(Lian2011).
So with high GDP, good inflation rate are very helpfuland suit for our company’s future
in China.
In China, Transparency International study that measures the perceptions of international
businesspeople on global corruption, China scored 3.4 on a scale of 0-10, where zero is
"highly corrupt" and 10 is "highly clean" surveyed in 2005. So China is not very cleannor
highly corrupted country. So with this low corruption rate as compared to other Asian
countries, our company will face problem in China but very few.
Corruption perception index for five Asian countries
Countries Score World rank Surveys used
Singapore 9.3 5 13
Japan 6.9 24 15
Malaysia 5.0 39 15
6|Page

7. China 3.4 71 16
Thailand 3.6 64 14
(Chatterjee& Nankervis 2007, p.7).
The amount of labor force with improved diathesis was sufficient. The cost advantage
caused by abundant cheap labor forces provided tremendous opportunities for foreign
investors. On the other hand, China also possessed related number of skilled labor forces
that have accepted favorable training and education, and can meet the requirements of
foreign investment on high-tech industries. So there is an advantage to get the labor at
very low price.
The area of China's land is more than 9.6 million square km, and is only next to that of
Russia and Canada. China is characterized by both the continental monsoon climate and
complicated and diversified climate. Also China stretches from the south to the north
equator belt, sub-torrid zone, warm temperate zone, temperate zone and cold temperate
zone. These are the favorable conditions to our company. We’ll get the land to open a
new branch there even at low price so that we can control the middle and eastern Asia
and can save the transport charges from Ireland to the Asia. The climate conditions favors
to people of China to drink alcohol throughout the year which favors us as well with
respect to production.
In recent years, China's infrastructure has been greatly improved, and the infrastructure
constructions like transport, telecommunication, water, electricity and gas supply, etc.
have been basically matured, and the capacity and quality of energy, raw material and
component supply were also obviously elevated, providing a favorable external
production management conditions for foreign investment. With these facilities we need
not to worry about selling our whiskey to different regions of China(2004).
CONCLUSION
From the above stated report we conclude that there are very favorable and encouraging
conditions for us to launch our brand in china. A huge proportion of young generation,
people willing to spend on high end products, the economic growth and the change in
tastes of people are going to be a huge boost up for us launching our brand in China. The
7|Page

8. global markets will continue to be highly competitive. China is a huge emerging market
in recent times and by having a right marketing strategy and good ad campaign we can
taste the success of our brand in china.
REFERENCES
Access Asia Limited., 2006. Alcoholic drinks in China a market analysis, Shanghai
China: Access Asia Limited.
ALCOHOL USE IN CHINA. Available at:
http://alcalc.oxfordjournals.org/content/38/6/537.full [Accessed October 10,
2011a].
BBC News - Chinese boost for Scotch whisky industry. Available at:
http://www.bbc.co.uk/news/uk-scotland-11706777 [Accessed October 10, 2011b].
Bronte Capital: Looming excess capacity in getting you smashed and Chinese statistics.
Available at: http://brontecapital.blogspot.com/2010/12/looming-excess-capacity-
in-getting-you.html [Accessed October 10, 2011c].
China food & drink report : including 5-year industry forecasts by BMI. (eJournal /
eMagazine, 2005) [WorldCat.org]. Available at:
http://www.worldcat.org/title/china-food-drink-report-including-5-year-industry-
forecasts-by-bmi/oclc/608318702&referer=brief_results [Accessed October 11,
2011d].
Chinese Alcohol, Chinese Spirits. Available at: http://www.chinadaily.com.cn/life/2010-
10/27/content_11692216_4.htm [Accessed October 10, 2011e].
Chinese Alcohol, Chinese Spirits - China culture. Available at:
http://kaleidoscope.cultural-china.com/en/132Kaleidoscope5907.html [Accessed
October 11, 2011f].
Court case: Spirited fight against liquor counterfeits | Business | chinadaily.com.cn.
Available at: http://www.chinadaily.com.cn/cndy/2011-
06/29/content_12797594.htm [Accessed October 11, 2011g].
Cultural aspects of drinking patterns and alcohol controls in China. Available at:
8|Page

9. http://www.ias.org.uk/resources/publications/theglobe/globe200201/gl200201_p1
8.html [Accessed October 10, 2011h].
Data monitor Research Store - China: spirit consumption trends pose challenge for
foreign. Available at:
http://www.datamonitor.com/store/News/china_spirit_consumption_trends_pose_
challenge_for_foreign_brands?productid=FA2D687D-B517-4456-BE07-
CF8DC098B5D5 [Accessed October 11, 2011i].
Diageo battles to overcome China’s taste for fiery “white spirit” baijiu - Telegraph.
Available at: http://www.telegraph.co.uk/finance/china-
business/7956248/Diageo-battles-to-overcome-Chinas-taste-for-fiery-white-spirit-
baijiu.html [Accessed October 11, 2011j].
EBSCOhost. Available at: http://web.ebscohost.com/ehost/pdfwin?sid=b8965dbd-785b-
4a63-91f3-0ec864396335@sessionmgr12&vid=5&hid=25 [Accessed October 10,
2011k].
Economic Boom in China Sends Booze Market Skyrocketing | China Beverage News.
Available at: http://chinabevnews.wordpress.com/2011/07/23/economic-boom-in-
china-sends-booze-market-skyrocketing/ [Accessed October 11, 2011l].
Market research in China (eJournal / eMagazine, 2000s) [WorldCat.org]. Available at:
http://www.worldcat.org/title/market-research-in-
china/oclc/270068560&referer=brief_results [Accessed October 11, 2011m].
The International Spirits Market in China - Forecasts to 2012 (2007 Edition) by just-
drinks in Vodka & Gin, Whiskey, China. Available at:
http://www.marketresearch.com/just-drinks-v3409/International-Spirits-China-
Forecasts-Edition-1467068/ [Accessed October 10, 2011n].
Wine in China (eJournal / eMagazine, 2000s) [WorldCat.org]. Available at:
http://www.worldcat.org/title/wine-in-
china/oclc/434905048&referer=brief_results [Accessed October 11, 2011o].
Available at: http://www.vinexpo.com/en/actualites/news/china-spirits/ [Accessed
October 10, 2011p].
Anon, 2004.China’s Investment Environment. Available at:
http://investchina.sina.com/display_why_invest.php?w_id=5&en_f=en [Accessed
October 11, 2011].
9|Page

10. Samir R. Chatterjee& Alan R. Nankervis, 2007.Asian Management In Transition First.,
New York: PalgraveMacmillan [Accessed October 11, 2011].
BBC, 2011. BBC News - China’s inflation rate moderated in August. Available at:
http://www.bbc.co.uk/news/business-14849166 [Accessed October 11, 2011].
Lian, 2011. Chinese exporters fear new wave of exchange rate fluctuations. Available at:
http://dinaroutcast.forumotion.com/t7625-chinese-exporters-fear-new-wave-of-
exchange-rate-fluctuations [Accessed October 11, 2011].
BIBLIOGRAPHY:
ALCOHOL USE IN CHINA. Available at:
http://alcalc.oxfordjournals.org/content/38/6/537.full [Accessed October 10,
2011a].
BBC News - Chinese boost for Scotch whisky industry. Available at:
http://www.bbc.co.uk/news/uk-scotland-11706777 [Accessed October 10, 2011b].
China food & drink report : including 5-year industry forecasts by BMI. (eJournal /
eMagazine, 2005) [WorldCat.org]. Available at:
http://www.worldcat.org/title/china-food-drink-report-including-5-year-industry-
forecasts-by-bmi/oclc/608318702&referer=brief_results [Accessed October 11,
2011c].
Chinese Alcohol, Chinese Spirits - China culture. Available at:
http://kaleidoscope.cultural-china.com/en/132Kaleidoscope5907.html [Accessed
October 11, 2011d].
Datamonitor Research Store - China: spirit consumption trends pose challenge for
foreign. Available at:
http://www.datamonitor.com/store/News/china_spirit_consumption_trends_pose_
challenge_for_foreign_brands?productid=FA2D687D-B517-4456-BE07-
CF8DC098B5D5 [Accessed October 11, 2011e].
Diageo battles to overcome China’s taste for fiery “white spirit” baijiu - Telegraph.
Available at: http://www.telegraph.co.uk/finance/china-
business/7956248/Diageo-battles-to-overcome-Chinas-taste-for-fiery-white-spirit-
baijiu.html [Accessed October 11, 2011f].
10 | P a g e

11. EBSCOhost. Available at: http://web.ebscohost.com/ehost/pdfwin?sid=b8965dbd-785b-
4a63-91f3-0ec864396335@sessionmgr12&vid=5&hid=25 [Accessed October 10,
2011g].
The International Spirits Market in China - Forecasts to 2012 (2007 Edition) by just-
drinks in Vodka & Gin, Whiskey, China. Available at:
http://www.marketresearch.com/just-drinks-v3409/International-Spirits-China-
Forecasts-Edition-1467068/ [Accessed October 10, 2011h].
Burton, David, Emerging Asia: Outlook, Challenges, and India’s Growing Role.
Available at: http://www.imf.org/external/np/speeches/2004/102104.htm
[Accessed October 7, 2011].
D’Arcy, C., the booming whisky export market. Available at:
http://uk.finance.yahoo.com/news/The-Booming-Whisky-Export-foolcouk-
4065355958.html.
Drysdale, Peter, 2011. Chinese economic risks | East Asia Forum. Available at:
http://www.eastasiaforum.org/2011/01/03/chinese-economic-risks/ [Accessed
October 11, 2011].
LPowell, B., 2010.Chanos vs. China - Term Sheet. Available at:
http://finance.fortune.cnn.com/2010/11/17/chanos-vs-china/ [Accessed October
11, 2011].
Whiskey, 2011. China Wins the Future. Whiskey’s Place. Available at: http://whiskeys-
place.blogspot.com/2011/07/china-wins-future.html [Accessed October 7, 2011].
Anon, China Inflation rate (consumer prices) - Economy. Available at:
http://www.indexmundi.com/china/inflation_rate_(consumer_prices).html
[Accessed October 7, 2011d].
Anon, China Inflation Rate at 6.20%. Available at:
http://www.tradingeconomics.com/china/inflation-cpi [Accessed October 7,
2011e].
Anon, 2005. China outlaws sexual harassment. BBC. Available at:
http://news.bbc.co.uk/2/hi/4192672.stm [Accessed October 7, 2011].
Anon, China’s Economic Figures in August, 2011. Available at:
http://news.xinhuanet.com/english2010/special/2011-09/09/c_131123167.htm
[Accessed October 10, 2011f].
11 | P a g e