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China's whisky sales poised for big growth: Diageo

Given it's massive population, China represents a key market for consumer goods companies, and even a small change in Chinese behavior can have a massive impact on bottom lines.

Diageo, the multinational company selling alcohol brands including Johnnie Walker and Captain Morgan, has its eye on the emergence of China's whisky drinkers.

"What we're seeing in China right now is really positive," Sam Fischer, Diageo's president of Asia, told CNBC. "We're seeing an increasing curiosity around people asking, 'What is whisky? Where does it come from? What taste do I like?'"

Employees box bottles of Johnnie Walker at Diageo Plc International Supply Center
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Employees box bottles of Johnnie Walker at Diageo Plc International Supply Center

Whisky is a big business for Diageo, especially in Asia where it accounts for 40 percent of its total sales, compared to 25 percent of sales globally.

Fischer cited demand from China's increasingly urbanized population and its rising middle class. Meanwhile, for the younger generation, status is becoming less about material possessions, and increasingly about the experience of consumption and story behind the brand.

That's where Johnnie Walker hopes to come in.

During an investor call recently, Fischer said the changing demographics are positive for new sales growth, pointing to a prediction that by 2022, 630 million Chinese will be classified as middle class.

But international spirits have not fully penetrated China's market, and local specialty baijiu currently dominates. (Diageo has a stake in baijiu brand Shui Jing Fang.)

Still, more than 100 whisky bars opened last year throughout China in key cities including Shanghai and Beijing, Fischer said.

"Given some of these green shoots, the curiosity and appetite is only going one way," Fischer said. "When you look at the scale of China, it doesn't take much of a shift for that to have an impact on our business and ultimately scotch whisky."

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