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The Big Interview: The Spirit of Success

The Big Interview: The Spirit of Success
 
     
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When did Diageo enter the Chinese market?

Diageo and its brands have over 100 years of experience in China. We’ve been selling Johnnie Walker there since 1910 and we have brand advertisements dating back to 1938. In 2002 we set up our Greater China hub office in Shanghai and have since invested significantly in the market. We offer a very strong brand portfolio in China and work with a number of first-rate partners to deliver the best possible marketing and distribution strategies across the country. As a trend leader for Asia Pacific, China also serves as an innovation incubator where we develop and test new brands and products. In May this year we created Shanghai’s Johnnie Walker House to showcase the extraordinary heritage, provenance and quality of the brand; this is the first “embassy” for Johnnie Walker and Scotch whisky outside Scotland. Most recently, we have increased our stake in ShuiJingFang, one of the leading super-premium Chinese baijiu or “white spirits” companies.  


What do you see as the importance of the baijiu market and product in China? Also, are there any other areas of the Chinese alcohol market you are entering or work in?

Chinese baijiu is by volume the largest spirits category in the world with £24 billion net sales value in 2010, baijiu represents about 50 per cent of the total beverage alcohol market in China. We now have 53 per cent of the Quanxing Group, which owns about 40 per cent of the Shanghai listed baijiu company, ShuiJingFang. This is one of the top super-premium Chinese white spirits brands, with super-premium baijiu being the fastest growing and most profitable segment within the white spirits market in China. As the only international spirits company to participate at a significant scale in this category, we are committed to expanding ShuiJingFang’s global business. Over the past two years, we have quadrupled international sales, doubling revenue in fiscal year 2011 (F11) alone.
 In Asian global travel retail, ShuiJingFang is now is the second biggest brand after Johnnie Walker in both revenue and in contribution. Our partnership has also taught us about new drinking occasions. Unlike most international spirits, Chinese consumers drink white spirits with meals, making us present in all China’s main alcohol categories.

What do you see as the future of Diageo in China? Will it focus on promoting foreign brands into the market, or acquiring more local products?

Diageo will continue to explore opportunities in China’s growing international spirits market as well as the Chinese white spirits market. We hope to benefit from changing consumer demand and the growing economy. As partners with ShuiJingFang, we remain committed to increasing our participation in the development of the Chinese white spirits industry. With our consumers aspiring to drink more premium, high quality brands, we see a great future for further development of super deluxe brands in China.

Do you think Chinese local alcohol products will gain market traction outside of Asia? If so, how might Diageo play a part in this?

As part of our agreement with ShuiJingFang, Diageo is committed to bringing super-premium Chinese white spirits to overseas markets for consumers worldwide and we are already enjoying some success in this area. With the support of Diageo’s global distribution network, ShuiJingFang plans to increase exports to become the leading China white spirit brand overseas. Thanks to our relationship, ShuiJingFang is already available in Duty Free outlets in China, Korea, Japan, Macau, Hong Kong, Singapore, Thailand and USA, and in duty-paid outlets in Korea, Hong Kong, Macau, USA, Australia and Singapore. Exports currently represent over ten per cent of ShuiJingFang’s total sales by volume, which is the highest percentage of international sales for any Chinese white spirits brand.

Paul Walsh Career Chronology
1982 – Joined GrandMet’s brewing division
1986 – Finance Director, GrandMet
1990 – Chief Executive, Pillsbury
1992 – CEO, Pillsbury Company
1997 – Joined the Diageo Board
2000 – Appointed Chief Executive, Diageo

 

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