Chinese get a temple to whisky - and wealth
Louis Vuitton has made inroads into the Beijing market. Photo: Getty Images
It's a gift fit for a Chinese billionaire. For the eye-watering, throat-searing price of $A125,000, a bottle of personalised Johnnie Walker.
That's what is on offer at Diageo's new temple to wealth and whisky, Beijing's 140 sq m, four-floor Johnnie Walker House.
Jim Beveridge, the company's appropriately named and professorial "master blender" flew from Scotland to China to create the bottle, which comes with its own wheeled leather trunk so that it can be rolled tableside in the private dining rooms upstairs.
The Johnnie Walker House, a $A2.8 million clubhouse for whisky lovers, is in a quiet courtyard compound a stone's throw from Tiananmen Square.
Partly, it is an exercise in burnishing Johnnie Walker's brand, communicating its history to Chinese customers. "Eighty per cent of Chinese millionaires are under 45. They like brands with history, heritage, provenance," says Gilbert Ghostine, the head of Diageo in Asia.
The building is a steampunk confection of copper, leather and wood with walls built from peat or trickling with water.
On the first floor is a painted advertisement from the 1930s with a Chinese-looking Johnnie Walker proclaiming the virtues of his whisky: "It has a strong taste and acts as a stimulant. One of the oldest brands in the world, it is a reliable product. It can benefit the drinker, making you healthier as you drink more."
But the project is also part of a wider competition among luxury houses to win the loyalty of the Chinese super-rich.
Hermes, a brand built on the principle of quiet luxury, recently broke with tradition to craft a garish "Chinese flag" version of its Birkin handbag. Louis Vuitton flies its high rollers to camel polo matches in Mongolia. Dunhill has a private members' club in Shanghai, the KEE Club, and in Shanghai and Hong Kong, Alfie's, a British gastropub.
"Dunhill was the first one to do it with their private house," says Paul French, chief China market strategist at Mintel.
"You would be amazed at how many people want to spend time in a shop. I think there are going to be a lot more of these concepts. Putting walls around everything is important in China. Once you are inside the walls, it is all about eliteness and imperial grandeur".
The move comes against a backdrop of slowing growth. The days of 20 to 30 per cent annual growth in the luxury market may be over, much to the chagrin of companies such as Burberry.
For Diageo, the success of its first Johnnie Walker House in Shanghai was a surprise.
"When we first started, it was about teaching people the art of whisky; the analogy between blending whisky and blending tea is a good one," says Mr Ghostine.
"But then we realised it was a good platform for bespoke and limited editions, and we moved to becoming more of a retail centre."
Indeed, the 4000 customers who have passed through spent an average of £500 each. As luxury brands expand into China, they face the challenge of maintaining a semblance of exclusivity.
The response for many companies has been an old marketing trick: limited editions, certificates, personal invitations. At Louis Vuitton's flagship stores, certain floors are by invitation only.
In the Chinese hinterlands, meanwhile, many luxury brands will sell only accessories – handbags and wallets – while keeping their full range for Beijing and Shanghai.
"Companies like Gucci cannot sell their brown logo bags any more because they are too ubiquitous. So they do special lines of rare skin bags which you would not find in Europe or the United States," says Mr French.
Mont Blanc produced a Dragon pen, Rolls-Royce has a China-only Year of the Dragon car and La Perla produces lingerie embroidered with dragons.
Unlike the heyday of the Japanese market in the 1980s and 1990s, Chinese customers have proved more fickle. "The Chinese like the idea that you can speculate on products as a way of diversifying assets, and these limited editions come with certificates and could hold their wealth," Mr French says.
Increasingly, like Johnnie Walker's personalised whisky, there is customisation. "It is natural evolution," says Yao Shifeng, chief editor of Fortune Character magazine in Shanghai.
"We will see customised goods and services accounting for half or more of the luxury market in the future. Big brands like Louis Vuitton will become mass-public luxury brands. If you see someone in the street wearing a belt with a big logo, you will not think of it as a luxury."
At the Johnnie Walker House, there are members-only whisky vaults, and private dining. Some 200 "patrons" will have concierges to fawn over them.
"Relationship managers" will closely monitor what sort of whisky they prefer. The Chinese billionaire will be well catered for.