beyondbrics

Taiwanese drinkers have long had a liking for foreign spirits as rice wine, the island’s national brew, is more often used for cooking than drinking. They have a particular affinity for Scotch whisky – so much so that Taiwan is now one of its top five export markets.

Sales of Scotch to Taiwan in the first six months of this year were worth £70m – nearly double the amount in the first half of 2010. That puts the island of 23m people behind only the US, France, Singapore and Spain, according to the Scotch Whisky Association.

The increase is a part of an emerging market boom for Scotch, which accounts for a quarter of the UK’s food and beverage exports.  Sales to Brazil in the first half of this year rose by 48 per cent from a year ago, and sales to South Africa increased by a quarter.

It also highlights how Taiwan’s highly export-reliant economy is showing signs of a recovery in domestic demand. With unemployment levels gradually falling since the financial crisis, Taiwan has seen steady if moderate growth in domestic consumption in recent months. Food and beverage sales are rising at an annual rate of 7.59 per cent, while car sales are up by 10 per cent, driven by strong demand for high-end, imported cars.

As Katrina Ell, associate economist for Moody’s Analytics, noted:

Taiwan has been enjoying a steady decline in unemployment and an uptick in wage growth. This is boosting consumer confidence, strengthening domestic demand and encouraging consumers to spend more freely.

Whether this can be sustained will become an increasingly important question as exports have already started to slow amid global economic uncertainty. The danger is that, with much of Taiwan’s economic growth still driven by export manufacturing, a slowdown in external demand would eventually impact domestic demand as well.

Yet there is still cause for optimism. Grace Ng, analyst at JP Morgan, said there were signs that the recent growth of Taiwan’s domestic economy was founded not just “in trade activity, but also in service sectors (including tourism) and investment flows arising from intensifying cross-strait economic links”.  This should make it more resilient to any external shocks.

That would certainly be something worth raising a glass (of Scotch) to.

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China: mad about whisky, beyondbrics
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