Page last updated at 14:43 GMT, Thursday, 1 January 2009

Will Venezuela go sour on whisky?

By Will Grant
BBC News, Caracas

When people in Venezuela turned up at their New Year's Eve parties, many would have been carrying with them a bottle of the nation's favourite tipple: Scotch whisky.

Whisky bottles in a Caracas liquor store
Whisky on sale in a nation that produces fine rums

Imported Scotch outsells local rums and other liquors in Venezuela by a ratio of almost two-to-one, making it the sixth biggest market worldwide. Indeed, Venezuelans claim to drink more Scotch than the Scots.

"It's effectively become the national drink," says Gavin Hewitt of the Scotch Whisky Exporters Association in Edinburgh, "and its popularity is still growing."

Whisky in Venezuela is certainly big business.

In 2007, Venezuelans consumed somewhere in the region of 3.4m boxes of whisky, and the trade is worth $151m (104m) a year to the Scotch whisky industry.

In fact the only countries which consume more are the US, Spain, France, Singapore and South Korea.

"My sales of whisky tend to peak at Christmas and the New Year, as the wholesalers give us special offers which we can pass on to the customers," says Alejandro Castro of CeLicor, a liquor store in central Caracas.

"But over the course of the year, I always sell much more whisky than rum. If I had to choose between the two, I'd definitely pick whisky. It moves off the shelves more quickly and it's more expensive."

Rum rejected

Up in one of the trendiest bars in Caracas, The 360, which boasts amazing panoramic views across the city, people are sipping tall glasses of whisky and ice on the rooftop bar.

Alejandro Castro in his liquor store in Caracas
Whisky is no longer the preserve of the rich... there is a whisky for almost every budget
Alejandro Castro
CeLicor liquor store

Everywhere you turn, you can hear English being spoken - a clear sign that the place is aimed at an upper class clientele and not Venezuela's poor majority. The price of the drinks reflects that too.

"Between all of us, a bottle like this doesn't work out so expensive," says customer Fortunato Castellanos, who's drinking a 12-year-old blend with two friends.

"The way people drink whisky in Venezuela has been the same for years - you all chip in for a bottle, add lots of ice and then drink it before the meal, while you eat and afterwards. That's probably why we drink so much of it here."

Nevertheless, it still seems strange that, in the country which produces some of the highest quality rum in the Caribbean, Venezuelans who can afford it choose to drink imported whisky instead.

"I doubt it'd make any difference if the price went up," says Fortunato. "Most people would still choose it over rum. Whisky's a social thing."

Isn't there an irony in that an ostensibly socialist country is consuming more of a luxury good such as whisky than richer countries with much bigger populations such as Germany and Japan? Not really, says Alejandro Castro.

"Whisky is no longer the preserve of the rich. These days almost everyone in Venezuela is able to drink it. It's not just an upper class drink.

"A bottle of scotch ranges from 33 bolivars (around $15 at the official exchange rate) to about 10 times that, so there is a whisky for almost every budget."

Unscathed so far

However, one man who isn't as keen on the boom in whisky is President Hugo Chavez.

A well-known moderate when it comes to alcohol, Mr Chavez spoke of the huge whisky imports during one of his weekly televised addresses in 2007.

President Chavez speaks during his weekly address on 21 December 2008
Mr Chavez often uses his weekly address for major announcements

"Is this the whisky revolution?" he asked rhetorically, "or perhaps the Hummer revolution?" referring to the American-made SUV - another luxury item of which Venezuela is one of the world's leading importers.

At the time he announced a series of measures including increased taxes on imported alcohol and a curb on the consumption of whisky at state parties. But Gavin Hewitt says his industry has been relatively unscathed so far.

"At the time, I initially thought he was targeting the whisky exporters in Scotland with those comments. But I've been to Venezuela since, and I now think that Mr Chavez was referring to a whole category of luxury goods which don't necessarily fit with his social politics," he says.

"I think as long as import controls, quotas and various new taxes are not introduced deliberately against Scotch whisky, and at the moment I don't see that as being the case, then Venezuela will continue to be a very thriving market."

Trouble ahead?

Since Mr Chavez spoke publicly about whisky however, the world economic downturn has taken hold and the president has recently warned industrialists and businessmen to be ready for new economic rules in Venezuela in 2009.

Despite the gloomy predictions for the global economy and the president's suggestion that the consumption of imported whisky is anti-revolutionary, Mr Hewitt is confident that the sheer popularity of Scotch will insulate it from any new government controls.

"I think President Chavez understands that if Scotch whisky has effectively become the national drink of Venezuela, there might well be electoral consequences if people found themselves unable to purchase it."

In the end, though, it may not be the government which slows down the hold Scotch has on the Venezuelan liquor market, but rather the consumers themselves.

With inflation running at over 30%, and many Venezuelans bracing themselves for harder economic times in 2009, those local rums may look like a much more attractive option on the pocket by next New Year's Eve.

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