DRINKS giant Pernod Ricard has provided further evidence of the challenges whisky makers face in China after suffering a slump in sales of Scotch in what is a key growth market for the industry.

The French group, which owns Paisley-based Chivas Brothers, said it recorded a “double digit” percentage drop in sales of Scotch in China in the first half. It did not elaborate on the scale of the decrease but indicated brands such as Chivas Regal and Royal Salute bore the brunt of the downturn.

The company said the fall reflected trends which have been apparent for 18 months in a country where political and economic factors are making life difficult for Scotch producers.

Sales of the drink have come under intense pressure amid an official crack down on extravagance and a slowdown in the growth of the country’s economy.

Pernod Ricard noted travel retail sales fell in Asia with demand for Scotch dwindling following a drop in the number of travellers and tough competition for the remaining airport trade.

The group said there was no sign that conditions would change in China.

The comments will spark fresh concern about the prospects for Scotch producers in a country where they have identified huge growth potential.

The growth of a new middle class of affluent consumers in China spurred strong growth in sales earlier in the decade, from a low base.

However, other Scotch producers have said they are facing headwinds in China. Some have invested heavily in the country.

Last month Diageo, which makes Johnnie Walker, said its Scotch sales had fallen 42 per cent in China in the six months to 31 December.

Pernod Ricard may take some comfort from the fact sale of its Scotches increased in some other emerging markets including India.

Chivas Regal has been doing well in Mexico.

Earlier this week Scotch Whisky Association chief David Frost said the trends for Scotch were good in Latin America, where there are parallels with China in terms of demographics.

But he also noted recent economic volatility in Brazil.

Pernod Ricard said sales of Chivas Regal fell in the Americas travel retail market, citing Brazil and foreign currency factors.

Sales of Chivas grew in Africa and in some European countries, including Germany and Poland.

However, total revenues for the brand fell 2 per cent in the first half.

Sales revenues for Ballantine’s whisky were flat.

Pernod Ricard, whose brands also include Beefeater gin and Absolut vodka, enjoyed more success in the US. Sales increased 4 per cent annually.

The group noted the Glenlivet maintained its position as the number one malt in the country.

Sales of Glenlivet increased 7 per cent by value globally.

Managing director Gilles Bogaert underlined the company’s faith in the potential of the malt market.

He noted the company has a number of small distilleries that produce malts which are doing well outside Scotland. These include Aberlour on Speyside.

Describing them as nuggets, he told reporters: “This is a small portion of our portfolio but it’s nonetheless quite alluring and profitable.”

However, Pernod Ricard appears to be making faster progress in the market for whiskeys produced outside Scotland than in the Scotch sector.

Sales of Jameson Irish whiskey increased by 11 per cent by value in the first half.

Alexandre Ricard, chairman and chief executive, said: “Our half year results are solid, delivering a continued improvement in Sales. Our strategy has remained consistent and is driving results, in particular in terms of innovation.”

He said Pernod Ricard expects to grow profits from recurring operations in line with previous guidance of one to three per cent on an underlying basis.

The group grew first half profits by three per cent annually in the six months to 31 December to €1.438 billion (£1.1bn).

Group sales increased by three per cent annually to €5bn.

Pernod Ricard said it achieved strong growth in the UK boosted by promotions. Jameson, Absolut and Mumm champagne did particularly well.

The economic problems in Russia and the fall in the Rouble posed challenges for Pernod Ricard.

The company achieved double digit growth in India and in the Africa/Middle East region.