By Normandy Madden

Published: April 02, 2007

SHANGHAI, China -- Sailing is almost unknown in China, but Pernod Ricard sees
the traditional Western sport of yacht racing as a chance to raise the profile
of its Chivas Regal whisky brand among China's most affluent consumers. The
French spirits company is sponsoring the first Chinese team to take part in the
America's Cup race. Brand overboard! The TeamChina yacht will be adorned
with plenty of Chivas branding during competition.

The America's Cup, held every four years, kicks off next month in Valencia,
Spain, with 12 sponsored country teams, and will continue in stages through
July 7.

"This is the first time an Asian team is participating in the America's Cup
(not quite - Ed) and the fact that it's from China is quite amazing," said Shanghai-
based Han Zantingh, Pernod Ricard's brand director-whiskies in China. He is
promoting the sponsorship through advertising and a series of themed sailing
parties around the country.

Plenty of spirits, meager expectations
No one expects the Chinese team to win. Even its organizers say their goal is
merely to get China on the international stage for sailing and enable the
team's members to learn the sport. Established by a consortium of Chinese and
French backers in 2005, the Chinese team has won only about 6% of its races. In
the America's Cup, it will be going up against the best sailors in the world.

But winning isn't the point, for China or Pernod Ricard. As the 2008 Olympic
Games in Beijing draw closer, China is investing in as many sports as it can,
seeking to raise the profile of its athletic program. Many of the Chinese
sailors on the America's Cup team will likely represent China in the Olympics.

Mainland China is home to 320,000 millionaires and many less-affluent consumers
who drink whiskey regularly. The upscale bars, clubs and karaoke/entertainment
zones (called KTV bars) they frequent are big business for Pernod Ricard.
Chivas accounts for about half of all imported-whiskey sales in China and is
the leading premium brand in the mainland among all spirits, not just whiskey.

Little brand loyalty
But competition is growing. Diageo's Johnnie Walker, for instance, advertises
heavily and held parties in more than 30 Chinese cities last year to promote
its sponsorship of a Formula One auto-racing team.

Pernod Ricard also realizes that Chinese, who did not grow up with foreign
brands, like to experiment, and trends change quickly in that fast-evolving
culture. Associating Chivas with the America's Cup, the company hopes, will
help it maintain the brand's stranglehold on China's imported-whisky market.

Pernod Ricard has added a sailing theme to its "This is Chivas Life" campaign
in China. A commercial by TBWA Worldwide, Shanghai, shows the Team China yacht,
Longtze, (which means "son of a dragon") adorned with the Chivas branding. A
website (http://www.chivas.com.cn/sailing/), which was developed by Agency.com,
explains sailing to Chinese consumers.

Seafaring parties
Chivas and TBWA's Tequila division have organized parties in 60 cities,
transforming venues into Chivas-themed bars with live entertainment, hostesses
and a replica of Team China's boat. Crew members and sailing instructors
attended the bashes to help heighten the sailing motif for Chivas consumers,
Mr. Zantingh said.

In a contest in upscale KTV bars, winners got coveted slots on Team China's
yacht as the "18th man" during the six America's Cup races. The company
connected the "18th man" prize to the age of Chivas Regal's 18-year-old
whiskey, the official brand sponsor of the promotion.

Pernod Ricard will fly the five winners, "all successful Chinese businessmen,"
said Mr. Zantingh with a sigh of relief, to Valencia next month.

Since the marketing program launched last fall, the sponsorship has made the
Chivas Regal brand "seem more prestigious" and "added international prestige,"
according to 65% of respondents in a study conducted in China by research
company GfK. About half said the association "made them proud to drink Chivas."

04/12/07