Learn about Wines in Tokyo

Sunday, 28 December 2014

U.S. wine industry toasts decline in Japan’s sake sales


— Standing next to the wine display at the Nissin World Delicatessen in Tokyo, Masahiro Ino eyed a $99 bottle of Silver Oak cabernet sauvignon imported from California.

“I do prefer wine over sake,” said Ino, 24. “Wine is becoming very trendy. It’s becoming mainstream nowadays.”

With more younger consumers rejecting the alcoholic drink of their ancestors, sake sales have steadily tanked in Japan, another victim of globalization. Forty years ago, Japan had 4,000 sake breweries, but only 1,500 remain.

“I feel sad, a little sad,” said Shunsuke Kohiyama, export adviser for the Japan Sake and Shochu Makers Association. “But is there anyone who wears Japanese clothing? Everybody wears Western clothing. Rarely there’s a kimono.”

For the U.S. wine industry, the sake decline is a reason to raise a glass, especially California growers, who provided 90 percent of the nation’s exported wine in 2013, amid a year of record sales in foreign countries.

“If you’re in Napa and you need to sell high-end wine, you need to feed the fish where the fish can jump, right?” said Russell Weis, the general manager of Silverado Vineyards in Napa, Calif. “And that makes Japan extremely interesting.”

"The Japanese love to drink."
Wine consumption in Japan is still relatively low, accounting for only 3 percent of alcoholic-beverage sales. Beer is by far the top seller, but the vulnerability of sake has made the wine market extremely competitive, with 50 countries exporting wine to Japan.
France, long the top supplier, controls nearly a third of the wine market, but its share has slipped as more countries enter the fray.

“The Japanese love to drink,” said Bill Campbell, the owner and chief executive officer of Hotei Wines, a top Tokyo importer of California wine. “People are drinking more wine in general, and they’re less fixated on France and more willing to try the rest of the world. And the old people who drank sake are dying, and the young people are drinking wine.”

Weis said Silverado expected to sell 500 cases of wine in Japan this year, a 25 percent increase from 2013. Each case, the majority of them 12-packs, sells for an average of $300.

Weis said a sputtering economy had forced Japanese restaurants to experiment with new products and that a “psychological barrier” had fallen in the past decade as more of them began including U.S. wine on their menus.

“Now you find California wines in Japanese restaurants and Italian restaurants and international restaurants and even – God forbid – French restaurants,” he said. “So there’s just been a real spirit of openness. . . . They’re trying all kinds of new concepts and ideas, and we are the beneficiary.”

Campbell, who grew up in Sonoma County, said he spent two to three months a year in California, visiting vineyards and trying to find wines that would sell in Japan. He and his team taste more than 1,000 wines each year.

“People always want something cheap and cheerful,” Campbell said. “And beyond that, people want something either really delicious, really interesting or really rare. There’s a cult wine market here. . . . I taste, I taste and I taste and then taste some more, then taste again.”

‘Opposition to tradition’
At the Tokyo office of California’s Wine Institute, trade director Ken-ichi Hori said more countries were battling one another as more consumers showed their “opposition to tradition.”
“The younger generation does not do the same thing that their fathers and grandfathers did,” he said.


The Wine Institute, based in San Francisco, represents more than 1,000 California wineries. Hori promotes them in Japan, lining up tasting events each year in Tokyo and Osaka for buyers.
At his last event, Hori rented a ballroom at a Tokyo hotel, hosting more than 1,000 prospective customers.

In 2004, he brought Arnold Schwarzenegger to the Nissin World Delicatessen store. Photographs of the former California governor still hang on the walls of the store, which carries more than 100 varieties of California wine.

"Now you find California wines in... even – God forbid – French restaurants "
“It’s been a good seller,” Mitsuo Takenaka, the store’s manager, said of the wine.
Ino, a university student from Saitama Prefecture, said he came to appreciate California wine after visiting the United States.

“I started with French wines, and afterward I compared them,” said Ino. “California wine had a special character. The taste is not too sweet and they have a really good aroma.”

In Tokyo’s Midtown, Tadashi Futami, the wine section chief at upscale Dean & DeLuca, said he sold nearly 1,000 bottles of California wine each month, with two-thirds of his inventory coming from the Golden State.

He said cabernet was a popular seller. He keeps his most expensive selection, a $1,300 bottle of rare Bordeaux from California’s Harlan Estate, in a locked cooler.

At Aizbar, a small wine bar that can seat only 10 patrons at a time, owner Ai Eto said 90 percent of her wine selection was from California after she toured the state’s wineries 15 years ago.
“I love California wine,” she said.

With California so dominant, only a handful of other states are trying to compete in the Japanese wine market, including Washington, Oregon and New York, said Tom LaFaille, vice president and international trade counsel at the Wine Institute.

But he said all of them would benefit if the United States and Japan would agree to scrap wine tariffs as part of the Trans-Pacific Partnership, a 12-nation trade pact proposed by President Barack Obama.

“It’d be huge,” LaFaille said. “Consumers are price-conscious all over the world, including Japan.”

Washington state is trying to beef up its marketing after its wineries sold more than 41,000 cases of wine in Japan this year, valued at more than $3.1 million. Japan is the state’s second-biggest wine export market (behind only Canada), said Steve Warner, the president of the Washington State Wine Commission in Seattle, who’s planning a trip to Japan in January.

‘It is impossible’
The United States ranks fifth in the Japanese wine market, accounting for roughly 12 percent of sales and trailing France, Chile, Italy and Spain.

Read more here: http://www.mcclatchydc.com/static/features/Yen2Trade/Wine-industry-toasts-decline-in-sake-sales.html?brand=mcd#storylink=cpy

Hori said tax receipts from U.S. wine sales in Japan had increased 9.5 percent in 2013, but he’s worried that the growth may be hard to sustain. He said Chile’s market clout would grow significantly after that country and Japan signed a free-trade agreement that called for removing wine tariffs. U.S. wines carry a 15 percent duty, he said.

“Under equal conditions, we can compete,” Hori said. “But a 15 percent disadvantage is too much, particularly for less expensive wines.”

Not everyone’s convinced.

Campbell said getting rid of the tariffs would have little effect on his more expensive wines because the tariffs were capped.

“The highest you can pay is 125 yen a liter. You’d be taking out a dollar a bottle in charges,” he said. “To cut out a dollar on a $40 bottle, it’s meaningless. On a $3 bottle, it has a lot of meaning.”

Tariffs or not, Kohiyama, the sake export adviser, knows the U.S. competition isn’t going away, and he takes it in stride.
“Of course the American winemakers are targeting Asia. That’s very reasonable,” he said. “The Japanese lifestyle has been Westernized over the last 100 years, so also for the drinks.”
He displayed a chart that showed sake consumption reached its peak in the mid-1970s, sinking ever since. He said he’d once brewed sake but had decided to quit the business, too, seeing the writing on the wall.

“It is impossible to say to the young Japanese people that they should drink sake,” Kohiyama said. “It is impossible.”

Source: http://www.mcclatchydc.com/

Read more here: http://www.mcclatchydc.com/static/features/Yen2Trade/Wine-industry-toasts-decline-in-sake-sales.html?brand=mcd#storylink=cpy