The National tax Administration (“NTA”) released shipment statistics for alcoholic beverages for 2019 across categories. Numbers continue to look disheartening for Japanese sake lovers. Over one generation (25 years), sake’s share declined from 13% to 5.3%. Meanwhile, beer as a category dipped from 70% to 38%. Beer shipments declined 50% in volume despite the active introduction from the late 90s of “ersatz” or alternative products in the market, which attract or attracted lower taxation (Happoshu, “third beer”). 

Clearly the Japanese consumer is drinking less. Shipments were down 15% over the period, while population is the same (about 125 mio people). Of course, median age increased significantly, from about 39 to 48 years of age. Such aging consumer is now enjoying a much broader diversity of beverages. Noticeable is the emergence of the “liqueur” category, a mixed bag where Chuhai in particular finds its place. Chuhai, a (cheap) mix of spirit, soda water and flavorings, sold in cans, is bound to become the number one product in the near future. The liqueur category, at 29% of shipments, is now ahead of the “standard” beer category. Other rising categories include distilled spirits, and wine. Meanwhile, Shochu, the traditional Japanese distilled spirit (a different category for the NTA), has remained overall stable. Volume is roughly equally split between “premium” Honkaku Shochu (single distillation in pot) and column distilled industrial Shochu. Whiskey has been rising, and brandy declining. Together they make about 2% of the market today.

From 1.7 mio liters (ML) in 1973, sake shipments dropped to 1.3 ML in 1995 and 467kL in 2019. According to JSS (the Sake and Shochu Makers Association), the 2020 number is even significantly lower: 419kL (a 75% drop in 40 years). “Tokuteimeishoshu” or “premium” sake (about 33% of the sake market in volume) is often consumed in restaurants, and this category was hit the hardest by the consequences of the COVID-19 pandemic. Of course, there are far ranging consequences:

  • Breweries have seen their financial position deteriorate significantly. A handful of them confirmed shut-down in 2020 and in 2021 again (there are about 1,100 companies still actively brewing). The launching of a few new projects constitutes a ray of hope though. 
  • The impact on agriculture and rice farmers is very significant: the MAAF (Ministry of Agriculture, Forestry and Fisheries) reported a significant market surplus in “Shuzoukotekimai” (designated rice cultivated for sake brewing) in 2020 despite (or on top of) a 13% drop in the crop. This 13,000 tons surplus is equivalent to 15% of the 2020 estimated crop, and the situation is expected to be far worse in 2021. 

Not all news are bad though.

A positive trend in my opinion started to materialize in 2010. In conjunction with the rise in overall “quality”, the average price of a sake bottle has been rising fast since 2010 (+17%), therefore the decline in sake sales expressed in value is more moderate than what shipment volume numbers are showing. If Japanese consumers drink less sake, we can hope they drink a more “qualitative“ one!

In addition, sake export numbers confirm their promising trend with a modest rise in total export value in 2020 over 2019, although COVID has impacted export volumes to most countries (-13% over one year). The export market represents close to 5% of total volumes in 2020.

According to the JSS, since 1995, sake exports have risen from Yen 2.9 bio (EUR 23.5 mio) to  Yen 24.1 bio in 2020 (EUR 198 mio), i.e. a rise of +740%. Over the last 20 years, since 2010, the rise is +183% in value, and +57% in volume. As a matter of fact, exports are driven by premium sake. 

China’s exports were multiplied by 16, pushing the country to the number 2 spot in value, while HK has become number 1. HK has become “the” hub for expensive Daiginjo and Junmai Daiginjo (sake brewed from premium rice milled down to less than 50% of its initial mass), followed by Singapore. Calculated average export prices are about Yen 3,300 and Yen 2,200 per 720 ml bottle respectively, significantly above all other large markets…and the Japanese average market price.

As the chart illustrates, the market has broadened, and Asia is a very clear leader. A sharp decline for Korea over the last 3 years is not a big surprise given the political tensions between the 2 countries. Korea traditionally imports “cheap” Japanese sake. The USA was more of a surprise with a significant drop between 2019 (when USA was still the number 1 export market) and 2020, in value (-25%) as well as in volume (-19%). We can however clearly see the impact of COVID on restaurant sales there and a sharp recovery can be expected if and when the pandemic recedes.

The Japanese Government, the JSS, individual producers have obviously taken note of the momentum exports are able to bring back to the Japanese sake industry…and all those who depend on it. Marketing expenditure has been rising. By nature though, it is spread across a number of micro or mini independent markets and we have to give some time to such investments.

Last but not least, sake culture is expanding overseas thanks to the initiatives of multiple local brewers. This phenomenon is not captured by NTA statistics. 

In summary, my beloved drink is not out of the wood yet, and it is likely that a number of producers will continue to suffer and others stop operations. However innovative brewers who are able to read foreign markets and/or choose the right partners may see the light at the end of the tunnel. 

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