Japan's drink companies look to tap into foreign markets

Faced with a number of challenges at home, companies in Japan's alcoholic beverages sector are looking to expand into new markets around the world and hope consumers will develop a taste for their premium sake, beer and whisky.    

The drink industry admits that the last few years have been difficult in Japan, with clear signs emerging that people have been going out to drink with colleagues and friends less frequently than was previously typical in Japan.

And that was apparent even before the COVID pandemic put Japan's bars and restaurants into hibernation from early 2020, they point out.

"There have been many reasons why people are drinking less, but I think many of the reasons are the same as in other countries," said Hiromi Iuchi, a spokeswoman for the Japan Sake and Shochu Makers' Association.  

"In Japan, we have a shrinking population and that is obviously a factor," she said. "Also, many sake drinkers are typically elderly because it is not seen as a young person's drink, although we are trying hard to change that. More generally, there has also been a switch away from alcohol by younger consumers out of health concerns."

Squeezed by foreign imports

The sake market has also been squeezed by imports of foreign liquor and beers, Iuchi said, which has had a serious impact on Japan's traditional drinks sector. Around 40 years ago, there were as many as 4,000 sake brewers across the country but today that number has shrunk to just 1,400 producers, she told DW.

It is a similar tale for Japan's beer brewers, with per capita consumption in 2022 standing at 34.2 liters (9.03 gallons). This figure was significantly behind the 188.5 liters consumed on average by Czechs and the 149 liters downed by Germans.

"The factors differ in part by the category, but consumption is falling due to the declining population and a change in the consciousness surrounding alcohol among young people," said Russell Roll, a manager in corporate communications for Kirin Holdings, one of Japan's biggest brewers.

And while the company's flagship Kirin Ichiban beer is doing well with consumers, along with the Kirin Hyoketsu, a vodka drink with soda and lemon juice in ready-to-drink cans, Roll says it is critical for the company to look overseas for new opportunities and build on its existing popularity.

"Kirin sees foreign markets as being very important as areas of potential growth," he told DW. "Our overseas business is already growing, with Kirin Ichiban the largest business but Hyoketsu and the Fuji brand of whisky have also been growing recently."

Figures compiled by the Ministry of Finance show that Japan exported 134.4 billion yen (€776.09 million, $845 million) worth of alcoholic beverages in 2023. And while that total is down a marginal 3.4% from the previous record-setting year, it was far higher than what it was in 2011, when exports were worth a mere 17 billion yen (€98.16 million).

Japanese whisky, sake account for most exports

The largest exports were whisky, accounting for around 37%, and sake, with 30% of the total, although both were down around 10% on the previous year. Japanese beer picked up the slack, with a year-on-year rise of more than 66%, ministry figures showed. Liqueurs made up a further 9% of exports and gin and vodka around 3%.

The top importing nation was China, followed by the United States, South Korea, Taiwan, Hong Kong, Singapore and the Netherlands, although analysts point out that increasing exports of beer to countries in the Asia-Pacific region were the result of unusual circumstances.  

Japanese beer brands were well positioned to take advantage when sales of China's Tsingtao brand contracted dramatically in December 2023 after footage was shared on social media of a man urinating into a malt tank at a Tsingtao brewery in Shandong Province. The company lost 4.2 billion yuan (€567.74 million) in a single day on the Shanghai Stock Exchange after the video came to light.

And while the stock price has largely recovered, many still eye the brand with caution.

Japanese alcoholic beverages also benefitted from a recovery in demand in South Korea, where consumers had launched a wide-ranging boycott of Japanese products in 2019 as the two governments argued over the legacy of their often fraught shared history.

Japanese beer rebounds in South Korea

South Korean government figures show that Japanese beer was the most popular imported beer in 2018 but sales plummeted after the boycott. In 2023, however, imports soared 283% year-on-year as bilateral relations improved.

Hiromi Iuchi said sake is presently primarily exported to China, the US and Hong Kong, but she is aiming to expand into other markets — including Singapore, Australia, Brazil and Mexico — as well as increasing the 6% of exports that presently make their way to Europe.

"A lot of it is education. We need to work with sommeliers to explain to them which sakes go well with different dishes, for example, and then encourage them to share that with their customers," she noted.

"It's about explaining the culture of sake, providing people with the back story and explaining how it works with European cuisine," she added.

"But I'm really optimistic. There are some really, really good sakes and shochus being produced in Japan now and I believe that if we are able to make sake popular and appealing to foreign consumers, then that will catch on with Japanese people and they will start to drink sake again."

Edited by: Srinivas Mazumdaru