JAPAN: Japan's High-End Distillers Are the Toast of Whisky World

JANUARY 20, 2010

By KENNETH MAXWELL

A Sake Scion Who Learned His Trade in Scotland Paved the Way for Blends That Would Make Robert Burns Proud

Strictly Japanese Whisky

In Paris, a shop called Strictly Japanese Whisky (no scotch inside). In contrast to the shrinking home front, overseas markets offer Japanese distillers a new market, for premium products in particular.

YOICHI, Japan—In 1918, Masataka Taketsuru, the son of a Japanese sake-brewing dynasty, sailed to Scotland to study chemistry—and he learned the craft of distilling fine Scotch whisky. Some 89 years later, a blend named after him prised something else from the Scots: the honor of being named best whisky in the world.

Japanese whisky maker Nikka boasts many prize-winning scotches, but most of their premium products are not available outside Japan. But now Nikka is targeting American customers.

But making expensive whisky is one thing, selling it another: Nearly three years after Nikka Whisky Distilling Co.'s 21-year old Taketsuru Pure Malt was named the world's best blended malt at the prestigious Whisky Magazine awards in Glasgow, the Japanese company is finally planning to launch a range of its prize-winning whiskies in the U.S. by the end of the year.

Nikka—owned by Asahi Breweries Ltd.—and rival Suntory Holdings Ltd. hope their premium branded whiskies can follow a long list of successful Japanese exports from autos to electronics, and from sushi to anime.

"The fundamental thing in premium whisky is the whisky itself and both Nikka and Suntory have, over the last two decades, proved that they can produce some of the best whisky in the world," says Christopher Bunting, founder of Japanese whisky blog Nonjatta, which translates as "drunk it all." "The Japanese distillers are taking it slowly and cautiously but there are definite signs that the foreign market is being taken very seriously. Times are changing."

Asahi/Nikka

Nikka Whisky's Pure Malt.

At the snowbound Yoichi distillery on Japan's northern island of Hokkaido, little has changed over the decades in terms of the principles of whisky distilling, says production manager Koichi Nishikawa. The stills—the large vessels in which the core of the distilling process takes place—at the Yoichi distillery are fired using coal, a method long since abandoned in most other distilleries. It makes for subtle differences in the way vapors pass into processing pipes before starting the process that converts them into alcohol, says Mr. Nishikawa.

Fresh from a traditional New Year's blessing by a local Shinto priest, the distillery is preparing for the first coal-firing of the year set for Jan. 24—the day before Scots mark their traditional celebration of national poet Robert Burns with a hearty meal of haggis washed down with Scotch whisky. (Unlike whiskey from the U.S. or Ireland, Japanese whisky is spelled without the 'e' like Scotch whisky.)

Until recently, Japan's whisky industry has taken a conservative approach to sales too, focusing on relatively low-cost brews that first rose to popularity in the domestic market in the 1970s.

Ulf Buxrud, author of "Japanese Whisky: Facts, Figures and Taste", says Japan's whisky makers missed a big overseas opportunity in the mid-1990s, when young and affluent consumers in Europe and the U.S. developed a taste for premium whiskeys that had previously been the province of connoisseurs and older drinkers.

"The Japanese were almost absent [from international markets] until 2006-2007 and, hence, lost an opportunity to take a significant slice of the market pie," Mr. Buxrud says.

In recent years, Japanese distillers have had to face declining sales of whisky in the domestic market, which had been a mainstay of demand.

Naofumi Kamiguchi, general manager of the wines and spirits division at Asahi, says whisky drinking in Japan has fallen off the scale since the smoking salarymen heydays of the 1970s and 1980s. Consumers have drifted to novel products such as beers made without malt and pre-mixed fruit cocktails, as well as traditional Japanese brews such as sake and white spirit shochu.

Japan's league of whisky drinkers is now only about a fifth of what it was 20 years ago, says Mr. Kamiguchi.

Tax changes in the 1990s that made whisky relatively more expensive than other alcoholic drinks have also hurt sales.

In contrast to the shrinking home front, overseas markets offer Japanese distillers a new market, for premium products in particular.

Last month, in a traditional stone building off the Boulevard Saint Germain in Paris's tony 6th arrondissement, liquor distributor La Maison du Whisky opened a pop-up store selling a range of Japanese whiskies including Suntory's 12-year-old Hibiki. (Hibiki's 30-year-old whisky was voted best blended whisky in the world at the 2008 World Whiskies Awards.) Originally slated to close Jan. 16, La Maison du Whisky's manager for Nikka products Geraldine Landier says the store concept—devised by the French company—proved more popular than expected: Its four-week run was extended by a week and will now close on Saturday Jan. 23.

"We've built up some local custom in just that short time," says Ms. Landier, "as well as connoisseurs and even some tourists who came specially for the store."

While most customers have spent about €50 to €60 ($35 to $42) per bottle, those who want to really splurge can buy the highest-end Japanese whiskies that are on sale for €700 to €800, says Ms. Landier.

Paris also saw the opening last year of the only official Nikka bar outside Japan, in the cellar at the Curio Parlor cocktail club in the left bank just off the Seine river. The club hosts monthly "Nikka'fterwork" tasting events as well as funky club nights with guest DJs running into the wee hours.

Japanese distillers have also tested their wares in the U.S. The Nihon Whisky Lounge in San Francisco's Mission district—one of a relatively select band of U.S. outlets selling a range of Japanese whiskies—offers Suntory's flagship 12-year-old Yamazaki single malt at $13 a shot, while a Hibiki 12-year-old sets drinkers back $16 a pop. Bar staff say demand is rising, along with awareness of the existence of such a thing as premium Japanese whisky.

Nikka declined to disclose details of plans for the U.S. launch, including timetable and pricing, saying it is still finalizing terms of a distribution deal.

Takahiro Itoga, general manager of business planning for the spirits division at Suntory Liquors, says Europe and the U.S are a top priority for the company's whisky sales. Suntory launched its Hibiki brand in Europe and the U.S. last year, and saw overseas sales hit 6,000 cases. This year's target for Hibiki is 8,000 cases. Suntory has also targeted a 23% increase in overseas sales of its flagship Yamazaki brand to 31,000 cases from 25,000 last year.

Those numbers are a drop in the vat compared to the overall size of markets such as the U.S., where sales are worth well over $5 billion a year, according to the U.S. Distilled Spirits Council.

But growth targets of the Japanese distillers indicate their ambitions in Europe and the U.S.—they are also looking at potentially lucrative emerging markets for premium whisky such as India, China and Russia.

Whisky enthusiast and author Mr. Buxrud is optimistic Japan's distilleries can succeed overseas.

"For me, Japanese malt whiskies are another color on the global palette...Their exclusivity not only lies in being true to and preserving the scheme they adopted from Scotland, but also in the desire to experiment and carry the concept forward, for example, using Japanese oak for maturing vessels, and developing own strains of yeast cultures."

—Hiroyuki Kachi contributed to this article

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