I was pleased to see an article on the paper issue of La Revue de Vins de France (November 2018) about the trade agreement between EU and Japan (EPA), which will lead to the elimination of custom taxes for European wine in Japan. The agreement will hopefully come into effect in 2019.
Sometimes it is a bit irritating to see how the Japanese wine market is constantly overlooked in favor of its big neighbor (China). A few days ago Wine News even titled: “The slow decline of wine in Japan, between ever ageing wine lovers and lowering consumption”. I work in the wine field in Japan since 2012, first in retail and now in education, but I never thought of the wine market here as declining. However we need data, not “feelings”. Are Japanese drinking wine or not? And how much?
If you can read Japanese, your best possible resource is the Kirin Brewery Company. Every year Kirin publishes a document on the state of Japanese market, with official data and useful graphs, beautifully written and summarized. An overview of 2018 statistics is here, while on this page you will find a more complete analysis of the situation.
Let’s take a look at what is happening.
- First, in the history of wine consumption in Japan seven “booms” can be identified, in seven different periods. The first dates back to 1972, the second to 1978, then we have 1981 as the third, followed by the 1987-1990 period (when Beaujolais Nouveau first became popular). In 1994 the wine market progressed still (5th boom), to explode in 1997-1998 (6th boom) when red wine enjoyed a sudden rise in demand. The figures for this period are particularly impressive: wine consumption almost doubled from around 1,600,000 hl to 3,000,000 hl in 2 years! I have heard that this was due thanks to the popularization of the French Paradox by some television program, but that’s another story deserving its own article.
After the bubble came the burst and a prolonged crisis that reflected on drink habits as well. Thankfully in 2009 the wine market slowly started to recover, culminating in 2015. In 2016, the most recent data available, it contracted again for the first time in nine years.
- Second, per capita wine consumption in Japan in 2016 amounted to 2.84 L, decreasing from 2015 (2.98 L). This is not much if compared with other Countries, but keep in mind that less than ten years ago (2009) it was just 1.90 L. It still means a 50% increase.
- Those in the industry know well the most popular wine Countries in the Japanese market: Chile dominates the still wine sector, at least in volume, France follows, with Italy third and Spain far behind. Remember that Chilean wines are not subjected to custom taxes here since 2007 and this Country usually makes wines that are affordable and reasonable in quality. Will the EU-Japan EPA help EU Countries to break this dominion?
The sparkling wine sector is still lead by France, followed by Spain. Italy is only third, the “Prosecco craze” has still not landed on these shores.
- The last page of the report illustrates the situation of Japanese wine. I have already written (very briefly) about this topic in the past, but basically there are intrinsic reasons why Japan is not and will probably never be a relevant wine producer. Some regions should and could developed interesting niche markets, but there are obvious limits. Anyway the data tell us that the bulk of wine production lies in Yamanashi, followed by Hokkaido (in my opinion the region showing the greatest potential), Nagano, Yamagata and Niigata.
Now, some general comments.
First, a question: is the wine market in Japan declining or not?
In my opinion it is a bit too early to judge. It declined in 2016, but it had also enjoyed 7 years of continuous growth, which is all the more relevant since the consumption tax increased from 5% to 8% in 2014.
What about the future? Japanese people are curious, they like wine, but will they keep buying it?
Well there are three elements that could be considered.
- First, next year consumption will rise again from 8% to 10%. This is not good.
- Second, next year the EU-Japan EPA will (hopefully) come into force. This is good and could partially offset the consumption tax hike (not only for wine).
- Third, the 2020 Olympics. This should theoretically be good for business, including wine. (But what will happen in 2021?)
All this considered, my guess for the future is that wine consumption will keep expanding, though very timidly.
Once an MW told me that the Japanese wine market is extremely interesting because together with the UK it is the only First World market when you can find virtually anything, even from small Countries.
And it is true: are you searching a Georgian wine? You’ll find lots. Israeli wine? We have it. With some effort you may also come by Indian wine, Lebanon wine, Romanian wine. A brief search on Rakuten, an online order and in three days you will uncork it.
The lack of a strong domestic wine sector makes the people very open minded, at least in front of the wine menu.
2015 saw the first Japan-based Japanese Master of Wine (Kenichi Ohashi) and there are more currently studying in the program. In 2017 we had a record of 12 new WSET Diploma graduates (including the author). In 2018 they were 7. These are astonishing numbers for this Country and very encouraging; they are important in lifting the image and knowledge of wine in Japan.
Demographics should be discussed as well, but I leave my considerations on this issue for a future post.