Being 95% consumed in its domestic market in 2021, according to IWSR Drinks Market Analysis, Japanese whisky is seeing investment in production capacity. The leading export markets for the spirit are the US, France, China, Taiwan and Australia, as the industry seeks to boost consumer awareness, with brand owners such as Kirin increasing investments in export opportunities.

While volumes in Japan were lower than usual in 2020 and 2021, Piotr Poznanski, research director at IWSR, says “export markets volume and value have been in growth since 2007 and are forecast to grow at a compound annual growth rate (CAGR) of 10% between 2022 and 2026 in both volume and value terms”. In Japan, the CAGR from 2022-2026 is forecast to be +2% in value terms and +4% in volume terms.

The big players

With this growth and increasing popularity of the category in western markets, Kirin is one Japanese whisky brand that has been looking to accelerate the category since it started exporting its Fuji whisky three years ago. Takashi Harada, category and brand manager at Kirin, says: “Japanese whisky export has been growing for 17 consecutive years. Due to the increasing popularity, there has been a 14-fold increase in the past 10 years. We are going to accelerate and focus on Fuji’s overseas exports – specifically, expand the number of countries, states and cities and expand the distribution, add new products on the current distribution and focus on the US and Europe.”

Whisky is one of Japan’s priority export items, as selected by the government, supported by public and private sectors in an effort to promote growth. Fuji currently exports to the US, China, Singapore, France and Australia but is looking to further this for future growth, much like other key Japanese whisky companies, such as House of Suntory. The category is continuing to see demand in wider markets. “The external environment is favourable for exporting whisky overseas, so we will take this as an opportunity and proceed with a sense of speed,” Harada adds.

However, with this demand, especially over the past 20 years, there is very little aged stock of Japanese single malts on the market. As evidenced by this year’s International Spirits Challenge results, the gold medals for Japanese whisky are dominated by single malts with no age statements, a result of this lack of stock in Japanese distilleries. “Japanese whiskies are now extremely popular around the world. However, we cannot control time and the maturation, so we’d like to just focus on making whisky as much as possible,” Harada says.

The country’s first and oldest malt whisky distillery, Yamazaki, is combating this and ushering in a new era of whisky-making in Japan with the release of two limited-edition expressions of its Yamazaki 12 and 18 Year Old single malt whiskies. Created as a nod to the future and to mark the 100th anniversary of House of Suntory, a statement provided to Drinks International says: “We’ve seen that Japanese whisky has really made its mark on the world, now rivalling that of the country that inspires it, Scotland. We’re looking forward to reopening the Yamazaki and Hakushu Distilleries, which have been closed for renovations following a 10bn JPY (US$77m) investment. This development will help us continue to lead the way when it comes to state-of-the-art facilities and production of Japanese whisky.

“This is a really exciting time for Japanese whisky and we’re expecting to see it continue to grow as an industry across the world. It’s already one of the fastest-growing categories outside of Japan, with sales more than doubling over the past five years. We expect to see more growth in other markets as people become invested in the cultural history and luxury that Japanese whisky represents.”

Whisky regulations

In February 2021, the release of a new set of regulations for the production of Japanese whisky came as a relief for the category. The Japan Spirits & Liqueurs Makers Association announced rules which stated that, to be labelled as “Japanese whisky”, the product must be made from malted barley, use local water and be fermented, distilled, aged and bottled in Japan (at a minimum of 40% abv), while also being aged in wooden casks for three years. Brands have a history of importing overseas whiskies for their blends to generate volumes due to a corporate competitiveness that has prevented distilleries from selling stocks to other domestic producers. The association says the new regulations will aim to “contribute to the appropriate selection of whisky products by consumers in Japan and abroad, and to thereby protect the interests of consumers, ensure fair competition and improve quality”.

House of Suntory says it is happy with the new regulations as they will “go some way in helping to preserve the quality of the Japanese whisky category”, the company’s statement adds. “We already take pride in ensuring our products are given the time and resources they need in production to ensure quality for our global customers. These regulations align with an ethos we already channel at Suntory as our products can only be made at each distillery’s location in Japan. Given this, we are working to expand production without compromising on quality.”

However, the regulations – which are voluntary, not law – won’t be enforced until the end of March next year, with Suntory Spirits and Beam Suntory among companies backing them. As seen with the heightened demand, resulting in booming prices alongside globally rising costs, there will still be a reliance on foreign whiskies.

The statement from House of Suntory concludes: “Japanese whisky has seen mammoth growth and is forecast to remain one of the fastest-growing categories outside of Japan over the next three years. Pushing this growth is the ongoing appreciation and respect for the craftsmanship that goes into producing Japanese whisky. Despite owing a lot to the Scottish whisky legacy, Japanese whisky has been able to carve its own identity and history throughout the years and it’s that sense of a culture, and dedicated master blenders, that have helped make Japanese whisky much adored around the world.”