Opportunities in the Japanese wine market

Japan is by far the second biggest wine market in Asia behind mainland China. The International Wine and Spirit Record (IWSR) reports that 39.5 million cases of wine were sold in Japan in 2016, compared to 157 million cases in mainland China and 3.8 million cases in third-placed Hong Kong.

After growing by 6 per cent per annum between 2007 and 2015, wine sales in Japan declined by 4 per cent in 2016. The IWSR expects the market to be flat over the next five years (see figure 1).

The Japanese economy is impacting on the drinks market, including wine. Wages are stagnant but living costs continue to rise, placing downward pressure on wine consumption. Furthermore, Japan’s population is shrinking from its peak in 2008 and is rapidly ageing. The on-trade market remains weak and wine faces increasing pressure from other categories, particularly RTDs.

Figure 1: Japan wine market historical and forecast (million 9 litre cases)

Source: IWSR

Future predictions for imported wines to Japan

Imported wines account for 71 per cent of the Japanese wine market. Australia, with 1.2 million cases sold, ranks sixth behind Chile, France, Italy, Spain and the USA. All but Chile recorded a decline in sales in 2016.

The positive news is that the IWSR expects Australia to be one of the few imported wine countries to increase sales in Japan over the next five years, predicting a growth rate of 2 per cent per annum through to 2021. A key factor is the Japan–Australia Economic Partnership Agreement, which saw the tariff on bulk wine immediately removed, with the tariff on bottled wine to reduce to zero by 2022. This will make Australian wines more competitive.

The IWSR predicts that Australian sales will grow at 4 per cent per annum in the premium to super premium segments (¥1000–¥3000 per bottle, which roughly equates to A$5–A$30 per litre FOB). Australia currently holds a 4 per cent share of this market; if the growth predictions are realised, this will grow to 5 per cent.

Changing wine opinions

Wine Australia Head of Market Asia Pacific Hiro Tejima said anecdotally, one of the most exciting elements of what is occurring in Japan is the changing opinions about what is fine wine.

‘The notion in Japan’s wine society for a long time about fine wine was limited to the Grand Crus of Burgundy and Bordeaux, Super Tuscans and iconic Californian wines. This is now changing, with younger and more open-minded sommeliers shaping fresh opinions about wine, Australia included.’

Wine Australia has been responding to – and in some instances, leading – this generational change through key initiatives such as the recent ‘New Australia’ master class with Kenichi Ohashi MW, and the annual Australian Wine Grand Tasting, held yesterday (4 September) at the prestigious Grand Hyatt Tokyo in the heart of Roppongi.

The biggest Australian wine category event in Japan for over a decade, the Australian Wine Grand Tasting is more than a tasting; it is an opportunity to expose the visitors to not only the styles and quality of our wine but also to educate them about the people behind the label and the Australian history and culture.

For more information contact Wine Australia’s Asia Pacific marketing team at asia@wineaustralia.com