In early June, the Scotch Whisky Association announced that Great Britain and Japan governments had begun negotiations on a free trade agreement between the UK and Japan.
Ian McKendrick, international director at the SWA, didn’t hide his satisfaction with the negotiations:
Japan is a top-ten market for Scotch Whisky, with consumers who understand the rich heritage and quality of Scotland’s national drink. Exports of Scotch Whisky to Japan were worth £147m in 2019, and we hope that the UK-Japan FTA negotiations will help to further develop the market in the years ahead – he said in a announcement published by SWA.
Over the past decade, Japanese whisky has grown from a niche product to one of the most desirable exclusive spirits in the world.
Much of the growing demand is fueled by American and European consumers who are seduced by the mysticism of Japanese culture and are willing to pay a very high price for the fruits of the labour of Japanese producers. According to the Distilled Spirits Council, last year the value of import of spirits from Japan to the USA was over USD 40 million, while in 2014 it was only USD 6 million.
However, there is a disturbing truth behind this "boom". There has been many voices stating, that Japanese whisky does not only have to be produced in Japan, but it does not even have to be whisky, in the sense to which its admirers are accustomed.
Unlike most whisky producing countries, Japan has very few rules on what constitutes whisky, let alone what makes it Japanese. Companies can buy spirits from abroad in bulk, bottle and label them as "Japanese whisky". Some Japanese "distilleries" don't even have their own alembics - they import ready-made whisky, most often from Scotland and Canada, and outsource bottling as Japanese. It is estimated that around two-thirds of Japanese producers do not have distillation equipment.
This is a potential PR disaster for the Japanese whisky market, because disappointed connoisseurs can turn their backs on it as fast as they began to cling to it. Many producers and personalities from the Japanese whisky world are trying to prevent such a situation and call for increased regulation as soon as possible, but also many use this situation to their advantage.
The Japan’s very loose approach to whisky regulations results from, at least in part, the history of this drink in The Land of the Cherry Blossom.
The history of whisky in Japan dates back to the mid-nineteenth century, but domestic distillers instead of barley, corn or rye often used sweet potatoes to produce it, beacuse there were more of them there. At the time, nobody thought about any regulations or definitions, because the goods were intended for domestic consumption only. The first modern Japanese whisky distilleries were opened only in the 1920s. Even though Scottish distilleries were a model for them and they often produced high quality alcohols, not many steps were taken to change the general nature of Japanese whisky, directed to the domestic customer as a daily drink to have after a hard day of work.
Japanese government introduced formal definitions of domestic whisky in 1989, but by then the industry was dominated by several large distilleries that wanted to keep loose rules. The result was provisions stipulating that whisky sold on the domestic market after 1989 had to contain at least 10 percent of aged malt whisky - the rest may have been non-aged alcohol, most often made from imported molasses.
International interest in Japanese whisky began to grow at the beginning of the 21st century, when premium brands such as Hibiki and Yamazaki won global recognition. But distillers did not have enough of fully matured product to meet demand, which caused many well-known and novice brands to buy alcohol wholesale from abroad.
The Japanese whisky industry is very non-transparent, so it's difficult to even determine which brands use foreign whisky for production. However, one can notice the dynamically growing export of Scotch and Canadian whisky to Japan in recent years, while the retail sale of whisky from these countries remains stable. According to SWA data, grain whisky exports, most often used for the production of blended whisky, increased by 141% in 2017-2018. Meanwhile, there is no comparable increase in bottled Scotch whisky sales on the Japanese market. According to the analyst IWSR, Japan imported about 70% more of Canadian whisky in 2017 than four years ago. In the same period, retail sales of bottled Canadian whisky in Japan were stagnant.
The conclusion that comes from this fact is unambiguous - most imported distillates go to Japanese producers and in retail trade they are already marked as Japanese whisky.
It often happens that brands offer whisky with an indication of age older than the distillery itself, for example there is an 18-year-old Kurayoshi, but the distillery opened only in 2017.
On the other hand, there are companies on the Japanese market that are very open about the origin of their whisky. There are brands made one hundred percent in Japan, such as Yamazaki, but also ones that directly inform the consumer that the whisky comes not only from The Land of the Cherry Blossom.
One of the brands that openly informs about its sources is Nikka, which owns the Scotish distillery Ben Nevis. Nikka explicitly says that high demand combined with insufficient production forces the company to use "a small amount of whisky from abroad". The manufacturer tries to soften the tone of this uncomfortable fact, explaining that the addition of Scotch whisky is the key element of the taste profile of Nikka whisky, which is strongly based on Scottish traditions. In addition, unlike the Scottish market, in Japan there is no custom of exchanging casks with other producers in the country, so to achieve their vision they need to look for whisky with specific flavour profiles abroad. More and more producers mark their whisky as "world blend", which means a combination of imported and domestic distillates.
- Regardless of the efforts of some producers, the Japanese whisky market must be regulated very quickly if it wants to maintain its popularity and reputation. The strength of Scotch whisky is, among other things, very meticulous control by SWA, thanks to which consumers and collectors always know that they are buying a product of a certain quality and tradition - says Krzysztof Maruszewski, the CEO of Stilnovisti. - Connoisseurs who have praised Japanese whisky in recent years precisely because of the alleged craftsmanship of Japanese producers and high-quality ingredients can be very disappointed by the fact that the drinks they desire do not even come from Japan. This could be the beginning of the end of popularity of Japanese whisky, which will lose all its domestic producers - those crystal-honest and those less transparent - adds the CEO of Stilnovisti.
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