Exploring the mysteries of the Japan wine market

In our recent feature Courting Japan's wine market, we gave you a summary of how New Zealand wine has been selling in Japan. Wine: Marker of Social change - a project, conducted by Tim Beal and Michel Rod of the School of Marketing and International Business at Victoria University Wellington and funded by Asia:NZ’s Big Issues Grant 2007 - has been exploring the background and perceptions in the Japanese market that can lead New Zealand winemakers to a better understanding of their Japanese consumers. Below Tim Beal offers some fascinating findings (including transcriptions of interviews) from fieldwork conducted in Japan in late 2008.

Japan poses a particular challenge for New Zealand winemakers.  It is our oldest and largest wine market in Asia.  On average, we get a higher price in Japan  than in other markets. Sales of our wine in Japan are edging up and in the first six months of 2008 volumes were up 15% on the previous year.  And yet.

And yet, there are other figures to consider.  Take our wine exports to Japan over the period 1999-2008. In 1999 Japan took 4.6% of our wine exports by volume, and 3.8% by value. By 2008 that had fallen to 0.6% and 0.9% respectively.  Is that bad? Not really, because New Zealand wine exports shot up over that period, over five-fold in dollar terms. By contrast our exports to Japan rose by half in terms of value, but dropped 1 quarter by volume. In other words, we sold less, but got more. Even so, our wine exports to Japan were very sluggish compared with other major markets.

We weren’t alone in that. Chile has had a rollercoaster ride. Excessive imports led to over-extended inventories and price slashing, which hurt Chile’s wine image. Lately they have bounded back in anticipation of the Japan-Chile FTA.  Other countries, including new Zealand, have had a more staid experience.Although alcohol consumption in Japan has gone up nearly five-fold since 1960, Japan remains a very small consumer of wine in per capita terms.  They consume 0.4 litres a year, a long way behind the world leaders, Portugal, where they drink, on average, 7.2 litres of wine a year.

Part of the problem is that although the Japanese like alcohol, and are the 13th largest consumer per capita in the world, there is a lot of competition in the market from sake, shochu, beer and other drinks. The Japanese population has now started to shrink and younger people are consuming less alcohol than their elders. Sake is making a comeback, playing on its connection with traditional Japanese culture.

The Japanese as alcohol consumers

Alcohol consumption in Japan now is stable but wine consumption nearly doubled over the last decade or so and is still going up.

However, much of the wine is domestically produced or bottled and the bottled wine imports, which is where New Zealand sits, have fallen slightly by volume  in recent years. New Zealand has a very small share of the market.  Our share by volume has hovered around 0.4% over the last three years while our share by value has inched up from 0.6% to 0.7%.  In 2008 we ranked number 10 in the wine import market by volume, and number 9 by value.

As a result we struggle very hard to get much profile in Japan outside those who have a personal interest in New Zealand; we met one wine buff who has been here nearly 30 times to watch rugby and got hooked on our wine in the process.  Those in the know, sommeliers, food and beverage managers, specialist wine merchants, and enthusiasts, tend to have a high opinion of new Zealand wine, but it is difficult to get the attention of the ordinary wine consumer. 

One shop we visited in Tokyo had its wine arranged, as is common, by regions, with signs in Japanese, English and the national flag.  From a distance we saw the words ‘New Zealand’, and the New Zealand flag but when we got closer we saw written in Japanese katakana osutoraria – yes, you guessed it.  And all the wines were Australian, with not a single one from New Zealand.

“I don’t think I remember seeing many New Zealand wines I’ve seen some Australian wines, say French, Italian there are many Californian wines and apart from that but not many New Zealand wines at all, no.  I mean we were students so we didn’t have much money we weren’t, we weren’t like going to the expensive stores we went to supermarkets and maybe that was one of the reasons.” (Akari KANO, Futaba MIZUNO - young female consumers)

“Actually the information for the New Zealand wine is not much I think, yes.  But for the wine specialist in Japan sommelier, wine adviser or wine importer, those people, including me, we understand the quality of the New Zealand wine.  Also the taste and most of the New Zealand wines, but still the information is not so much.”  (Tomonori IWAO - young male hotel food and beverage manager)

Who drinks wine and what do they drink?

The statistics show that the biggest wine drinkers are those between 30 and 39, and women more than men.  It is reported that 40% of women drink wine once a month, compared with 31% for men This was borne out by our observations. Not surprisingly, wine drinkers are concentrated in the cities while out in the countryside traditional alcohol holds sway.

“- Women, Japanese women like new trend, yes new trend, change lifestyle usually drink wine and champagne.  See like new trend.
- New ideas and new fashion?
- Yes.  New fashion in wine and champagne.Yes, I think maybe our customer are many women customers about 60% are women.”  (Takeshi ISHIGURO - young male restaurateur)

The Japanese market is a place of crazes and fads.  Some ten years back there was a plethora of articles extolling the health benefits of red wine. Sales shot up and then slowly subsided.  Recently there has been a fad for sparkling, especially among women.

One of the more curious drivers of the sales of specific wines in Japan is the manga (comic book) Kami no shzuku, or the ‘Drops of the Gods’.  This has a readership of 500,000 each week and when a particular wine is mentioned, sales skyrocket.  Until the next issue at least. Ata Rangi Pinot Noir 2001 got a mention early in the series but it is mainly French wines that feature.

In Japan, as in many other countries, France is wine and wine is French. Nearly 60% of bottled imports come from France. Next in popularity is Italy, and the reason for that is pizza and pasta.  Italian food is popular in Japan and people tend to think that Italian food, if it wants wine, demands Italian.   We came across just a couple of New Zealand-themed restaurants in Tokyo and one of them, Aotea Rangi in Ebisu, serves New Zealand wine, New Zealand ingredients such as mussels – cooked in the Italian style!

“- So you have New Zealand food and New Zealand wine?
- Yes.  Good marriage, New Zealand wine and food.
- But do you drink wine with Japanese food?
- Yes.  Japanese food good with Riesling.
- Riesling?
- Yes.  Now pinot gris, soft texture, just like sake, yes.  Soft texture wine goes with Japanese food. Yes.”  (Takeshi ISHIGURO -  young male restaurateur)

Cork vs. screwcap

“- For me, to buy non-cork wine means buying cheap wine. Corked wine seems more premium and made carefully. We are talking about screwcap and cork. Cork is expensive wine but screwcap is cheap.
- That’s your perception?
- Yes, yes.” (Yasuko YUMISAKI, Yumi FUJIWARA, Miki SHIMATANI, Maiko KUBO - young female consumers)

One of the interesting battles going on in the Japanese market is about screwcaps.  This great trans-Tasman invention is slowly gaining acceptance but mainly at the lower end of the market (where we tend not to be).  Many Japanese still think that cork means quality.  In order to counter this, Villa Maria has invented a special screwcap opening ceremony which it attempts to teach to sommeliers.

“- Cork.  I get bit disappointed if that is a screw caps for wine.
- So screw caps are disappointing?
- A bit disappointing yes…….. Yes screw cap and while it’s very convenient I still prefer the cork ones. If there were two bottles with one with cork and the other with screw cap I definitely prefer the cork……. Just the feeling, just the ritual, just the all these things that you have to do to open the wine I guess.  Just increases the value of drinking the wine I think for some reason.
I think so like when I was back in England well me and my friends, my friends from Europe mainly, used to choose wine by labels because we don’t know what they taste like and we’re students of course so we didn’t have much money and so we got all these nicely labelled colourful like with pretty pictures wines and we used to drink it.” (Akari KANO, Futaba MIZUNO - young female consumers)

Sommeliers are one of the keys to the restaurant market at least, and everyone tries to catch their attention. And there are a lot of them. It is said that there are more sommeliers in Japan than in France.

One reason for this is that the Japanese tend to take buying and consuming quite seriously.  Most of the people who do sommelier courses in Japan don’t actually work in the industry – they just want to know a lot about wine.

Even those who don’t have the energy to go to wine appreciation classes still want to know more about the wine than customers elsewhere.  And one way to catch their attention is to tell them a story about the wine and to link it, if possible, to the wine maker.

"- Yes, I think in Japan has wine schools more than New Zealand or even France so for the young generation means about 30s, late 20s to early 30s especially for the women they like to go to wine school to study about wine……… So you know in Japan they have lots of school through private arrangement through sommelier, so to become good housewife they have to study about that.  So some people wine is like that, is like tea ceremony or flower arrangement kind of titleholder to be a good housewife.  And all the kind of trend new things to study………. the Japanese loves to get the information before open the bottle. (Motoko ISHII - middle-aged female journalist/marketer)

The Japanese market presents challenges as well as opportunities for New Zealand wineries.  In the long term prospects for growth are good, but it will not be easy. It is a crowded marketplace where we suffer price disadvantages.  We will always be a niche player so the trick is to identify and exploit niches.  One of the best ways to do that is to tell our story to Japanese wine lovers in general but particularly to Japanese tourists and students. We need to give personality to our wine.

For more information, visit the project's website:

http://www.vuw.ac.nz/~caplabtb/wine_project_site

Photos courtesy of the researchers