Japan: Japanese whisky sales starting to moderate after exploding in demand a decade ago

After exploding in demand a decade ago, Japanese whisky sales have started to moderate as more brands enter the market, according to retailers, The Spirits Business reported on October 10.

It’s been nearly 10 years since Suntory’s Yamazaki Sherry Cask 2013 took the top accolade in the Whisky Bible in 2015. Since then, demand has skyrocketed for Japanese whisky but producers have struggled to keep up due to production constraints. However, in recent years, brands have been able to increase production while newer players have joined the fold, alleviating the stress on the category and widening choice for consumers.

In July 2023, spirits retailer Amathus Drinks reported a 186% increase in Japanese spirits sales since 2019, however “growth in high-value Japanese whisky in the past year plateaued due to demand outstripping supply”. Amathus’ triple-digit growth was driven by House of Suntory’s centenary releases, which also boosted the brand owner’s 2023 full-year sales.

More recently, Japanese spirits retailer Dekantā has seen demand for Japanese whisky sit at a stable rate, according to operations director Liam Hiller. The online retailer has been able to fulfil demand as more brands and retailers of Japanese spirits come into the market, Hiller explains.

“We’re seeing sales tracking in line with last year compared with two years ago,” he says. “It’s definitely slightly down a bit. It’s not the same as it was during the boom. I think it’s going to level out a little bit. Demand is not where it was certainly three or four years ago, but it is still high. People are still really interested in Japanese whisky.

“One of the reasons that demand is not the same as it was a few years ago is [because] it became very, very popular, then as people get more used to a product in the market and more used to its availability, it becomes less desirable, I suppose. One of the things that made it so popular back then was the fact it was so hard to find.”

Some newer brands in the category include Diageo-backed Kanosuke and Fuji whisky, which entered the European market after partnering with Pernod Ricard. Kanosuke launched in the UK last month.

Hiller has also noticed more Japanese whiskies becoming available in the US, which is Dekantā’s biggest market, at 70% of total sales.

“Three or four years ago, you would get allocations going into the US maybe once or twice a year, but they would be really small allocations, and they would sell out really, really quickly. I was in New York six months ago, and the bottles are available on the shelves now almost year‐round,” he explains, citing the likes of “really popular bottles” such as Yamazaki 12 and 18.

Dawn Davies MW, head buyer for The Whisky Exchange and Speciality Drinks, notes the interest in Japanese whisky is “still strong”, and despite being dominated by several brands, the company has seen “good growth” as “more distilleries come online”.

However, she has seen demand “start to soften, so we don’t have to allocate stocks or control the flow of stock into the market like we used to. With new distilleries like Fuji and Kanosuke coming online, we are able to offer diversity to the customer, which has also helped soften the pressure on stocks.”

One of The Whisky Exchange’s best-sellers is Chichibu, while Nikka from the Barrel is “always a top seller, as is Hibiki Harmony and Yamazaki Distillers Edition”, Davies says.

She also expressed her excitement for sales of Kanosuke “as a new brand to the market”.

With price hikes on bottles across the category, both Hiller and Davies have also noticed a slowdown in Japanese whisky sales at auction.

“If you look at the old and rare market, for example, especially in Asia – like Karuizawa – the prices are down by up to 30%,” Hiller says, noting this is evident at auction houses such as Sotheby’s and Bonhams. “Other old and rare bottles are not commanding the prices they once were. People aren’t spending as much on it when they are buying it.”

Davies says it’s an industry-wide problem. “Flippers have dropped out of the market, as they are not making the same gains as they were before on whisky on the secondary market. While we are happy that people who are buying the liquid are actually drinking it, as opposed to just selling it on the secondary, it has hit the Japanese collectable market so volumes have very much slowed on these lines.”

Davies also notes that the demographic for Japanese whisky remains “very male-dominated, but we are seeing more and more women buying it”.

It’s a similar story at Dekantā, where Hiller has seen an increase in women buying Japanese spirits, representing around 35% of total customers.

Furthermore, he has seen the 18-to-24 age bracket grow to represent 15% of overall buyers, while drinkers aged between 25 and 35 have risen “significantly” and now make up 25% of total buyers. The other 60% is comprised of consumers aged 35 and above.

Davies said that while purchasing has slowed on Japanese whisky, the category is still seeing growth on last year, however the order value has dropped.

She also noted that consumers are exploring different categories, but this hasn’t had a huge impact on Japanese whisky’s popularity.

“I think people are much more experimental with what whisky they are drinking, and with the increase in countries producing whisky, people are diversifying what they are buying,” she explained.

“We are seeing whiskies from China and Korea coming online, for example, and people are happy to try them as there is still a fascination in the UK with all things Asian. Having said that, people are still very loyal to Japanese whisky; we see any masterclass we do at The Whisky Exchange Whisky Show sell out. People are still requesting Japanese whisky who have heard that it is popular and haven’t tried it.

“Japan has to up its game on recruitment of new customers and not rely on its reputation, as the market is definitely softening.”

Despite a slowdown in the market, the Luxury Brand Index 2023 (which tracks spirits priced at US$5o and above) from the Distilled Spirits Council of the US, showed that Japanese whisky grew its volumes by 30% last year in the States. It was one of only two spirit subcategories to post growth in 2023, alongside Tequila (up by 9%).

Between 2018 and 2023, the Luxury Brand Index revealed that Japanese whisky grew by 11% in volume.

10 October, 2024