Japan’s Wine Market and Opportunities

By Ken Ohashi MW / 13 Oct, 2022

Japan is a small wine producing country in the world wine map. Meanwhile, annual per capita wine consumption in Japan continues to be relatively low with no more than 3.3 litres (equivalent to 4.4 standard 750 ml bottles). However, it can be said that Japan is definitely one of the major consumers of fine wines in the world wine market. It is also known as the culinary capital of the world boasting the largest number of Michelin-starred restaurants in the world. And “Washoku”, otherwise known as traditional Japanese cuisine, was registered as an UNESCO Intangible Cultural Heritage. Now I would like to briefly explain the opportunities in Japan from several viewpoints related to wine.

1) Japan’s wine market
First of all, I’d like to unravel the domestic market of Japan as a wine consuming nation. As per Japan customs data, wine is one of the better performing alcoholic beverages even during the pandemic as of 2021. Wine imports remained in the 90% range by volume, compared to 2019 (in comparison with pre-Covid level). Despite a slight decline, wine consumption remains relatively firm compared to other alcoholic beverages in Japan.

In recent years, a trend has been seen in Japan’s market that the higher the price per bottle, the greater the year-over-year growth rate. Wines based on imported bulk wine in the category below USD 3.5 per bottle has significantly decreased by 20% compared to the previous year. By contrast, we have seen an increase of 20% in the segment of $20-35 per bottle, 29% in the category $35-70 per bottle and more than 30% in the segment of $70 per bottle.

Supermarkets is now the largest distribution channel segment, accounting for around 40% of overall wine sales by volume in Japan. While its market share is still not as large as in other countries, which also indicates that on-trade wine sales remains strong in Japan. The capital city Tokyo is filled with restaurants cost above $200 per person for one meal and there are many sushi restaurants command higher rate above $400 per person. Of course, a great many fine wines have been consumed through these channels. And nightclubs still boast tremendous champagne sales even during the pandemic.

Wines from traditional regions such as France, Italy and Spain, as well as Chilean wines with lower price and Californian wines have large market shares in Japan. On the other hand, the Japan Sommelier Association which is one of the leading forces in Japan’s wine market, has been providing wine education focusing equally on wines from different countries, which contributes to the rapid multinationalisation of Japan’s wine market. Although the recent depreciation of Japanese yen might act as a headwind for many wine exporters, I believe there are definitely great opportunities in Japan.

2) Japanese wine market
For those who are engaged in wine imports, it is worth to give attention to the trends of wine production in Japan. Japan has seen wineries boom with the number of wineries more than doubled to over 430 during last ten years, compared with ten years ago which’s only less than 200. Although many of them are small-scale garage wineries and currently Japanese wine accounts for only more than 5% of the total wine sales by volume in Japan, there have been scrambles among wine retailers and sommeliers for high-quality Japanese wines and quite a few Japanese wines are recognized as cult wines in domestic market.

The major wine producing regions in Japan are Yamanashi, Nagano, Hokkaido and Yamagata. Yamanashi Prefecture is located at the foot of Mt. Fuji and known for cultivating Japanese indigenous varieties Koshu and Muscat Bailey A; Nagano Prefecture, which is a former host of Winter Olympics, boasts impressive highland areas; Hokkaido, recently known for having attracted the investment from Montille family of Burgundy, is a region rarely influenced by rainy season (thus considered very suitable for organic farming). And Yamagata Prefecture in northern Japan is also known as the home to many renowned Japanese sake. Now many Japanese wines have achieved quality improvement significantly and quite a few are winning gold medals at international wine competitions.

Above, the current condition of Japan’s wine market was briefly explained. At last, I would like readers to envision various opportunities from your respective standpoints that might help you approach Japan in the future.