Japanese whisky – an unsustainable success?

16th May, 2016 by Kristiane Sherry

Japan has established itself as a key player on the global whisky scene. But amid stock shortages and price hikes, could the category become a victim of its own success?

Suntory's Yamazaki distillery in Japan

Suntory’s Yamazaki distillery in Japan

**This feature was first published in the January 2016 edition of The Spirits Business

Tucked away in a nondescript building just a stone’s throw from the neo-classical, colonial grandeur of the National Museum of Singapore is The Auld Alliance whisky bar. Inside, rows upon rows of Scotch welcome whisky enthusiasts who flock to the venue from all corners of the city state and, indeed, Asia. But, festooned in the library-esque comfort of Chesterfield sofas and soft lighting, consumers are looking beyond Scotch and finding solace in one of the largest collections of Japanese whisky outside of Japan – including, temptingly, rare malt-of-the-moment, Karuizawa.

This picture is no longer unusual. For the past 15 years or so, Japanese producers have been quietly setting up whisky embassies of sorts in key markets around the globe. This, like an avalanche, slowly but surely built up momentum and today, the market is red hot.

From 2003 onwards, when Japanese whiskies began winning awards traditionally the territory of Scotch distillers, consumer and collector interest was piqued. Distributors across Scandinavia, France and the UK started to vie for the right to work with Japan’s finest distilleries. Rare releases started to regularly sell for eye-watering sums on the secondary market, boosting the category’s wider credentials at the same time. In October this year, a full 54-bottle range of Hanyu Playing Cards made it into the record books when it sold for HK$3,797,500 (£319,000) at a Bonhams Hong Kong auction. Retail prices are shooting skywards, too.

Stock ‘exhausted’

Such is the demand for aged stock that in June 2015, key supplier The Nikka Whisky Distilling Co., which owns, among others, the Yoichi and Miyagikyo distilleries, suddenly delisted 14 of its aged products in all markets with immediate effect.

“Following the Japanese whisky boom in foreign markets and due to the growing popularity in the domestic market, the sales of Nikka are growing very fast and stock levels of Yoichi and Miyagikyo malt whiskies are becoming very low,” the group said in a letter to its importers.

“With the current depletion, Yoichi and Miyagikyo and malt whiskies, which are the base of most of our products, will be exhausted in the future and we will be unable to continue the business.”

Does this then mean that the Japanese whisky category has overshot equilibrium, and now faces a battle to sustain its long-fought popularity?

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