Karuizawa: a brand history

Japanese whisky distillery Karuizawa is spearheading the upper echelons of the secondary whisky market – Tom Bruce-Gardyne tells its story.

The distillery lies at the foot of Mount Asama

The stills of this boutique distillery at the foot of Mount Asama, Japan’s most active volcano, have been silent since 2000. Yet a decade after Asama’s last eruption in 2004, the whisky, or rather old, single cask expressions of it, hit the secondary market with similar volcanic force. Tracking this sector, Rare Whisky 101 reported a “staggering rise” in the value of Japanese whisky last year, with its so-called ‘Karuizawa Index’ up 75% in nine months.

Marcin Miller, whisky guru, PR man and now Japanese gin distiller, was Karuizawa’s agent. “There was a frenzy around 2014 at the Whisky Exchange where people had to email in, and they’d pull your email out of a hat, so you could have a chance to buy one of the bottles,” he recalls. “It just became ludicrous.” The year before, Miller and David Croll – his partner in The Number One Drinks Company – released 41 bottles from a cask dating back to 1960.

Split between key distributors, “no-one got very much,” he said, adding “the retail price was £12,500 and we could have asked for a lot more, as I think it was the oldest Japanese whisky ever released and was in beautifully-designed bottles.”

How much more became clear when a bottle sold at Bonhams in Hong Kong for HK$918,750 (£77,250) last August. Even when you’ve deducted those auctioneer premiums, whereby the buyer and seller are milked at both ends, that’s quite a jump. But “once it got crazy, I got fed up with it,” says Miller. “I don’t like the idea of people just flipping bottles, where you queue up at a show to buy a bottle for a couple of hundred quid, and sell it the next day for three times as much. It’s a bit grubby and sordid.” No longer involved, Miller is unsure what stocks are left, and says: “Everything’s been bottled and sold, and what’s still in cask has been reserved.”

Studying Scotland

In 1955 drinks firm Daikoku-Budoshu decided to build a distillery beside its vineyards near the resort town of Karuizawa. “Their ambition was to create a proper whisky using Scotland as a template,” Miller explains. “Obviously after the Second World War getting hold of Scotch whisky was hard.” Discerning drinkers wanted the ‘real thing’, and not some ersatz whisky from a Japanese laboratory.

The Macallan may have been the inspiration, at least in terms of grain and wood, with Golden Promise barley shipped in from Britain and Sherry casks from Spain. Although, with its twin pair of 4,000-litre stills, Karuizawa was tiny compared to the famous Scotch distillery, and at 850 metres up with Mt Asama rumbling away in the background, its surroundings were not exactly Speyide.

“The most amazing thing about Karuizawa is that it ages so beautifully,” says Miller. “It retains its high strength and everything’s so concentrated, and that’s because of the specific atmospheric conditions. The average temperature is about 10°C while the humidity’s about 80%, so every two or three days it would be misty.”

In 1962 Karuizawa’s owners were absorbed into what became the Mercian Corporation, producers of the popular Chateau Mercian wine, while the distillery continued supplying malt for Japanese blends. Miller flew there for the first time in 1999 as a Japanese whisky virgin, since exports were still pretty rare.

With the country’s economic slump and lower tariffs on imported Scotch, brought in during the Thatcher era, Japan’s whisky distilleries had begun closing. In 2000 it was the turn of Hanyu and Karuizawa, with the former dismantled in 2004, and the latter more-or-less silent ever since. Ichiro Akuto, the man behind the new Chichibu distillery and grandson of Hanyu’s founder, did a couple of runs in 2006, the year before Mercian was bought by the Kirin Brewing Company. That was the last time Karuizawa was active, according to Miller.

True taste

It was in 2009 that he really fell under its spell. “My partner and I tasted 69 cask samples at the distillery and I would have bottled all but maybe one of them. They were all pretty different, but the quality was uniformly amazing.” Realising for the first time that Karuizawa had stopped distilling, the pair offered to buy it. “This was immediately rebuffed,” says Miller, “but being the East European spiv that I am, I counter-offered to say we’d buy the entire inventory.”

“In the early days,” he continues, “Dave and I came in as massive fanatics of the whisky. We looked at the purchase price and added a bit of margin.” At around £80, early bottles from the 1980s were almost bargain basement, but if that encouraged consumption so much the better. As whisky writer, Ian Buxton, put it – “that’s what those few billion yeast cells died for”. Needless to say, once it became clear just how finite stocks were, prices began to rise steeply, but mostly “somewhere further down the chain,” says Miller with a rueful laugh.

He likens the distillery to Diageo’s Port Ellen on Islay which shut in 1993, reasoning that the standard bottlings of both were never all that exciting – one reason their owners closed them. Older casks of Port Ellen might suggest Diageo made a mistake. Similarly “when you open Karuizawa from the 1980s that has been lying in magnificent Sherry butts for thirty years, they’ve taken on such complexity and richness,” says Miller. “You wonder are they very slow maturing? Do they work in a very different time scale? That’s the way I look at it.”

Miller mentions that someone may have bought Karuizawa’s stills, while someone else may be building another distillery on the site, but he sounds perhaps deliberately vague. There are rumours of four or five new whisky distilleries, but he doubts there will ever be anything quite like Karuizawa. “I think there’s a thirst for premium Japanese spirits, but I don’t think people are necessarily going to hang around waiting for whiskies to mature.” That’s one reason he’s now dreaming of Japanese gin.

Click through the following pages to see the timeline of Kazuizawa’s brand history.