Nikka expands whisky production at Miyagikyo

Japanese whisky producer Nikka has expanded production at its Miyagikyo Distillery amid soaring demand for the group’s products.

Nikka’s Miyagikyo distillery is now operating at full capacity for the first time since the late 1990s

In September this year, Miyagikyo restarted production of four stills that had lay dormant since the late 1990s, bringing its total number of active stills to eight – four wash and four spirit stills.

The distillery was built in 1969 with four stills, adding another four in the 1970s. However, due to a decline in demand, production on the original four stills was suspended.

Nikka Whisky has struggled to meet soaring consumer demand for Japanese whisky in recent years, announcing in June 2015 that it had been forced to discontinue the majority of its age statements, delisting 14 of its products in all markets.

In a letter to its importers, Nikka said stocks from its two distilleries – Yoichi and Miyagikyo – had become strained.

Speaking to The Spirits Business last month, Sakuma Tadashi, chief blender for Nikka, said: “Last year, our sales grew so, so much and two years ago, I found that sales destroyed our stocks completely. Then we asked sales and marketing to stop aged products.”

Tadashi also said that while Nikka is trying to maximise capacity at its two existing distilleries, the group has no plans to open new sites.

Nikka’s products will remain on strict allocation globally for at least two-three years and the company will not seek to enter any new markets, predominantly focusing on the UK and US.

Emiko Kaji, international business development manager for Nikka’s parent company Asahi Breweries, forecasts that Nikka’s growth will be 2-5% in 2016, following unprecedented sales for the company in 2014 and 2015.

“We could seek more [new markets], but we know we shouldn’t,” she said. “It’s frustrating because we get a lot of calls from importers, but we need to focus on our priority markets.

“If we have healthy growth here, then we will grow in other markets in the future.”

Suntory Holdings’ CEO Takeshi Niinami recently told The Spirits Business that the Japanese whisky shortage could last for another 10 years.