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Japanese sake startup finds way to float in sinking industry

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Entrepreneur Nao Kohara sits at a table in his favorite neighborhood bar, checking emails on his laptop computer and sipping a glass of sake.

Some of his brightest business ideas have been hatched over a few drinks — including the concept behind his latest venture, a startup called Nihonshu Oendan (sake supporters). Despite the fact that, according to government statistics, sake shipments in 2016 were the lowest since 1955, Kohara’s fledgling company is flourishing.

Nihonshu Oendan, which incorporated in summer 2015, currently produces four brands of sake — Kakeya, Noto, Kunisaki and Ageo — and aims to expand its portfolio to include 30 labels over the next five to seven years. However, instead of brewing on their own premises, Nihonshu Oendan works with small makers scattered around Japan to craft original styles that express the terroir of each region. Kohara, who spent years living in the U.S. as a child and as a student at Stanford Business School, has effectively created the sake world’s first disruptive business model — a radical approach to production that has revived a nearly defunct brewery and is helping to foster a new generation of brewers.

The company started out as a passion project between Kohara and his friend, Masa Takeshita. Both were avid sake fans with a taste for muroka nama genshu — a typically robust style of unpasteurized and undiluted sake that has not undergone charcoal filtration. The two were so smitten with the drink that one night, after several glasses of sake, they decided to try making it themselves.

“I wanted to know what makes sake taste so different from place to place. I thought there must be something inherently Japanese about the connection between the land and craftsmanship,” Kohara recalls.

The only glitch was that they needed a place to brew. Kohara suggested carrying out the experiment at Takeshita Honten, the sake brewery that Masa Takeshita’s family had owned for 150 years in Kakeya — a tiny town with a population of 2,500 in Shimane Prefecture. The brewing facilities had lain largely dormant for the past decade, and Takeshita’s father was contemplating shuttering the business. The former master brewer, 79-year-old Mikio Ishitobi, had retired years before, but Kohara and Takeshita persuaded him — along with four retired brewery workers — to return for a season to teach them the basics of sake making.

Surmising that others shared their interest, the duo launched a crowd-funding campaign to raise money to brew a tank of muroka nama genshu. They called the initiative the We Love Sake project and rallied 120 volunteers, who signed up to help out in exchange for a few bottles of the final product. The group produced 3,000 bottles (2.1 kiloliters) and named the sake Kakeya, after the town where it was made. Nihonshu Oendan began selling the surplus online and discovered that the sake’s full but approachable flavor — combined with the compelling story behind the project’s inception — resonated with consumers.

The success of the venture inspired Kohara to turn his hobby into a business backed by angel investors. He began approaching breweries about collaborating. The plan was to export half of the sake to overseas markets, which have been growing steadily since the mid-2000s. Nihonshu Oendan would sell the other half directly to domestic restaurants and consumers through its online shop. The move eliminated the need to go through Japanese wholesalers and distributors, allowing the brewers to retain a larger cut of the profits.

Last year, Nihonshu Oendan enlisted Kazuma Shuzo, in Ishikawa Prefecture, to produce its second sake, and then quickly added Kayashima Shuzo and Bunraku Shuzo — in Oita and Saitama prefectures — to the roster. Meanwhile, the company ramped up production at Takeshita Honten to 60,000 bottles. For the first time in nearly 20 years, the brewery was operating at full capacity. By early 2017, Nihonshu Oendan had started exporting its sake to key markets abroad such as San Francisco, New York and Hong Kong. In late March, Tokyo department store Takashimaya began carrying the entire lineup, along with exclusive limited-edition bottles from each brewery.

Each of the company’s partner breweries creates one item specifically for Nihonshu Oendan, and the brews bear the name of their place of origin. In terms of production parameters, Kohara gives master brewers free range to develop styles that reflect the geography and food culture of the area. From the outset, however, he decided that Nihonshu Oendan would sell only junmai muroka nama genshu — unfiltered, unpasteurized and undiluted sake made without the addition of brewer’s alcohol.

Kohara has transitioned from his work in venture capital to act as the company’s CEO full time, while Takeshita has left his previous job to return to the family business. He has been training under a master brewer for the past two years and plans to take over the reins next season. Another Nihonshu Oendan employee is also learning to brew, and Kohara hopes that the project will encourage more young people to enter the industry.

“We are in this for the long haul,” Kohara says. Challenges remain ahead, but the future looks bright for Nihonshu Oendan. And that is a glimmer of hope for the entire sake world.

For more, visit welovesake.com. Nihonshu Oendan will hold a sake tasting party on April 13. Tickets available at passmarket.yahoo.co.jp/event/show/detail/01ew16yrtf9w.html#detail