"A hundred people must have told me it was impossible," said Sarah Cummings as we sipped sake in the stylish Kurabu restaurant in the village of Obuse.

Against the odds, she has turned part of an old sake brewery into a successful new restaurant, while managing to retain its special atmosphere.

The heart of Kurabu is its large open kitchen. When we visited on a busy Friday night, chefs in traditional happi jackets were darting about. Steam wafted from the old-fashioned kamado rice stove, and the fragrance of firewood mingled with food grilling before our eyes.

Obuse, about 30 minutes by car or train from Nagano, is well known for its chestnut delicacies and the Hokusai Museum. Near the museum is an attractive cluster of buildings, linked by courtyards and paths made of chestnut wood. This is a family business, the Obuse-do confectionery and Masuichi-Ichimura sake brewery.

The new Kurabu restaurant is in a large old kura (storehouse) adjoining the family residences. Unlike the average tourist spot, Kurabu is refreshingly authentic, and serves good Japanese food in a relaxed atmosphere.

Huge barrels, an inner garden and old photographs on the walls all hint at the interesting story I heard over dinner with 17th-generation president Tsugio Ichimura and managing director Cummings. While we ate bright green fern shoots in tofu dressing, sashimi dipped in sake, and a delicious warm scramble of eggs, bamboo shoots and tiny white fish, they told me about the brewery which started in 1755, and branched into sweets in the 19th century.

Although Obuse-do sweets had become famous, sake sales dwindled, and when Cummings joined six years ago the brewery was in danger of going under. Armed with a degree in international business from her native Pennsylvania, fluent in Japanese and blessed with a lot of energy, she set to work. "There was never a better time to do something drastic," she said.

"After the war, most sake brewers went for quantity rather than quality," she explained. "But it's scary when people all move in the same direction. So much can be lost. A lot of people say it's too expensive to save traditions, but I think the cost of losing them is much higher."

Her plan involved going back to basics, and saving old skills through fresh ideas.

Last year, the company launched a new product: Square One sake.

"I was surprised when Sarah chose a traditional ceramic bottle," Ichimura said, "but it appeals to young people. Since wine has become so popular it's really important to attract a new generation to sake."

With dinner we drank chilled sake, with the kind of natural fruity taste that wine drinkers enjoy. Its name, Hekiiken, brings the artist Hokusai into the story.

The 12th-generation head of the business, Takai Kozan, was a cultivated man and a fan of Hokusai's. When the artist fell on hard times he invited him to Obuse. He named Hokusai's studio Hekiiken, alluding to a Chinese poem about a river in spring. The original poem is written on noren curtains by the brewery gate.

"Sake is more than a product," Cummings said. "It's a culture." To help visitors enjoy this, she insisted on making many changes, such as revealing the private garden to diners in the restaurant.

As we talked, tasty new dishes arrived from the kitchen: charcoal-grilled chicken, fresh salad and a platter of abalone, mushrooms and young bamboo.

Glossy, modern refrigerators are built into the walls, but nothing is frozen. "If you can't get fresh produce in the country, where can you get it?" asked Cummings. "Fusion cooking is very fashionable now but we wanted to offer old-style Japanese food. It's a lot of hard work, but it's great to revive old family recipes."

Another American, John Morford, masterminded the design of the restaurant. When Cummings saw his interiors for the Shinjuku Park Hyatt Hotel, she flew straight out to Hong Kong to meet him. By contrast, when it came to recruiting staff the company avoided the big cities preferring to train local people. She said, "At first they were very shy about the open kitchen, but now I think they're quite proud to be here."

Restaurant manager Norikazu Suzuki agreed. "It's good to have direct contact with the customers," he said. "We can see what people enjoy."

The two massive barrels are highly significant. For the first time in 50 years the company is brewing in authentic cedar vats. Cummings, who is also a sake sommelier, said, "As far as I know we're the only company using them at the moment." The resulting Hakkin (White Gold) sake is limited to 2,000 bottles, and will go on sale National Sake Day, Oct. 1.

Masuichi's head brewer is 74 years old and has worked there for 50 years. During the busy winter months, young and old workers alike climb a steep wooden staircase to stay in cozy rooms above the brewery. "The old traditions are just surviving," said Cummings.

Visitors to the shop and bar on Obuse high street see a lively painting of sake workers by the doorway, including a young woman with blonde hair.

"This year our production has increased three-fold and the quality is still there. That's the Sarah effect!" said Ichimura with a smile. "Now we can see a future."

After a delicious chestnut ice cream, he took us out into the crisp night air to see a special view. It was an old brick chimney lit up beyond a silhouette of tiled roofs. Ichimura had been anxious that it might be damaged in a storm, but on a recent trip to Britain he realized that, happily, skilled bricklayers could still be found.

Such are the perils and pleasures of keeping tradition alive.