Bourbon makers look to cash in on Japan's whiskey boom

by Ben Dooley


Japan is high on American whiskey, and Kentucky’s bourbon distillers are racing to the country, hoping to sell consumers on the merits of the iconic, corn-sweetened U.S. spirit.

Greg Davis, master distiller at high-end bourbon producer Maker’s Mark Distillery Inc., a subsidiary of Beam Inc., embarked in May on his first trip to Japan, thirsty for a taste of its burgeoning whiskey market.

U.S. whiskey exports to Japan have always been strong, but they recently entered a period of explosive growth, fueled by demand for the highball, a mix of whiskey and soda served over ice.

In the first quarter of 2013, Japanese imports of whiskey from the United States almost doubled over the same period in 2012, according to statistics compiled by the Japan Wines and Spirits Importers’ Association.

Bourbon, however, has not fared as well. As Tennessee whiskey — best known for Jack Daniels — and other American varieties fill up Japanese glasses, bourbon sales have evaporated 10 percent from 2011 to 2012.

Nevertheless, “it’s one of our faster growing markets,” said Davis, who planned on making the most of his time by “talking about bourbon with different consumers on the wholesale level, the retail level, the distributor level.”

Davis is only one of a number of so-called bourbon ambassadors who are increasingly blazing a trail from the United States to Japan.

“It’s a fantastic market. The culture there is respectful of high-quality whiskeys,” said Paul Hletko, master distiller at FEW Spirits LLC, who plans to travel to Japan this fall.

The company began distilling spirits just two years ago and jumped into the Japanese market this March, eager to take advantage of surging American whiskey sales.

Hoping to reverse that trend and court the country’s discerning customers, even companies that once passed over the market are now eager to woo Japanese consumers.

Super-premium bourbon maker Woodford Reserve, a product of Brown-Forman Corp., entered the Japanese market “a couple of months ago,” according to master distiller Chris Morris.

“Everybody says, ‘Oh, you all must sell a lot in Japan.’ We’ve never sold it there. We’re getting started,” said Morris, adding that Japan is a country where his product “will be appreciated and where people will pay a lot of money for it.”

The importance of the market is perhaps best represented by bourbon’s most famous ambassador, Leonardo DiCaprio, who was featured in a recent Japanese TV spot for Beam’s flagship bourbon, Jim Beam.

The advertisement shows the actor, who portrays the eponymous whiskey-peddling, prohibition-era bootlegger in the blockbuster “The Great Gatsby,” carving a ball of ice for a bourbon highball.

Eric Schuetzler, Beam’s director of product development for core spirits innovation and global expansion, said the advertisement is an attempt to get the brand “up to its fair share” of the Japanese market.

He said the ad was a statement of faith in bourbon’s ability to win over Japan.

“You’ll continue to see increased investment in that area,” he said. “We don’t usually like to throw bad money around.”

Bourbon sellers have good reason to be optimistic. Despite slow sales in Japan, bourbon has seen a resurgence in the United States, where the rising popularity of cocktails featuring bourbon has made the drink, once a blue collar staple, popular among trendy urbanites.

This popularity has had a drawback. Premium bourbons take a long time to produce. They are generally aged from four to seven years and thanks to the drink’s increased profile, many companies have maxed out their production capacity, running their facilities virtually 24 hours a day, seven days a week.

Several large distilleries have invested in new production lines as a long-term fix, but that still leaves them with short-term supply gaps. Maker’s Mark attempted to solve this problem by slightly diluting their product, lowering the whiskey’s alcohol content — known as its proof — by adding water.

The move was met with outrage from the brand’s customers, who felt the decision cheapened a product that had long emphasized quality. Production of the new bottles lasted a week before the company returned to the old formulation.

As a result, a glass of Maker’s Mark is harder to come by than ever. Even with the overall slump in Japanese bourbon sales, the company has had to put strict limits on its shipments to Japan, as well as other countries, according to Davis.

What happens if Japanese retailers sell out?

“For us, that’s a good problem to have,” said Davis with an apologetic shrug, but “that’s all they get.”

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