Business

Japanese winemakers look to boost global brand as EU trade deal brings opportunities and challenges

by Noriyuki Suzuki

Kyodo

In Japan, Yamanashi is synonymous with wine.

As well as being famous for its spectacular views of Mount Fuji, the prefecture is the birthplace of domestic winemaking and it has become inextricably linked with the region’s reputation for high-quality produce.

His sights set on overseas markets, local industry figure Shigekazu Misawa has been exporting whites made with Koshu grapes in an endeavor to boost the variety’s image abroad.

With a free trade agreement between Japan and the European Union set to enter into force on Feb. 1, opportunities and challenges are expected to arise for the domestic wine industry.

“It’s true that more wines can be shipped to European markets, but the challenge is whether they can establish a reputation,” said Misawa, who knows firsthand what it takes to compete in overseas markets with deep-rooted wine cultures.

And Japanese winemakers are also in a struggle to win domestic market share at home, where imported wines hold a roughly 70 percent stranglehold over sales.

Japan hopes that the pact signed in July will help boost exports to the European Union, the world’s largest free trade area covering around 30 percent of the global economy. As part of the agreement, the 28-member regional bloc will start accepting wines produced according to Japanese standards, a major shift from the usually strict rules that govern winemaking, enforced on areas such as alcohol content and labeling.

Joining the list with Kobe beef and Yubari melons, Yamanashi is registered as a geographical indication, meaning it will be protected under the agreement. GIs are designed to ensure the quality and reputation of products associated with the place of their origin.

“I hope GI Yamanashi will become synonymous with quality and trust overseas. We are still far from Bourgogne and Chablis in France in this respect, but we need to aim for a higher goal,” said Misawa, who is the president of Chuo Budoshu Co., also known as Grace Wine.

Encompassing the northern side of Mount Fuji, Yamanashi Prefecture boasts around 80 wineries.

The GI Yamanashi label is limited to wines made in the prefecture from local grapes. About 1,600 wines have registered to use the GI mark, according to a local wine manufacturers’ association.

Local wineries launched a project in 2009 to export their wines to Europe and the first promotional campaign was held in 2010 in Britain, a vitally important wine market.

The number of bottled wines exported to the European Union stood at around 2,000 in 2010 but grew to around 20,000 in 2017.

The volume may be tiny compared to the number of wines coming into Japan from the EU but the popularity of Japanese cuisine, particularly sushi, has boosted the appeal of Koshu white wines that are said to pair well with raw fish.

But Misawa, the fourth president of his company, which was established in 1923, also thinks there is more work to be done at home.

Consumers will be more interested in European wines once the 15 percent tariff on them is scrapped, according to a survey conducted by Sapporo Breweries Ltd.

In the online survey targeting around 13,000 adults, a total of 56 percent said they expect to drink more European wine once the free trade deal takes effect, and local wineries are bracing for an influx of competing European products.

Imports of Chilean wine have been on the rise in recent years, accelerated by the 2007 entry into force of a bilateral free trade agreement with the South American country.

That growth, according to some industry watchers, has enriched the domestic wine market with diverse wine choices at affordable prices. The incrementally reduced tariff on Chilean wines will hit zero in April 2019.

Japan and the European Union expect their agreement to achieve high levels of trade liberalization and serve as a counter to a rise in protectionism as U.S. President Donald Trump pursues his “America First” agenda.

But the increasingly uncertain fate of Britain’s Brexit process is creating concerns.

The clock is ticking on Britain’s planned departure from the bloc in March, but fears remain about what a “no deal” exit will mean. British Prime Minister Theresa May has put off a parliamentary vote on her Brexit deal with the European Union until January.

“Depending on how Brexit goes, we may see more wines (in the Japanese market) from France, Italy, and Spain, especially if the pound depreciates and the cost of importing to Britain increases,” Misawa said.

“Chances are that the Japanese wine market becomes an appealing destination for wine sellers. That being the case, we need to make our GI-approved domestic wines more appealing at home as well.”

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