Why you won’t get rich exporting sake – part 4

by | Apr 29, 2018 | Sake News from Japan

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Here’s the final instalment on Isseki Nagae’s long and fascinating blog post about why you won’t get rich exporting sake on Blogos (if you missed them, you can go back to part 1, part 2 and part 3).

After pointing out that half of sake production costs are taken up by bottling and the other half by rice, and asking where you think you can make cost savings there, Nagae moves on to some more graphs.

You need about 1.2 kg to 1.5 kg of grapes to make about 720 ml of wine. It takes about 0.77 kg of polished rice to make a 1.8 L bottle of sake, so the same 720 ml requires about 0.3 kg of milled rice. But not any old table rice, sake-specific rice with its larger grains and taller plants that are more difficult and therefore more expensive to grow. But this is also milled rice, so taking into account the part that is milled away, it’s even more expensive.

And if you want to produce more sake, you need more sake-specific rice. Which is when you run in to a whole other set of problems – the ageing workforce in Japanese agriculture. Nagae describes farmers as almost extinct. He presents another table, this one showing a collapse in rice production from 405,000 tons in Heisei 10 (1998) to 248,000 tons in Heisei 26 (2014), with sake-specific rice going from 99,000 to 90,000 tons. The biggest drop is in table rice, while rice grown for livestock feed is increasing. (There are government subsidies at play here, which are due to be phased out, and there may also have been some land converted to growing rice for livestock feed after the Great East Japan Earthquake in 2011.)

And this is why, according to Nagae, many of the big breweries are already producing overseas. Another table from the Development Bank of Japan report shows major locations around the world – outside of Japan – producing sake. In the USA, Gekkeikan, Ozeki, Sho Chiku Bai (Takara), Yaegaki and SakeOne (Momokawa), Canada’s Artisan Sake Maker (Osake), Lotte in Korea, six breweries in China including Sho Chiku Bai, Ozeki and Hakushika, and one each in Taiwan, Vietnam, Australia and Brazil. The table is presumably from 2013, so there’s definitely more by now. Which is why, Nagae points out, all you get abroad is inferior products from the big breweries – they’re made closer to the drinker than Japan.

Nagae says he thinks sake made by small breweries should be priced higher. The issue is then that it seems expensive when compared to wine or shōchū, which are cheaper to produce. If the price goes too high, people will switch to beer, shōchū, or whisky. And while you can lay down wine or whisky that doesn’t sell, that’s not an option for sake. (Well, not really.) So raising the price isn’t without risk.

All this means that sake drinkers are getting a good deal, Nagae points out, like the absurdly cheap tendon (tempura on rice) at Imoya (a tempura version of a fast food chain found all over Japan). Producers don’t even set their prices based on their cost of production. Everyone is doing it for love, from the wholesalers through to the retailers. No wonder no young people want to carry on the traditions. If you love it, you’d better show your support by carrying on drinking it.

Small-scale production, meagre profits, no way to make real money – that’s why so many small breweries are just scraping by, in the red. If they want to export, they have to increase production. They have to decide on how much they’ll produce and bring in enough rice. But the risk if they can’t sell it all is just too high, no-one would try it. Imoya can do it because they’re a national chain, but a small local brewery is very far from that.

Nagae’s parting shot is that you can only drink the real thing in Japan, so the better strategy (to promote sake, not to get rich) is to work on increasing inbound tourism. He’s heard that’s why many wealthy Chinese come to visit. As for the original questioner… it’s good to have dreams, but do a little research first.

 

 

Wow. That was a fantastic article and I now have many tabs open with more things to read and follow… but it really does underscore two things for me. One, a warning gratefully received by someone who has been in the game far far longer than I have (I only got interested in sake around late 2016) is that no-one seems to actually make money from it. It’s all done for love, or for favours, and basically think very carefully about giving up your day job.

The other is how far export – especially by the small breweries producing with so much care and attention but also manual labour – can go. Yes, exports are increasing, but what kind of market is there for sake abroad? Is it developed enough for these small breweries with necessarily expensive products to break in, and to sell enough to make it worthwhile – if they can produce enough? The Goto/Benten brewery we visited in November 2017 don’t export because all their production is snapped up locally or by restaurants in other prefectures.

So, not saying there’s no future for it (and I’m carrying on trying to develop a sake education kit and spread the word about it) but very far from the “sake boom” that gets so much coverage elsewhere. Lots of food for thought.

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