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Diamond Online has a very long interview with two Yūsukes – Yūsuke Satō, 8th head of the Aramasa brewery, and Yūsuke Asakura, author of a book on financial thinking in Japan.

They start by discussing Satō’s indirect route to taking over the Aramasa sake brewery. He was supposed to study commerce at university, but dropped out after a year and ended up studying English literature and eventually working as a freelance writer and editor.

Although he was the successor he had no intention of taking over the family business – he actually hated sake and thought it gave you a terrible hangover. It wasn’t until he was 31 and at a meeting of journalists, when he accepted a tokubetsu honjōzō from Isojiman in Shizuoka, that he realised he had been wrong to write off all sake. From then on he made a point of trying jizake [“local” sake produced by small breweries] and was impressed by the junmai ginjō Ōmachi from Kamoshibito Kuheiji in Aichi.

Asakura points out that although Aramasa has been releasing one novel and delicious sake after another since Satō joined, the business was actually in poor financial shape when he took it over. Satō confirms, noting that the sake industry has a high concentration of long-established companies. The license required for brewing means businesses are handed down from generation to generation over hundreds of years, making them resistant to change. The market is shrinking, the workforce is ageing and the entire industry tends to be conservative.

After developing this interest in sake, Satō asked his father to let him into the brewery. The family had no cash on hand, so his first action was to sell off the inventory they had built up over the course of about three years, a classic move in all the financial textbooks. Research during his writing career had given him some knowledge of additives and an inclination towards natural products without chemical or artificial additions, so he had already decided to pursue that approach when brewing sake. Which was unusual back when he took over, Asakura mentions.

Satō agrees, adding that even today over 60% of the total volume of sake produced is cheap futūshu diluted with brewing alcohol. If a business’ strategy is producing this kind of sake, it inevitably leads to producing greater volume in the face of price competition and eventually the company hits their limit. His family were producing the cheapest grade of sake, driving themselves deeper into the red and left with no cash in hand. They were chasing whatever money was in front of them, coming up with sales campaigns like buy one get one free, which continuously eroded their profits. If they’d carried on as they were, they wouldn’t have survived.

Satō also points out a strange thing about sake. For wine or beer, reducing production increases price. But for sake, reducing production also reduces price.

Asakura asks Satō where he started when he began changing things at the brewery, as there must have been so many issues in both production and sales. Satō’s priority was shifting production to relatively high-priced, value-added jizake centred on junmai. The brewery didn’t have the equipment or the skills to brew this kind of sake, so his first action was to run down their stocks, brewing almost nothing in the first year. That went against the grain, as breweries generally took volume sold as an indication of how well they’re doing.

When Asakura asks if he means litres sold, Satō replies that it isn’t even litres, it’s kokudaka. [A medieval valuation, where 1 koku is 180.39 litres of rice and total value is evaluated on that basis.] Asakura jokes that breweries are not even focusing on profit and loss, instead looking at this medieval measurement. He dubs it “kokudaka thinking” as a pun on his book “Financial Thinking”. Satō agrees, pointing out that breweries are thinking about their value as a feudal lord would have in the Warring States period.

Satō mentions that jizake has a positive “handmade” image as the vast majority of the companies are small, but that this is relatively new – it used to be that the bigger the kokudaka the better. Not only that, he recalls the previous kyubetsu seido (級別制度) system, where breweries would submit their sake to the government for classification by official tasters as tokkyū (特級, special class) or ikkyū (一級, first class) or not send it for classification and settle for the default nikyū (二級, second class). The National Tax Agency (NTA) set the price and almost no-one wanted anything but nikyū , so volume sold effectively equalled revenue. But that system is gone, replaced by the current tokutei meisho (特定名称) classifications in 1990, and breweries now set their own prices. So sales volume no longer equals sales revenue, but many breweries are still stuck in that mindset. Satō’s first challenge was to convince the rest of the company that they had to think about the business in terms of revenue and profit, not kokudaka.

When he took over at Aramasa, they were producing just under 6,000 koku. He brought it down to 2,000 koku but of junmaishu instead of futūshu, so the end result was higher revenue and profits. He stopped hiring seasonal workers and brewed medium to high quality sake with a small team while running down the stocks. He also brought in the brewing equipment they needed – just the bare minimum, as special equipment wouldn’t magically give them the ability to brew great sake. The company didn’t have the money for the equipment so he had to get a bank loan. Once that was in place, he decided to strike out in a different direction from other brewers by using only traditional techniques and rice from Akita Prefecture.

Asakura stops him to confirm that he was going beyond just making high-class sake and differentiating Aramasa from other brewers. Satō agrees. saying that his motivation was always to create something completely original, unlike the sake produced by any other brewery. Satō reviews the characteristics that have become synonymous with medium to high quality sake today: highly aromatic, fairly sweet, not much acidity, easy to drink. He points to Jūyondai as the label responsible for the style thanks to their aggressive move to take over the market, and Dassai, who succeeded in producing the style at scale and became synonymous with the best sake had to offer.

That was not the sake Aramasa was producing, or what Satō wanted to produce. The brewery had used yeast #6 for 90 years, ever since his ancestor Uhē Satō, the fifth owner, discovered it in the kura in 1930. He was focused not just on producing junmai but using Edo period kimoto starter. Even brewing in wooden barrels. His approach was completely different from mainstream modern production, and generated lots of flavour components, including acids. The result was not an easy-drinking sake but one with very strong and original characteristics that made a strong statement.

Asakura asks if he saw traditional production techniques as a way out from the industry’s decline. Satō replies that small breweries absolutely have to have this level of originality to survive. Eating and drinking habits are more diverse than ever, and Japanese consumers are now enjoying more acidic drinks such as wine, shaoxing or lemon sours. If you look back to the Edo period, sake and other food and drink were more acidic and had more of many other flavour components. But today, acidic sake is treated as faulty, and the astringency and bitterness that are so important for food pairing are treated as zatsumi (雑味, flavour defects). Even flavours that are prized in other types of alcohol are considered off flavours (negative flavours produced by deterioration of quality). This closed way of thinking, which is actually relatively new in sake evaluation, stuck in the post-war period. Satō wonders if it’s preference for ginjō gone too far. He has no problem with the industry having an ideal to aspire to, but objects to everything on the market being like that.

Asakura remarks that it was amazing that Satō saw all of that after returning to the brewery. Satō points out that he came back in his 30s, after working in another industry. He was a relative outsider who could see the problems clearly. He also had ideas about what kind of sake would be appreciated overseas. He avoided taking on any projects that would only benefit the brewery in the short term. He knew that if he focused on what was in front of him he would end up doing the same thing as every other brewery, and if he had done that Aramasa would not have the powerful fan base that supports it now.

This is a very long article, but a fascinating one with its focus on how the old classification system still affects the sake industry today. I’ll post it in four instalments.