State of sake in 2024

Published in June 2024, just as the brewing year was coming to an end, the NTA Osake no Shiori 2024 provides a reliable and thorough snapshot of the Japanese drinks industry at that point in time.

It starts with a rundown of the familiar threats: declining birthrate and ageing population creating a smaller domestic market, changing lifestyles including drinking less, diversification of preferences and price sensitivity. These led to a shakeup in the composition of drinks produced, with the quantity of beer declining sharply as cheaper beer-like (beer-lite?) happōshu and pre-mixed chūhai become more popular.

The amount of tax revenue generated from alcohol has been declining since FY1994, amounting to just JPY 1.2 trillion in FY2022, but it still considered an important contributor to the nation’s coffers due to its relative stability. Low-alcohol drinks (beer, happōshu, chūhai) account for about 2/3 of total alcohol tax revenue. 

Sake production is currently 410,000 kilolitres, less than 1/3 of the 1973 peak of 1.77 million kilolitres. Digging in to the statistics, there is less futsūshu but more junmai and junmai ginjō, and unit value is also increasing–reflecting more demand for higher value added products. Most sake producers are classed as small and medium enterprises (SMEs) but some are growing through product differentiation, added value and overseas expansion. The industry is also seeing entrants from other industries and investment of foreign capital.

Exports fell in 2023 relative to the record performance in 2022, with whiskey accounting for the highest export value (JPY 50.1 billion, down 10.6% from 2022), followed by sake (JPY 41.1 billion, down 13.5% from 2022). Top export destinations were China, USA and South Korea. The fall in the value of exports was attributed to global price increases, declining consumption in some countries, and prolonged inventory adjustment in the USA.

A downward trend in the number of licenses for alcohol production is seeing a reverse due to the growing popularity of domestic wine and other drinks. Doburoku was singled out along with liqueurs made from local products as being made under licenses granted subject to special exemptions to minimum production requirements, part of measures for structural reform in designated areas.

Value of sake exports 2014-2023 in units of JPY million, data from the National Tax Agency’s Osake no Shiori 2024.

The number of licenses for brewing sake (as opposed to the “other alcoholic beverages” license required for doburoku or craft sake) fell from 1,684 in 2012 to 1,536 in 2022.

Easing of supply-demand adjustments starting in 1998 has led to significant changes in alcohol retail, with traditional specialist drinks retailers disappearing as more supermarkets, convenience stores, home centres and drugstores starting selling drinks. 

The NTA identified exports to overseas markets as a key factor for growing the Japanese drinks industry, and is therefore focusing on four main areas (by taking the following actions): 

• compliance (ensuring companies producing and selling alcohol are licensed, revoking unused licenses, ensuring fair trading, preventing underage drinking, preventing alcohol-related health issues, promoting recycling, ensuring accurate labelling),
• developing overseas markets/promoting exports: Japanese drinks account for just 0.1% of the global drinks market and there are government targets of JPY 2 trillion in exports of agricultural/marine products by 2025, and JPY 3 trillion by 2030, so Japanese producers need to understand local distribution structure and restrictions in order to increase sales (supporting creation of new sales channels, increasing awareness of Japanese drinks, promoting sakagura tourism, product differentiation and creation of high added value products, utilising GIs, certifying industry associations under the Export Promotion Law, holding bilateral and international negotiations on elimination of tariffs and import restrictions),
• leveraging technology and securing human resources: ensuring knowledge transfer from toji and other experts who are ageing out of the workforce, creating attractive working environments to recruit new workers, and handling problems with business succession (ongoing technical support from NRIB and NTA, supporting NRIB research into raw materials, microorganisms and value creation, collaboration with industry, academia and the public)
• supporting SMEs: breweries and distilleries are embedded in the local economy, are potential tourist destinations and key to regional revitalisation (cooperating with industry associations, local government and the private sector, reducing alcohol tax for approved producers working to improve their business, supervision of brewing/distilling organisations)