two stories about the shortage of japanese whisky

[Ken Gargett]

The Story of How Japanese Whisky Almost Disappeared from America

Contributed by Nino PadovaPosted on Mar 28, 2019

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(illustration: Headexplodie)

Last spring, when Suntory announced it would stop making two of its most beloved products, Hakushu 12 Year and Hibiki 17 Year, Japanese whisky fans around the world let out a discontented sigh.

I went shopping.

I marched into my local liquor store and laid down a tidy sum on a bottle of each. Yes, I paid above the suggested retail price but nothing near the sticker shock I was witnessing on the secondary market, where an empty bottle of aged Hibiki can fetch $100.

A week later, I went back to the shop and saw that the bottles had been marked up 100 percent. I returned again the following week, and there they were, jacked up yet another 50 percent. Stunned, I questioned the shop owner, a soft-spoken man in his mid-40s who keeps a photo of his infant sons behind the counter. “Everyone keeps asking for them,” he told me, almost apologetically. “I need to make my inventory last. Every time I sell a bottle, I increase the price. But it doesn’t matter. People still buy it.”

In less than a decade, Japanese whisky has gone from total obscurity to mild curiosity to arguably the most sought after spirit on the planet. Since 2013, exports have grown by nearly tenfold, igniting a global feeding frenzy on what’s proved to be an increasingly dwindling supply. Today, aged single malts and premium blends from the country’s two largest producers, Nikka and Suntory, are strictly allocated—or worse, discontinued. Prices have skyrocketed, with the rarest bottles attracting record amounts at auction. Demand is, as one Suntory executive put it, “excessive.”

Low Stocks, High Demand

“It’s gotten to the point where we’ve had to hide our whisky,” says Khaled Dajani, the owner of San Francisco’s Nihon Whisky Lounge, one of the first places in the U.S. to feature Japanese whisky when the bar opened in 2005. Back then, bottles of Yamazaki were displayed prominently behind the bar as a way to promote the unknown brand to a drinking public just turning on to brown spirits.

“Most people had never heard of Yamazaki; they had no idea what it was or whether it was any good,” says Dajani. “Now, they come in off the street demanding it. I’ve actually had to tell my staff to downplay our Japanese whisky, at least until the supply returns to normal.”

Exactly when that will be is a touchy topic for whisky watchers. In 2016, Suntory’s CEO, Takeshi Niinami, said it would take 10 years for his company’s stocks to recover. Not cheerful news for anyone holding out for a bottle aged for 12, 17 or 18 years.

Some have started calling the shortage a crisis. Just last month, Nikka announced that it was temporarily suspending its popular Coffey Grain and Malt whiskies for the Japanese market, two products that were introduced to help stem the demand for its discontinued aged single malts. In the meantime, Japanese whisky lovers are left watching the clock and asking: How did we get here?

The Silent Period

Brian Ashcraft, the author of “Japanese Whisky: The Ultimate Guide to the World’s Most Desirable Spirit,” traces the shortage back to the 1980s, when new liquor tax laws and an uptick in shochu consumption in Japan all but crippled the country’s thriving whisky business. At that time, he says, international sales were more or less nonexistent. “When Hibiki appeared in 2003, Japanese whisky wasn’t yet on the world radar,” says Ashcraft. “It was just some product Bill Murray’s character was doing ads for [in the movie “Lost in Translation”]. It wasn’t the global sensation that it is today.”

The mid-1980s kicked off what some in the industry refer to as the “silent period” of Japanese whisky, three-plus decades of year-over-year decline, punctuated by halts in production, plant closures and brand sell-offs. “Many employees were encouraged to take early retirement packages, and some were sent to other companies,” says Emiko Kaji, who manages international business development for Nikka.

A low point came in 2011, when the legendary Karuizawa distillery—once the second largest in Japan behind Suntory—shuttered after more than 50 years in operation. “The Karuizawa name was so strong that, even as the whisky business was hitting historic lows, shutting it down showed a tremendous lack of foresight and imagination,” says Ashcraft. (In a feel-good twist, some 300 casks were rescued from the distillery. Today, they are among the rarest and most expensive bottles of whisky sold at auction, commanding tens of thousands of dollars each.)

Even during the spirit’s darkest days, Japanese whisky had its champions. Suntory’s global brand ambassador, Mike Miyamoto, has worked for the company since 1978, formerly managing both its Yamazaki and Hakushu distilleries. “At a certain point, the decision was made to reduce production,” he says. “I was afraid of the impact this would have on long-term supply and felt strongly that our whisky would be enjoyed by a larger global audience in the future.”

Miyamoto says the decision led to an emotionally difficult period in his career, when many distillery workers, colleagues and friends of his lost their jobs. But he says he did what he could and worked hard to focus the rest of his team on the future. “It’s hard to say where we would be had we made more whisky in the early 2000s,” he says. “I like to think we’ve learned from the past.”

The Future Is Full of Whisky

To meet the soaring demand, Nikka and Suntory have made heavy investments in production, from new stills to storage facilities. At the same time, Japan is experiencing its own craft distilling boom. The country now has 23 operational whisky distilleries, more than twice the number that existed in 2011, with others ready to break ground. The ongoing joke is that Japan is swimming in whisky; it’s just that none of it is ready to drink yet.

But who’s to say we’ll still be thirsty once it is? Australia, India and Taiwan, not to mention powerhouses like Ireland, Scotland and the U.S., are all doubling down on whisk(e)y production. New expressions and styles come to market on an almost weekly basis, each one vying for precious real estate on crowded backbars and store shelves. Can the Hakushus and Hibikis of the world really afford a decade-long disappearing act?

“I think Japanese whisky will do what it’s always done: reinvent itself,” says Dajani. “If you look at how they make whisky, fusing together so many different elements and flavors, the capacity for experimentation is limitless. And so, too, is the potential.”

Dajani points to the new wave of no-age-statement Japanese whiskies currently sweeping the U.S. as a possible model for success. They include Hibiki Harmony, Suntory Toki and, most recently, Nikka From the Barrel. Some in the whisky community dismiss them as second-rate placeholders, sent here to keep us mollified until stocks mature. Others see them as the future.

In December, “Whisky Advocate” named Nikka From the Barrel 2018 Whisky of the Year, praised for its “depth of flavor,” “supple mouthfeel” and “long finish.” The blend, a mix of more than 100 whiskies, distilled and aged at different locations throughout Japan, costs a cool $65. Judges hailed it as a welcome addition to a category dominated by the ultra-rare and hyper-expensive, calling it “a consummate Japanese blend for anyone to enjoy.”

That night, I stopped into my local liquor store to pick up a bottle, but they were already sold out.

 

 

Is Japanese whisky a victim of its own success?

29th March, 2019 by Melita Kiely

Age-statement Japanese whiskies are being withdrawn due to stock shortages, putting pressure on retailers. But with consumer interest at an all-time high, could the category become a victim of its own success? The Spirits Business investigates.

*This feature was originally published in the January 2019 issue of The Spirits Business

It has been 15 years since Sukhinder Singh became enamoured by Japanese whisky. The co­founder of retailer The Whisky Exchange can be credited with introducing the UK to Japan’s now highly coveted spirit. “Suntory said, ‘we want to launch in the UK but we don’t really know what to do; we’d like your help because nobody really knows Japanese whisky’,” recalls Singh, who was “hugely impressed” by the offerings. At the time, there were only two expressions to launch: Hibiki 17 and Yamazaki 12. A miniature bottle was sent out with every order of any liquid from The Whisky Exchange – a highly uncommon marketing tactic for the time – with the promise of a discount if consumers liked what they tried and bought more.

“Within six months of promoting it on the website, we found one in every 10 orders had a bottle of Japanese whisky in it,” says Singh. “And that was just the two brands – no Nikka, that was it. We controlled Japanese whisky in the UK for a good three or four years, then they started bringing competition.” Little did he know Japanese whisky’s popularity was about to explode.

A PENCHANT FOR JAPANESE WHISKY

While Japan was preoccupied with Scotch single malts, the UK, other parts of Asia and Europe were developing a penchant for Japanese whisky. As the category’s success began to snowball, Suntory decided to expand its distribution footprint beyond The Whisky Exchange – “and rightly so”, says Singh. Japan’s attention also picked up and resulted in fresh favourability of the Highball cocktail. Kakubin was the whisky of choice, and “sales started growing insanely”, Singh adds. Yamazaki and Hakushu stocks were earmarked for Kakubin, putting pressure on single malts, which unfortunately were unable to keep up with demand.

Then the awards started rolling in. When author Jim Murray named no­-age-­statement (NAS) Yamazaki Single Malt Sherry Cask 2013 the “best whisky in the world” in his Whisky Bible 2015, while Scotch brands failed to make it into the top five, a consumer frenzy for Japanese whisky ensued. Year on year, the category continues to excel in blind tastings and is showered with awards, which Singh says “keep it in the limelight”, and its popularity is yet to dwindle.

So much so that brands have struggled to keep aged expressions available, and several have been discontinued. In 2015, Nikka decided to pull a number of its age-­statement whiskies. A letter to the company’s importers explained that stocks from its Yoichi and Miyagikyo distilleries were under pressure. A total of 14 products were delisted in all markets – including Japan – and comprised all single malt Yoichi and Miyagikyo whiskies, the Tsuru 17 Years Old ceramic bottle, Tsuru 17 Years Old glass decanter, G&G White, Black Nikka 8 Year Old and Malt Club. NAS expressions were brought in as replacements, but it will still be some time before mature stocks are ready for release.

“We still have restrictions of supply,” explains Emiko Kaji, Nikka Whisky international business development manager. “Although we are distilling at full capacity, we do not have enough whisky well matured yet. Most products are highly allocated in all markets. We do not have any tangible plan to reintroduce new age statements.”

Nikka pulled a number of its age statements in 2015

Last year, Suntory’s hand was also forced to call time on two of its aged whiskies because of supply constraints: Hibiki 17 Year Old and Hakushu 12 Year Old. From this year, the two variants will be withdrawn from certain markets, and overall availability will be limited over the next few years.

A spokesperson for Beam Suntory said at the time of the announcement: “As demand for our Japanese whisky portfolio continues to increase, Suntory has made strong investments to increase production capacity and ensure we are primed for continued long­-term growth and category leadership.”

Consequently, retailers and distributors alike are keenly feeling the strain on supplies – and it seems consumers truly do want what they can’t have.

“We had a significant rise in the number of people coming to us for these bottles and the sell price rose significantly overnight,” says Makiyo Masa, founder and director of online platform Dekantā. “There was an immediate impact on the price of these particular expressions, but there was also a rise in demand for other whiskies with an age statement. It is thought that other Japanese whiskies with age statements will also be discontinued in the near future, so they too have become highly collectible items.”

There are worse positions to be in than to have consumers the world over clambering to get their hands on your whisky. But as demand continues to outstrip supply, is Japanese whisky at risk of becoming a victim of its own success?

“I think what Japan is trying to do is to put more expressions into the market and to get people not only looking to drink aged stock,” says Dawn Davies MW, head buyer at UK trade supplier Speciality Drinks. “That’s the real problem: aged stock. I don’t think people are looking so much at age as they are at style; they want Japanese.

“So unless quality drops I don’t think it’s a case of the category being a victim. People are excited to see it, and as long as the liquid tastes good, consumers will be loyal.”

Excitement for Japanese whisky has seeped through to the on-­trade, with bars desperate to increase their offerings and entice fans into their venues. “We can’t keep up with them,” says Davies. “We have to ration out everything. We very much have to allocate everything because demand is so great – everyone wants Japanese whisky, but you’ve got to be loyal to the people who’ve always had it.”

It looks like there’ll be no slowdown in Japanese whisky’s popularity; with the Rugby World Cup set to take place in Japan this year, and the Olympics in 2020, the world will be watching what the country can do. Therefore quality has never been so paramount.

“There has never been greater dynamism in terms of whisky being distilled worldwide,” says Marcin Miller, founding partner of The Kyoto Distillery and Number One Drinks, known for its Karuizawa bottlings. “Unless Japanese whisky maintains a reputation for top quality liquid, there is a distinct danger that consumers will look elsewhere. Will promiscuous whisky consumers pay top dollar for Japanese NAS whisky or ‘Japanese whisky’ when there is a lot of positive noise about whiskies from Taiwan, India, New Zealand, Australia?” It’s a fair point to raise.

The limited edition Murasaki Geishas

TENUOUS LINK

By ‘Japanese whisky’, Miller is referring to the practice of whisky from outside of the country being imported, bottled and sold under the guise of ‘Japanese whisky’ when the liquid’s link to Japan is tenuous at best. It’s a problem that Speciality Drinks’ Davies says she has also encountered when approached by new brands looking to secure distribution. She envisions a backlash against such bottlings that aren’t Japanese as consumer knowledge grows.

Has Japanese whisky reached a point where a geographical indication (GI) is necessary to protect its reputation, then? There is consensus across the board. “It is extremely important because at the moment the regulations are so loose almost anything goes,” stresses Stefan Van Eycken, author of Japanese whisky book Whisky Rising. “The problem is, without regulations, we’re talking about ethics. I can’t tell you how many times I have had to tell people who asked me about a particular ‘Japanese whisky’ that they hadn’t seen before that it was maybe legally ‘Japanese’, but not in terms of actual contents and what most people would understand as being ‘Japanese’ – at least distilled and aged in Japan.”

However, he is doubtful this will come to fruition in the near future. “Too many producers have a vested interest in keeping their internal kitchen closed so, yes, I think a GI is desperately needed, but no, I don’t think it will happen any time soon.”

Miller is equally as keen to see a Japanese whisky GI status established to increase transparency in the category. “It’s extraordinary to hear neophytes extolling the virtues of some Japanese whisky or other when they’d turn their nose up at the same liquid if it was more appropriately packaged as a bottle of Scotch, Irish, American or Canadian whisky,” he says. “There is no problem with bottles of Japanese whisky containing other whiskies – the practice has a long and illustrious tradition – but it should be labelled and described as such to prevent consumer embarrassment.”

YOUNG WAVE OF PRODUCERS

Since the turn of the millennium, new Japanese whisky distilleries, such as Chichibu, have been joining the fold and garnering greater attention for the category, and an even younger wave of producers, such as peated malt whisky maker Akkeshi Distillery, is poised to provide more dynamism in the sector. With Japanese whisky in such fierce demand, additional stocks – provided quality prevails – will be welcome relief, not just for brands but distributors, retailers and consumers too.

“In 2017 and 2018, Japanese whisky was up there in my Christmas sales and there were a couple in the top­10 selling whiskies,” says Singh. “If I had more stock they would probably be in the top two positions. But my feeling is it will be another three to five years until age statements come back. For the next three years, I can see pressures will maintain.” Japanese whisky’s full potential is evidently still to be seen.

[Colt45]

I've tried a few Japanese whiskeys...

They're whiskey......

There's a pappy for every seat......

[Lotusguy]

I've tried a few Japanese whiskeys...
They're whiskey......
There's a pappy for every seat......

So true. Not a single one is worth the crazy prices being asked for them now. Don’t fall for the hype.

[Fuzz]

11 hours ago, Lotusguy said:

 

So true. Not a single one is worth the crazy prices being asked for them now. Don’t fall for the hype.

Some could say the same could be said about bourbon, wine, cigars, etc. Whatever floats your boat. To each their own. Different strokes for different folks. Whatever starts jerkin'your gherkin. <add in your own idiom>

[Ken Gargett]

Just now, Lotusguy said:

 

So true. Not a single one is worth the crazy prices being asked for them now. Don’t fall for the hype.

 

the prices are partly driven by hype, and the better examples are surely extremely good whiskies. but the main reason for the massive rises is simply shortages. if they had made more of the stuff way back when, we would not have seen this.

so people have to decide, as they do with any product that is extremely limited, do they pay the extra to try it or not. the prices are out of whack from a quality perspective but not a supply one - because there are plenty of people willing to pay. i try and pick up an occasional bargain but the expensive ones are simply out of my reach. i can live with that, although i would wish it were otherwise. 

been happening in the wine world for years. i love romanee-conti and think it the finest wine in the world. but a newly released bottle now pushes $20,000 plus. good vintages can go for multiples of that. worth it? up to the individual. i can't afford it and if i had that sort of dosh, as much as i love it, would probably buy alternatives that are nearly as good for a fraction of the price. but they only make tiny quantities so if i or anyone wants it, you pay through the nose. 

[Lotusguy]

Some could say the same could be said about bourbon, wine, cigars, etc. Whatever floats your boat. To each their own. Different strokes for different folks. Whatever starts jerkin'your gherkin.

Definitely. I don’t recommend buying Pappy or Cohiba Talisman either

[Ken Gargett]

Just now, Lotusguy said:

 

Definitely. I don’t recommend buying Pappy or Cohiba Talisman either

 

the Talisman is a cracking cigar. i don't have the resources to stock up, sadly, but i have no issue that those more fortunate in that dept do. if you can afford a great cigar, why not? 

[JohnS]

I'm chasing down reasonably-priced Nikka from the Barrel today. Curse those shortages!!!!!

[Sluffo]

On 3/31/2019 at 6:18 PM, Ken Gargett said:

Last spring, when Suntory announced it would stop making two of its most beloved products, Hakushu 12 Year and Hibiki 17 Year, Japanese whisky fans around the world let out a discontented sigh.

Strange.  Hakushu 12 has shown up at my local store four times in the last three months.  Same with Yamazaki 12 and 18.  Seems like they are starting to ship it a lot more frequently not less.

[ChanceSchmerr]

Just back from a 10 day visit to Japan (Kyoto and Tokyo).

I did a few whisky searches in both towns.  Prices continue to skyrocket.  In late 2017 I got a bottle of Hakushu 12 in Tokyo for ¥8000.  Now, it sells for ¥38000.  Yamazaki 12 sells for ¥18000-¥20000.

I did find a Nikka that I like - the Yoichi "Peaty and Salty" and "Sherried and Sweet" was available behind the counter at a Kyoto store, so I picked up one each of that.  Also found Nikka From the Barrel for ¥2380 at a grocery store, so that was an easy purchase.  And Akashi White Oak Cabernet Franc-finish (cask strength) Single Malt  from Shinjuku Isetan, after tasting it I was suitably impressed to pick up a bottle.  Lastly, the Yoichi NAS was ¥3700 at the Haneda airport Duty Free - probably the best price I've ever seen a Yoichi, so I picked it up too.

If you like Japanese whisky or want to try it without breaking the bank, steer clear of the skyrocketing Yamazaki, Hakushus and Hibikis (as good as they can *sometimes* be) - try the Akashi Single Malts (particularly the cask strength single casks), and the Nikka bottlings beyond the simple blends.  Nikka from the Barrel is a great place to start.  Also, be wary of other new "Japanese" distilleries - there is a lot whiskies out there from Japan that are actually a good portion of other world whiskies mixed in with a bit of Japanese, and not great on the palate.

Do your research, know what you're buying.  

[Lotusguy]

Yamazaki 12 is now $110+tax here

You’d have to be suffering from a serious case of FOMO to buy it...

[Sluffo]

Yamazaka and Hakushu 12 are both $99 here too.  Ahh, the good old days when it was "cheap".