Crossing the Pacific

What do consumers know, or think they know, about imported Japanese products? According to a number of sake and Japanese whisky experts, misconceptions about the category are plentiful and confusion is rampant.

Since retailers are the gatekeepers who often introduce consumers to sakes and Japanese whiskies for the first time (or at least the first time off-premise), it’s important to understand the misplaced assumptions about Japanese products when educating consumers – especially given rising sales numbers in the category.

Sales of sake were up 1.8 percent in 2013, rising from 1.90 million cases to 1.94 million according to Beverage Information & Insight Group data. Led by Takara Sake and Sidney Frank’s Gekkeikan, the category is showing continued growth off-premise after years of on-premise success (though that success was largely limited to Japanese bars and restaurants until recently).

Meanwhile, sales of Japanese whisky have risen more than 40 percent over the last year in the control states (the only markets for which data is available), led by Suntory’s Yamazaki and Hibiki brands. Hibiki alone has risen from 31,000 cases in 2012 to 112,000 in 2013. While admittedly a small sample size, both brands will undoubtedly receive increased marketing from the new Beam-Suntory.

 

Sake’s Long History

“The House of Gekkeikan was founded in 1637 by the Okura family and has been brewing sake over 14 generations, making it one of the oldest family-operated businesses in the world,” says Yoshi Yumoto, vice president of Gekkeikan at Sidney Frank.

Despite nearly 400 years of innovation, sake still faces hurdles to expanding in the U.S. “We have seven breweries in Japan and one in California, which allows the delivery of fresh sake to most of the world,” Yumoto says. “However, many people don’t realize that sake only has a shelf life of two years, much of which can be spent simply in the time it takes to export to America.”

The variety of sakes available on the market also allows the category to compete against much of the beverage alcohol industry. Gekkeikan’s portfolio, for example, includes 15 sakes and plum wines, including at least one offering in each of the four main sake categories.

“For more traditional sakes from Junmai, Ginjo and Daiginjo, wines would be a direct competition,” Yumoto says. “For the specialties such as Zipang (sparkling sake) it could be an alternative to Champagne and prosecco. Draft sake is a great substitute for beer occasions, and sake is a fantastic base for classic and contemporary cocktails, taking share from the spirits business as well.”

 

Retailers Go to School on Sake

“Education is an integral part of our strategy, and TY KU strives to ensure that retail partners are educated and informed on all aspects of sake,” says Davos Brands vice chairman Guillaume Cuvelier. “Our entire team is Level 1 Sake certified through our master sake sommelier, which allows us to train our wholesalers and retailers, as well as conduct consumer tastings.”

TY KU has supported its education program through POS items, social media marketing, and even sake educational classes to help retailers understand the category better. But it’s tasting and pairing sessions that help the company educate consumers.

“A majority of consumers have encountered sake at Japanese restaurants,” Cuvelier says. “They tend to associate it with a beverage that pairs only with sushi, but actually sake is a better pairing beverage than white wine for many foods since it contains a high amount of amino acids.”

SakeOne also created an online course geared toward distributor sales representatives to educate them on the sake category.

“Because sake is not well-understood in the U.S., much of our marketing efforts are geared toward sake education,” says CEO Steve Vuylsteke. “That includes our POS materials, website and social media pages.”

 

Process and Packaging

Unlike with beer, wine and craft spirits, even the most educated consumers often don’t know how sake is made. That lack of awareness has not been helped by product packaging, which often causes this information to literally get lost in translation (if it’s translated at all).

“When I founded Joto in 2005, I already had the experience of working in food and beverage for Brooklyn Brewery and Belvedere Vodka, and I’d also studied Japanese in college,” says Joto Sake president Henry Sidel. “I spent a lot of time researching and buying sake at retail because I wanted to create sakes with packaging that was accessible to consumers — something that was lacking at the time.”

Joto Sake takes the original Japanese labels on its sake and adjusts them for the American market, keeping the design but replacing the Japanese lettering with descriptions of the product and manufacturing process in English. Sidel says he makes it a point to put the brand name and type of sake on the front of the label.

“Our target consumer is a young, 21-35 year old, educated, craft-oriented consumer who drinks craft beer and spirits and fine wine,” Sidel says. “We’ve tried to make the packaging very truthful and demonstrate our passion for sake to the consumer, while also making it accessible to people who are new to the category.”

 

Hot and Cold Sake

There’s no single answer to whether sake should be consumed hot, warm or cold – often it depends on the type of sake and individual consumer preferences. However, one company is trying to make the serving temperature question as simple as possible.

“We have two types of sake, a Junmai called Hiro Red and a Junmai Ginjo called Hiro Blue,” says Carlos Arana, Hiro Sake’s co-founder and CEO. “We’ve found that most consumers drink chilled sake, so our Junmai has a blue label. For the small percentage of consumers who like sake warm, we also have the Junmai Ginjo with a red label.”

The differences in how a sake must be classified (i.e. Junmai vs. Ginjo) is partially determined by how much the rice is polished, much like whiskey types are determined by raw material make-up. The more the rice is polished, the more the outer shell is removed, leaving a grain that’s of a higher quality.

Arana says that the demand for consumer education is accompanying sake’s increased visibility in the U.S. market. “The category is experiencing a lot of growth, like what happened with tequila a few years ago,” he says. “When Mexican food became more popular, tequila took off; now there are Asian and Asian fusion restaurants everywhere, not just on the coasts, and so you see high growth rates in sake.”

 

Sake Questions Answered

Sake is often misunderstood by consumers, who aren’t sure how to classify it, what to pair it with (other than traditional Japanese food), or how to drink it. These are what sake brand managers see as the most common mistaken assumptions about the sake category.

 

“Many people think sake should be served hot, when in actuality most premium sakes should be served slightly chilled to experience the best flavors and aromas. People also equate sake to having an alcohol content closer to that of a spirit, when in reality the average is between 15.5 and 16.5 percent. Some even have a lower ABV.”

— Yoshi Yumoto, vice president, Gekkeikan Sake

 

“The percentage of the population who isn’t willing to try sake is increasingly small, while the number of people who are passionate about the category is increasing. Nine times out of ten when I walk into a wine shop in almost any market, the retailers are interested in the category and they’re reporting that customers are more interested – they all want to learn about sake.”

— Henry Sidel, president, Joto Sake

 

“There’s a movement in many places around lower calorie options, which should benefit sake. Our sake doesn’t have any additives, and it’s gluten free. There’s a lot of innovation and facts about the category that needs to be better communicated to retailers and consumers.”

— Carlos Arana, Co-founder and CEO, Hiro Sake

 

“Sake drinkers are generally experimental and cross over beverage alcohol categories. This is especially true with Millennials, who thrive on experimentation and authentic drinking experiences.”

— Steve Vuylsteke, CEO, SakeOne

 

“Sake plays a role in boosting a food’s “umami,” which is considered the fifth sense and contributes to the more savory elements in cuisine. This helps neutralize the unpleasant flavors in seafood, as well as gamey flavors in meats.”

— Guillaume Cuvelier, Vice Chairman, Davos Brands

 

 

Increased Interest in Japanese Whisky

 

Since Suntory’s acquisition of Beam Inc. was announced earlier this year, industry experts have speculated about the possibility of more Japanese whisky brands coming to the U.S. market. Beverage Dynamics spoke to Neyah White, Suntory’s U.S. Whisky Ambassador, to find out more about the newly-formed Beam-Suntory and what the company’s plans are for bringing new products stateside.

 

BD: Why has Suntory shied away from entering the U.S. in a large way before now?

 

NW: We’ve been making whisky in Japan for 91 years and it’s only recently that we’ve broken out into areas other than Japan. It wasn’t for lack of confidence – all the whisky was being consumed in Japan, since the market has been on fire there since the 1950s.

Suntory has explored the U.S. market in previous decades in a small way, mostly just supplying Japanese restaurants. It’s been negligible volume until now and almost no marketing, since the product was only sold to certain accounts. About 10 years ago, Yamazaki 25-year-old came in and then our flagship 12-year-old became available.

Once the company brought over the Hibiki 12- and 18-year-old, Suntory had a portfolio here and that’s when I came onboard.

 

BD: What does the Beam acquisition mean for Japanese whisky in the U.S. market?

 

NW: The deal certainly wasn’t made to bring more Japanese whisky to this market – it’s a little more complicated than that, because we didn’t need a stronger route to market. Beam-Suntory is a global prospect, but that being said, it would be silly not to take advantage of the fantastic sales team and energy behind us and not expand in the U.S. I can guarantee there will be more affordable Japanese whisky in the U.S. soon, but I don’t know what that will look like yet.

 

BD: Which spirit category’s consumers do you hope to draw to Japanese whisky?

 

NW: We’re trying to build a new market altogether, so we want to establish Japanese whisky as its own category and stop stealing from Scotch. We want to be looked at separately on menus and in retail stores. It’s not that we’re in competition with anyone, it’s just the process of category development.

 

BD: What differentiates Japanese whisky brands from other whiskies?

 

NW: Considering we only have three production facilities with a dozen brands coming out of them with different formulas and ages, we make a ton of whiskies. We have a number of oak styles and six different still shapes. In fact, nobody varies their oak like we do in Japan. We have five different size barrels made of wood from three continents.

We have a lot of flexibility in what we can produce stylistically and we’re well-positioned for what’s trending. Blends are the future and non-age statements are the future because we want to make as many people as happy as we can by getting our products into their hands.

We’ve put a lot of effort into making better, younger whisky – a lot of retooling and investment. There’s more liquid coming out of the stills than ever before, and we’re smarter with what we’re doing with it than we’ve ever been.

 

BD: What’s the biggest misconception about Japanese whisky?

 

NW: One I’d like to correct is the perception that Japanese whisky is made from rice – that’s number one, two, three, four and five on my list. After that, I like when people say, “What does Japan know about whisky?” and I get to tell them we’ve been working on it for 91 years, so we know a lot.

In retail, I have to push back a little at the notion that we’re craft or boutique. Because we have a small volume in the U.S., we get pegged in with American craft distillers. I don’t have anything against the whiskeys in that category, but those guys are a lot younger and don’t have the heritage behind them that we do. We’re sometimes being put on the wrong shelf at retail, and I’d like to correct that by building out Japanese whisky as a category with its own shelf space.

 

Japan’s Mixable Liqueurs

The most widely known Japanese liqueur, Midori, has seen sales decline from 125,000 cases in 2008 to 90,000 cases in 2013, the most recent year data is available, according to the Beverage Information & Insights Group. The 40 proof melon liqueur, launched by Suntory in the U.S. in 1978, redesigned its packaging in 2013 after adding two RTD brand extensions (Midori Skinny Girl Margarita and Midori Sour) in 2012.

TY KU produces a citrus liqueur, a blend of Yuzu and other Asian fruits with TY KU Soju, the company’s distilled spirit. The 34 proof liqueur is 65 calories per serving, designed to be used in low-
calorie cocktails. The bright green bottle also comes with a built-in light in the bottom that causes the liqueur to glow when activated.

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