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| March 22nd 2008 |
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| Japanese sun growing brighter |
by Robert Joseph
After the first wine boom ebbed following the bursting of the Japanese financial bubble in 1990, eyes turned to the Chinese and Indian markets. Yet Japan is by far the largest and most upscale Asian wine market, as Robert Joseph discovers in his discussion with Carl Robinson of specialist importer Jeroboam.
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As the global wine industry increasingly turns its eyes towards new markets such as India and China, sophisticated players are shifting their attention back to the more established Asian market of Japan. This was, of course, the home of Asia’s first wine boom in the late 1980s, a time when premium French wines flooded into Japan – and Japanese investors, flush with cash, rushed to buy wine estates in the west, ranging from Chateau Lagrange in Saint Julien and Robert Weil in the Rheingau, to Ridge Vineyards in California.
The bursting of the Japanese financial bubble in 1990 naturally led to a dampening of Japan’s vinous enthusiasm, but it was massively rekindled in 1995 by the victory of Tasaki Shinya in the 8th Competition for the World’s Best Sommelier. The impact of this success can be seen in the existence today in All Man magazine of a widely read Manga cartoon featuring Joe Satake, a sommelier, who fights crime (and gets the girl) by winning at blind tastings set by his evil adversaries. Joe’s correct identification of Californian Pinot Noir from Calera in a typical episode boosted sales sufficiently to ensure that a third of Calera’s global sales now go to Japan.
But Japan is still the hardest market to understand in the world, a place where a respect for tradition is coupled with a passion for novelty. No other major wine drinking country has such influential sommeliers – and so few influential professional critics. Other peculiarities here include a love of half bottles and the popularity of prestige Champagne. Dom Perignon sales here are huge. LVMH happily sent 20 bottles of a limited edition of its 1995 vintage to be sold last year at ¥1.26m ($11,800/€7,980) at outlets like the Matsuzakaya Department Store, while Tokyo’s Maxim’s de Paris restaurant offered Kakigori shaved-ice dessert topped with the Champagne.
Until recently, most sales were made in department stores, (where wine was often bought as a gift that was subsequently exchanged for cash), hotels and restaurants. Distribution was firmly in the hands of a complex network of huge importers, who are usually producers of beer or whisky, and smaller wholesalers who offered access to those outlets. Today, a relaxation of the licencing system and shifting attitudes among a new generation of professionals and consumers have made for a different picture. To gain a clearer impression Robert Joseph spoke to Carl Robinson of Jeroboam, winner of the ‘Best Importer’ category in our Who’s Who in Japan reader’s poll (see the December 2007 issue). A long-established member of the Japanese trade, Robinson’s comments are essential reading for anyone who is interested in selling wine to Japan.
Meininger’s: Can you describe Japan in a nutshell?
Robinson: There’s a constant state of change and growth. From the point of view of getting a product in front of the |
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consumer it’s an easier and more open market than it was before. Japan is very much interested in the new, new, new. There’s a lot of buzz about retail, and we’re seeing steady growth there. Accurate figures for the overall market are hard to get, but for us at Jeroboam, annual sales are growing at about 20%.
Meininger’s: Wine drinking was historically something done in Japan by men, outside the home. How is that changing?
Robinson: Wine has definitely become part of the beverage market. While the on-trade is still predominant, home consumption is growing even faster. Accessibility is much greater and Japanese consumers now expect to find wine where they shop for their groceries. 7-Eleven has wine in all of its thousands of outlets, ranging from Wolf Blass and Yellow Tail to selections by Tasaki Shinya, Japan’s local superstar winner of the Meilleur Sommelier du Monde competition.
Meininger’s: What are people drinking in restaurants?
Robinson: Wine suffered from the cut in business entertaining accounts in the mid-1990s. When people had to pay for themselves, there was a fall in prices in restaurants. Those effects can still be felt, but at the very top end, the entertainment market is back. People are drinking a lot more Champagne than they were. Wines like the Dom Perignon Oenotheque range are considered a good way to show off. The wine drinking habits of foreign businessmen and bankers in the icon restaurants of the newer international hotels like the Mandarin, Conrad and Grand Hyatt are having an influence on their Japanese colleagues and friends. So, while the focus is still generally on the established European labels, top New World wines, including Californians such as Opus One, are doing well.
Meininger’s: How important are the global wine gurus and wine competitions?
Robinson: Medals and overseas critics like Robert Parker and Jancis Robinson are becoming less and less important – apart from in the online market. There are too many 100-point wines in the world. Ten years ago 93 or 95 from Parker or the Spectator would make a huge difference. But we’ve a wine from Achaval Ferrer which got 98 points from Parker and the Spectator and we still can’t sell it because it’s a ¥12,000 ($110/€75) red from Argentina. So I can’t rely on the international press to help me convince my customers.
Meininger’s: What about local critics?
Robinson: I have a very good relationship with the Japanese wine press, but I know that when one of my wines gets a good review in a wine magazine, the phone isn’t going to ring with an order the next day. But after a write-up by a freelancer in a magazine featuring food and restaurants, the phone will ring. So, we’re now spending a lot more time with food and restaurant writers. However, you |
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still need to be accepted by the old school sommelier world before you can drive demand in the wider market. You also need to have the sommeliers on board once the demand exists and do lots and lots of tastings and lots and lots of visits. A wine producer is still totally dependent on his importer to do that sort of thing. The importers drive everything.
Meininger’s: What’s happening in the online market?
Robinson: Online sales are growing fast here and unlike us, they do need those critical ratings. The Internet works in Japan because it’s very safe and we have this fantastic distribution system that gets the wine to you the next day – in a refrigerated truck. But that market is very competitive and price driven and there’s a constant demand for novelty. Customers constantly move onto the next thing and that can kill a brand. When we launched Giaconda here, we had to fight off demand from Internet buyers. It’s a well-known, expensive Australian brand, but in the long term it would have been cheapened by being offered online.
Meininger’s: France has been the mainstay of Japanese wine drinking. How is that evolving?
Robinson: I’d say that the wine range on offer in Japan would probably match that of the United Kingdom. If I want to find a Uruguayan Tannat or Sula Sauvignon Blanc from India, for dinner, I can find one. France continues to do well, driven by Champagne, and there’s great growth in organic and biodynamic French wines, with some importers focusing exclusively on them. New Zealand is up by about 15% from a small base and Australia is growing in a real sense, quite apart from the spectacular success of Yellow Tail. Californian wine is also incredibly popular here, but not across the board. Selling high alcohol wines can be difficult, but if there’s balance and acidity the Japanese will drink it. Spain is showing nice growth, benefitting from the fact that the Spanish have been very clever and spent money on promoting the gourmet side of Spain. However, countries that are growing in Great Britain, like Portugal and Austria, remain small – and Germany is still suffering from an ageing base of consumers. It’s still seen as something that was popular in the 50s and 60s. Young people are not demanding it. We’re launching two German producers this year and I think it’ll be tricky...
Meininger’s: How regional is Japanese wine consumption?
Robinson: There are several companies that only work in Tokyo – and successfully. Wine consumption in the regions is growing in some ways and being stifled in others. The main issue was the introduction of zero-tolerance drink-drive laws. That’s really affected restaurants in the countryside. But big cities like Osaka, Fukoka and Nagoya – which is rich thanks to Toyota – are all seeing good growth.
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Meininger’s: Can you describe the way distribution is changing in Japan and the way you think it is likely to evolve over the next few years?
Robinson: We are seeing a lot of consolidation at the top, with large companies like Suntory and Mercian buying middle sized firms as a way to get a fine wine division, and great opportunities for specialist companies who might sell 5-10,000 cases of exclusively biodynamic wine, for example. The distribution system is becoming more flexible because the licensing is easier – and there are now hundreds and hundreds of importers in Japan. At Jeroboam, as an importer, we currently do 30,000 cases of higher end wine a year and can sell to anyone: the end user, a restaurant, a supermarket or a wholesaler. The old three-tier system survives, but the people in the middle have to work a lot harder. We still rely about 70% on whole have a real job to do. They supply all those little restaurants with 26 seats that aren’t going to buy by the case. And
then some bigger customers such as traditional hotels only work with wholesaler X, and that’s just the way it is.
Meininger’s: What are the most interesting developments at retail level?
Robinson: Daimaru Peacock is an upscale supermarket chain that’s working very hard, but the market is ready for someone who wants to come in and do something on a much larger scale. Enoteca is a specialist chain that’s growing by putting small shops into department stores. It’s also opening a chain of ‘375’ shops that only sell half bottles. The half bottle market is huge, thanks to the growing take-home market. People stop at a store at the station and pick up a half bottle on their way home with the groceries.
Meininger’s: What is happening with wine packaging?
Robinson: The screw-cap battle is pretty much won with importers and consumers, but there’s still some resistance in the trade. For example, although we could take La Vieille Ferme under screw-cap at any time, we’d lose banqueting sales to big hotels if we did. On the other hand, there was an Australian tasting the other day where there was nothing with a cork, and an established producer like Laroche can sell its Chablis with screw-caps. All the other forms of packaging such as Tetra, pouches and the Sofia Coppola wine-in-a- can are here. As far as the consumer in the supermarket is concerned, they are not a problem. They’re a novelty.
Meininger’s: How important is public relations and, if it is relevant, how should outsiders approach it?
Robinson: We’re 90% a PR company; 10% wine. We’re here to sell the brands because demand often needs to be created. We have an open door here: customers are willing to be convinced to buy X or Y wine, but you have to sell the human faces behind the label. If you look at our website, the first picture is always of the man – never the vineyard or the cellars or the bottle. Japanese people want to drink something that is made by someone from somewhere that they know about.
Meininger’s: How loyal are Japanese consumers to brands and producers?
Robinson: They are very loyal. Despite the taste for the new, the repeat factor is high, even when prices go up. If people like the brand, they’ll stick with it – and pay top prices. I was at the Peninsula Hotel today organising a wine dinner for Chateau Beaucastel, which is priced almost 50% higher than the same event last year.
Meininger’s: How and where do you think would-be exporters to Japan most often fail in their efforts?
Robinson: Persistence is always the key to Japan. It takes a long time to get established. People often give up five minutes before they are about to make their breakthrough.
Meininger’s: Any final comments?
Robinson: This is a very exciting time to be distributing wine in Japan. We won the first battle 10 years ago to prove that wine is not something for special occasions limited to French and Italian restaurants. The fact that you find girls asking for wine in chains like Denny’s is, for me, a great thing. It shows that wine has arrived in Japan. Now it’s a matter of what we are going to do with it.
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