This year marks the 100th anniversary of whisky production in Japan, and the spirit has taken a ride similar to those of other hit items here.

Japanese whiskies started out as imitations of foreign drinks. But over the years, the Japanese products improved, and they are now considered on par with their overseas counterparts.

Although the domestic market experienced a long slump, it is now seeing a comeback. However, a shortage of component whiskies for blends and a decrease in overall alcohol consumption are hurdles for further growth.

TRADITIONAL METHODS

Suntory Spirits Ltd. got the ball rolling when it began construction of its Yamazaki Distillery in Osaka Prefecture in 1923.

The upgraded Yamazaki Distillery was shown to the media on Oct. 10 this year.

Trees were planted on the premises to form the Forest of Yamazaki. A new entrance has also been added.

Visitors can sample whiskies in a tasting lounge lined with 3,000 bottles of spirits.

In addition to free tours of the premises, two fee-based tours offer samples of high-end whiskies.

To improve the quality of its products, Suntory revived the traditional method of “floor malting.” Workers spread out barley, the main ingredient in whisky, on the floor and stirred it by hand to further bring out its flavor.

The company is investing 10 billion yen ($67 million) to renovate the Yamazaki Distillery and the Hakushu Distillery in Yamanashi Prefecture.

“For the next 100 years, we will strive to make the world’s finest whiskies that will be loved by fans across the world,” Suntory President Nobuhiro Torii said on Oct. 10.

POPULAR ABROAD

The domestic whisky market expanded during the postwar rapid economic growth before peaking in fiscal 1983 ending in March 1984.

A lackluster period followed, lasting until the early 2000s.

But demand started rising around 2008, backed by the popularity of highballs.

According to the National Tax Agency, whisky shipments increased by about 2.6 times to 168,000 kiloliters in fiscal 2019 from 65,000 kiloliters in fiscal 2007.

Japanese whiskies became increasingly popular overseas after Suntory’s high-end Yamazaki products, Nikka Whisky Distilling Co.’s signature brand Taketsuru and other spirits won awards at international competitions.

Whisky exports totaled 14,250 kiloliters in 2022, more than 15 times the volume for fiscal 2006.

International markets and inbound tourists have provided major business opportunities for domestic whiskies.

Kirin Brewery Co. launched Fuji, its flagship whisky brand for overseas sales, in 2020, while an increasing number of small-scale craft breweries have emerged against the backdrop of Japanese whisky’s growing popularity.

Seventy-eight places had whisky-producing licenses in fiscal 2001. The figure rose to 157 in fiscal 2021.

SHORTAGE OF COMPONENT SPIRITS

But producers of blended whiskies are now troubled by a shortage of component spirits.

It is difficult to rapidly increase production because whisky needs to be aged for long periods.

Production of component whiskies declined in and after the 1980s when demand was low. Producers are now experiencing a shortage of these spirits.

Some companies have ended sales of some products.

Nikka invested about 6.5 billion yen on its two distilleries in Hokkaido and Miyagi Prefecture to increase spirit production capacity by 20 percent.

Suntory also spent 12 billion yen to build additional storage warehouses in 2019 and 2020.

But even recently prepared blended whiskies take several years to become commercial products.

Therefore, speculation has been rife that certain rare, high-end whiskies will increase in value.

According to leading pawn shop chain operator Daikokuya Inc., Yamazaki 25 Years Old, which carries a price tag of 160,000 yen, currently has an auction price topping 1 million yen.

The price started to gradually rise around 2015 before it skyrocketed in 2019.

“The price has been rising due to its increased value in Asia, coupled with demand from inbound tourists,” a Daikokuya representative said.

Some investors are buying whiskies that are currently being aged, expecting their prices to soar.

RISE IN ‘SOBER CURIOUSITY’

Although Japanese whisky has become increasingly popular, the “sober curious” lifestyle, which is about consciously refraining from drinking alcohol, is increasing its presence in Japan and pushing down booze consumption.

According to the tax agency, alcohol consumption per capita in fiscal 2020 was 75 liters, down by about 26 percent from the peak in fiscal 1992.

Efforts around the world are introducing restrictions on alcohol ads out of health considerations.

“The position of Suntory has largely changed since the 1980s (when the market was slumping),” Torii said.

Making use of its global sale channels, the company will continue to invest to improve production and storage capacities, he said.

“We are considering ways to cater to customers across the globe, including promoting appropriate drinking habits,” Torii said.