With a population of 127 million, the Japanese market is characterised by consumers with high levels of disposable income, and companies with a strong global orientation and willingness to invest in sustainable, long-term products and services. Japan has made a name for itself as a nation of quality and innovation, and has staked its future on this value proposition.
Wine is still an infant market in Japan, with each adult consuming 2.4 litres per annum. The total market for still and sparkling is worth around 2.8€ billion per annum. The majority of wine is imported – 14 million cases annually, including more than 0.57€ billion worth of still wine.
The market is still dominated by the Old World wines, such as France holding 57 per cent share in value and Italy holding 14 per cent. In particular, Chilean wine has expanded its share significantly following the implementation of the Free Trade Agreement between Japan and Chile. This is a traditional country and the Japanese buy wines from countries like Italy and France where wine is a tradition. France and Italy account for two-thirds of all wine imports to Japan.
The volume of imported wine from Spain in CY 2010 increased 11 percent while total value increased 2 percent. Spanish wine currently benefits from a boom in the number of Spanish restaurants in Japan. However, unit values of Spanish wine are declining due to sales of lower priced Spanish wine in supermarkets and izakaya restaurants. Spain’s volume share of Japan’s total import wine market slightly increased to 10 percent from 9.6 percent. Value share remained at 5 percent.
Although cost is now increasingly important to the Japanese. The quality and unique story of the wine allows buyers to focus on the product rather than the price. Being able to provide the buyers and retailers with a unique pitch will help them to differentiate the wine in a positive way.
Key to selling quality wine in Japan is finding the right distributors and offering them strong support as well as building a strong marketing story. I recommend surveying the market thoroughly before selecting a distributor, developing connections that enable a personal introduction to the target and being patient, as the initial deal may take more than a year to sign. I also recommend building a story that lets Japanese consumers know why to buy a product – the strength of the brand being a major factor in selling the wine.
There are two major segments in the Japanese wine market: ‘price fighters’ and discount wines. These have a retail price at ¥380-¥880 for 750ml bottle and are mainly distributed through large-scale retail outlets such as supermarket chains, ‘casual’ food service outlets and are sold by full container loads.
The next category is ¥1000-¥1500, where the challenge is to demonstrate cost performance against French and Italian wines in the same category. Premium wines for special occasions, when supported by ratings, awards, and reputation retail at ¥1500-¥3000 and above and are distributed through specialised wine outlets, upper-tier hotels and restaurants. Premium wines require indicating an outstanding and unique story and high value proposition, which is proven by an international recognition.
The Japanese market is attracting continuous approaches from the various wine exporting countries throughout the world. To successfully market into Japan, consider the following:
- Define the market area that your wine would target, and research that market and price points.
- Appoint a partner in Japan. Select a local partner, either an importer or distributor, with a competitive advantage in the distribution channel which suits your product segment.
- Be creative, unique and have a long-term commitment to be successful in this market.
- Market strategies need to differentiate your product against local and international wine brands, which are being introduced in growing numbers. Competition is also with other popular alcoholic beverages such as beer.
- Keep in mind Japanese consumers are increasingly price and quality conscious so it is important to support your locally based partner and maintain constant communication.
- Participate in targeted wine promotions in department stores and retail outlets. Credentials such as awards are also useful promotional tools in Japan.
- Approximately 60 percent of wine consumed in Japan is distributed through retail, and the remainder through on-premise channels including bars and restaurants.
- The Japanese distribution system is becoming more efficient, but wholesalers still play an important role in making frequent small-lot deliveries to retail shops with limited storage space.
- Your sale volume objectives, along with the positioning of your product, will be key factors when considering suitable distribution channels.
- Some major retail chain stores source wine directly from overseas or domestic wine suppliers to increase efficiency in distribution.
Traditional distribution methods are:
- Importers or manufacturers > wholesalers > retailers or the food service industry
- Specialist wholesalers with strength in particular channels and regions
- Major national wholesales covering various channels and regions
The statistics show that the biggest wine drinkers are those between 30 and 39, and women more than men. It is reported that 40% of women drink wine once a month, compared with 31% for men This was borne out by our observations. Not surprisingly, wine drinkers are concentrated in the cities while out in the countryside traditional alcohol holds sway.
The Japanese market is a place of crazes and fads. Some ten years back there was a plethora of articles extolling the health benefits of red wine. Sales shot up and then slowly subsided. Recently there has been a fad for sparkling, especially among women.
One of the more curious drivers of the sales of specific wines in Japan is the manga (comic book) Kami no shzuku, or the ‘Drops of the Gods’. This has a readership of 500,000 each week and when a particular wine is mentioned, sales skyrocket. Until the next issue at least. Ata Rangi Pinot Noir 2001 got a mention early in the series but it is mainly French wines that feature. In Japan, as in many other countries, France is wine and wine is French. Nearly 60% of bottled imports come from France. Next in popularity is Italy, and the reason for that is pizza and pasta. Italian food is popular in Japan and people tend to think that Italian food, if it wants wine, demands Italian.
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