(Last updated: 24 Nov 2011)

Trends and opportunities

The market

Consumer awareness of Australian still wines in Japan is improving, as demonstrated by an increase in the volume of Australian wines exported to Japan in the ¥1000-¥2000 (A$12-24) retail price category. Despite this, Australia continues to face strong competition from other countries as overall growth in this segment increases. The total volume of imports of still wine in this category in 2010 displayed strong growth of 22 per cent to 4,516,000 cases when compared with 2008. (Source: Wands Review April 2011).

The export of Australian sparkling wine to Japan has shown consistent growth and reached 120,000 cases (1.1 million litres) in 2010, which is an 11.2 per cent increase from 2009. The average import price per litre also increased to ¥583 in 2010 from ¥569 in 2009. (Source: Ministry of Finance trade statistics)
Several factors adversely affected Australian wine exports to Japan in 2011. The depreciation of the US dollar and Euro exchange rates against the yen provided a pricing advantage to wines from those countries compared with Australia. The Great East Japan Earthquake that occurred on 11 March 2011 and resulting destruction of certain areas of the Tohoku region had a negative impact on consumer sentiment, adversely impacting overall wine consumption.

Total alcoholic beverage consumption in Japan decreased by 0.9 per cent in 2010. The volume of imported Australian still wines in 2010 dropped by 10.9 per cent to 830,000 cases or 7.4 million litres (value of ¥3.1 billion). However, the average import price per litre increased to ¥418 in 2010 from ¥375 in 2009 (Source: Ministry of Finance trade statistics), while the average export price was A$4.77/L FOB (Source: Australian Wine and Brandy Corporation).

Australia remained the sixth largest exporter by volume to Japan in still wines, and fourth largest exporter in sparkling wines. Japan is still dominated by the Old World wines (both in still and sparkling wines) with more than 60 per cent of total volume shared by France, Italy and Spain. France holds 33 per cent, Italy 17.8 per cent and Spain 10 per cent. Chile has recorded a dramatic increase in exports by volume since 2007 and is currently the third largest exporter to Japan in still wines. According to Wands Review (April 2011), the main reason for the overall decline in the import volume of Australian wines into Japan is stock adjustments undertaken by major volume retailers.

Among total wine consumption in Japan, the biggest volume category remains at the retail price of ¥500-¥1000 for a 750ml bottle, which has increased dramatically to 928,000 cases. (Source: Wands Review April 2011). Imported wines share 47 per cent of this price range with severe competition between Japan, US, Spain, Chile, and France. These wines are mainly distributed through large-scale retail outlets such as supermarket chains and ‘casual’ food service outlets. The ongoing deflationary environment in Japan is exacerbating consumer preferences to purchase lower priced products.

Premium wines for special occasions, when supported by established reputation, ratings, and/or awards, retail at A$18-37 and above are distributed through specialised wine outlets, online shopping, mail-order/catalogue, upper-tier hotels and restaurants. The super-premium wine segment of more than ¥10,000 (A$125) retail price per bottle has increased in volume to 42,000 cases annually, which is a 20 per cent increase compared with 2008. Successful premium wines require an outstanding and unique reputation with highly regarded international awards.

Tariffs, regulations and customs

Wine imports must adhere to the Food Sanitation Law. Customs duties and liquor tax apply, depending on volume, product category, type of container and place of origin. Customs counsellors can answer questions and offer advice via email.

Customs duty and liquor tax on general Australian wine are as follows. (These should be confirmed with Customs and the National Taxation Agency through a Japanese importer).

• Customs duty:
  • Still wine – ¥125 per litre or CIF 15 per cent, whichever is less
  • Sparkling wine – ¥182 per litre
• Liquor tax:
  • Wine – ¥80,000 per kilolitre

Marketing your products and services

Market entry

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 segmentation(s) 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. Please note that the importer needs to hold an import licence approved by the government.
• Be creative, unique and have a long-term commitment to be successful in this market.
• Market strategies need to differentiate your product against other Australian, 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 and/or attendance of wine tasting events with your distributor. Credentials such as awards and stories about your wines including pictures of vineyard and winery are also useful promotional tools in Japan.

Distribution channels

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. In the recent years, retailers with a large number of stores are more likely to import wines directly to reduce the distribution costs, but will only sell these wines at their stores.

Common distribution structures are:

• Importers to wholesalers to retailers or the food service industry
• Specialist wholesalers with strength in particular channels and regions
• Major national wholesales covering various channels and regions

Links and industry contacts

Wine–related resources

Japan Wines and Spirits Importers Association – www.youshu-yunyu.org/english/index.html
Wine Australia Japan www.wineaustralia.com/japan

Government, business and trade resources for Japan

Ministry of Health, Labour, and Welfare – www.mhlw.go.jp/english/index.html
National Tax Administration Agency (in Japanese) – www.nta.go.jp/

Australian resources

Australian Wine and Brandy Corporation – www.awbc.com.au
Japan External Trade Organization – www.jetro.go.jp/australia

Contact details

The Australian Trade Commission – Austrade – is the Australian Government’s trade and investment development agency.

Through Austrade’s network of offices in over 50 countries, we assist Australian companies to succeed in international business, attract productive foreign direct investment into Australia and promote Australia's education sector internationally.

For more information on how Austrade can assist you, contact us on:

Australia ph: 13 28 78 | Email: info@austrade.gov.au

A list of Austrade offices (in alphabetical order of country) is also available.