Wine to Japan

Trends and opportunities

The market

Wine consumption in Japan is on the rise and the market has increased by 3.6 per cent from 2010 to 2015, with 889.3 million litres sold annually (Source: Euromonitor Alcoholic Drinks in Japan August 2016). Japanese consumers now drink 2.98 litres per head in 2015, up from 2.92 litres in 2014.

Sales of wines have expanded predominately from small retail and mass merchandise stores to specialty wine shops. Convenience store wine sales continue to push sales volumes for wines in the JPY500-1000 price range. This sales channel alone has boosted by 7.8 per cent in 2015 and now makes up more than 11.1 per cent of the sales of all imported wines.

Despite wine sales being only 10 per cent of total alcohol purchases across Japan, new retail stores are increasingly stocking wine in order to compete. Supermarkets have expanded their volume of wines sold by more than 7.2 per cent, from 2014 to 2015. The number of new concept wine bars or casual, standing wine bars is also on the rise (Source: WANDS April 2016).

In 2015, Australia exported 882,321 case of wine into the Japanese market - an increase of 3.4 per cent from 2014.

Competitive price points

Japanese importers, wholesalers, buyers, sommeliers, and consumers now understand that Australian wines do not compete with lower-priced Chilean or Spanish wines which sell for under JPY500 (about A$5) per 750ml. Australian wine sales are currently pitched at retail price points in the JPY1000-1500 (A$ 5-10) per 750ml bottle category. In 2015, sales of Australian wine in this price range have increased by more than 15 per cent up from the previous year (Source: WANDS Review April 2015).

The sales of wines in the JPY500-1000 per bottle price category include around 76 per cent of Australian wine sales in Japan. Further success of Australian wine will rely on Australian exporters/Australian wine importers in Japan aggressively maintaining shelf space in supermarkets, convenience stores and other retail outlets at the JPY 1000-1500 price point. Australian wine brands also compete in the higher JPY1500-2000 price range, however, the Australian market share in this category has reduced by 3.4 per cent since 2014.

A recent trend in the Japanese wine market is the rapid growth of ‘new world wine’ which are typically sourced from Chile, United States, and South Africa. In 2015, for the first time in Japanese wine industry history, Chile took the number one position from France in terms of volume of wine sold in Japan. Overall, the total imported wine market has also increased by about three per cent in the past year.

Growing sales channels

Wine sold on premise throughout Japan account for 36 per cent of industry sales with the majority of wine sales made off-premise (64 per cent). Two sales channels identified as areas of growth include supermarkets (107.2 per cent), and convenience stores (107.8 per cent). Although online sales have been increasing, sales results are not yet publicly available. Some of the major players in online sales have import licences, allowing them to secure strong brands that are popular amongst Japanese consumers. The online channel is an opportunity for Australian wineries to showcase their product due to greater customer access with fewer intermediaries in the distribution channel. Wine in Japan is considered a ‘brand business’ and suppliers should take extra care in choosing the appropriate channel to market their product. The online distribution channel has some positive attributes but can also lead to price competitiveness and destroy brand integrity in Japan.

Consumer preferences

The Japanese wine consumer’s level of understanding in wines is polarised. This trend is demonstrated by increased sales of produce in supermarkets and convenience stores and also by online sales. Consumers educated in wine follow the vintage reports, world famous competitions or critics, and look for specific wines through less price sensitive online channels.

Alternative categories

The sales of sparkling wines (in particular dry style sparkling wine) is on the rise with total sales reaching 3,780,520 cases, almost a 2 per cent increase.

The demand for mini wines and half bottle wines are expanding as the population of single-person households increases.

Demand from the food service industry for wine is also escalating and presents an opportunity for strong sector growth. The number of tourists visiting Japan from abroad reached almost 20,000,000 in 2015. Hotel occupancy rates have increased with customers from Japan as well all over the world.

Bulk wines and private label

Private label products are increasing in market share, mainly with major retailers such as AEON, Seven & I Holdings, some convenient stores, and mid-sized supermarket chains. Most of these private label products are developed from imported bulk wines and are bottled in Japan. Due to the contribution of JAEPA, Australian bulk wine tariffs were eliminated with immediate effect in January 2015. Many players in Japan moved quickly to realise the potential of Australian wines for this particular business model. As a result, bulk wine imports increased almost 35 per cent to 5,352,639 litres in 2015 (Source of Data: Australian Bureau of Statistics).

Opportunities

Amongst total wine consumption in Japan, the most popular and biggest volume category remains at the retail price of JPY500-JPY1000 for a 750ml bottle, which has increased to 12,135,000 cases (Source: WANDS Review, April 2016). Imported wines hold 60 per cent market share of this price range with fierce competition between France, Italy, Spain (with the influence of the strong yen against the Euro), Chile, and the US. 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 influencing consumers to purchase lower priced products.

The export of Australian sparkling wine to Japan has shown consistent growth and increased by 3.4 per cent in 2015 to 153,451 cases (Source: WANDS review, April 2016).

Premium wines for special occasions, when supported by established reputation, ratings, or awards, retail between A$18-$37 and are distributed through specialised wine outlets, online shopping, mail-order/catalogue, high-end hotels and restaurants. The super-premium wine segment (more than A$100 retail price per bottle) has increased in volume to 80,000 cases annually in 2015. Successful premium wines must have an outstanding and unique reputation and boast highly regarded international awards.

The Japan-Australia Economic Partnership Agreement (JAEPA) has improved access for Australian exporters.
Read more about using JAEPA to export wine and cider to Japan (PDF, 614KB).

Competitive environment

Australia remained the sixth largest exporter to Japan in 2015 (an increase of 3.4 per cent), and the fifth largest exporter in sparkling wines (increase of 11.7 per cent). The wine market in Japan is still dominated by ‘old world’ wines (both still and sparkling) with close to 60 per cent of total volume shared by:

  • France - 27 per cent
  • Italy - 17.5 per cent
  • Spain - 11.6 per cent
  • Germany - 1.5 per cent.

Chile has recorded a dramatic increase in exports by volume and is currently the largest exporter to Japan in still wines.

There is a strong focus from industry toward Australian wines due to outcomes as a result of JAEPA in 2015. Many importers who never imported Australian wines before have started to consider importing Australian wines. Major Japanese breweries have advised that they are reviewing their product portfolio from Australia and investigating their sourcing options.

Tariffs, regulations and customs

Consumer prices for wine are high compared to other kinds of liquor because most wine are imported. A combination of import duties, taxes, high distribution costs and mark-ups result in retail wine prices that are two to four times higher than in Australia. The tariff and tax system is as follows:

  • Import Tariff – 9.4 per cent (compared to 15 per cent for other countries than Chile 3.5 per cent)
  • Liquor Tax – 80,000 JPY per 1000 litres
  • Consumption Tax (VAT) - eight per cent.

Marketing your products and services

Market entry

Consider the following to successfully market wine into Japan:

  • Define the target market segment(s) for your wine, and research that market and associated 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 must hold an import license approved by the Japanese government.
  • Be creative, unique and have a long-term commitment to the market.
  • Market strategies need to differentiate your product against other Australian, local and international wine brands, which are being introduced in growing numbers. Other popular alcoholic beverages, such as beer, also compete with wine.
  • 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 attend wine tasting events with your distributor. Credentials such as awards and stories about your wines, including pictures of vineyards and wineries are also powerful 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.

Sales volume objectives, together 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 recent years, retailers with a large number of stores are considering importing wine directly to reduce 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 wholesalers covering various channels and regions.

Links and industry contacts

Government, business and trade resources for Japan

Japan Customs
Japan External Trade Organisation
Ministry of Agriculture, Forestry and Fishery
Ministry of Finance
Ministry of Health, Labour and Welfare

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