Japanese Wine MarketJapanese Wine Market

Sebastian TeunissenHaas School of Business

University of California, Berkeley

My BackgroundMy Background

• Undergraduate degree in Economics and Mathematics, University of Guelph, Canada

• Graduate Degree in Economics, Duke University, USA• Assistant Secretary, Commercial Policy, Department of

Finance, Papua New Guinea• Faculty, Fuqua School of Business, Duke University• Director, Far East Management Study Program, Wake Forest

University• General Manager, Kinoshita International, Osaka, Japan• Consultant to wine industry• Director, Vinhos Barbeito (Madeira)• Faculty, Haas School of Business, University of California,

Berkeley, USA

AgendaAgenda

This is the text box History

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Madeira wine

Product Recall

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Japan Alcohol Consumption, 2000Japan Alcohol Consumption, 2000

Beer

Happoshu

Sake

Shochu

Liquer

Fruit Wine

Whiskey

Other

56%

16%

10%

8%

4%

Japan Wine Imports by Volume, 2001Japan Wine Imports by Volume, 2001

France

Italy

U.S.

Germany

Chile

Others

41%

20%

12%

9%

7%

11%

Consumer PatternsConsumer Patterns

• The princess of the business world is the young Japanese working woman. They are fueling the continuing wine boom. They love Italian food and love eating it with Italian wines.

• Men drink sake or whisky if they have money, cheaper shochu spirits if they are hard up. Cocktails are usually shochu-based. They make fortunes for restaurants and bars.

Consumer PatternsConsumer Patterns

• Wine consumption almost tripled in the 4 years ending in 1997.

• In 1997 alone wine consumption increased by 32.1%

• In the first half of 1998 wine imports tripled over the same period in 1997.

• In 1998 consumption of red wine exceeded that of white wine for the first time ever.

The Red Wine BoomThe Red Wine Boom

• “The appetite for red wine really took off in Japan in 1997, after a number of television shows played up the advantages of red wine.”

• “A new TV series called “Sommelier” features a teen-age heartthrob playing the lead role of a wine expert.”

CNN 1/1/1999

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• “In the past, French wine had a luxurious image, while Californian wine was thought to be cheap, in terms of price and taste. But, people are looking at other labels now, including those from California.”

• Japanese imports of California wine rose 242 % in 1998

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California wines find growing California wines find growing market in Japanmarket in Japan

1999 CNN story on the wine boom in Japan

California wines find growing California wines find growing market in Japanmarket in Japan

1999 CNN story on the wine boom in Japan

Japanese Wine ImportsJapanese Wine Imports

1414

1997 1998 1999 2000 2001 2002

Wine(mn litres)

963.32 1,060.27 962.14 921.38 893.93 878.20

Wine(¥ bn)

991.65 1,038.00 957.79 915.20 887.32 870.34

Wine (off-trade) in Japan

Euromonitor 2003

1515

1997 1998 1999 2000 2001 2002

Beer(mn litres)

4,390.49 4,696.84 4,820.96 4,795.80 5,057.36 4,913.85

Beer(¥ bn)

2,427.74 2,499.54 2,441.31 2,345.13 2,356.45 2,139.89

Beer (off-trade) in Japan

Euromonitor 2003

1616

1997 1998 1999 2000 2001 2002

Spirit(mn litres)

432.58 435.01 447.66 452.96 470.13 482.45

Spirit(¥ bn)

532.88 542.80 549.60 543.19 546.43 543.86

Spirit (off-trade) in Japan

Euromonitor 2003

Consumer Expenditure on DrinksConsumer Expenditure on Drinks

¥ bn Wine + Beer Spirits

2002 287.29 1,471.83 872.69

2001 320.67 1,413.91 856.87

2000 283.88 1,430.10 864.16

1999 235.45 1,414,26 857.63

1998 319.29 1,317.76 801.43

1997 211.72 1,406.46 841.33

1996 162.93 1,460.49 895.19

1995 143.21 1,476.74 932.69

1994 139.96 1,555.12 938.61

1993 161.38 1,464.03 877.84

1992 189.53 1,487.00 849.35

1991 222.67 1,494.11 898.98

1990 280.57 1,285.59 837.72

USA EXPORT SALES 6 Months Jan. - June 2002

                                                                              

 

Wine MagazineWine Magazine

HistoryHistory

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The Growth of Fruit WinesThe Growth of Fruit Wines

The Growth of Fruit WinesThe Growth of Fruit Wines

Convenience StoresConvenience Stores

• Seven- Eleven 9,116 stores• Lawson 7,734• FamilyMart 5,287• C&S 4,721• Daily Yamazaki 2,281• Mini Stop 1,395• Am/pm 1,096• Seicomart 970

Number of Stores – End of Fiscal Year 2001

Convenience StoresConvenience Stores

• Seven- Eleven 5.3 %• Lawson 0.7• FamilyMart 0.2• C&S 5.2• Daily Yamazaki -5.2• Mini Stop 3.3• Am/pm 3.4• Seicomart 0.8

New Store Openings in 2002 (estimated % increase)

Meishu Jiten –Industry “Bible”Meishu Jiten –Industry “Bible”

KICO Wine Portfolio (examples)KICO Wine Portfolio (examples)

A Fad Driven MarketA Fad Driven Market

• Japan's well-heeled consumer market is often fueled by fad. Steven Tolliver, the Japanese-speaking marketing executive of Spain's Codorniu Group, likes to point to the "tiramisu tsunami" of a decade ago. Top women's magazines featured stories on the Italian dessert, and before you could say "chocolate" it was featured in every trendy restaurant, supermarket and fast food chain in the country. Once universally available, it lost its exclusive allure and sales fell.

1999 White Wine Revival1999 White Wine Revival

• How come the white wine revival? Tokyo wine guru Sandra Shoji said that chemists at Suntory Laboratory put e-coli into a lot of sample dishes, along with whisky, vodka, sake, beer, antibiotics, gin, red wine, white wine. Voila! The white wine killed more bacteria, faster. In the humid heat of a Japanese summer when raw fish attracts bacteria, this is a powerful selling tool. Drink white and protect your tummy.

• Overnight, red is out, white is in. Get on an aircraft these days taking off from Narita and every Japanese on board will be drinking white. Last month, it was red. (Think of the problems for the purchasing officers of large airlines, scrabbling to get their hands on palatable whites! Think of the opportunities for nimble winemakers and merchants!).

• Food Sanitation Lawhttp://www.jetro.go.jp/se/e/standards_regulation/food2003mar-e.pdf

Madeira WineMadeira Wine

Madeira WineMadeira Wine

Madeira WineMadeira Wine

Madeira WineMadeira Wine

German Exports (hectolitres)German Exports (hectolitres)

1995 1996 1997 1998 1999 2001 2002

Japan 150,305 139,313 145,402 182,802 146,008 112,107 94,260

S. Korea 13,450 10,279 12,777 3,545 7,521 8,683 8,899

Taiwan 1,212 1,967 5,889 3,348 2,225 7,866 1,758

H. Kong 1,123 1,292 2,681 522 523 454 566

China 487 1,091 3,225 2,340 1,191 1,628 1,199

Singapore 999 1,200 3,444 1,220 879 1,096 557

Malaysia 148 225 243 198 304 312 1,470

Thailand 524 562 482 181 1,710 1,341 1,713

TOTAL 168,248 155,929 174,143 194,156 160,361 133,487 110,422

Source: DWI

4141

4242

4343

4444

4545

On May 1, 2003 a ¥10.48 per 750ml bottle increase in duty

Major Grape Production Areas of JapanMajor Grape Production Areas of Japan

4848

4949Country Per Capita in L

Luxembourg 63.3

France 60.1

Italy 58.1

Portugal 53

Argentinia 39.4

Spain 36.9

Austria 31.9

Greece 30.1

Denmark 29.1

Hungary 28.5

Belgium 24.3

Germany 22.8

Australia 19

United Kingdom 14

Netherlands 13.6

Chile 13.6

Sweden 11.9

New Zealand 11.4

South Africa 8.9

Canada 7.39

United States 7.38

Ireland 5.3

Japan 1.7

5050

5151

5252

Wine consumption is increasing significantly in China, according to information from the China Vintage Industry Association (CVIA).

Statistics show that Chinese people consumed 390 million liters of wine in 2001, with per capita consumption reaching 0.27 liters.

China's wine output rose by 30 percent between 1994 and 2000. It produced 300,000 tons in 2001, a rise of 19 percent on a yearly basis.

China also imports about 50,000 tons of wine annually.

Although wine production in the country dates back more than 2,000 years, wine consumption in the past was very low. Influenced by traditional habits and customs, and mode of production, Chinese people greatly prefer distilled wine and millet wine.

But these days more and more Chinese people were drinking wine,a result of rapid economic development, marked improvement in people's living standards and people's awareness of health needs, said Geng Zhaolin, a CVIA senior executive.

Yantai city in east China's Shandong Province is the only Chinese wine city named by the Office International De La Vigne etdu Vin. However the managers of several restaurants told Xinhua that the number of people drinking white wine had dropped drastically compared with the past.

At present, China has about 450 wineries. Among them, 10 are capable of producing more than 10,000 tons each annually.

Geng said China's annual wine output was expected to reach 500,000 tons by 2005.

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