Wine market in Japan to grow to USD 10.45 B by the year 2025

The Wine Market in Japan is valued at USD 9.67 billion in 2019 and is estimated to reach USD 9.8 billion by the end of year 2020.

It is expected to grow at the CAGR of 1.3% within the time horizon of 2020-2025 because of the increasing consumption of wine and rising preferences of wine consumption in restaurants.

Its market value will reach USD 10.45 billion by the year 2025.

Definition / Scope
Market Overview
Market Risks
Top Market Opportunities
Market Trends
Industry Challenges
Technology Trends
Pricing Trends
Regulatory Trends
Market Size and Forecast
Market Outlook
Technology Roadmap
Distribution Chain Analysis
Competitive Factors
Key Market Players
Strategic Conclusion
References
Appendix

Definition / Scope

Wine is the alcoholic drink made from the fermented grapes and additional crops( rice, plum, cherry, pomegranate, currant elderberry). They are produced through the interaction of the sugar compound contained in grapes with the yeast, which are converted into ethanol, carbon dioxide and heat.

The major variants of wine are red wine, rose wine, white wine, fruit wines, sweet, dry, still, mead and starch based wine. In the context of Japan, the annual consumption of wine ranges from 3.1 liters to 4.1 liters per adult Japanese population.

There are more than 200 wineries in the context of Japan. Here, the most popular high ends variety of wines are Bordeaux, Burgundy, Champagne, etc.

The wine market is concerned with the manufacturing, importing, distributing and selling of the variety of wine products. On the basis of the distribution channel, Japanese wine market is categorized into on trade and off trade market.

On the basis of the type of color, the Japanese wine market consists of three segments i.e. red wine, white wine, and rose wine.

Market Overview

Japan holds the 23^rd position in the ranking of the worldwide biggest wine market. The wine consumption in Japan accounts for 3.8% of total alcoholic beverage consumption. Japan is the sixth biggest trade partner for wine with the large number of sommeliers worldwide.

The average consumption per capita is almost 2.6 liters. In the context of the distribution of wine, the import of the wine accounts for 70% of the total Japanese wine market.

The total market size of the wine market in Japan is valued at USD 9.67 billion in 2019 and is expected to reach USD 9.8 billion by the end of the year 2020. Its market value is estimated to grow at the rate of 1.3% within the forecasted time horizon of 2020-2023.

The market value of the Japanese wine market is estimated to reach USD 10.45 billion by the year 2025.

On the basis of the color type, the red wine segment is leading the Japanese Wine Market with the market share of almost 50%. The market size of this segment is valued at USD 4.83 billion in 2019.

On the basis of the distribution channel, the off trade is leading the Japanese wine market with the market share of 64% of total wine market in Japan.

Increasing consumption of wine, health benefits associated with wine consumption are factor driving the growth and development of the wine market in Japan.

However, unsuitable environment for viticulture in Japan and stringent government regulations might restrain the growth of its market value. The key market players engaged in this wine market are Orca International, Monte Bussan, Mottox, Codorniu, etc.

Market Risks

Unsuitable environment for viticulture

The acidity of soil, high amount of rainfall and humidity and other climate conditions in Japan is creating the unfavorable environment for the cultivation of grapes. However, grapes are grown in some regions of Japan such as Yamanashi for the domestic purpose.

Old World Cabernet Sauvignon, Koshu and Merlot are the most common variety of grapes grown in these regions. Besides this, inadequate sunshine hours usually cause rotting and damage of the produced grapes.

Because of this, more than 70% of the wine is imported from the foreign countries such as Chile, US, etc. It is causing the risk for the growth and sustainability of the local grape production based wine companies.

Top Market Opportunities

Rising aging population

Japan is experiencing the aging population in both urban and rural areas. About 33% of the Japanese population is of age more than 60 years. It has been expected that the population above 65 years of age will reach one third of the total population by the end of the year 2050.

In Japan, there is a unique culture and trend of drinking alcohol at the older age. The older people drink wine more in comparison to the young people. In this context, the increasing aging population is creating the significant opportunity for the growth and development of the wine market in Japan.

Health benefits associated with non-alcoholic red wine

The consumption of non-alcoholic wine is associated with the decline of the risk of occurrence of hypertension, heart diseases, type 2 diabetes, and cataracts.

For instance, a study conducted among 67 men who were affected from the diabetes and heart diseases risk factors has concluded that the person who drinks non-alcoholic red wine has lower risk of the heart diseases by 14% and stroke by 20% in comparison to the person who drink wine with alcohol.

It might be due to the presence of the polyphenols on the non-alcoholic red wine. The associated health benefits of the non-alcoholic wine will create the opportunity for the growth of the wine market in Japan.

Market Trends

Increasing consumption of wine

In Japan, more than half of the population is wine drinkers and 47.4 million people are regular wine drinkers. Here, more than 50% of the Japanese drinks wine at least once a week while 7% drinks wine every day.

Along with this, the consumption of red wine, white and rose wine among Japanese has been increased by 54%, 37% and 9% respectively. On average, the consumption of wine has been increased by 12% within a year.

This huge and increasing consumption of wine is driving the growth and development of the wine market in Japan.

Huge number of high end restaurants

Japan is one of the country highest number of the Michelin restaurants globally. There are almost 217 Michelin starred restaurants in Tokyo, 89 in Osaka, and others. In the context of Japan, the consumption pattern of the wine is highly concentrated in restaurants.

This high number of the restaurants is driving the growth and development of wine market in Japan. The wine drinkers in Japan prefer to drink wine with their food. Because of this, about 90% of wine is drank with foods in restaurants.

The increasing number of restaurants and preferences of wine drinkers towards its consumption in restaurants is driving the favorable environment for the growth and development of the Japanese Wine Market.

Rising governmental liquor taxes

The government of Japan has subjected 8% of general tax on all liquor products. Along with this, it is planning to increase taxes on the wine products. In 2018, the liquor tax rate is about USD 720 for one kiloliter of wine.

It is expected to be USD 815 per kiloliter of wine by the October of the year 2020. This increasing liquor tax rate might restrain the growth and development of the wine market in Japan.

Industry Challenges

Trend of importing wine

In Japan, more than 60% of the consumed wines are imported from other countries while the local Japanese wine manufactures accounts for just one-third of the wine consumption. Almost fifty-five countries are supplying the wine to the Japanese market.

Here Chile is the largest supplier of the wine to the Japanese market in terms of volume and about 77.9 million liters are imported followed by the supply from the United States. Besides this, the import of wine from Spain and Italy is in increasing trend.

Increasing import of wine from other countries is creating the challenge for the growth and development of the local based Japanese wine manufacturing companies.

Technology Trends

Advancement in the technological aspects are widening the scope of the distribution of the wine products through the online trading system.

Along with this, smart application containing the information of the world’s largest wine library and high PET packaging technology are also the driving the growth in the wine market. Some of the other key technological changes in the wine market are as follows:

Wireless networks: This technology is used to manage the production of the grapes in the field through the improvement of the microbiological environment of the fields. It collects the information about the weather and forecasted when the grapes cultivated filed is needed to be sprayed with fungicides. This technology has been adopted by one of the Japanese wine company, Okunota Winery.
Wine collection inventory management system: Multiple applications such as Vino cellular facilitates the consumers to keep track on the wine inventory through online cellar management tool.
Geographic information system technology: It facilitates the winemakers to create the spatial maps to provide the information about the location of the growing grapes.
Automating wine making: In this system, the sensors are used to review, track and adjust the tank temperature and pressure in the winemaking process.

Pricing Trends

The price of the products of this market depends upon the type of the product, quantity of product and distribution channel through which wine are sold out. For instance, the price of the wines is about USD 15 per bottle in restaurants while it costs almost range from USD 4.5 to USD 9 per bottle in market.

The average price of the sparkling wine is USD 20.08 per unit in 2020 while the average price of the fortified wine is USD 17.83 per unit in 2020. On average, the Japanese people spend almost USD 11.2 for wines per person. The average price of the wine is about USD 30.18 in the year 2020.

Regulatory Trends

The regulations related to the management of the wine market in the Context of Japan are discussed as follows:

Food sanitation Law requirements: This law defines the amount of wine coloring agents and preservatives used as additives in the wine products. Along with this, the wine importers must submit Notification form for the import of foods.

Labeling requirements: All the labeling content including product name, food additives, alcohol content, type of product, country of origin, and other importer details if any must be attached to the container in a visible manner and must be Japanese language.

New packaging recycling law: According to this, all the manufacturers, distributors, and retailers who produces and consumes materials such as wine are responsible for the recycling costs.

The manufacturers and users must pay the recycling charges as USD 37.36 for metric ton of colorless glass, USD 50.11 for metric ton of brown glass, USD 83.82 for metric ton of green glass, USD 15.49 for metric ton of PET bottles, USD 121.18 for metric ton of paper containers and USD 598.61 for metric ton of plastic containers.

Market Size and Forecast

Japan holds the 23^rd position in the ranking of the worldwide biggest wine market and the sixth biggest trade partner for wine worldwide. The wine consumption in Japan accounts for 3.8% of total alcoholic beverage consumption. The average consumption per capita is almost 2.6 liters.

On the basis of the color type

The red wine segment is leading the wine Market with the market share of almost 50% of total wine market in Japan. The market size of this segment is valued at USD 4.83 billion in 2019.
The white wine segment accounts for 38% of the total wine market in Japan with the market value of USD 3.67 billion in 2019.
The rose wine segment is holding the market share of about 125 of the total wine market in Japan. The market value of this segment is estimated to value at USD1.16 billion in 2019.

On the basis of the distribution channel

The off trade market segment ( groceries, retail stores) are leading the Japanese wine market. It accounts for the market share of almost 64% of total wine market. The market size of this segment is valued at USD 6.19 billion in 2019.
The on trade market segment accounts for 36% of the total Japanese wine market with the market value of USD 3.48 billion in 2019.

Market Outlook

The wine market in Japan is expected to grow at the CAGR of 1.3% within the forecasted time period of 2020-2025 because of the increasing consumption of wine and increasing preferences of consumer for wine consumption in restaurants.

The market value of the Japanese wine market is estimated to reach USD 10.45 billion by the year 2025.

Technology Roadmap

The technological changes such as adoption of wireless networks, sensors, smart applications are widening the opportunities for the improvement of the grapes cultivation, wine making process and sale of the wine products in the market.

Along with this, high quality PET packaging technology is facilitating the process of the wine packing. Thus, the technological changes and its adoption in the wine technology is driving the growth and development of the wine industry in the context of Japan.

Distribution Chain Analysis

The key stakeholders involved in the operation of this market are grapes cultivators, wine product manufacturers, importer, distributors, sales, retail store. At first, the grapes cultivators are responsible for the production of the grapes at the local level.

After this, the wine manufacturing companies manufactures and packs the wine in the bottles. Then the wine bottled produced at the local level is ready for sale. Besides this, the wine products are imported from other countries.

Almost fifty-five countries are supplying the wine to the Japanese market. Here Chile is the largest supplier of the wine to the Japanese market in terms of volume and about 77.9 million liters are imported followed by the supply from the United States.

Besides this, the import of wine from Spain and Italy is in increasing trend. The wine products are available at supermarkets, convenience stores, liquor stores, online stores and discount stores.

Competitive Factors

In the context of the Japanese wine market, the external market players who are engaged in the export of the wine products to Japan are competing to establish and grow their wine sales.

Besides this, they are competing to adopt the technological changes in the wine manufacturing process and marketing of the products through the digital applications and software. They are focused to enhance the quality of the wine products.

Key Market Players

Short profile of the key market players engaged in the wine market of Japan are discussed as follows:

Hotei Wines: It is the importer of wine products in Japan from California, United States. It imports more than 50 brands of wine in Japan. Its top suppliers are Chateau Montelena, Shafer, Cline Cellars, and Joel Gott.

Orca International: It is one of the leading importers of wine from USA in Japan. It works with restaurants, wine shops and hotels. Its top suppliers are Woodward Canyon, Freemark Abbey, Domaine Serene, etc.

Monte Bussan: It is one of the leading importer of Italian wine products in Japan with its top suppliers Fontana Fredda, La Spinetta, Mellini, etc.

Mottox: It imports high profile brands and value-oriented products from its top suppliers such as Mastroberardino, Bruno Giacosa and Valdivieso.

Codorniu: It is one of the oldest wineries worldwide, which produces sparkling wine in traditional method.

Freixenet: It is one of the largest exporter of the traditional sparkling wine worldwide including Japan. It has its headquarter in Spain.

Franzia wines: It is the world’s most popular wine in the most carbon efficient packaging. It produces red, white and blush wines.

Strategic Conclusion

The wine market in Japan is growing at the rate of 1.3% because of the increasing consumption of the wine products, increasing aging population and rising preferences towards the wine consumption in restaurants.

However, rising government taxes on liquor products and unfavorable grapes cultivation environment might restrain the growth of its market.

References

Appendix

PET= Polyethylene terephthalate
USD= United States Dollar
CAGR= Compound Annual Growth Rate