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Opportunities for NZ in revival of Japanese wine demand

Opportunities for New Zealand in revival of Japanese wine demand – Rabobank

Signs of a revival in demand in the important, high-income Japanese wine market present opportunities for New Zealand wine producers, according to Rabobank’s latest Wine Quarterly report.

After a nearly two decade-long hiatus, beginning after the Asian financial crisis in the late 1990s, the Japanese wine market has now ‘come of age’ with the country’s wine drinkers increasingly open to new consumption occasions, wine styles and innovations, the report says.

Emerging indications that white wines are beginning to grow in popularity amongst Japanese wine consumers, albeit from a relatively low base, signal opportunities for New Zealand producers, according to report co-author, Rabobank senior wine analyst Marc Soccio.

Far from being a ‘curiosity’, the Rabobank report says, Japan ranks as one of the world’s most valuable wine import markets.

However, many global wine-exporting regions had turned their attention away from Japan after the market declined from its peak 16 years ago.

“But in more recent years, the hype surrounding the China wine market boom has coincided with a significant, yet much-less publicised, renewed interest in wine across the Sea of Japan,” he says. “This has opened the way for New World producers, most notably Chile, to gain a foothold in the market, with the added advantage of a Free Trade Agreement,” Mr Soccio said.

Changing Japanese market

Japan has matured into a much more rounded, stable wine market that is increasingly open to exploring what wine the world has to offer, the report says.

“It is becoming clear that wine has become less of a novelty in Japan and is steadily edging into the mainstream food and beverage culture of Japanese society,” Mr Soccio says. “Japanese consumers at large are becoming increasingly exposed and open to foreign cultures and consumer trends. At the same time, the Japanese wine market is benefiting from the waning popularity of traditional beverages, such as beer and sake, as both the trade and consumers become more confident in matching wine with local cuisine.”

Newer generations of consumers – including female drinkers – are also bringing a new perspective to the wine category. “For example, premium sparkling wines are experiencing strong growth, assuming the traditional role of sake in celebrations,” Mr Soccio says, “while wine continues to benefit from the implicit health associations it has among the health-conscious Japanese market.”

Emergence of New World wines

This growing maturity in the high-value Japanese wine market has led to foreign wine suppliers finding increasing success with more diverse and sophisticated wine offers.

Long considered the domain of Old World wine exporters, particularly France, the Japanese wine market is opening up to New World players.

“The Chilean wine industry, with its powerful low-end offering has resonated with Japanese wine consumers and the trade,” Mr Soccio says. “With the assistance of import tariff cuts associated with the Japan-Chile Economic Partnership Agreement enacted in 2007, Chile’s share of Japanese wine import volumes has more than tripled, growing from 7.5 per cent in 2007 to more than 25 per cent in late 2014, eclipsing France.

“While the challenging economic environment in Japan remains, this is a wine market that is growing most strongly at premium price points which makes it very interesting to global wine producers. With competition expected to continue to heat up, more New World countries, and less familiar Old World powers such as Spain, are set to follow Chile’s lead in this market.”

NZ wine export performance in 2014

The Rabobank Wine Quarterly report says New Zealand wine export volumes finished 2014 11 per cent higher than the previous year. Above-average volume growth was recorded to all major markets, with the notable exception of Australia, where export volumes fell by one per cent over the course of the year.

Japan is a relatively small market for New Zealand wine exporters, ranked twelfth largest by volume in 2014. Total New Zealand wine exports to Japan fell by 1.7 per cent in 2014, while white wine export volumes in particular inched ahead by 0.7 per cent over the course of the year.

ENDS

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