評価 Value Opportunity on Categorization
Ain’t it funny that a place which earns a lot from the labelling and values the presence has been very slow on actually changing labelling laws?
Of course I am talking about the changes to the “Japanese Whisky” designation!
要約 Brief Background
As key watchers of (Japanese) whisky have observed, there are few if any reguilations on what counts as Japanese whisky. It could be made from virtually any grains in any allocations, just as long as the product was bottled in Japan. There were a lot of blends with imported distillate (often labelled ‘World Whisky’ but sometimes not) and very lax rules about what is called what. Especially for newer distilleries or companies aiming to recover the cost of production and long time for cash flow generation, listing themselves as “Japanese Whisky” is an easy way to collect additional premium for the bottle and can be very tempting and has hence been a relatively common practice.
影響 Likely Immediate Effects
There will be a bit of a shakeout as brands are scrambling to relabel themselves. Even though the regulations are not binding (the industry will have until 2024 to comply) there will likely be a push for expressions closer to the end of the year to mention that they are compliant with the regulations. Hence there can be a bit of a rush for newer bottles being early on in regulation compliance.
Price differentiation on older bottles and selected other terms ensuring “Japanese Whisky” labelling compliance. Hence Single Malt, Single Cask / Cask Strength, and similar labels will continue to command a premium and potentially extend it.
Lower considerations for blends and non-Japanese ingredients from a collectors perspective. As sad as it might be, a lot of people like the idea of drinking the particular expression more for the price and rarity than for the flavor. This will likely create a great opportunity for snapping up great bottles that have previously gone out of reach - Nikka From The Barrel comes to mind (see: further reading at the bottom as well) but there can be other blends in the range. Yamazakura is a company I am keeping an eye on from this perspective!
Bye bye Japanese “World Blend Whisky”. This will simply not be allowed anymore - hence will likely go away. Thus expect to see a labelling for the company and keeping the “World Blend” distinction.
As I’ve written before, the lack of labelling has offered early entrants an opportunity to build their own portfolios with good research, for exactly this moment. Pick up good, real Japanese whisky, and better blended whisky where you can!
余震 Lasting Impact
I think this will create a lot of lasting impact in general, quickly listed here for further review later down the line:
Distinction between Japanese companies producing whisky! Given that Japanese companies don’t tend to share distillate from each other, they have often gone to other parts of the world to find blend opportunities. Now, only the bigger players can produce a “Blended Japanese Whisky”. These would be the likes of Nikka, Suntory, and Hombo Shuzo (more known as ‘Mars’). However companies like Yamazakura (mentioned above), Akkeshi, and other smaller newer distilleries will have a smaller opportunity to create “Blended Japanese Whisky”. Expect Suntory Hibiki, Nikka Taketsuru, and Mars Iwai blend labels to maintain premia as they can often still be listed as “Blended Japanese Whisky” and maintain their wording.
Remember, bottles not meeting this distinction cannot use Japanese names (of places, people etc.) hence the companies will need to go through a re-branding exercise. What is the most appropriate way of doing this? Most likely the blender route - specifically referencing key blenders very subtly, but building the blender’s profile across a range of expressions.
Broader introduction to Japanese-produced whisky! With lower prices and more media attention, there is likely to be a broader market for entry-level whiskies produced by Japanese producers. So there can now be whiskies more akin in pricing levels to Johnnie Walker Black Label where the starter level previously was closer to Green Label or Gold Label. Thus this creates the opportunity for more people to go for the premium expressions - Limited Edition Blue Label or John Walker & Sons expressions. Wider base, higher peaks!
For more: Further reading, courtesy of Bloomberg.
