Japanese Wine Market

1. Japanese Wine Market Sebastian Teunissen Haas School of Business University of California, Berkeley

2. My 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

3. Agenda This is the text box • History • 2 • Madeira wine • Product Recall • 3 • 4 • 5 • 6

4. Japan Alcohol Consumption, 2000 4% 8% 56% 10% 16%

5. Japan Wine Imports by Volume, 2001 11% 7% 41% 9% 12% 20%

6. Consumer 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.

7. Consumer 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.

8. The 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

9. 9 • “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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11. California wines find growing market in Japan 1999 CNN story on the wine boom in Japan

12. California wines find growing market in Japan 1999 CNN story on the wine boom in Japan

13. Japanese Wine Imports

14. 14 Wine (off-trade) in Japan Euromonitor 2003

15. 15 Beer (off-trade) in Japan Euromonitor 2003

16. 16 Spirit (off-trade) in Japan Euromonitor 2003

17. Consumer Expenditure on Drinks

18. USA EXPORT SALES 6 Months Jan. - June 2002

19. Wine Magazine

20. History

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22. The Growth of Fruit Wines

23. The Growth of Fruit Wines

25. Convenience Stores Number of Stores – End of Fiscal Year 2001 • 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

26. Convenience Stores New Store Openings in 2002 (estimated % increase) • 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

27. Meishu Jiten –Industry “Bible”

32. KICO Wine Portfolio (examples)

33. A 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.

34. 1999 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!).

35. Food Sanitation Law http://www.jetro.go.jp/se/e/standards_regulation/food2003mar-e.pdf

36. Madeira Wine

37. Madeira Wine

38. Madeira Wine

39. Madeira Wine

40. German Exports (hectolitres) Source: DWI

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45. 45 On May 1, 2003 a ¥10.48 per 750ml bottle increase in duty

47. Major Grape Production Areas of Japan

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