Craft Brewing in Japan

May 1, 2010 By Bryan Harrell

It was July of 2000 and Bryan and Sayuri Baird had just finished completing their new Fishmarket Taproom across the street from the port in Numazu, Japan. They had already applied for a brewing license for their startup, Baird Brewing Co. While the taproom offered Hoegaarden White, Guinness and several other beers, the Bairds were anxious to start serving their own beer. As it turned out, the license would finally be granted six months later, in December.

Bryan relates that the interaction with the authorities to obtain his brewing license was particularly intense. Most applicants hire consultants for this process, but he ended up doing it himself, in person. He admits that it took “countless visits” but since he was able to answer all their questions on the spot, it was to his advantage. “We were easily the smallest operation, but if you do exactly what they tell you to do, they will not deny you.”

By January, 2001, Baird Brewing was in production. Bryan was brewing on a 30-liter pilot system he had configured in the United States. Lack of investment capital kept him from purchasing the proper three-barrel system he’d wanted. He and Sayuri had put all the capital they had into the taproom itself, and had decided to start small. Still, in their first year, Baird Brewing produced about 50 barrels and established themselves as a quality leader in Japan’s craft brewing industry.

Glimmers of Variety

The standard beer of Japan has always been lager, similar to European export types, but lightened with a bit of rice. The only major shift in a century of beer drinking was in 1987 with the appearance of Asahi Super Dry, a highly attenuated lager that did not have the heavier maltiness of, say, Kirin Lager. Super Dry eventually carved out a large share of the market, and in the process many of the other popular lagers became “drier” and less sweet.

A few beer enthusiasts, however, were reveling in sweetness. In the late 1980s, Tokyo and other big cities in Japan were experiencing a small, localized boom in Belgian ales, particularly Trappist beers. A small specialty bar, Brussels, opened in Tokyo and was followed by a few others, most notably Bois Cereste, which was known as a favorite of the late Michael Jackson during his visits. While the overall popularity of Belgian beer in Japan is small, the love of these beers by Japanese enthusiasts has been enduring. At present, there are perhaps 30 Belgian beer specialty bars in Tokyo, and perhaps about half as many spread throughout Japan’s smaller cities.

Other kinds of different beers were also coming in. Phred Kaufman, a native of Los Angeles, had moved to Hokkaido, Japan’s northernmost major island, and began running an international beer bar in 1980. Around 10 years later, he began importing Rogue Ales’ beers from the United States, most of which were branded with his own label, Ezo Beer. Currently, Kaufman handles both Rogue and Ezo, along with a number of minor beers from Belgium, Germany, the Netherlands and Scotland. He was recently joined by Andrew Balmuth, who began importing American microbrew into Japan in 2006, and handles a lot of brews from California, Colorado, the East Coast and other places.

In the early 1990s, Bryan Baird lived in Osaka for several years. He grew to love Japan, and wanted to be involved with it for the rest of his life. He returned to the United States for graduate school, and while there developed a strong interest in craft beer. Back in Japan in 1995, Bryan assumed an ordinary “salaryman” white-collar job in Tokyo.

During that time, Bryan was paying close attention to craft beer in Japan. Certainly there was a lot of news. Microbrewing had just been “legalized,” in the sense that a brewery need only produce 60,000 liters annually to obtain a license to make beer, down from 2 million liters yearly required during the era of oligopoly in brewing. The first two breweries to obtain licenses, Echigo Beer in Niigata and Ohotsk Beer in Hokkaido, were granted them on the same day in 1994.

Echigo threw their opening party in December, 1994—in a newly built brewpub that reminded many of a modern European church— in Niigata, directly north of Tokyo. Their beer, based on popular U.S. microbrew styles—a pale ale, an amber ale and a stout, as I recall—tasted as beautiful as the new brewpub. Ohotsk Beer in Hokkaido had their opening party later, and got into operation the following March.

A Culture of Craft

Little by little, the craft brew industry in Japan grew, despite the collapse of the economic “bubble” economy around the same time. Baird recalls that what struck him most is that Japan is a culture of craftsmen, and that Japanese consumers have a particular appreciation for high quality products. Still, most of Japan’s initial craft beer output was generally of poor quality.

One obvious reason is that homebrewing is illegal in Japan, so there is no army of hobbyists to draw upon when looking for people to brew craft beer professionally. Instead, people hoping to learn would train under brewers from overseas, usually Germany or the United States, who would stay in Japan for rather short periods of time, often just three months, while the local Japanese trainees would scramble to learn as much as possible. From 1995 until 1999, over 175 breweries opened in Japan, followed by about another 100 through 2005.

In 1994, around the time brewery licensing regulations were changing, Ryouji Oda founded the Japan Craft Beer Association. The group initially set up a system of beer evaluation seminars based on U.S. standards, but rather than call it beer “judging,” they preferred to refer to students as beer “tasters.” In 1998, the JCBA began holding craft beer festivals, and now holds yearly events in Tokyo, Osaka and Yokohama.

Still, at this point Japan had no consumer-oriented beer club or organization, nor did it have any kind of a beer magazine. These would have to wait until after the year 2000. However, an emerging craft beer bar, Beer Club Popeye in Tokyo, functioned as a kind of beer geek clubhouse thanks to its continually growing selection of Japanese craft beer. Founded by Tatsuo Aoki as a western-style pub in 1985, Popeye was an early adopter of Japanese-brewed craft beer. From three taps in 1995, the number of handles grew to 20 in 1998, to 40 in 2002 and to 70 in 2008.

When Bryan Baird made the decision to start a brewery, he returned to the States in 1997 and enrolled at the American Brewers Guild in Davis, CA. Following a seven-week intensive course, he apprenticed for five weeks at Redhook. Back in Japan, he worked briefly a U.S. brewing equipment supplier, a position he soon left to devote almost a year to writing his initial business plan, while doing translation on the side. On a trip to the States, he met with old friends who would be interested in investing in his venture, and also had a 30-liter gravity-fed pilot brewing system configured and shipped to Japan.

Bryan arrived back in Japan with an investment of about $100,000 gathered from five investors, all of which went into the pub and the tiny 30-liter system. He now admits that he is glad they started so small. His biggest fear was to disappoint the backers by not being able to do things properly. Since he and Sayuri could barely pay themselves a salary, it was a challenge to stay afloat in all the red ink, and not to be forced to fold and walk away.

Still, sales of Baird Beer increased on a regular basis, and by most accounts, Bryan’s brew was considered to be the best in Japan. In 2003, he was able to move up to a larger 250-liter (two-barrel) system, and in 2006 he installed his current eight-barrel system. However, he still uses his older two-barrel system to produce one “seasonal” beer each week, on average—a grueling brewing schedule, but the effort has been instrumental in keeping shops, pubs and customers interested in the brand.

Good Beer—at a Price

Meanwhile, the beer enthusiast contingent at Beer Club Popeye held Japan’s first Real Ale Festival at the pub in the early spring of 2003. From this, a group decided to form a club for beer consumers. While the initial name was to have been the Real Ale Club, the interests of members quickly broadened, and they settled on the name the Good Beer Club at the founding meeting in 2004.

For the first two years, membership grew at a good pace, but by 2006 it began to decline somewhat as some realized the main focus of the GBC was to organize beer events, and not to campaign for lower beer taxes or homebrew legalization. Still, the group is fairly active and stages regular events.

For a short time, Japan got its own beer magazine, thanks to prolific beer writer, illustrator and bon vivant Hiroyuki Fujiwara. He was the editor of The Beer & Pub quarterly that was published from spring 2005 to the end of 2006. This full color glossy magazine featured a selection of interesting articles and great photography, and is still sadly missed.

Today, Japan has a very diverse beer culture, though it is concentrated on mass-produced lagers and low-malt beers (generally defined as those made with up to 25 percent malt) from the four major brewers. Beer taxes are high—about $2.50 per liter. This brings the cost of an ordinary six-pack as high as $16. The low-malt beers are taxed less, and have appeared as a way of offering cheaper beer, with a six-pack costing as little as about $9.

At the other end, the least expensive craft beer will run at least $18, and often nearly twice as much. What needs to be remembered with Japanese craft beer, though, is that all the inputs are imported, so that top quality craft beer from the United States is fairly competitive in price.

Bryan Baird still faces challenges, though most involve getting more people interested in better quality beer. Interestingly, these days none of them involve laws. “Of course, the liquor laws in general are actually quite free,” Bryan admits. “It is utter freedom—no interstate commerce laws, no three-tier system, and thanks to the Internet, we can sell directly to anyone. This means retailers, pubs and restaurants, and even consumers. Since our first Taproom, we have opened two more, both in Tokyo: one in Nakameguro in 2008, and another in Harajuku in 2009.”

Bryan’s business strategy is at one philosophically with his approach to brewing. He explains, “We make beer in a certain way, we are committed to retailing the beer well. We run our own taprooms, which is easier to do than in the U.S. since we have full legal rights to owning our pubs. They are our showrooms, and enable us to sell twice as much beer as we could otherwise. The Taprooms are absolutely essential to our business.

We also began exports to the U.S. in April, 2008, through Shelton Brothers, our importer. This is a very small part of our business, less than 10 percent, but exporting is mainly for pride, reputation and brand-building. When you are as small as us, it is not that profitable.”

In the next 10 years, it is safe to say that craft brewery openings will be minimal. Baird and breweries like his will grow incrementally while closures will continue apace. “There is no entrepreneurship in brewing here,” Baird explains. “It has been corporate from the beginning. It’s really been about local promotion and tourism. Out of over 200 breweries now, there are about 20 that are really committed to making a good go of it, and making really good beer,” he explains.

In the fall of 2009, a new government was put into place in Japan, and there is talk that liquor taxes will be heavily revamped, perhaps to the benefit of craft brewers. Still, fundamental change in Japan takes place at a very slow pace, so dramatic changes should not be expected.

Still, Baird is optimistic. “The future is bright because of the demographics. Brewing good beer is your only chance to make it in this business in Japan. I believe there is a culture here that can support good beer.”