Japan’s Independent Breweries

November 1, 2000 By Wayne Gabel

In a country where you can buy beer from vending machines, it’s seldom difficult to find a cold brew when you want one. And if you’re content with well-made, but fairly uniform mass-market lagers, you’ll have no trouble quenching your thirst in Japan.

But if you’re looking for something  with a bit of local flavor, think about hitting the highway, because a road trip is about the only way you’ll be able to sample the handiwork of most of this country’s small-scale brewers. Although a handful of microbrews are readily available in major cities like Tokyo, Osaka and Nagoya, which are also home to a number of brewpubs, the availability of craft beers from elsewhere in Japan tendw to be limited. To make matters more difficult, beer festivals are few and far between, retailers wary of unfamiliar products with limited shelf lives, and bars specializing in extensive selections of microbrews almost nonexistent.

That’s not to say that microbrewed beers have had no perceptible impact on the Japanese market, though no one would go so far as to suggest that they pose any threat to the megabrewers. Although observers and brewers alike say that more consumer education is needed, there’s little doubt that Japanese beer fans are savvier than they were in 1994, when the government partially deregulated the industry, opening the doors for a new generation of brewers.  Among them are three of the first to enter the market: Echigo in Niigata Prefecture on the Sea of Japan side of the main island of Honshu, ‘s Echigo Brauhaus, Okhotsk on the northern island of Hokkaido and Kanagawa Prefecture’s Sankt Gallen, located just south or Tokyo.

“A couple of years ago, visitors to the Great Japan Beer Festival would point and say, ‘Give me this. Give me that,'” notes Ryouji Oda, head of the Japan Craft Beer Association, a consumer-oriented group that organizes beer-related events and evaluation classes. “Now, they say, ‘I’d like a pale ale.’ Or, ‘I’d like a weizen.'”

Prior to the revision of the law, the industry was dominated by four major players whose product lines largely reflected a lager-oriented German heritage: traditional market leader Kirin Brewery Co.; upstart Asahi Breweries, whose wildly successful Asahi Super Dry put it hot on the heels of Kirin; venerable Sapporo Breweries; and distiller Suntory, the last company to enter the business in the pre-deregulation years. The only other domestic beer maker at the time was Orion, a much smaller regional based in Okinawa.

Japan’s beer landscape was forever altered seven years ago during the administration of then Prime Minister Morihiro Hosokawa. Smaller producers were allowed to enter the market for the first time when the minimum production requirement was lowered from 2,000 kiloliters (16,800 US barrels) per year to 60 kiloliters (504 barrels) for beer and just 6 kiloliters (50 barrels) for happoshu, a catch-all category for malt beverages that cannot legally be called beer and are therefore taxed at a lower rate. By comparison, Kirin, one of the world’s leading brewing companies, sold a total of 2.94 million kiloliters  (24.7 million barrels) of beer and happoshu in 1999.

To put things in perspective, consider this: Modern Brewery Age estimates that only about 25 US specialty breweries, including Anchor, Sierra Nevada, Redhook, Pyramid and Widmer, are now capable of producing more than 16,800 barrels per year. To qualify for a brewing license in pre-deregulation Japan, these well-established US names would have been required to have the capacity to produce that much beer from the moment they left the starting gate. More than likely, that would have been an impossibility for all.

As the law now stands, however, most of the familiar US craftbrewers would be able to gain admission to the club, even if they weren’t able to produce to requisite 60 kiloliters per year at the outset. Progress toward that goal would be monitored over a three-year stretch during which they’d have to apply annually for a one-year temporary brewing license. Obtaining a permanent license, on the other hand, requires proof of the ability to meet the minimum production requirement on a consistent basis.

For some brewers, that can be a constant headache. Purchasing habits vary according to season and location. An unusually cool summer can hurt brewers of all sizes, wherever they may be situated. And in more northerly climes, winter can really put the chill on beer consumption. After all, it wasn’t that long ago that draft beer of any kind was a summertime-only phenomenon in Japan.

Location, Location, Location

Not surprisingly, location can mean everything. As in North America, brewers in Japan like to tout the virtues of consuming beer where it’s at its freshest: the source. But unlike English-speaking countries, where terms like “micro” or “craft” are used to indicate the size of the operation or the skill of the brewer, the Japanese refer to the products of small breweries as jibiiru, which means “local beer.” It’s a term that some brewers take quite literally.

Although hundreds of brewpubs and microbreweries have sprung up in Japan since deregulation, only a handful have managed to establish a foothold outside of their own backyards. The vast majority are still local in orientation, some because they were established as tourist attractions designed by “third-sector” ventures organized by public and private entities to help revive depressed local economies. Others are private-sector brewpubs that cater mainly to the local market, though some may bottle small quantities of their beer for souvenir-seeking travelers or for use in gift packs sold  during the traditional summer and winter gift-giving seasons.

While  there are those who are quite content not to stray too far from home, others are setting their sights farther afield. In some cases, they’re bypassing the retail maze by hawking their wares via the Internet; in others, they’re building restaurant chains to supply their beer to the thirsty and curious up and down the archipelago.

“There are more than 300 breweries in this country, and that means there are probably 300 different reasons for making beer,” says John Schultz, owner of Minami Aizu Brewing,  a micro in rural Fukushima Prefecture and the only brewery owned and operated by a foreign-born entrepreneur, though others are on the way.

Schultz’s reason is one that will resonate with his peers in North America. After a lengthy career in the fast-paced world of Tokyo’s securities industry, the amateur homebrewer was looking for an occupation that suited his dream of living the rest of his life in Japan in a mountain village that spends much of the winter buried under a deep blanket of snow. Unlike so many other dreamers in this world, Schultz has had the good fortune to realize his by turning a hobby into a profession.

“There are other homebrewers who turned professional because they like brewing,” Schultz notes. “A lot of them would like to start their own breweries, but they don’t have the capital. Money’s the main barrier. It’s a lot cheaper in the United States, because there’s used equipment and land isn’t so expensive.”

Expertise from Abroad

While Schultz made the leap from homebrewing, fate decided the career paths of others, including Satoshi Niwa of Hakusekikan Brewery, located within a museum complex in Gifu Prefecture.

“Our management decided to diversify, and my boss asked me to start brewing. I didn’t have any experience or knowledge about beer, but I believed I could make good beer someday if I put my mind to it,” Niwa said.

Fans of Hakusekikan’s Super Vintage barley wine, which at 14 percent alcohol is reputedly the strongest beer brewed in Japan, would be quick to point out that he’s just being humble.

Although there are plenty of examples of individuals who got into the brewing business by other means, many of those who are responsible for making beer at Japan’s small-scale breweries have been trained by consultants from abroad or served as apprentices to foreign brew masters for periods of time ranging anywhere from a couple of weeks to a couple of years. Less common are those who have studied brewing overseas, and even fewer in number are foreign-born brewers working on long-term⎯or lifetime, in the case of those who get married⎯assignments.

The reliance upon imported expertise during the early years of the craftbrewing movement here has much in common with the drive toward modernization that followed the Meiji Restoration in the mid-1800s. Then, as now, foreign advisers groomed the homegrown talent who would eventually take over the reins.

The homebrewing route is, however, a somewhat unusual way to enter the business. To be more precise, it’s a route to which some would rather not draw undue attention. That’s because Japanese law does not permit homebrewers to make beer with more than 1 percent alcohol by volume. Nonetheless, some of the kits on the market clearly detail how to make both legal and illegal brews. While homebrewing supplies are sometimes available in retail outlets, many hobbyists must rely upon the Internet to obtain hard-to-find items.

The Virtual Community

In spite of these obstacles, the hobby flourishes. For evidence of the skill of Japan’s homebrewers, look no further than Ichiri Fujiura, who was named Homebrewer of the Year in 1999 by the American Homebrewers Association, making him the first person from outside of North America to be so honored. Of course, he and his peers understand an important unspoken rule of homebrewing in Japan: If you’ve got it, don’t flaunt it. Keeping a low profile, however, is not a problem among homebrewers in this country.

“It’s a virtual community,” explains Fujiura, who, like many others here, had to rely upon English-language texts for advice due to the lack of information available in Japanese. “There aren’t many homebrew shops, and we homebrewers are scattered across the country. The only way we can communicate is online. That doesn’t allow us to taste and compare.”

Although Fujiura says he has no intention of turning pro, other Japanese hobbyists have made the transition. One who did is Hiroyuki Aoi, who began homebrewing in Japan. He found his calling while a graduate student at the Florida Institute of Technology, where he had easy access to ingredients and advice. Upon returning home, he was pleased to find that the government had given the go-ahead for microbrewing, but says he soon realized that quality varied wildly and prices were invariably steep.

Eventually, he and his wife, Masako, formed a company called Bier-Reise and, quite literally, built their own brewery, which opened in February 1998. A plant engineer by training and a largely self-taught brewer who also attended a course at the American Brewers Guild, Aoi designed the brewery and oversaw the installation himself. That meant that he was able to complete the project  with substantially less money than those who relied upon major Japanese trading companies to handle all of the details, as was typical of many installations in the early years of this country’s craft-brewing revolution.

“I didn’t operate the cranes,” Aoi recalls with a laugh. “But I did the basic design, contacted the manufacturers, imported the equipment and oversaw the whole project.”

His gamble paid off. These days, the couple’s Yachiyo Brewery in Chiba Prefecture produces Yachiyo Brau beer for sale in the greater Tokyo area and makes contract-brewed products for clients around the country. They’ve also obtained a license to brew happoshu, which will permit them to brew with ingredients that are not approved for use in beer. Set to make its debut this autumn is a brew in which nigauri, a bitter melon beloved in Ms. Aoi’s native Kagoshima, is used instead of hops.

A National Game Plan

Success, however, does not come overnight, and sometimes it doesn’t come at all. For small, family-owned enterprises like Minami Aizu Brewing and Bier-Reise that lack the deep pockets of some of the major players in the microbrewing business, the struggle is particularly difficult. In the Japanese craftbrewing scene, they are the exception, not the rule. Many small-scale brewers have ties to much larger companies.

Take, for example, two of the nation’s biggest and most visible micros: Ginga Kogen and Gotemba Kogen. The first is affiliated with major property developer Higashi Nihon House and has devised what’s been referred to as a zenkoku, or “nationwide” strategy. It’s a game plan that Masahiro Suzuki of the brewery’s Tokyo sales office says calls for Ginga Kogen products to be available around the country⎯from Hokkaido in the north to Okinawa in the south⎯via a network of breweries around the country that supply draft beer to the company’s growing chain of franchised beer-themed restaurants and canned and bottled brews for the retail trade, including the all-important convenience stores. In the long-term, the brewery, which is now said to have the capacity to make 1 percent of the country’s beer, would like to obtain a market share of 5 percent.

Gotemba Kogen, on the other hand, has ties to Yonekyu, a company that specializes in processed meats. In addition to a highly successful and recently enlarged brewpub at a hotel and resort complex in Shizuoka Prefecture, Gotemba Kogen has expanded its capacity to meet the demands of the growing chain of Chimney pubs that sell its beer on tap at locations around the country.

While all sorts of companies have gotten involved in the microbrewing business in Japan, it should perhaps come as no surprise that saké brewers have taken a special interest in the beer market. Niigata Prefecture’s Uehara Shuzo, whose highly touted Echigo Brauhaus is regarded by many as the first new microbrewery in Japan in modern times, is one example of a saké company that’s diversified into beer. Another is Konishi Shuzo, the nation’s oldest saké maker and its leading importer of Belgian specialty beers. Konishi operates two Shirayuki brewpubs, one in Nagoya and the other in Itami, near Osaka.

For Ibaraki Prefecture-based Kiuchi Shuzo, a 200-year-old saké company, entering the beer business not only promised a new economic opportunity, it also solved a dilemma that undoubtedly plagues other saké brewers around the country.

“Traditional saké breweries only brew during the winter season, when temperatures are cold,” explains Toshiyuki Kiuchi. “Traditionally, we hired workers known as toji, who work on farms during summer and at sake breweries during the winter, when the heavy snowfall prevents them from taking on agricultural work. This system was in existence for nearly 300 years in Japan, but these days, young people have come to dislike these system, so the number of toji became very small. That presents serious trouble for saké brewers. We solved our problems by brewing beer as well as saké. We’ve got seven young brewers now. During the summer, they spend 80 percent of their time on beer and 20 percent on saké. In winter, it’s the reverse.”

Kiuchi Shuzo’s line of Hitachino Nest beers have been earning plaudits abroad, winning a gold medal at this year’s World Beer Cup. Such glowing reviews have made Kiuchi think seriously about exporting his beer, which could very well make his company the first Japanese micro to do so.

Brewing Innovators

In years past, beers from Shinano Brewery in Kurohime, Nagano Prefecture, were available in the US market, albeit as contract brews made by New England’s Ipswich Brewing Co. for Japanese restaurants in the northeastern United States. Although that arrangement is no longer in effect, the American heritage of Shinano’s beers still comes to the fore. That’s because Megumi Sekiguchi opted for an internship at Ipswich while she was studying hotel and restaurant management at Boston University.

“That was before the Japanese government changed the regulations to allow microbreweries,” Sekiguchi says. “I had no idea that the law was going to change, but my father was really interested in the beer business, so he advised me to work at Ipswich.”

Months later,  the law was revised and the Sekiguchi family was well placed to benefit from the advice of their US counterparts. Working in cooperation with Ipswich, they started a brewery that has come to be recognized as an innovator in Japan, most recently for its zero-emissions program.

“We started working on the project in 1998, when C. W. Nicol, who’s a novelist and environmentalist in Kurohime, told us about the zero-emissions system,” Sekiguchi explains. “We realized there was so much waste at the brewery⎯spent grain, spent hops, surplus yeast, surplus wort, etc. So, we devised the slogan ‘No waste! Mottainai!’ for our project. The first thing we tried was baking bread using our spent grain. We came up a great way to process the spent grain and make it suitable for baking bread. We also made a great recipe for the bread, which we’re now trying to patent.”

Another brewer that’s not letting things go to waste is Kawagoe, Saitama Prefecture-based Koedo, a unit of the agricultural firm Kyodo Shoji Corp  located just north of Tokyo. Like a growing number of brewers these days, Koedo has two separate licenses: one to make beer, and another to make happoshu, including a brew made with sweet potatoes.

The term happoshu, which exists primarily for taxation purposes, encompasses such a broad range of beverages that it has little descriptive value. Basically, however, there are two kinds of happoshu. The first are budget-priced products popular in today’s recession-hit economy that are typically brewed with large amounts of sugars and less than 25 percent malt. The second group consists of  brews that do not qualify as “beer” under Japanese law because they were made with ingredients that are not approved for use in beer, including spices, fruit and certain unmalted grains. In some cases, brewers deliberately tweak their all-malt beers by doing things like adding honey or maple syrup to qualify for the lower production requirement and the lower tax bracket. In others, different motivations are at work.

“The area around Kawagoe has long been known for its sweet potatoes. Farmers here have cultivated them since the Edo Period,” explains Yukiyoshi Asagiri, president of Kyodo Shoji. “Unfortunately, some sweet potatoes can’t be sold as produce because they’re too big or not sweet enough. So, we buy them and use them to brew our happoshu, thereby giving value to sweet potatoes that would otherwise have been thrown away.”

For Koedo, it’s a win-win situation. Area farmers are happy to find a market for what was once unusable produce, and consumers⎯particularly tourists⎯can enjoy a brew with a truly local flavor. The local angle is particularly important to Asagiri, whose company has advised other breweries on the development of brews made with locally produced ingredients, including all manner of vegetables and fruits. In Japan, that’s important, as products that are clearly associated with a particular region can be marketed as souvenirs, or omiyage, aimed at vacationers looking for gifts for the folks back home as well as at corporate travelers seeking something special to give their coworkers upon return from a business trip.

Differences in the Market

To meet the demands of the tourist market, brewers are increasingly turning to bottling and canning their beers. In contrast to the United States, many small-scale brewers prefer to can their products rather than bottle them. In part, that’s because shopping habits differ greatly. In automobile-dependent North America, consumers can pick up a case of bottled beer  and put it in the trunk of a car. Throughout much of Japan, shopping is often accomplished on a bicycle and refrigerators are rather small. Cans represent a more practical alternative, regardless of the effects that some consumers may perceive such containers may have on beer taste.

The popularity of canned microbrews is just one way in which the industry in Japan differs from that in North America. Another, perhaps, is the attitude toward the newcomers by the megabrewers, who have helped and, in some respects, been helped by the microbrewing industry.

“The impact of jibiiru on Kirin and major Japanese breweries is  minor. We’re not afraid of them. In fact, we think the arrival of jibiiru has helped to broaden the beer market and introduce different types of beer in a market that has been dominated by pilsner-style beers,” said a Kirin spokesperson. “What’s more, Kirin has a section that supports jibiiru companies by advising them. Since 1994, we have helped more than 200 jibiiru companies. The diversity of our product line is not due to jibiiru companies. Rather, we are always aiming to develop our multibrand strategy.”

At the moment, Japan’s microbrewing sector is in a state of flux, which seems quite natural for an industry which, in its infancy, grew at a pace so rapid that it could never be sustained for long. A shakeout is coming, and it’s not a question of if, but when. Some producers have closed forever, while other companies have shuttered their brewpubs in order to concentrate solely on the microbrewing business.

“Last year (1999) was the worst yet for craftbrewers,” said Oda of the Japan Craft Beer Association. “But this is a new year.”
And from across the Pacific comes  one of the many voices of experience from a more established market that’s been through downturns before.

“Historically, the fact of the matter is this: In the restaurant industry⎯and a brewpub is a restaurant concept⎯there will be ventures that are destined for success, and there will be a certain percentage that are going to fail, no matter what country they’re in,” said Jon McKinnon, whose Seattle, WA, based McKinnon International supplies brewing equipment and raw material to Japan’s microbrewing industry.

Unlamented though some of those departed brewers may be,  residents of Japan from lands with more developed craftbrewing industries can only say, “Better to have brewed and lost, than never to have brewed at all.”