Japanese Whisky Demand Soars In U.S., Straining Supply

As brown spirits of all kinds continue to boom, Japanese whisky is quickly gaining traction in the U.S., putting pressure on producers to ramp up their output. The category expanded by more than 65% to 67,000 cases last year, according to Impact Databank, and leading distillers tell SND they’re struggling to keep pace with demand.

“We’re producing at full capacity, and we’re making expansion investments, but until they’re complete we don’t really have the capability to expand production as we should,” says Naoki Tomoyoshi, international business development representative for Nikka Whisky. “No one was really interested in our whiskies five years ago, and five years is not enough time to age and blend our whiskies.”

Handled by Anchor Distilling Company in the U.S., the Nikka Whisky Distilling Co. portfolio is led by its Coffey Grain expression ($70 a 750-ml.), which accounts for around 55% of the brand’s U.S. sales. The Nikka lineup also includes Taketsuru Pure Malt ($70) and Coffey Malt ($75), as well as newcomers Yoichi Single Malt and Miyagikyo Single Malt ($80). The latter two offerings launched in September and are designed to tap the U.S. market’s growing interest in single malt whiskies. Overall, Nikka more than doubled in the U.S. last year to roughly 20,000 cases.

Category leader Beam Suntory is also fighting production constraints. Its lineup comprises Yamazaki, which includes 12-year-old ($85 a 750-ml.), 18-year-old ($250) and 25-year-old ($1,600) single malts; Hakushu, which offers 12-year-old ($85) and 18-year-old single malts ($250); and blended range Hibiki, which has a 12-year-old ($65), 17-year-old ($150), 21-year-old ($250) and Harmony ($65). This summer, Suntory extended with Suntory Whisky Toki ($40), a blend of whiskies from the Hakushu, Yamazaki and Chita distilleries, which is positioned to draw consumers from the Bourbon, Scotch, Canadian and Irish whisk(e)y categories.

“Demand for Japanese whisky continues to grow, (even as) many distillers struggle to maintain sufficient supply,” notes Maya Rubalcaba, senior brand manager, U.S. for Beam Suntory Scotch and Japanese whisky. “We’re able to meet this demand by continuing to release a range of offerings, including limited edition expressions, and new blended innovations such as Suntory Whisky Toki and Hibiki Japanese Harmony, which consist of a wide range of aged single malt and grain liquids.”

Last year, the Hibiki range was up more than 160% to 17,100 cases in the U.S., according to Impact Databank. Yamazaki slipped 3% to just over 10,000 cases, but that decline was offset by Hakushu, which posted a 126% gain to nearly 7,000 cases. “Since 2013, Japanese whisky in the U.S. has grown by 577% in dollar sales and by 508% in volume,” adds Rubalcaba, citing Nielsen data. “It’s undeniable that Japanese whisky is hot now.”

News Briefs:

•Teeling Whisky Co. enjoyed sharp rises in revenue and profit in its latest fiscal year. The Irish whiskey company’s revenue more than tripled to €24.6 million ($27m), while its pre-tax profit jumped by 73% to €2.95 million ($3.25m). Launched by Jack and Stephen Teeling—sons of John Teeling, who sold Ireland’s Cooley Distillery to Beam Inc. in 2012—Teeling Whisky Co. has also ramped up its headcount, with its number of employees rising from 15 to 24 last year. In June 2015, the company opened a new €10 million ($11m) distillery in Dublin—the first distillery to open in the city in well over a century.

•Andover, Massachusetts-based Burtons Restaurant Group, which currently operates 14 locations, is opening a new unit in Charlotte, North Carolina next month and will launch locations next year in Florida (Boca Raton), Massachusetts (Shrewsbury) and Maryland (College Park). Burtons will also expand its Red Heat Tavern concept to New Hampshire (Bedford) and Massachusetts (Peabody) in 2017. CEO Kevin Harron said the company is seeking new sites in Indiana, Ohio and Kentucky. A typical Burtons restaurant spans 6,500 square feet, seats 200 and grosses more than $4 million annually, with 25% of revenues coming from beverage alcohol. Twelve of the 15 draft beer handles in each unit are reserved for local craft products.

•Anheuser-Busch InBev has named Marcel Marcondes vice president of marketing for the U.S., replacing Jorn Socquet. Marcondes was previously global vice president, marketing brands and growth development platforms. Socquet has been appointed to a new role as vice president, marketing strategy, core brands, reporting to global chief marketing officer Miguel Patricio.

Craft Brewing and Distilling News:

•Vökin Vodka has established operations and opened a production facility in Plymouth, Michigan. The site will produce a series of vodkas and other spirits, including the brand’s flagship vodka, which is distilled six times and made with Midwest-sourced grain. The first shipments are slated for this fall, with Vökin Vodka and Vökin Öne Vodka—an ultra-premium Polish import—among the initial releases. Handled by Republic National Distributing Co., the Vökin portfolio initially will launch across Michigan, with nationwide expansion planned for 2018.

•Elk Rapids, Michigan-based Short’s Brewing Company is bringing back The Double Magician as its latest seasonal entry. Originally brewed in 2007, The Double Magician is billed as a 8.1%-abv double London-style red ale, featuring notes of toffee, raisins and light citrus. The seasonal offering began rolling out in bottles across Michigan earlier this week, with expansion into Pennsylvania, Ohio, Indiana, Illinois and Wisconsin to follow. The Double Magician marks the 10th seasonal in Short’s lineup, joining Autumn Ale, Beard Of Zeus, Chatterbox, Controversiale and Good Humans, among other beers.

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