Spirits & Liqueurs Other Whiskey

The Story of How Japanese Whisky Almost Disappeared from America

Image: Headexplodie

Last spring, when Suntory announced it would stop making two of its most beloved products, Hakushu 12 Year and Hibiki 17 Year, Japanese whisky fans around the world let out a discontented sigh.

I went shopping.

I marched into my local liquor store and laid down a tidy sum on a bottle of each. Yes, I paid above the suggested retail price but nothing near the sticker shock I was witnessing on the secondary market, where an empty bottle of aged Hibiki can fetch $100.

A week later, I went back to the shop and saw that the bottles had been marked up 100 percent. I returned again the following week, and there they were, jacked up yet another 50 percent. Stunned, I questioned the shop owner, a soft-spoken man in his mid-40s who keeps a photo of his infant sons behind the counter. “Everyone keeps asking for them,” he told me, almost apologetically. “I need to make my inventory last. Every time I sell a bottle, I increase the price. But it doesn’t matter. People still buy it.”

In less than a decade, Japanese whisky has gone from total obscurity to mild curiosity to arguably the most sought after spirit on the planet. Since 2013, exports have grown by nearly tenfold, igniting a global feeding frenzy on what’s proved to be an increasingly dwindling supply. Today, aged single malts and premium blends from the country’s two largest producers, Nikka and Suntory, are strictly allocated—or worse, discontinued. Prices have skyrocketed, with the rarest bottles attracting record amounts at auction. Demand is, as one Suntory executive put it, “excessive.”

Low Stocks, High Demand

“It’s gotten to the point where we’ve had to hide our whisky,” says Khaled Dajani, the owner of San Francisco’s Nihon Whisky Lounge, one of the first places in the U.S. to feature Japanese whisky when the bar opened in 2005. Back then, bottles of Yamazaki were displayed prominently behind the bar as a way to promote the unknown brand to a drinking public just turning on to brown spirits.

“Most people had never heard of Yamazaki; they had no idea what it was or whether it was any good,” says Dajani. “Now, they come in off the street demanding it. I’ve actually had to tell my staff to downplay our Japanese whisky, at least until the supply returns to normal.”

Exactly when that will be is a touchy topic for whisky watchers. In 2016, Suntory’s CEO, Takeshi Niinami, said it would take 10 years for his company’s stocks to recover. Not cheerful news for anyone holding out for a bottle aged for 12, 17 or 18 years.

Some have started calling the shortage a crisis. Just last month, Nikka announced that it was temporarily suspending its popular Coffey Grain and Malt whiskies for the Japanese market, two products that were introduced to help stem the demand for its discontinued aged single malts. In the meantime, Japanese whisky lovers are left watching the clock and asking: How did we get here?

The Silent Period

Brian Ashcraft, the author of “Japanese Whisky: The Ultimate Guide to the World’s Most Desirable Spirit,” traces the shortage back to the 1980s, when new liquor tax laws and an uptick in shochu consumption in Japan all but crippled the country’s thriving whisky business. At that time, he says, international sales were more or less nonexistent. “When Hibiki appeared in 2003, Japanese whisky wasn’t yet on the world radar,” says Ashcraft. “It was just some product Bill Murray’s character was doing ads for [in the movie “Lost in Translation”]. It wasn’t the global sensation that it is today.”

The mid-1980s kicked off what some in the industry refer to as the “silent period” of Japanese whisky, three-plus decades of year-over-year decline, punctuated by halts in production, plant closures and brand sell-offs. “Many employees were encouraged to take early retirement packages, and some were sent to other companies,” says Emiko Kaji, who manages international business development for Nikka.

A low point came in 2011, when the legendary Karuizawa distillery—once the second largest in Japan behind Suntory—shuttered after more than 50 years in operation. “The Karuizawa name was so strong that, even as the whisky business was hitting historic lows, shutting it down showed a tremendous lack of foresight and imagination,” says Ashcraft. (In a feel-good twist, some 300 casks were rescued from the distillery. Today, they are among the rarest and most expensive bottles of whisky sold at auction, commanding tens of thousands of dollars each.)

Even during the spirit’s darkest days, Japanese whisky had its champions. Suntory’s global brand ambassador, Mike Miyamoto, has worked for the company since 1978, formerly managing both its Yamazaki and Hakushu distilleries. “At a certain point, the decision was made to reduce production,” he says. “I was afraid of the impact this would have on long-term supply and felt strongly that our whisky would be enjoyed by a larger global audience in the future.”

Miyamoto says the decision led to an emotionally difficult period in his career, when many distillery workers, colleagues and friends of his lost their jobs. But he says he did what he could and worked hard to focus the rest of his team on the future. “It’s hard to say where we would be had we made more whisky in the early 2000s,” he says. “I like to think we’ve learned from the past.”

The Future Is Full of Whisky

To meet the soaring demand, Nikka and Suntory have made heavy investments in production, from new stills to storage facilities. At the same time, Japan is experiencing its own craft distilling boom. The country now has 23 operational whisky distilleries, more than twice the number that existed in 2011, with others ready to break ground. The ongoing joke is that Japan is swimming in whisky; it’s just that none of it is ready to drink yet.

But who’s to say we’ll still be thirsty once it is? Australia, India and Taiwan, not to mention powerhouses like Ireland, Scotland and the U.S., are all doubling down on whisk(e)y production. New expressions and styles come to market on an almost weekly basis, each one vying for precious real estate on crowded backbars and store shelves. Can the Hakushus and Hibikis of the world really afford a decade-long disappearing act?

“I think Japanese whisky will do what it’s always done: reinvent itself,” says Dajani. “If you look at how they make whisky, fusing together so many different elements and flavors, the capacity for experimentation is limitless. And so, too, is the potential.”

Dajani points to the new wave of no-age-statement Japanese whiskies currently sweeping the U.S. as a possible model for success. They include Hibiki Harmony, Suntory Toki and, most recently, Nikka From the Barrel. Some in the whisky community dismiss them as second-rate placeholders, sent here to keep us mollified until stocks mature. Others see them as the future.

In December, “Whisky Advocate” named Nikka From the Barrel 2018 Whisky of the Year, praised for its “depth of flavor,” “supple mouthfeel” and “long finish.” The blend, a mix of more than 100 whiskies, distilled and aged at different locations throughout Japan, costs a cool $65. Judges hailed it as a welcome addition to a category dominated by the ultra-rare and hyper-expensive, calling it “a consummate Japanese blend for anyone to enjoy.”

That night, I stopped into my local liquor store to pick up a bottle, but they were already sold out.