April 20, 2023

The Dilemmas for Craft Beer in Japan, and Kyoto Brewing

When we started our brewery, it felt like craft beer was on an upward trajectory worldwide, and it was hard to imagine anything but a bright future. Craft beer was shooting up towards reaching 20% of the total volume of beer in the US and there was greater attention being paid to it in Europe and Asia.

While Japan had seen a “ji-biiru boom” in the 90s that had subsequently fallen flat, numbers of new breweries opening were just starting to turn up again, and this time it felt different. While in the 90s it was a loosening of regulation that had caused all the new openings, reaching a peak of over 300 breweries by 1999 when there had been just a handful at the start of the decade, this time it was being caused by people who had become familiar with the movement in America, inspired by a turning away from light, straw-coloured mass produced lagers, and an embracing of the huge breadth of variety that beer can offer.

The industry felt full of hope, with breweries treating each other as comrades in arms, rather than competitors. Help each other get better, make craft beer more appealing, and thus make more people want to drink it. It felt like there was no limit to how much it could grow. Since then, craft beer’s growth in the US has flattened out, but it has still reached a point where everyone at least knows where it is, and it is accessible in pretty much any town outside of the dry states, including in regular restaurants, supermarkets, and liquor stores.

Comparatively, Japan finally passed the 1% of beer consumed mark, but is still yet to reach 2%. A fair number of people are familiar with the phrase “craft beer”, but many would struggle to provide a definition, or even a description of why it is different from “normal beer”, which to Japan is still a pale mass produced lager, if a little more flavourful than the American equivalents that craft beer rose up against.

This leaves craft beer in Japan at a point of being at a crossroads. Is it growing? Yes. There are now close to 700 breweries in Japan, more than 3 times the number a decade ago. More restaurants stock craft beer now, and you can even see selections in some supermarkets, particularly in Kanto.

It is not widespread enough, however, to register with the majority of alcohol drinkers, and unless it succeeds in getting over that hump, it is going to be very hard to create enough demand for going through the trouble of wider distribution. We therefore have a bit of a chicken-and-egg situation. Distributors want craft beer to meet the increasing requests from liquor chains and supermarkets. However, they don’t want it enough to go through the trouble of making themselves well set up for refrigerated storage and distribution. As a result, people have to go out of their way to find craft beer. Craft beer fanatics will travel far and wide for a good selection, but the casual drinker will not, and this further prevents growth.

But hang on: didn’t I see a bunch of craft beer popping up in convenience stores? Another problem with the limited awareness of craft beer is one of identity. The Brewers Association in America has a definition of an American craft brewer as “a small and independent brewer”. This is further defined through a listing of some concepts related to craft beer and craft brewers:

-Craft brewers are small brewers

-The hallmark of craft beer and craft brewers is innovation. Craft brewers interpret historic styles with unique twists and develop new styles that have no precedent

-Craft beer is generally made with traditional ingredients like malted barley; interesting and sometimes non-traditional ingredients are often added for distinctiveness

-Craft brewers tend to be very involved in their communities through philanthropy, product donations, volunteerism and sponsorship of events

-Craft brewers have distinctive, individualistic approaches to connecting with their customers

-Craft brewers maintain integrity by what they brew and their general independence, free from a substantial interest by a non-craft brewer

Japan does not have as clear a definition as this, meaning that mass produced makers are using the name “craft” without causing much fuss, and without many seeing a reason to doubt it. Kirin has perhaps been the most active in this space, creating their own “craft” brands, and also investing in other breweries that were craft.

And if a distributor can select a low cost mass produced product with “craft” on the label, which is one that does not need to be kept refrigerated, and if the general public doesn’t have a clear definition of what craft beer is, why would they want to go for a small scale, lovingly crafted but also highly priced product that requires end-to-end refrigeration, and which has a significantly shorter best before date?This is where craft beer is right now. And the dilemma? It seems that there are two paths for craft beer in Japan:
  1. We accept that craft is being hijacked by mass produced beer, and settle for craft beer being limited to such a small market share.
  2. Craft beer starts to loosen some of its requirements, looking for longer best before dates, and trying to become able to be stored at room temperature. Doing this can allow it to be seen and tried by a wider audience.
The first option seems to allow craft beer to maintain its authenticity, as well as not requiring any compromises on quality. There is a risk, however, that the term “craft beer” becomes owned by large scale manufacturers, and authentic craft beer becomes even more difficult to access. The second option exposes independent craft beer to a wider audience, hopefully gaining it greater traction and broader distribution, allowing more people to access it, and in turn allowing greater growth. Depending on how it is done, however, loosening requirements could see authentic craft beer lose much of what makes it a higher quality product in the first place.

We have decided where we are going as a company, both in terms of where we want to see our beer, and how we want to see it get there, and we look forward to sharing this in a subsequent blog post in a couple of weeks.