Still and sparkling wine in Japan had been stagnating for a few years before the pandemic hit, and in 2020 and 2021, volumes dropped by as much as 15%. The share of these wines has now dropped to below 4% of the Japanese total beverage alcohol sector, which represents a fall of nearly 0.5% in just two years. The growth of the RTD category has been a contributing factor, but there are other drivers at play.
Almost four million wine drinkers have left the wine category in Japan between 2018 and 2022, despite the adult population remaining stable. Covid-19 will have contributed to the loss of some of these drinkers, particularly in the on-trade, where wine does well when compared to some other markets, but the shortfall of consumers has put a downward pressure on consumption.
Wine Intelligence research also indicates that an ageing consumer base is another influential factor behind the negative trend, finding that nearly two-thirds of Japan’s wine drinkers are 55 or over, up from less than half in 2018. Bringing new younger LDA drinkers into the category will be challenging especially with the distraction of an upbeat RTD market.
Although many may be exiting the wine category, the remaining wine drinking population is becoming a more highly engaged, enthusiastic and motivated community. What is promising for the long-term prosperity of the wine sector is that the most engaged generational groups are LDA Gen Z, Millennials and Gen X.
The rising engagement of the drinkers that have stayed loyal to wine is reflected in an escalating knowledge of wines. The awareness of brands, countries and regions of origin has risen notably. This expanding category knowledge has manifested itself in a broadening of the number of cues that consumers use when they make purchasing decisions around wine. Repertoires by country are also widening, as are purchase rates for the top brands.
The spirit of discovery among wine drinkers is facilitating the development of the alternative wine segment. The top alternative wine types in Japan have all seen an increase on both 2017 and 2020, with natural wine being the biggest winner, recording a sustained increase in awareness. Millennials have been found to be consistently more interested in alternative wine categories than other generations with a particular affinity to natural wine, non-alcoholic wine and lower-alcohol wine.
It will be these Millennials, and indeed LDA Gen Z and Gen X, who shape the development of the wine category in Japan. Consumers in these age bands may be less habitual in their consumption patterns to older generations, but their willingness to trade up and experiment with their wine will generate opportunities for the wine industry going forward — particularly in terms of value.
This widening engagement with the category, helped by a recovering on-premise and falling sake demand, will help to facilitate wine’s recovery.
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