Whisky is fast becoming one of the most popular luxury items around the world. Whether it’s to be drunk, collected or invested in, high net worth individuals are increasingly turning their eyes to whisky. This increased interest means that the global market has increased by over 700% in the last five years.


But while Scotch has traditionally dominated the market the past few decades, Japanese spirit is hot on its heels. Because the industry holds much looser regulations, the rise of Japanese whisky is challenging what truly makes a premium spirit. As investors are falling over themselves for Japanese expressions, the ways the Japanese are exploring the traditions of whisky are an exciting disruption to Scotch supremacy.


Why whisky?


Whisky enjoys a unique status as an investment item as unopened bottles maintain quality for a long time. Unlike wine and watches, an 18-year-old whisky will always be an 18-year-old whisky, so it offers a more reliable investment opportunity than many other luxury markets. Additionally, the average bottle value of Scotch has increased by 26% in the past year, going from £299 in 2017 to £377 in 2018.

Whisky is gaining such popularity that the Rare Whisky 101 investor reports for 2018 show that the volume and value of single malt Scotch sales is constantly increasing – volume sold has more than tripled and value increased by more than five times.


Why Japanese whisky?


Beyond the Scotch market, Japanese distillers are enjoying considerable growth. The Rare Whisky 101 report also shows that their Japanese Icon 100 index of the 100 most desirable bottles outperformed the Scotch Icon 100 index by almost 20%. As the spirit grows in popularity both at home and abroad, demand is outstripping supply, making quality expressions even more desirable.

In the past few years, the Japanese market has been garnering international acclaim. Suntory’s Hibiki 21 Year Old won the World’s Best Blended Whisky at the World Whiskies Awards 2019 and Ichiro Akuto from the Chichibu distillery won Master Distiller at the International Spirits Challenge.

Thanks to this, exports of Japanese whisky have doubled in the last 10 years and the market grew 43% in volume and 21% in value in 2017.


Bringing back blends


One of the most distinct differences between Japanese and Scottish whisky is the celebration of blends. With Scotch, anything other than a single malt is unlikely to fetch high prices, whereas in Japan, blends are some of the most highly regarded bottles.

This is typically ascribed to a cultural difference as the Japanese are more willing to explore every possible route and get creative with the development of flavour profiles.

The Japanese also have fewer distilleries than Scotland so many different types of whisky are usually made in the same distillery, meaning master distillers have a variety of spirits to choose from when producing each expression.

The popularity of blends like Hibiki 21 Year Old have flipped previous perceptions on their head and shown that blends have the potential to be highly desirable whiskies.

Single malts from the most recognised distilleries, such as Yamazaki, Nikka and Karuizawa are still in high demand but Japanese distillers have successfully extended the definition of premium whisky with quality blends.


Quality restrictions


In addition to the success of blends, Japanese distillers have also successfully made No Age Statement (NAS) whiskies more appealing to consumers. The success of most Scotch distilleries rests on the expectation that older whiskies are of better quality and while this generally true, the Japanese have been driven to innovate the NAS category.

Thanks to a dramatic rise in interest from the domestic and international markets, Japanese distillers have been forced to halt production of many of their most successful aged whiskies, including Hibiki 17 and Nikka 12. This has led to more NAS releases as distillers attempt to maintain buyer interest while they recover stock.

The proliferation of NAS bottles in the Japanese market has led to a number of Scotch producers, such as The Macallan, The Glenlivet and Talisker, to release similar expressions. While NAS whiskies are usually more affordable, the success of these expressions in both the Japanese and Scotch markets could see interest and value continue to rise in the future.


Market growth


Though most of the highly investable Japanese whiskies are still single malt, aged whiskies, their approach to the market has undoubtedly rocked the boat on the international stage. WhiskyStats noted that their Japan index grew by 35% in 2018, 10% more than any Scotch whisky region in the same period.

Their 2018 summary also found that the silent distillery Karuizawa was the most successful, beating out classic investor darlings like The Macallan, Rosebank and Port Ellen.

The most sought-after bottles from Japan typically come from Yamazaki, Karuizawa and Hanyu, but with so many bottles being discontinued the value of many other expressions is sure to only keep going up.


For those interested in diving into the alternative investment of whisky, the Japanese market offers exciting and varied opportunities.


This article was written by Damon Culbert from The Spirits Embassy, rare and unique whisky specialists in the UK.

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