Pursuing Local Development and National Revival through Japan-Branded Sake

TOMITA Hideaki
Senior Fellow, RIETI

The Saijo "Sake Festival" as part of local revitalization

The Saijo district of the city of Higashi-Hiroshima in Hiroshima prefecture held its annual "Sake Festival" on October 12-13, 2013 (Note 1). A city-wide revitalization event held each year in early October, the Sake Festival, since 1990, has served as a symbol of the sake-brewing culture that has been passed down as a traditional local resource. A "Sake Plaza," where about 1,000 local sake brands from around the country could be enjoyed, and an izakaya (Japanese-style tavern) venue accommodating 5,000 people, were set up, as well as a variety of programs held throughout the Saijo district, including sake brewery events hosted by brewers and a mikoshi (portable shrine) procession. Both days saw the streets of Saijo so packed with Japanese sake fans and families that walking around was difficult. According to the festival organizers, approximately 240,000 visitors participated in the two-day festival, an attendance larger than the population of Higashi-Hiroshima itself (just under 200,000).

Promoting sake exports

Overall consumption of alcoholic beverages in Japan has been in an almost consistent downtrend for the past dozen years or so (see Figure). Beer accounted for about half of total consumption at the beginning of the 2000s, but both its consumption and share have significantly declined. Consumption of sake (refined sake) has been no exception, with its share in FY2011 at a mere 7%. This drop in the consumption of alcoholic beverages as a whole and sake in particular can be attributed to a number of factors, including a declining population, changes and diversification in consumer tastes, and the emergence of a wide variety of alcoholic beverages (Note 2).

At the same time, total exports of alcoholic beverages have been in an uptrend in recent years following a decline in the first half of the 2000s, and sake exports rose consistently throughout that decade. Hand in hand with growing health consciousness worldwide and a boom in the popularity of Japanese cuisine, there has been a surge in demand for sake that pairs well with Japanese food, and it has drawn increasing attention overseas. Nevertheless, exports of alcoholic beverages, including sake, are still miniscule, accounting for less than 1% of total domestic consumption, and there is still considerable room for exports to grow.

The Japanese government has also been undertaking efforts to promote sake exports as part of its "Cool Japan" campaign and the Japan Revitalization Strategy (Note 3). One project being implemented by the Ministry of Economy, Trade and Industry to promote the exports of alcoholic beverages is the Small and Medium Enterprise Agency's Japan Brand Development Assistance Program (Note 4). Given the limitations that small sake brewers face in trying to expand exports on their own, this assistance program by the national government will undoubtedly prove useful.

The Saijo Sake Japan Brand Establishment Project based in the Saijo district was the first sake project nationwide selected for assistance, which it has received for the past three years. A new logo mark and the slogan of "Taste Japan" were recently approved, and publicity efforts aimed globally are being conducted under the unified appellation of "Saijo Sake." Only those brands meeting the certification standards of the Saijo District Designated Refined Sake Certification System are authorized to bear the name "Saijo Sake."

Figure: Consumption and Exports of Alcoholic BeveragesFigure: Consumption and Exports of Alcoholic Beverages
Note 1) Consumption is calculated on a fiscal-year basis and exports are on a calendar-year basis.
Note 2) In addition to the totals for consumption and exports, the respective figures for beer and refined sake were also extracted.
(Reference material) Prepared using Sake no Shiori (Statistics on Alcoholic Beverages), National Tax Agency

Economic effects of tourism and events

Several recent empirical studies have verified the economic impact of tourism and events on local economies and the national gross domestic product (GDP). Önder et al. (2009) used time-series data for the period 1980-2005 from the port city of Izmir in western Turkey to verify the factors that have an impact on international tourism demand, and concluded that the decisive factors in tourism demand were income and relative prices (exchange rates) in the tourists' home countries, and not the economic development, transport infrastructure level, etc. in the host country. Consequently, the government has decided to make use of the host country's natural, historical, cultural, and other features to promote experiential tourism (Note 5) alongside mass tourism.

Development of the tourism industry had been considered to contribute to a country's economic growth, but it has now been suggested that, depending on the degree of an economy's "tourism specialization" (the ratio of the travel/tourism sector to the national GDP), growth in the tourism industry does not necessarily lead to macroeconomic growth (Chang et al. (2010)). This is believed to be the case because the greater the development of the tourism industry, the greater is the portion that trickles out from the economy (Note 6).

Saito and Toda (2004) is one of a few research endeavors in Japan on this topic. Utilizing macroeconomic data from countries worldwide, this study confirmed a positive correlation between tourism revenue and economic growth, and subsequently derived a supply-side model explaining the tourism revenue of the host country. The study determined that exchange rates and air transport capability had considerable explanatory power, while various economic variables in the host country (capital, labor, etc.) did not. These outcomes are similar on the whole to the findings in Önder et al. (2009).

Efforts by sake-producing areas toward local revitalization and national revival

To utilize local sake breweries as resources to solicit tourism from overseas, the renowned brewing locale of Kashima in Saga prefecture has launched Kashima Sake Brewery Tourism®. Similar efforts are being pursued across the country, occasionally involving tie-ups with relevant industries in arranging sake-making experiences and collaborating in projects that make use of local culinary culture and traditional crafts.

A growing number of local governments have also been enacting local sake "Kampai Ordinances" in order to expand the consumption of locally-produced sake. Such an ordinance went into force on July 1, 2013 in Higashi-Hiroshima as well. While these ordinances are controversial, they do demonstrate that local governments are seeking out ways to boost the consumption of local sake to revitalize their communities.

It is important to communicate to as many people as possible the appeal of sake and sake breweries as traditional cultural and tourism resources belonging to their communities by promoting their exports and hosting brewery tours and related events to enable people to learn and experience sake making. It is hoped that sake breweries, tourism and business groups in sake-producing areas, and other connected industries as well as local governments will collaborate and cooperate in local revitalization, and that this drive will spread throughout the country and bring about Japan's revival.

November 19, 2013
  1. ^ The Saijo district is a sake-producing area known since the Taisho and early Showa eras as the "Sake Capital." Blessed with good-quality rice and water that are essential to sake making as well as a climate suited to winter brewing, it stands alongside Nada in Hyogo prefecture and Fushimi in Kyoto as one of Japan's three great brewing districts. Sakagura-dori (Sake Brewery Avenue), running east-to-west along the south side of JR Saijo Station, and the adjoining streets feature the sake breweries of eight different makers.
  2. ^ Regional Planning Department, Development Bank of Japan (2013) is a recent research effort that analyzes the present status of the sake-making industry as a whole and its growth strategy, and provides concrete examples.
  3. ^ See Headquarters for Japan's Economic Revitalization (2013).
  4. ^ This program supports basic strategy formulation as well as product development, participation in overseas exhibitions, etc. in assisting collaborative efforts by multiple small and medium companies to utilize top-caliber local materials and techniques in developing overseas markets. A total of 10 projects connected with Japanese alcoholic beverage production were adopted.
  5. ^ The term "experience economy" is used in the original text, and this idea reflects the marketing approach of seeking differentiation from other companies by providing memorable experiences to customers.
  6. ^ Many of the countries with a high degree of specialization in tourism are emerging countries which procure funds from international institutions and foreign companies to accelerate infrastructure improvement, so among the reasons for this outcome are that the repayment of these funds is required and that more imported goods are used to support the tourism business.
  • Chang, Chia-Lin, Thanchanok Khamkaew, Michael McAleer and Roengchai Tansuchat (2010), "A Panel Threshold Model of Tourism Specialization and Economic Development," International Journal of Intelligent Technologies and Applied Statistics, Vol. 3, No. 2, pp. 159-186.
  • Önder, A. Özlem, Aykan Candemir & Neşe Kumral (2009), "An Empirical Analysis of the Determinants of International Tourism Demand: The Case of Izmir," European Planning Studies Vol. 17, No. 10, pp. 1525-1533.
  • Regional Planning Department, Development Bank of Japan (2013), "The Present Status and Growth Strategy of the Refined Sake Industry: The Future of Japan's National Drink [Seishu gyokai no genjo to seicho senryaku: Kokushu no mirai]"
  • Saito, Hidetomo and Toda, Tsunekazu (2004), "A Consideration of International Tourism and Economic Growth: An Empirical Analysis Focusing on International Tourism Revenue Worldwide [Kokusai kanko to keizai seicho ni kansuru ichikosatsu: Sekai kakkoku no kokusai kanko shunyu wo chushin toshita jissho bunseki]," Regional Economic Research [Chiiki keizai kenkyu], No. 15, pp.31-44.
  • Headquarters for Japan's Economic Revitalization (2013), "Japan Revitalization Strategy"

November 19, 2013