Foreign Sales May Offset Slumping American Demand : U.S. Wine Firms Targeting Japan

For American wine makers, it must seem like deja vu: In recent years, young Japanese have been forsaking their traditional drinks--just as their American counterparts did 15 years ago--and instead are quaffing imported wines. Sake and Scotch are giving way to Cabernets and Chardonnays.

“Drinking imported wine has become very fashionable in Japan,” said Reiko Schwartz, who works for Los Angeles-based Japan-Pacific Publications and recently edited a book on Japanese cuisine.

And so California wine makers, trying to offset slumping domestic consumption, are pushing to expand their presence in Japan, where European wines currently outsell American imports by more than two to one.

Sebastiani Vineyards, California’s ninth largest with sales of 2 million cases in 1984, said this week that it will begin selling its wine in Japan under an agreement with Nittetsu Shoji of Tokyo. By 1990, the Sonoma-based vineyard hopes to be exporting 40,000 cases--a volume that would make it Japan’s third-biggest-selling American import behind Seagram Wine’s Paul Masson brand and Heublein’s Inglenook label.

The announcement comes just months after the industry’s San Francisco-based trade group, the Wine Institute, opened an office in Tokyo to help spur sales of U.S. wines in Japan and other Pacific Rim countries.

“Foreign markets are becoming increasingly important for our wine and spirit sales,” said Seagram spokesman John Oliver.

After growing at nearly double-digit annual rates in the 1970s, the U.S. wine industry has been clobbered this decade by a flattening of U.S. consumer demand and by competition from foreign imports. Growth in the Japanese market could potentially offset the slowdown that the industry has encountered domestically and thus help avoid production cutbacks and loss of jobs.

But in Japan, where wine tariffs still are among the highest in the world, U.S. wine sales have more than quadrupled since 1980. In the first six months of 1985 alone, exports of 839,865 gallons of U.S. wine to Japan were more than 200% higher than the 258,460 gallons shipped in the first half of 1984.

However, American wine makers still lag behind European brands in Japan such as Portugal’s Mateus, which sells about 160,000 cases a year, and French Calvet, which sells 130,000 cases a year, according to T. Randall Emch, Sebastiani’s director of planning.

In part, the disparity is because the strong dollar has made U.S. products more expensive than their European counterparts. But it also reflects the greater experience that Europeans have in marketing to the Japanese.

“The American wine industry has not pursued opportunity in Japan as compared to German and French producers,” admitted Emch.

Yet it will take more than marketing expertise to make inroads. U.S. wine tariffs were revised last year to allow imposition of stricter duties on incoming wines unless the importing country also eases its tariffs on U.S. wine exports. However, Japan’s stiff tariffs will remain in place until April, 1987, when they will fall to 30.4% from 38%, and carry a specific duty of at least 53 cents a liter.