American Sake Takes Off: What is Dassai's goal for localization? (Part 3)

The United States has long been not only an important export partner of Japanese sake, but also the top country in terms of the number of local sake breweries. In this series, Sake journalist Saki Kimura explores the future possibilities of American Sake by interviewing some of the players involved in the industry.

In the first installment, we spoke with Kita Sangyo's President Tsuneo Kita, a leading expert on the history of sake in the U.S. For the second installments, we interviewed Weston Konishi, president of the Sake Brewers Association of North America (SBANA), a trade association of American brewers.

In this final installment, we interview Kazuhiro Sakurai, president of Asahi Shuzo, which has built a sake brewery in New York. He let us know about the reasons and prospects for entering the U.S. market, as well as the latest news on the new Dassai Blue brand.

Learning the U.S. market through exports

– This interview is about the establishment of sake breweries in the U.S., but since we are talking about the relationship between the U.S. and Dassai, it is impossible not to talk about exports. You were stationed in New York for a while after you joined the company for the export business, right?

Sakurai: Actually, I used to be an anti-export person. When I traveled to the U.S. a long time ago, I was served a terrible-tasting sake cocktail at a bar in a reasonably well-known hotel.

Furthermore, when I first started working in New York, I was visiting clients with a local distributor, but it was a tough sell. They were selling many other brands, and their main products were not sake but food stuffs such as rice, seaweed, and seasonings. There was no way they would take us seriously, and even after spending a day visiting a dozen or so stores, we still couldn't sell at all. Even when we finally sold a case of 300 ml bottles, he would say, "Well, Mr. Sakurai's sincerity has been appreciated." It was not a very healthy situation.

– While major Japanese distributors have a wide range of sales channels, they often have the disadvantage of not being able to focus on marketing one brand at a time. How did you achieve your current position in such a situation?

Sakurai: We changed our approach from selling to new customers to increasing the number of fans among existing customers. I held workshops and events for restaurant staff, and I went to the tables of customers who had ordered Dassai and explained the product directly to them.

– You mean that you were working alone, not with a distributor's representative.

Sakurai: Yes. Customers who became fans through these activities went to other restaurants and asked, "Do you have Dassai here?" They spread our brand by word of mouth. Since New York is a financial city, this information started in New York and spread to other parts of the United States, Europe, and Hong Kong.

– Indeed, the U.S. West Coast has more affinity with Asia, while the East Coast is strongly influenced by Europe.

Sakurai: We grew because we took a customer-driven approach overseas. I was initially opposed to exports, but I began to see the potential in it, believing that customers would follow us even across borders as long as the quality was good.

Local brewing is essential for the localization of sake

─ I understand that the offer to build a sake brewery in New York came from The Culinary Institute of America (CIA), a world-renowned culinary university. The CIA, which has programs in Japanese cuisine and sake, suggested that you build a sake brewery that students could visit and learn from.

Sakurai: We thought that in order to localize sake, someone absolutely had to do the local brewing. However, until we were approached by the CIA, we never thought that we would be the ones to do it. We had been thinking, "Someone will do it," so we were like, "Oh, we're going to be in that batter's box."

– What do you mean by localization as you just mentioned?

Sakurai: Sake is still just an outsider from the Orient to the rest of the world, and 80-90% of our target audience is people who are interested in Japan or have been to Japan. We have to step out from there, but there has to be something that catches their attention at that time. I believe that if it becomes something familiar that is built locally, people will look at it differently.

– CIA students, who are the ambitions of world-class chefs, will be studying at the Dassai What specific initiatives do you have in mind?

Sakurai: The CIA has already created a sake course, which we are supervising, and we are designing it as a course to learn how to sell, preserve, and serve sake, including pairing. Once the brewery is completed, we will open the brewing process to students and also offer training for those who wish to learn, and since the CIA is one of New York's tourist destinations, we plan to make it open to the public as well.

– I understand that you originally planned to start operations in 2019, but the construction period was extended due to difficulties with brewing permits, construction, and other contracts. I have interviewed several local breweries in the US and they all struggle with that aspect. Moreover, after that, New York City went into lockdown due to the spread of the COVID-19.

Sakurai: We suspended construction in April 2020. In terms of permission from the government, it was possible to proceed with the construction itself, but it is too difficult to turn construction and distribution around while taking measures against infectious diseases. And even if we did move it, it wouldn't help if the distribution and restaurants weren't working. Moreover, sales at that point were about 40% of the previous year's level both domestically and internationally. We decided that we had no choice but to stop this.

– You have maintained your commitment to Yamadanishiki in the U.S. and have contracted with a farmer in Arkansas to try to grow it in the U.S.

Sakurai: Currently, we are in the experimental cultivation stage and are increasing the amount of rice while receiving feedback from the rice ears sent to us. The quality of the rice to seed cultivation was better than expected. I actually saw the rice grown last year, including the ears of rice, and I believe they know what the intuition is. We can't make a decision on a one-time basis, so we will continue to monitor the quality, but there is a good chance we will be able to use their rice starting this winter.

– Then, will you be using rice from Japan or other states in combination for the initial brewing?

Sakurai: Using good rice to make good sake is our top priority, so in the beginning we use a large percentage of rice from Japan.

But basically, we want to work in partnership with our contract farmers in Arkansas. California is said to be a major rice-producing state in the U.S., but it is an area where water is so scarce that wildfires occur every year. When water supply is low, the first priority is water for human consumption, followed by water for livestock, then perennial crops such as oranges, which take time to grow, so water for crops that die in a year comes last. In comparison, Arkansas has stable conditions for rice cultivation.

─ So you have high expectations of contract farmers.

Sakurai: The main reason is that farmers are motivated. Until now, the level of rice cultivation in the U.S. was such that as long as it is recognized as Yamadanishiki by DNA, it is OK. But we are educating them by showing them actual examples of how the quality of the same Yamadanishiki varies depending on the growing conditions. They are a father-and-son farming family, and enthusiastic about the challenge, which is good for them as well.

The best sake possible in the environment of the USA

– When you first decided to brew locally in the U.S., you said that you wanted to keep the local distribution price at the same level as the selling price in Japan. What are your thoughts on this now?

Sakurai: The price of Dassai imported from Japan and locally brewed will not be much different. Imports from Japan have transportation costs, but when you consider labor costs in the U.S., etc., I don't think there will be that much difference. I used to think that we would position the new brand as a completely separate product from Dassai, a sort of introductory brand, but I have changed my mind considerably.

– The brand is "Dassai Blue", although there were rumors that you would not use the name Dassai in the new product name. As the saying goes, "Blue is from indigo, but bluer than indigo." The name was given with the goal of surpassing the existing Dassai.

Sakurai: We have shifted our direction to making the best sake that is worth the price with American ingredients and environment. As a result, we have had a competition with the Japanese Dassai, and if one of them is eliminated, that is fine with us.

— Why did your thinking change in this way?

Sakurai: There are two reasons. One - and this is the main reason - is that there is no point in making a second-class brand. Although the conditions for using local rice and water are different, we should aim for the top, and we thought we should create a brand that matches that.

The other reason is that as we simulated the American sake brewing process, we realized that if we tried to make cheap products, we would only be able to make so-so products. We reconsidered the importance of not being market-oriented to be price-competitive with imports, but rather to produce delicious products with confidence while offering them at a price that takes into account the increasing volume of the product.

— I understand that the "3-tier system" in the US has to go through a distributor whether it is imported or locally brewed, and that it is not that different in terms of cost. Have you decided on a distributor for locally brewed sake?

Sakurai: We have not decided yet. We will set up a retail store with a tasting room in the brewery, but we have not yet decided whether we will sell outside of the brewery or not. First of all, the most important thing is to build a culture for sake to permeate the local market, and to make good products for that purpose.

— Won't you be able to be directly involved in the local distribution situation, making quality control and other aspects easier?

Sakurai: It will certainly make things easier, but the biggest problem with overseas distribution is that various infrastructures, such as storage environments and educational systems, are already in place for wine. For example, even if wine cannot be sold this year, the vintage will make some things even more expensive. We are having difficulty communicating to wine distributors that the product structure based on storing is different from the product structure based on fresh rotation of sake.

— The more confidence and pride you have in your wine business, the harder it will be to change your mindset. This is a mediocre analogy, but it is like when you hire someone mid-career who was in a managerial position at a previous company (laughs).

Sakurai: "Maybe it was fine at your last company, but not here, okay?" (laughs). For the first year or two, until we find a distributor that we are satisfied with, I am prepared for the possibility that we will sell only to customers who visit the brewery.

Reasons to make sake in the U.S.

─ The U.S. was chosen as the location for the local brewing this time, but how do you see the characteristics of this country as you export to the rest of the world?

Sakurai: I feel that there is a good balance in the penetration of sake in terms of money, culture, and information dissemination. In Asia, because of its proximity to Japan, there is a big tendency to "drink because it is popular in Japan" while taking in information provided by Japan. In the U.S., information flows through a cushion, and many people have money to spend on luxury items, so a unique culture is being created.

— It seems that in urban areas such as New York and California, there are many wealthy people who are intellectually curious and want to invest in things that they believe are valuable. How would you compare this to Europe?

Sakurai: Europe is more traditional in some respects, and another major point is that the local people involved in the sake business tend to be disciplined about European traditional culture. Local consumers are looking for something newer, but the sellers tend to be more influenced by the wine culture. Compared to this, I think the sensitivity to accept new things is relatively strong in the United States. There is a mature style of exploring things in a fun way without becoming too geeky. This is probably the result of the efforts of all the sake players in America.

— How do you see the recent increase in the number of small local breweries?

Sakurai: It is a good thing. The more local breweries increase, the more people will become familiar with sake. It is difficult for a single company to promote sake, so I think it is a good thing that the number of breweries is increasing.

— The United States has the largest number of small breweries in the world, and the characteristics you mentioned earlier may have something to do with why there are so many sake breweries in the United States.

Sakurai: I think there is a culture that tolerates new things, and the background provided by craft beer is probably significant. I hope that the number of unique breweries will continue to increase. In the future, it will no longer be the case that if you make it overseas, it will sell, and as the market matures, competition will intensify, and I hope that more players are prepared to take the plunge.

— The laws regarding sake brewing in Japan and the U.S. are different, but is there anything you would like to do only because you are brewing locally in the U.S.?

Sakurai: For example, using maple sap or hops for brewing, right? If we try it, and if the sake tastes better that way, we will do it. If it really tastes better, there is even a possibility that you could become a company that makes only maple sakes, not even junmai daiginjo.

─ You mentioned earlier that it is okay for export products and local brewing to compete with each other, but you believe that the most important thing is what is "delicious" for the customers.

Become a local brew in America

— When Dassai imported from Japan and Dassai Blue made in the U.S. are on display, what do you think the roles of each will be?

Sakurai: Basically, we would like one of them to remain the better tasting one. For example, Dassai could be wholesaled to Japanese-affiliated stores, while Dassai Blue could be sold to local stores, but I believe that this is something that will naturally happen, and at this point, we are not considering controlling who we sell to. Anything is possible.

— As I have seen from the initial plan to the present, you seem to be flexible in your thinking and less resistant to change.

Sakurai: Worse, it may be a matter of randomness (laughs), but I think that's the way it is in reality. For example, the sake market in the U.S. has changed a lot in the past 10 years. Even as our brewery is being established and penetrated, the environment will change, and I think it will be difficult unless we do it in a way that we can go anywhere.

─ Rather than having a clear vision of what you want to do, I get the impression that you yourself are excited about what kind of sake you can create.

Sakurai: I am excited. Of course, there is the original Dassai and the members who think it is delicious go and make it, so that is certainly the starting point. However, just as the personality of twins changes when they grow up in different environments, I would like to see that change, and I would like to feed back to Japan the feedback, including the failures, as we experiment with various things.

— Dassai has become famous in urban areas in Japan, but just as Nada sake used to be drunk in Edo (Tokyo), it looks like sake that goes out to the outside. On the other hand, by making sake in the U.S., it will be positioned as jizake, locally brewed sake in the U.S. What do you think of local sake?

Sakurai: It is like an Olympic athlete. I believe that the athletes who go around the world with their hometowns on their shoulders should be local sake. We understand that one way is to drink only locally, but we believe that it is necessary for the brand and quality to go abroad, meet various customers, and play other games with other alcohols.

─ The name Yamaguchi Prefecture is well known among sake fans overseas, and Asahi Shuzo has made it famous to a large extent. So there is a role for such local sake as well.

Sakurai: Dassai is the outgoing type of sake. The idea of jizake is to compete with the rest of the world while taking pride in your hometown of Yamaguchi. In the U.S., we will start out in New York, but with New York as a backdrop, we will expand to other regions such as California, Oregon, and Arkansas, and eventually we may go to Europe and Asia.

Mr. Sakurai says that he realized the necessity of local brewing through exporting. The advantages of the U.S., as described by a sake maker with knowledge of countries all over the world, reveal the long history of sake brewing in the U.S. and its culture.

This series of articles has revealed why the United States is a key country in the spread of sake around the world. The development of sake in the U.S. should be a major foundation for building a future in which sake, including Japanese one, will be drunk around the world. I hope that more people will become interested in sake through this series, and that I can continue to pay attention to and support this passion so that it will keep growing.