Can a 'Sake Special Zone' Become Reality? — Voices of Current Breweries and Prospective Entrants

For more than half a century, the issuance of licenses to produce sake has been tightly regulated under a system rooted in prewar Japan. Unlike wine or beer, where one can set up a brewery by following the necessary procedures, the barriers to entry in sake brewing remain exceptionally high.

In recent years, however, several regions have begun exploring new possibilities for entry through the framework of sake special zones—special districts designated to ease certain regulatory restrictions. These initiatives have sparked debate between aspiring newcomers and established producers.

How do stakeholders view these changes, and what shifts are actually underway? This article examines the current landscape by featuring interviews with prospective entrants operating under the special zone system, as well as survey responses from existing sake producers.

Note: A “special zone (tokku)” refers to government-designated areas where certain regulations are relaxed in specific industries or regions to encourage innovation and revitalization.

An overview of the current regulations and recent developments is outlined in the preview article of this series.

Current Landscape and Aspirations of Prospective Entrants

The Japanese government is currently engaging in consultations with sake special zone applicants and local stakeholders, following recommendations put forth in recent advisory council meetings. But how much progress has actually been made on the ground?

To find out, we interviewed two applicants seeking to enter the sake industry through this special framework.

Reviving Local Roots and Building Community Through “Sixth-Order Industry”: Fukumitsu Shuzo

In the town of Kitahiroshima, Hiroshima Prefecture, Hiroyasu Fukumitsu has submitted an application to establish a sake special zone. He is a descendant of the founding family of Fukumitsu Shuzo, once known for brewing a local sake brand called Asahikari. The brewery, however, was forced to cease operations in 2006 when the previous head brewer—who was also the owner—fell ill. As a result, the sake license was relinquished.

After training at a sake brewery in neighboring Yamaguchi Prefecture, Fukumitsu, a great-grandson of the original founder, set out to revive the family’s legacy. But since new sake licenses remain essentially unobtainable—even if the previous one was voluntarily returned—he turned to the special zone framework as a means of reentering the industry. Under this system, he currently brews doburoku (unrefined sake) and wine using rice and grapes he helps cultivate himself.

“My hope was that the special zone framework might also enable me to resume brewing sake,” he explains. “I figured it was worth applying—even if the chances were slim.”

Since submitting the application, two rounds of consultations have taken place with local stakeholders. However, concerns from existing producers remain strong. Fukumitsu says he understands the hesitations, particularly in light of what happened during Japan’s “craft beer boom,” when many new breweries launched and later failed. He agrees that lifting restrictions too easily would be unwise.

“Even if sake brewing were eventually approved through this or other regions’ negotiations,” he says, “that doesn’t necessarily mean I would rush to start. If I pushed forward despite strong opposition, I don’t see how that would be beneficial. It’s important to reach a point where existing breweries are on board.”

Looking ahead, he expects further consultations to progress in parallel with developments in other regions. Should he eventually be allowed to brew sake under the desired conditions, he envisions a future that ties sake more deeply to local revitalization.

“I see one of the values of the special zone system as a pathway to realizing what Japan calls the ‘sixth-order industry’*,” Fukumitsu explains. “I want people who come to this area—people who visit the brewery—to experience our sake in a way that goes beyond just the product. I see sake as one reason for people to visit, but the real goal is deeper communication and connection.”

Fukumitsu believes that helping visitors feel not just the sake itself, but also the people and stories behind it, can create stronger bonds with the region and grow a fan base. To that end, he has been working to share not only the taste but also the experience of doburoku, including the stories of who makes it and why.

As part of this effort, he’s also developing a variety of food offerings in collaboration with local restaurants—everything from hot pot dishes and Western-style desserts to curry, all made with doburoku.

Fukumitsu has already secured a restaurant license for the former brewery space, and if sake brewing becomes possible, he hopes to eventually create a full-fledged brewery auberge—an inn where guests can enjoy freshly brewed sake on-site.

“I’d love for visitors to enjoy a meal tailored to the sake we make here, relax in a bath warmed with the brewery’s spring water, and browse the many books on sake left by my predecessor,” he says. “I want to create a place where people can spend time immersed in sake culture—not just through taste, but through the entire environment.”

Note: “Sixth-order industry” refers to a model in which primary producers (such as farmers or fishers) also engage in secondary (processing/manufacturing) and tertiary (retail/services) sectors, creating value-added businesses rooted in local resources. It is promoted by the Japanese government as a strategy for rural revitalization.

Craft Sake as a Gateway to the World—With an Eye Toward the Future: Ine to Agave

Shuhei Okazumi, founder of Ine to Agave in Oga City, Akita Prefecture, has been vocal from the outset about one of his company’s core missions: to push for the lifting of restrictions on new sake brewing licenses. That goal, he says, has never wavered.

“Specifically, we’re working toward making that happen through the special zone framework,” Okazumi explains. “But the idea itself predates the founding of Ine to Agave.”

The seed was planted when someone working within the National Tax Agency told him, “Your vision might actually be possible under the special zone system.” Inspired by this encouragement, Okazumi launched Ine to Agave in 2021 and quickly formed a team with Oga City officials to pursue a special zone designation. However, the path to approval remained unclear for some time.

Things began to change when a Cabinet Office official—coincidentally from Akita Prefecture—took an interest in Okazumi’s work and paid a visit to Oga.

“Through that encounter, I learned about a Cabinet Office initiative inviting proposals for regulatory and institutional reforms aimed at regional revitalization,” Okazumi recalls. “So in 2022, I partnered with the city to submit a proposal. After reviewing it, the Cabinet Office asked us to formally develop it further.”

He has since engaged in numerous discussions with both the Cabinet Office and the National Tax Agency to refine the proposal and submitted a formal application for a special zone. Since late 2023, he has also entered into multiple rounds of dialogue with the prefectural sake brewers’ association. But much like in Hiroshima, the response from existing producers has largely been one of opposition. Discussions are expected to continue.

“At first, I was openly critical of the current system—I thought it made no sense,” he admits. “But after facing strong concerns from established brewers firsthand, I came to appreciate the harsh realities they’re up against.”

Understanding those concerns, Okazumi says, is just the beginning. “We need to be able to clearly communicate the potential benefits. Otherwise, any new entrants will only deepen divisions within the industry.”

When asked what kind of “benefits” should be presented, he responds:

“Existing brewers are working hard, and that’s exactly why they’re struggling. We need to align our vision of what a healthier, more vibrant industry actually looks like. It’s not enough to offer token concessions like saying, ‘We’ll only produce a small volume.’ Instead, we need to ask each other: What kind of future do we want for sake? What does an ideal sake industry look like?”

Okazumi believes this ideal includes a sake industry in which new-generation producers can enter the field, create products that appeal to younger domestic audiences, and succeed overseas. In his view, this is not a disruption, but an opportunity.

“If new entrants are positioned not as outsiders, but as part of a shared vision for the industry’s future, that’s the most constructive path forward.”

Currently, Ine to Agave produces a beverage categorized as “Craft Sake”—a new genre that builds upon traditional sake brewing techniques using rice and koji, while incorporating fruits, herbs, and other ingredients. Their goal, Okazumi explains, is not simply to offer a novel product, but to help expand the broader category of sake through new cultural expressions.

“I often say that Craft Sake could be to sake what the California Roll was to sushi. In sushi’s global expansion, localization played a huge role. At first, many Japanese said, ‘That’s not real sushi,’ but now you’ll find similar offerings even in conveyor belt sushi restaurants across Japan. Meanwhile, high-end sushi spots in New York don’t serve California Rolls—but the point is, those rolls helped sushi reach global recognition.”

“Craft Sake might not fit traditional definitions of sake, but outside Japan, people are open-minded. They just want to know: ‘Is it delicious?’ The ability to adapt to local tastes and customs is a strength, not a compromise. And as the broader global market for sake expands, I want people to recognize that the highest value still lies in Japanese-made sake. That’s the world I want to help build—and I believe it’s our responsibility.”

Looking further ahead, what kind of future does Okazumi envision if he were allowed to brew sake under a domestic license?

“In the long run, I believe we also need to be able to make genuine sake ourselves. Ideally, people who try our Craft Sake will become curious and move on to taste the sake we brew—and then go on to discover other Japanese sake as well. I want to help create that kind of flow.”

“Right now, we hold an export-only license, so we can’t sell our products domestically. But if we could produce for the Japanese market as well, we’d be able to scale production, hone our skills further, and aim even higher in terms of quality. That’s the future I want to work toward.”

What Do Existing Breweries Think? A Survey of Industry Sentiment

As part of this feature, SAKE Street also investigated the status of other sake deregulation zone applications across Japan. In every case, it became clear that negotiations with existing breweries have been challenging. As seen in the interviews with applicants, one key reason appears to be persistent concerns within the industry about the impact of new entrants.

To better understand the nature and extent of these concerns, SAKE Street conducted a survey in February 2025 targeting existing sake producers. Using publicly available email addresses, we reached out to 963 breweries and received 98 responses—a response rate of roughly 10%.

In the following section, we present the results of this survey and what they reveal about the current mindset of the industry.

Strong Concerns About Deregulation—But Conditional Support Emerges

When asked about the potential impact of deregulation, the most common response—at 43.9%—was that “the negative effects would outweigh the positive.” This was approximately 1.2 times greater than the 36.7% who believed “the positive effects would outweigh the negative.”

At the same time, when respondents were asked about their stance on easing restrictions, the largest share—42.9%—chose the option: “I would support deregulation under certain conditions, such as limits on production volume or the number of licenses issued per year.” Notably, some of the respondents who had indicated concern about negative impacts in the previous question still selected this conditional approval, suggesting that the specifics of any deregulation framework are key to winning broader support.

Responses submitted through the open-ended comment section generally fell into two camps. On one hand, there were those who hoped deregulation would invigorate the market and promote diversity and the evolution of traditional techniques. On the other, many expressed serious concerns that increasing supply in the face of declining demand could drive down prices and quality, lead to bankruptcies among existing breweries, or open the door to foreign capital, thereby threatening the cultural integrity of sake.

There were also comments advocating for the restructuring of existing resources—through mergers, acquisitions, or the reactivation of dormant licenses—as alternatives to issuing new ones. Additionally, some respondents approached the issue from a broader societal perspective, calling for a reevaluation of blanket restrictions in light of individual freedom to pursue a profession or the potential benefits to regional revitalization.

Below are selected excerpts from the open-ended responses:

“Due to licensing restrictions, the industry has become closed off, with very few new entrants. While there’s certainly value in preserving traditional customs and practices, without welcoming new energy, the entire industry risks fading away.”

“There is far too much supply in relation to demand. Ideally, the number of producers should be halved. The oversupply is driving prices down and devaluing sake. Easing license restrictions would only exacerbate this issue by increasing supply even further.”

“While the current system is said to protect existing breweries, I wonder if it’s actually leading to further decline. An increase in new entrants could energize the broader ecosystem surrounding sake—equipment manufacturers, IT providers, retailers, and restaurants. That said, unregulated expansion isn’t the answer. We need limits on the number of licenses issued and strict screening processes.”

“With the growing number of breweries expected to close due to succession issues, the industry should shift toward reusing those existing licenses. That approach could prevent overall decline.”

“The current restrictions should be abolished for the following reasons:
(1) They violate the constitutional right to choose one's occupation. The restrictions primarily protect the vested interests of existing businesses, not the public good.
(2) They deviate from the intended purpose of the Liquor Tax Law, which is to ensure proper and reliable tax collection—not to regulate market entry.
(3) They run counter to the public interest by hindering innovation, diversity, and regional revitalization.
(4) They accelerate the decline in population engagement with sake, and by extension, contribute to market contraction.
(5) Existing breweries are allowed to expand freely, which contradicts the stated logic of limiting overall production through new license restrictions.”

Special Zones: A Limited Approach, But Similar Concerns Persist

While the special zone system is designed to allow for targeted deregulation—limiting the scope of change while enabling policy impact to be tested—many breweries still perceive significant potential repercussions. When asked about the impact of easing sake license restrictions in specific regions through special zones, a combined 74.5% of respondents said the effect would be either “significant impact” or “some impact.” Moreover, 36.7% felt the negative impacts would outweigh the positive—slightly more than the 31.6% who believed the opposite.

In the open comments, many respondents raised concerns that such measures could amount to de facto deregulation, drawing on prior examples of how exceptions have led to broader change. Others expressed skepticism that special zones would meaningfully revitalize the market. As the next article in this series will explore in more detail, some of these concerns are not without merit.

That said, some respondents did highlight the potential for innovation and new market development, as well as contributions to regional revitalization and tourism. However, these optimistic views were tempered by worries about mass-produced, low-quality sake flooding the market, increasing disparities between regions selected for special zone status, and creating tensions within the industry.

Several also questioned the long-term viability of using exception-based frameworks like special zones, arguing instead for a more holistic reconsideration of the industry’s entry requirements.

Below are selected excerpts from the free-response section:

“If special zones are introduced, it will eventually lead to deregulation by default. If deregulation isn’t the goal, then there’s no need for special zones in the first place.”

“History has already shown, through various past examples, that such measures have limited impact. In a declining industry, policies that benefit only a few regions or players won’t significantly revitalize the sector as a whole.”

“Even if the sake brewing license is relaxed in certain areas through special zones, it’s unlikely to invigorate the entire industry. That said, it could have localized benefits for the selected regions.”

“The special zone system can contribute to the public good by promoting diversity, innovation, and regional revitalization. It can expand the population engaged with sake and grow the market, ultimately benefiting existing breweries as well. Given that these are pilot frameworks, I believe they should be implemented more swiftly and decisively.”

“My opposition is not based on protectionism, but rather on the current state of the industry. New entrants may not revitalize the market but could accelerate its decline. When retail liquor licensing was deregulated, local liquor stores disappeared, replaced by supermarkets and convenience stores. The result wasn’t an expansion of shelf space, but rather shelves curated solely by POS data. I fear a similar disruption if manufacturing licenses are eased—even under special zones.”

“We should not blur the definition of what qualifies as ‘sake.’ I'm fundamentally opposed to creating too many exceptions.”

“Since sake production involves handling tax-liable goods, even under special zones, we must ensure that participants have sufficient expertise and can bear the associated tax responsibilities.”

A Spectrum of Views: Diverging Opinions Within the Industry

The free-response section of the survey also revealed a wide range of perspectives—many of them deeply felt. Some respondents, reflecting on the challenging circumstances many producers face, expressed frustration that these discussions are happening at all. “The very fact that this debate is taking place is upsetting,” wrote one respondent.

At the same time, others expressed appreciation for the survey itself, calling for more flexible policy discussions and voicing hopes for positive change through deregulation. Taken together, the responses highlight a complex and nuanced set of views within the industry. Below are selected excerpts that illustrate this diversity:

“We must learn from past failures: if deregulation is poorly handled, it will hasten the industry’s decline. Even under current rules, it's still possible to obtain a new license under specific conditions. Broad deregulation is premature.”

“I support the current supply-demand adjustment requirements for license issuance. But I question the logic of granting new sake licenses solely for export-focused businesses. Rather than opening the floodgates, we should prioritize robust support for existing regional breweries to stabilize and strengthen the industry.”

“Japan’s population is expected to fall below 100 million within the next few decades. I fear that the long-term downsides of issuing too many new licenses under relaxed conditions will become more apparent with time.”

“Before debating new entry rules, shouldn’t we first address the issue of double taxation—i.e., the combination of sake tax and consumption tax? Many sake breweries are family-run. Forcing closures or dismantling industry associations through ill-considered deregulation surely can’t be the National Tax Agency’s intent.”

“Our company entered the market through M&A, but waiting for another brewery to fail just to gain a license feels fundamentally wrong. With slightly more flexible policies around license acquisition and transfer, the industry could move forward more constructively. Please don’t let the flame of sake die out.”

“Yes, traditional-style producers may be pushed out by new entrants—but I believe the industry as a whole would be revitalized. In the long run, that would be a better outcome.”

Details of the survey questions and methodology can be found at the end of this article.

Industry Dialogue Must Include a Diversity of Voices

It’s worth noting that the results of this survey may contain certain biases. For example, since SAKE Street has previously published articles exploring regulatory issues in the sake industry, it’s possible that the respondents were disproportionately composed of those already open to engaging in such discussions.

Additionally, because the survey was distributed via email and answered through a web form, more conservative breweries—either those unreachable by email or those reluctant to participate—may be underrepresented.

Even so, the fact that a significant portion of respondents expressed conditional support for deregulation should not be overlooked. This indicates that, while concerns remain strong, there is also openness to dialogue—provided the terms are carefully considered.

For industry associations representing existing producers, these findings suggest a need to engage more actively with a wider range of perspectives. Moving forward, it will be essential for representative bodies to facilitate thoughtful discussion, weighing both tradition and innovation as the industry confronts its future.

Toward Shared Ideals Amid Conflicting Interests

Throughout this series, we’ve explored the complex backdrop to Japan’s long-standing restrictions on sake brewing licenses—tracing their roots to the importance of sake tax revenue in the pre- and postwar periods, as well as to wartime rice shortages. We’ve also examined how, despite the rise of a more liberal economic model, these regulations have remained largely intact, even as the government signals a general intention to move toward their eventual abolition.

Most recently, we’ve reported on the renewed push for deregulation through the special zone framework, alongside the resistance it has encountered and the wide-ranging perspectives shared by both new entrants and established producers.

As the sake industry continues to grapple with its future, it will be critical to strike a balance—presenting broader social benefits, as suggested by Ine to Agave’s Shuhei Okazumi, while also addressing the concerns voiced by many within the existing brewing community.

In the next part of this feature, we will turn our attention to case studies where special zones or comparable initiatives have succeeded in gaining broader public and industry support. By analyzing how these models have taken root—whether formally designated as special zones or not—we hope to shed light on how Japan’s sake licensing system could evolve, and how the diverse hopes and visions of those within the industry might be reflected in that process.

Appendix: Survey Questions (Multiple Choice and Open-Ended)

Question 1:
Do you believe that the restriction on sake brewing licenses based on supply-demand adjustment requirements has successfully fulfilled its legal purpose (i.e., ensuring sound business operations and industry stability)?

• Fully achieved
• Partially achieved
• Not well achieved
• Not achieved at all

Question 2:
What is your position on lifting or easing restrictions on the issuance of new sake brewing licenses?

• I support lifting/easing the restrictions
• I support lifting/easing under certain conditions (e.g., production volume limits, annual issuance caps)
• I oppose lifting/easing under any circumstances
• I’m unsure / No opinion
• Other

Question 3:
If restrictions on the issuance of sake brewing licenses were lifted or eased, what kind of impact do you think this would have on the sake industry?

• The positive impact would outweigh the negative
• The negative impact would outweigh the positive
• It would have no significant impact

Question 4:
Please share any additional comments regarding the supply-demand adjustment requirement or potential legal reforms.
(Open-ended response)

Question 5:
If restrictions on sake brewing licenses were eased in specific regions under the special zone system, how significant do you think the impact would be on the sake industry?

• Significant impact
• Some impact
• Little impact
• No impact at all

Question 6:
If restrictions were eased in specific regions under the special zone system, what kind of impact do you think it would have?

• The positive impact would outweigh the negative
• The negative impact would outweigh the positive
• It would have no significant impact

Question 7:
Please explain your reasoning behind your answer to the previous question.
(Open-ended response)

Question 8:
Please share any additional thoughts or opinions on the easing of sake brewing license restrictions through the special zone system.
(Open-ended response)

Question 9:
If you have any other comments about sake licensing or this survey itself, please share them here.
(Open-ended response)

Can a 'Sake Special Zone' Become Reality?
Can a 'Sake Special Zone' Become Reality? — Tracing the Origins and Future of Japan’s Strict Licensing Barriers