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As Japan falls out of love with sake, brewers look to the West

Sake sales within Japan have decreased 30 percent since 1975, forcing brewers to try to tap into growing overseas markets, including the United States.
Image: Sake in Kyoto
The Shoutoku Shuzo brewery in Kyoto, Japan.Daniel Hurst / for NBC News

KYOTO, Japan — Sake runs in Tokubee Masuda’s blood. He’s the 14th generation of his family to operate one of the many sake breweries in Fushimi, a small district in Japan’s old capital of Kyoto.

Masuda’s passion shines through as he escorts visitors around the Tsukino Katsura facility, explaining how high-quality rice and fresh groundwater is used to produce the traditional Japanese drink, sometimes described in simple terms as rice wine.

But passion isn’t enough. There’s a stark problem confronting brewers like Masuda as they seek to ensure that their businesses are not relegated to history: Japanese people are drinking less sake.

The long-term trend is forcing brewers to try to tap into growing overseas markets, including the United States.

Image: Sake in Kyoto
Tokubee Masuda is the 14th-generation president of his family's sake company.Daniel Hurst / for NBC News

“We would like to continue to proliferate the goodness of sake in the world,” said Masuda, who is president of the Fushimi Sake Brewers Association.

Sake sales within Japan have decreased 30 percent since 1975, according to figures from Japan's tax agency. That’s had an impact on sake-producing hotspots like Fushimi, where the number of breweries has declined to 24 from about 50 in the 1970s, said Yohsuke Yamanaka, chief manager at the Gekkeikan sake brewery.

Why does Japan's love of sake seem to be fading? The country’s aging population, said experts, is one factor driving a reduction in total alcohol consumption — including sake.

“The main consumer base for sake remains limited to middle-age men,” said Akari Utsunomiya, an analyst at the market research provider Euromonitor.

Sake is a strong drink; its alcohol by volume (ABV) is usually about 15 percent, compared to 9 to 16 percent for wine, and 3 to 9 percent for beer.

Utsunomiya explained that young people often prefer ready-to-drink alcoholic cocktail beverages.

Image: Sake in Kyoto
Sake barrels in front of the Fushimi Inari shrine, which is a tourist hotspot.Daniel Hurst / for NBC News

Others pointed to the transformation of Japanese society in its post-World War II boom years. The mayor of Kyoto, Daisaku Kadokawa, is backing efforts to boost the industry at home and abroad.

“In the past half a century, about 50 years, Japan as a whole has been very interested in acquiring a Western way of living and Japanese traditions have not been focused [on] too much by the people,” Kadokawa said, as he sipped some locally produced sake. “Japanese people started to appreciate drinking beer, wines, enjoy eating meat and this has spread in the country.”

Those trends have put pressure on sake breweries like Gekkeikan, which was founded in 1637.

Koichi Murakami, the company’s export manager for North America, said the number of employees had fallen to 300 or so today from about 1,000 when he first joined in 1991. The last two decades had been “very challenging and tough years for the company,” he conceded.

However, Murakami sees a bright spot. Consumers outside of Japan still account for less than one-tenth of Gekkeikan’s sales, but it’s a growing segment.

Image: Sake in Kyoto
The Tsukino Katsura brewery in Kyoto, Japan.Daniel Hurst / for NBC News

“The area we’re now focusing on, exports and production at overseas sites, is something that brings hope for the whole company,” Murakami said. He spoke to NBC News just before his transfer to the U.S., where the firm has set up a production plant in Folsom, near Sacramento, California.

This reinforces evidence that the number of Americans who appreciate sake is on the rise. Japan’s total sake exports to the U.S. were worth $45 million in the year to March 2016 and are growing fast: The trade was up 21 percent compared with the previous year, according to Japan's tax agency.

The U.S. accounts for more than a third of Japan's sake exports, making it the top overseas destination.

Johnson Ngo is on a mission to expand the customer base in the U.S. His company, Genji Sake, based in Austin, Texas, distributes premium products to restaurants across Texas and is looking to expand into hotels and cocktail bars.

Image: Sake in Kyoto
Texas-based Johnson Ngo (left) and Yuji Fukai (right), who works for the international sales division of Tama No Hikari. Daniel Hurst / for NBC News

Ngo recently traveled to Japan to meet with sake producers and hunt for cheaper products that would appeal to a broader cross-section of the market. He was joined by distributors from Canada, Australia, Singapore and Chile at talks organized by the Japan External Trade Organization.

“I’m on this trip to find a different price point to be more accessible to all the other restaurants,” Ngo said after visiting Tama No Hikari, a brewery that already supplies some of the products he distributes.

Japanese restaurants are an obvious target for sales, but Genji Sake is gradually making inroads into the white tablecloth fusion restaurants popular in the U.S., Ngo said.

“We try to pair them up with the right sake and food pairing, to broaden their ideas and minds for the taste.”

Reflecting on the appeal of sake in Texas, Ngo said California and New York were “way ahead of the game,” but adding that his company’s sales team runs seminars and training to improve awareness.

Image: Sake in Kyoto
Geisha serve sake for guests in Kyoto, Japan.Kyodo / AP file

Sometimes they’re joined by brewery reps who help to educate Texans about “sake culture.” Documentaries, short films and social media have also increased the exposure of premium sake in the U.S., he said.

Here in Japan, some of the breweries have adapted to the domestic slump better than others.

Yuji Fukai, from the international sales division of Tama No Hikari, explained that the Fushimi-based company had taken a gamble a decade ago to tailor its products to more premium, high-end tastes, and it reversed a decline in domestic sales.

Tama No Hikari has also targeted overseas buyers. This started 30 years ago with exports to the U.S. and Hong Kong, but the company now sells to about 25 countries. International growth is running at about 10 percent a year, Fukai said.

Industry insiders acknowledge sake producers still have to do more to make their products accessible to international buyers. A commonly cited issue is the complicated labels, which are often in Japanese and state a range of information ranging from rice polishing ratios to product names that are not immediately recognizable to Western buyers.

Image: Sake in Kyoto
The Shoutoku Shuzo brewery in Kyoto, Japan.Daniel Hurst / for NBC News

And getting people to take a risk on sake, over possibly more familiar choices like wine or beer, is a basic obstacle.

Nonetheless, Kadokawa, the Kyoto mayor, is optimistic that surging numbers of foreign tourists to Japan, along with a boom in the prevalence of Japanese restaurants in other countries, will spur further growth.

“Five years ago the number of Japanese restaurants in the world was 55,000, and today there are about 110,000, which means it has doubled,” he said. “Together with the increase in the number of Japanese restaurants, the need for drinking Japanese sake is also increasing. So, focusing on that point, we are interested in enhancing the exports of sake to the world.”