Kamotsuru Sake Brewing Company

Abstract

Hiroshima-based Kamotsuru Sake Brewing Company not only has a long history but is a successful producer in a slowly declining industry. It has a well-known brand, which Prime Minister Abe served President Obama in Tokyo. This essay looks at the company and at the challenges it and its industry face from the changing nature of the beverage market generally and the alcoholic beverage market in particular. Kamotsuru Sake Brewing Company Hugh Patrick Sake brewing is considered a declining industry. Consumption has been falling since at least the 1970s. Whiskey, wine, and other alcoholic drinks have broadened choice, and in the last decade or so overall alcohol consumption has declined. The number of breweries has been falling for over a century. But even within a declining industry, specific firms can survive and even flourish. This note looks at one such company. Kamotsuru Sake Brewing Company is a well-established, successful sake brewery, with a major brand. According to its tradition, it began operation in 1623, adopted the Kamotsuru brand name in 1873, and was incorporated as a family-owned and managed company August 28, 1918. It has a paid-in capital of a mere ¥10 million ($83,333 at 120 yen/dollar), but no debt and, undoubtedly, substantial accumulated reserves. Sales data were not disclosed. Kamotsuru produces 20 different sakes. Because they are bottled in an extraordinarily wide range of containers (some of which are considered collectible), there are about 370 different products in all, some seasonal. The price range is equally wide – a 1.8 liter bottle of the most expensive daiginjo is ¥30,000, the cheapest is ¥1,934 (plus taxes). (Sake traditionally sold by the “sho,” which is just over 1.8 liters, hence the modern bottle size.) Kamotsuru is in the Saiji district of Higashi-Hiroshima City, about 35 minutes by train east of Hiroshima. The Saijo area considers itself “one of Japan’s premier sake brewing neighborhoods” where “you will encounter some of the world’s most prestigious and oldest sake breweries.” To promote it, the area’s 8 firms have a common web site (in English, French, and German, as well as Japanese) to encourage visits and tastings. Kamotsuru achieved special recognition when one of its sakes was served U.S. President Barack Obama when he and Prime Minister Shinzo Abe ate at world-renowned Tokyo sushi restaurant Sukiyabashi Jiro on April 23, 2014. How that came about is an interesting story. Sukiyabashi Jiro has regularly stocked and served Kamotsuru sakes for more than 40 years. The Foreign Ministry, in arranging the Abe-Obama dinner, asked the restaurant’s owner, Jiro Ono, to serve a well-known sake from Yamaguchi Prefecture. Mr. Jiro said he did not stock it, and if the Foreign Ministry official would deliver it, he would use it. The Foreign Ministry official never did. So Mr. Jiro used his preferred brand, the award-winning Kamotsuru Daiginjo Tokusei Gold. Kamotsuru’s sakes have received 100 awards for quality since 1970. I understand Obama and Abe were delighted. (This sake is available on-line in Japan for just ¥1,378 [plus tax] for two 180 ml bottles). Akinori Fujihara is the first CEO not to come from the founding family. A banker at Hiroshima Bank most of his career, he was brought in 2009. There probably were several reasons for his being hired. The founding family has become numerous and wide-spread; there is no single dominant shareholder; and no family members currently work at Kamotsuru. Moreover, in an increasingly competitive environment, the company has had to revise its business strategy, operations, and its mindset. About 30 percent of total production (by volume, 50 percent by value) is high quality sake produced largely by hand. Kamotsuru has three brewery facilities, one rice polishing mill, and a bottling factory. We visited the brewery next to the headquarters office, and observed rice early in the production process, both in huge vats and in a huge amount being piled together by hand by several workers. (A good presentation of the sake brewing process is at http://sake-world.com/html/how-sake-is-made.html.) Like many beverages, Kamotsuru touts the quality of the water used: “made with water drawn from subterranean sources in Hiroshima’s northern Takamiya highlands.” Kamotsuru has 80 regular, full-time employees, and hires an additional 20 to 30 during the approximately nine-month sake-brewing season that begins with the rice harvest (September-October). There are three brewmasters, one a college graduate and two high school graduates. One is fairly young, about 36. The standard workweek is 8:00am – 5:00pm, five days a week. However, the manual production process for sake sometimes requires work overnight.