The Challenges for Craft Distillers in Japan

Hi, this time the newsletter is written by me! Javier. I’m Head Distiller of our beautiful, craft distillery.

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First, let me explain what my job is, and then, second, what is a craft distillery.

Head Distiller

A head distiller oversees the entire process of creating spirits. My responsibilities include designing equipment, product development, sourcing raw materials, and formulating a unique mash bill (grains in the recipe) that all need to come together to represent Rishiri island’s uniqueness. I also make decisions related to quality control and consistency, manage my team, and handle daily operations. A competent head distiller should be able to enter any distillery and take control of the processes to have things running smoothly in a short period.

What is a Craft Distillery?

What is craft? Well, for me, it is creating something unique with care, skill, and experience, using traditional and modern techniques. 

Our start-up has a similar origin story to the early days of some the largest, most famous companies.

All these images are the same for us. We started in a garage!

I worked during 2021 with two amazing ex-members (Rusty and Julia) for months. Traveling from Chile to the states in the middle of the Covid Pandemic, enduring multiple weeks of quarantine, in order to create 2 mash bills. We did it in a classic American garage. Like the ones from Rick Sanchez or Homer Simpson (for our Adults comic cartoons connoisseurs). These are the places where the magic happens, where portal guns or well-known Flaming’s Moe are developed. 

One of the most amazing things about craft distilling is that you can buy pot stills in varied materials, sizes, with different heating sources, coming from different origins, all from the web. In the garage phase, we bought everything either through Amazon or home distilling websites. Combining that with the fermentation phases, we could move our precious wash and alcohol by relying on brewing, winery, and agricultural equipment that you can find anywhere. 

Craft Distilling Challenges in Japan

I was curious to understand why in the States there are 1,000 craft distilleries and in Japan, the third largest economy of the world, with 130 million inhabitants, there are only around 50 whisky distilleries. Only a few that make 100% Japanese whisky, from fermentation to being aged completely in Japan. 

(Graph from: https://www.nomunication.jp/data/newly-licensed-breweries-and-distilleries/ )

Once in Japan I hit a wall. A giant one. One I was not aware existed. One related to my wrong assumptions. I thought finding small equipment from breweries, wineries, and distilleries would similarly be super easy in Japan, as easy as buying a custom Anime figure or the freshest Japanese cuisine food online.

Here are some examples of how my expectations were misplaced.

Most of our largest equipment was ordered years before I arrived in Rishiri. Our pot stills were made In the United States, our fermentation-mashing system from China, and our steam boiler from Japan. But I was not ready for some small, but actually really big challenges. One of the first was this old, traditional Japanese system. It is how we must measure everything here. It is called “Shakubo.” It is a simple wood stick with centimeter markings on it.

It traces back to the old times of sake production in Japan and is, surprisingly, the only method of measurement accepted by Japan’s Taxation office today. Bye-bye to my idea of having a digital scale on the legs every tank to easily receive density readings. Crazily, this seemingly simple “Shakubo” takes like 2 months to produce.

Another shock was that there are only one or two sellers for most distilling equipment here in Japan. The most “affordable” bottling machine was too expensive for us, priced at $6,000. That is too much for the small production that we have here. Plus, space is a real limitation for us, our building is not quite big to hold a bottling line, land to expand in Rishiri is very hard to get, meaning the bottling system has to be small enough to pack away every time after use.

Anyway, we were able to find the classic from the nineties that are still in production, Enolmatic, on amazon.co.jp. It cost $600, and is super good quality for the price.

More Craft-sized Equipment Problems

We ordered a stainless filter from the US to go with our craft-size bottling machine. But the filter remains on hold at Japanese customs. Their rule is that they need to burn it, meaning burn all the individual parts, to see if is safe for the food industry. We can’t just have the product we bough burned, so Yasu, our amazing operations manager, contacted the manufacturer and they sent us the food-grade certificates from the EU, one of the strictest in the world. Japanese customs answer: they need it in Japanese. Yasu’s reaction, “Translate the document!!!” It has the answers they need, the same ones you would get if you get if you actually burned each piece of the equipment, but, no, that doesn’t work.

How do we move all our precious alcohol through the distillery? We need pumps. Different ones for different purposes. We found one that can cover most jobs. It is explosion-proof, perfect for alcohol, with enough power to move weighty wash, as well as being heat resistant. The missing detail, it cost too much.

The pattern with buying other distilling equipment is the same. We can buy an alcohol pump from outside Japan that costs $20. The problem is that it only move 6 liters per minute then needs to stop every 20 minutes. It is super cheap, but yeah, way too slow. Good for a hobbyist, but not quality enough for our size.

And of course, if we buy from overseas, it will be stopped at Japanese customs.

Pay Lots of Yen or Get Stuck at Customs

We are in a hard position now. We cannot import stuff from the states without having to go through the “Burn Test”. It is either buy expensive equipment that is in Japan, and often, too big for our craft distillation needs, being more on the industrial distillery-size, or have our cheaper, but more right-sized equipment get stuck at customs for months. That’s our conundrum now.

Tough for Small Distilleries in Japan

I’ve started to understand why it is so hard to start a small distillery here in Japan. It is not only related to sourcing of materials. It’s that there are not many small businesses for equipment to support a small scale here. Most of it is industrial sized.

One of the most challenging situations for me is that Japanese Taxation has strict rules. The most shocking part, a seemingly anti-small business rule, is that to obtain an Alcohol Production License you need a minimum annual production. 6000L is the minimum per year. That’s a high number!!! What if I want to have a super-premium spirit with limited releases per year? Even with a good business plan, it is not possible. It’s tough to be craft.

Here is my opinion, not Kamui Whisky K.K’s. official position: this is a situation that only benefits the big alcohol companies, it allows them to control the market by blocking entrepreneurs from entering it. It keeps the market positions of companies fixed, not dynamic.

A Team Effort

Despite all of these equipment sourcing challenges, we have gotten to the point of making our whisky. It was not something solely achieved by me. We overcame many, many challenges. Since getting our license a lot of them have been equipment and purchasing challenges. How could we find the right priced, right capability equipment, for our small, remote craft distillery? It has been hard. But our team, together, did it.

I am grateful for the composition of my team. Our Senior Distiller, Taura-san, is a special soul. He has experience working for a Japanese whisky distillery. He oversaw everything in his last job. He has been a constant help to our Operation Manager, Yasu. On our team, Taura-san is the one with the most experience working with the taxation office, navigating the unique rules required of Japanese distilleries. These two members are the ones realizing the challenging work of creating what Casey and I have been working on for several years. Years of research and endless Zoom meetings throughout the world, across time zones.

Resilience

I am the one who is responsible for the whisky and the distillery. I have had a rollercoaster of emotions and feelings these last months. It’s been a big, bone-shaking rollercoaster. Our team spirit can be summed up in that we have the strength to recover from setbacks, adapt well to change and keep going in the face of adversity. Resilience is one of the qualities that every entrepreneur and small business must work on it. Really every human being.

We have lots of resilience here in Rishiri.

It is in the air.