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Japan Implements Domestic Wine Industry Protection Measures

  •   7 Nov 2018
  •    Lennie Tao
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    Takehome:

    • Japan has implemented a new labeling rule to improve the competitiveness of its domestic wine industry which is facing mounting inward trade pressures on the back of new trade agreements with the EU and Chile.

    On Oct. 30, Japan implemented a new labeling rule for wines. It stipulates that only wine made from Japanese domestic grapes and fermented in Japan can be labelled as "Japanese wine".

    Producers that use imported grapes as raw material, and subsequently ferment the product in Japan, cannot label their wine "Japanese wine". Under this rule, wine manufactures can mark Japanese origin information on the label provided 85% of the raw material grapes are from that place.

    According to data from Japan's Tax Agency, 15,849 kiloliters of Japanese domestic wine was exported in the 2016 fiscal year, representing a 5% year-on-year increase. Japan is also the sixth largest wine importing country globally. Imported wines in Japan account for over 60% of the Japanese wine market. A recent article by Australian Trade and Investment Commission, highlighted the current growth in demand and consumption in Japan and underscores the great potential for foreign investment and market entry especially for EU countries, Australia, Chile, etc. Many of these countries have also signed FTA's or similar agreements (e.g.: EPAs) with Japan to cancel or reduce tariffs. The impact of these agreements is obvious. Before the implementation of a trade agreement with Japan, Chile only held a 5% share of the Japanese wine market, but in 2017, it has expanded to 31% and has already replaced France as the dominant force in Japan's wine market.

    According to Japanese trade experts, after the EU-Japan EPA is implemented (predicted to come into force at the beginning of 2019) wine supply from these will grow rapidly. The new labeling rules should offer some solace in the face of mounting inward trade pressures.

    Reference

    Japanese News

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