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It is said that there are many Japanese businesses in traditional industries facing insolvency due to liquidity issues and being unable to find a successor.We spoke with Hironari Okayama, an entrepreneur who took over a sake brewery, about the struggles, challenges, and fun of taking over a business not as a family member or a former employee, but as a third party.
I’m from Ise, a city in Mie Prefecture. When I was 22, I started a live music venue in my hometown, after which I launched a food and drink company starting with events, and that company is now in its 21st year. Today, I split my time between Ise and Tokyo. At first, my peers and superiors spoke frankly with me, saying things like “Do you think your business can survive?” That’s why the desire to create an environment in which I can receive support from people who are active locally for the things I want to do locally is fundamental for me.I’m currently operating around 10 dance studios. Local people in music and dance tend to face people saying things like “How long are you going to stick with this?” and “What are you going to do in the future?” But I think it’s fine to continue as you are if you are enjoying what you are doing, so I’m trying to keep going here. One of the young people who works on production for me is managing to work on compositions for famous singers while living in Ise, so I think you can stay local as long as you have a clear vision. Now I’m trying to keep this kind of scene alive regardless of age. It’s a personal mission.
After I turned 30, I started to feel that little by little the things I’ve done have been recognized for their worth. I’m being invited to more and more local festivals and jobs connected with regional revitalization. Thanks to JAL choosing our company as part of an initiative for tourists with Ise City in Mie Prefecture, I was entrusted with managing a joint project between JAL and Mie Prefecture and Ise City. We worked together for around 4 years, during which time I also had the opportunity to get involved with regional revitalization in the town of Shimanto when the person in charge happened to visit Kochi Prefecture.
After connecting with the town of Shimanto, I was commissioned to work on PR and production for Iwamoto Temple, which is known as Temple 37 on the Shikoku 88temple pilgrimage, and this temple was becoming popular as an art temple thanks to its ceiling featuring a selection of paintings from artists throughoutShikoku. That gave me the idea of promoting Shimanto as a town of art. I thought I might be able to translate what I had been doing in Ise into something useful for Shimanto, so I searched for up-and-coming artists inShimanto, and despite the pandemic, held many music and art-related events to give those artists a platform.
At some point during that process, I came into contact with Shimanto’s "Niida mai" rice brand. This is a deliciously fragrant rice. I also heard that Fumimoto Sake Brewery, which was Shimanto’s only sake brewery and had been going for 120years, was about to close down. I thought it would be a waste for sake to disappear from this town with its wonderful rice brand and the clean water ofShimanto River, so I launched a project to save the brewery. It was quite difficult to achieve this, and someone needed to take the lead in terms of the sake business transfer and other elements, but thankfully we received cooperation with the project from people like the chief priest of IwamotoTemple, and after an M&A on July 1, 2022, we were able to relaunch the sake brewery on May 1, 2023.
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There were many problems but coordinating with the locals was not so difficult. One of the reasons for that was that I had been accepted by the area through my activities up to then. Apparently some people questioned whether I was really suitable to take over the brewery, but I didn’t let that bother me. I started working after receiving a license to brew sake, but there were significant obstacles to overcome as a new business. We were faced with the reality of being unable to produce the same sake as before without satisfying current health center regulations. I hadn’t anticipated this wall that was suddenly in front of us. Using the same methods as the previous generation had would mean failing to comply with the regulations, so we needed to construct a system in accordance with today’s regulations, and it became apparent that to do so would require a huge amount of capital investment. Another concern was that the chief brewer had left the brewery due to COVID-19. I own the brewery, but there was no way to make sake without a chief brewer even if we could come up with the capital investment that was needed. This was really worrying. On top of that, this brewery was well established and had been in business for 120 years, but the previous generation had not borrowed any money from the banks, which meant there was no credit history, and this prevented us from borrowing. It took one year to overcome these three problems and actually get started.
Regarding the absence of the chief brewer, a movie director friend of mine, GenkiTakigawa, had shot a sake production-themed movie called Koi no Shizuku ,so I asked him for some help. He introduced me the head of the chief brewers’ association who provided support during production of the movie, and then he introduced me a chief brewer from Ibaraki Prefecture who had been searching for a sake brewery at which to work.
But there were still other problems. For one thing, the pandemic had resulted in a lack of bottles in the sake bottle industry. Major sake bottle manufacturers were even going under because sake wasn’t being produced. This meant that even if we could produce sake, we wouldn’t have bottles to store it in. Sake breweries that had been in business for a long time were able to survive thanks to their existing stock and connections with bottle businesses, but it was extremely difficult for us, as a new brewery with no guaranteed sales, to find bottle companies that would provide the bottles we needed. Initially driven by this challenge, we explored alternative packaging options and decided to use pouches. We quickly realized that this approach not only addressed our immediate needs but also significantly aligned with our commitment to sustainability. The use of pouches effectively reduced transport costs and CO2 emissions, reinforcing our dedication to environmental responsibility. These pouches, available in small sizes, were not only practical for sample testing and refrigeration, but also for recycling, and they garnered a surprisingly favorable response. Additionally, their convenience made them an attractive option for people from other countries looking for unique souvenirs.
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There’s still a genuine lack of national support for business succession. Maybe it varies from prefecture to prefecture, but there is no support for succession asa new business like ours. I think we could have received support in the form of capital investment, for example, if we’d applied under the guise of business reconstruction. We did what we could to search for and make use of all the support we could get from the taxation bureaus and prefectures. But sake is a unique industry, and once a license to make sake is issued, it’s never updated.So the only way to enter the sake industry is through M&A. With other types of alcohol, such as beer, there are legal changes and it’s easy to enter the industry. Also, sake is mostly consumed locally, so it’s difficult to raise prices. While there are cases where breweries collaborate with companies to make high-end products, it’s still difficult to raise prices even when labor costs are going up and there is general inflation, so these projects often don’t work out. This is the environment in which we launched our product at a higher than average price, so some people were asking “Why is it so expensive?”Explaining the circumstances in a way that people will understand is also a challenge.
Ideally, I envision us as a sake brewery that, much like a Japanese indie band finding success abroad, is lesser-known in Japan but widely recognized overseas. With inbound business bolstering Japanese industry, my goal is to connect with international partners who can help us popularize our sake globally. At the same time, gaining popularity in Japan remains vital, so I’m equally focused on ensuring local people enjoy and appreciate our sake.
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What I want to concentrate on now is a “sake bank” (that’s just a provisional name).By this I mean a project that’s like a fund of sorts. It’s important for me to be able to do more things by receiving investment in my brewery, but I also hope we can develop our story horizontally and create an overall budget for a conglomerate of indie breweries. Also, if people from other countries want to get involved, no doubt they’ll face the same difficulties as us, so I would like to act as an intermediary and communicate know-how to such people. There might also be room for investment from overseas companies split into 80% investment in the brewery’s production output and 20% investment in preservation of local industry in Japan, for example. I’d like to get involved with matching investors in the future as well.
Fumimoto Sake Brewery : https://fumimoto.jp/en
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