Luxury Trendsetters: Karuizawa

History

The Karuizawa distillery was founded in 1955 by the Mercian Corporation, a subsidiary of the Kirin Brewery Company. Located in the town of Karuizawa, in the Nagano Prefecture of Japan, which was a popular holiday destination, the distillery was built on the site of an old vineyard, and used the pure, fresh water that flowed from the nearby Mount Asama as its source. In their earliest days, there was one key problem facing the distillery though: Karuizawa struggled to obtain ingredients like malt barley due to post-war import restrictions. Luckily for the distillery, just two years after opening, restrictions were relaxed & Karuizawa started using Golden Promise malt - the same used by Macallan.

Karuizawa initially produced blended whisky, but in 1976, the distillery started producing single malt whisky. The whisky was matured in ex-sherry casks, which gave it a rich, fruity flavor with notes of raisins and dried fruit. Even though the distillery offered impressive quality and low quantities, it was an up-hill battle for Karuizawa as the collector and investor markets favored Scotland's Speyside spirits. Additionally, Karuizawa's limited production meant they had to price their bottles above average market price - not a good combo for a distillery selling to a skeptical audience.

While the distillery produced whisky until 2000, it was closed down due to declining sales.

Closure

As mentioned, there were several factors that contributed to the closure of the Karuizawa distillery. One of the main factors was the decline in demand for whisky in Japan in the 1990s. The Japanese economy was in a recession, and consumers were turning to other drinks, such as beer and wine.

Another factor was the high cost of production. The Karuizawa distillery was a small, artisanal operation, and the cost of producing whisky was higher than that of larger distilleries. This meant that the price of Karuizawa whisky was higher than that of other Japanese whiskies, which made it less competitive in the marketplace. With limited market growth outside of Japan, the Karuizawa Distillery was officially mothballed in 2001. The building was overtaken by ivy and in 2012 all distillery equipment was liquidated while the remaining stills were demolished in 2016.

Market

Since the closure of the Karuizawa distillery in 2000, the market for Karuizawa whisky has grown rapidly. The rarity and quality of the whisky has made it highly sought after by collectors and whisky enthusiasts around the world.

Between 2018-2022, the Karuizawa Index tracked by Rare Whisky 101 increased by 200% while single bottles from vintages including their 1960, 1964, & 1965 have sold for at least $50,000/each. Record-breaking sales at auction have followed and in 2020, Sotheby's sold a 52-year bottle for $435,273, the most ever for a Japanese whisky. Within the collector market the demand has been sparked by strong performances by the whisky at competitions. Karuizawa has now won several prestigious awards including the World Whiskies Awards & the International Wine & Spirit Awards.

The rarity of Karuizawa whisky has also been fueled by the rise of the whisky investment market. In recent years, investors have been buying up rare bottles of whisky as an alternative asset class, and the high demand for rare whiskies has driven up.

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