Nikka Expands Whisky Production in Japan

Nikka Whisky is betting that the global appetite for Japanese whisky still has room to grow, even as more supply enters the market and raises the risk of a future glut.

The company, a unit of Asahi Group Holdings, said it has spent 7 billion yen, or about $45 million, to upgrade its historic Yoichi distillery on Hokkaido, Japan’s northern island. The expanded production is scheduled to come online next year. Nikka also set a long-term sales target of 100 billion yen a year by 2034, about double its 2023 revenue of 53.4 billion yen, and said it aims to reach 200 billion yen by around 2040.

“We are making large investments now with the future in mind,” Naoto Ono, Nikka’s president, said in an interview. He said whisky must be aged before it can be sold, which means the company is investing now for demand that may not fully materialize for years.

Nikka’s sales have risen from 27.3 billion yen in 2013 to 59.7 billion yen last year, though that growth was interrupted by the pandemic, which hurt demand from bars and restaurants. The company now sells products in more than 65 countries, with the United States its largest overseas market by volume.

The expansion comes after years of tight supply in Japanese whisky. Single malts and blended whiskies from Japan began winning major international awards around 2008, helping drive strong global demand. By about 2015, that demand had effectively drained inventories at many producers and pushed prices higher. In response, established makers and smaller distillers alike began expanding capacity.

Suntory, Japan’s largest whisky maker, announced a 10 billion yen investment in 2023 to upgrade distilleries including its flagship Yamazaki site. Nikka’s Yoichi distillery dates to 1934 and was founded by Masataka Taketsuru, who is widely known as the father of Japanese whisky.

At Yoichi, a new barrel-making facility is expected to be completed in July. Ongoing construction of new warehouses will raise storage and aging capacity by roughly 30% compared with 2019 levels.

Ono acknowledged that the increase in supply could shift the market toward oversupply. Still, he said Japanese whisky’s premium image and relatively small share of the global spirits market leave room for further growth.

Nikka’s products are sold in more than 65 countries, and Ono said tariffs imposed by President Donald Trump last year had not materially affected sales. He added that Nikka wants to become one of the world’s top 10 whisky brands and believes that goal will require stronger recognition overseas.