TOKYO -- How much of a difference does a dollar and change make? Quite a bit, as far as Japan's imported wine businesses are concerned.
Japan and the European Union have reached a broad agreement to lower trade barriers on a wide range of goods. The economic partnership deal, expected to take effect in 2019, will scrap the tariff Japan currently slaps on European wine, lowering retail prices.
For now, Japan levies a tariff of 15% or 125 yen ($1.12) per liter, whichever is less, on wine from EU countries. The most popular price range for wine in Japan is up to 1,000 yen, which raises a question: Will an 875 yen bottle be that much more attractive?
The discount may not seem like much, but the wine industry is pumped about the prospect of a lower mental barrier to buying European vintages. Players are looking to the success of Chilean wine: Japan's step-by-step elimination of tariffs from 2007 sparked a surge in imports.
Chile, in fact, overtook France as the No. 1 import source. Now is the time for European labels to stage a comeback.
Industry watchers reckon Japan may end up imbibing more wine than sake -- the country's traditional alcohol of choice, but one that has been losing its edge in recent years.
The trade accord will expand the wine market by making it something "consumers can drink regularly," predicted Shinichi Hirano, president of Asahi Breweries, which owns popular wine retail chain Enoteca.
The elimination of the tariff will "lower psychological hurdles to buying" European wine, said one 40-something company worker purchasing a Chilean vintage at a wine shop.
Market conditions are changing in favor of Japan's own wine producers as well.
New, stricter labeling rules to be introduced next autumn will draw a clear distinction between wine made solely from domestic grapes and that made from imported grape juice. This should help Japanese wineries differentiate their products.
Major players are expanding their wine businesses.
Mercian, a wine producer owned by Kirin, plans to make true domestic wines the "backbone" of its business, President Teruyuki Daino said. This past spring, Mercian opened a 90,000-sq.-meter vineyard in Shiojiri, Nagano Prefecture. The company plans to double the size by 2027.
Asahi Breweries, meanwhile, has acquired 40,000 sq. meters of farmland in Yoichi, Hokkaido, for growing wine grapes.
It is a different story for sake brewers. Consumption of the traditional Japanese liquor, made from fermented rice, has been steadily declining.
"As other liquors such as chuhai and wine have gained popularity among consumers, occasions for drinking sake at home have decreased," observed an executive at Takara Shuzo, a major sake brewer. Chuhai refers to shochu distilled liquor mixed with soft drinks.
Domestic consumption of seishu, another word for sake, fell to 550,000 kiloliters in fiscal 2015 -- less than half the amount two decades earlier. Shochu surpassed sake in popularity in fiscal 2003.
The number of sake brewers, mostly small businesses, has declined 20% in the past decade.
Even without the EU deal, wine has been closing the gap. Japanese drinkers used to consume nine times more sake than wine; now they drink only 50% more.
As the country's population ages and shrinks, liquor producers of all stripes need to attract younger consumers. Yet young Japanese today are less inclined to drink than previous generations.
Overall Japanese liquor consumption shrank by more than 10% over the two decades to fiscal 2015, falling to around 8.5 million kiloliters.
Consumption of beer and beerlike beverages has fallen particularly sharply -- a fall that has not been offset by the increased popularity of drinks like canned chuhai or whisky and soda.
One bright spot is craft beer, which has piqued the interest of the younger set. These brews now account for nearly 1% of the beer market, and the figure is expected to rise to 3% in 2021.
Craft breweries have struck a chord with their distinct flavors, independent vibe and fashionable pubs. Like wine, craft beers often have unique regional characteristics and are made in relatively small batches.
The craft beer boom might offer some marketing lessons for wine merchants looking to seize the looming opportunity.