DASSAI: OPENING A SAKE BREWERY IN THE UNITED STATES
CASE STUDY SOLUTION
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SYNOPSIS
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The Japanese sake market has been shrinking for the past 40 years, primarily due to consumer preferences
shifting to other types of alcohol such as wine and beer, along with the aging of sake-drinking consumers.
Despite the declining market, Asahi Shuzo Co., Ltd. (Asahi Shuzo), a family-owned brewery from a small
village in Yamaguchi, has grown rapidly by selling only one brand: Dassai. The company’s sales exceeded
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¥16.5 billion in 2022,2 which is 165 times more than their sales in 1984. Hiroshi Sakurai, the current
tio
chairperson of Asahi Shuzo, has successfully transformed a brewery with no money, skilled labour, or
market share (at one time on the verge of bankruptcy) into a powerhouse in the sake industry.
By 2016, Asahi Shuzo has expanded into 20 countries, becoming one of the top-10 breweries in Japan.
lu
While the brewery has enjoyed growing sales in Japan, its overseas revenue constitutes only 10 per cent of
its total revenue. With the goal of a 50:50 revenue ratio between sales brought in from the Japanese market
So
and sales brought in from overseas markets, Hiroshi Sakurai’s son Kazuhiro, the president and fourth-
generation owner of Asahi Shuzo, decides to build the company’s first overseas brewery in New York in
2017. Due to delays resulting from COVID-19, the construction cost of the brewery balloons from its first
estimate of ¥1 billion to ¥8 billion as of March 2023. The New York brewery was scheduled to open in
April 2023. Is overseas production going to positively impact the Japanese premium sake brand? What are
the challenges of being made in the United States going to be for Dassai? Is building a brewery in the United
States the right decision for Dassai’s global strategy?
OBJECTIVES
The Case Solution Starts From page 7
,• Understand how country-of-origin contributes to product value and consumer perception, especially
for a premium brand or brands considering offshore production.
• Explain the range of marketing and strategy issues that need to be addressed in order to produce a
nationally branded product in a foreign country.
• Define the challenges of managing the quality of high-end alcoholic beverages in a foreign country.
• Explore critical factors for companies in deciding whether to enter a new market and how doing so
may affect brand equity, as well as its unique selling proposition (USP).
• Understand how a business achieves value innovation by utilizing the eliminate-reduce-raise-create
(ERRC) grid.
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ASSIGNMENT QUESTIONS
1. What are the risks of Asahi Shuzo establishing its first overseas brewery? What are the benefits of
opening the New York brewery?
2. How important would the “Made in Japan” designation be for consumers outside of Japan?
3. Does Dassai have the potential to become a premium brand comparable to the French premium wine brands?
4. What product, price, distribution/placement, and promotion strategy (marketing mix) would you
recommend that Asahi Shuzo use to promote Dassai in the United States?
5. For Asahi Shuzo’s first overseas brewery in the United States, how should it position its new products
as being made in the USA?
6. Analyze the reasons why Dassai has been so successful in Japan based on the ERRC grid.
7. How many years will it take for the New York brewery to recoup its construction costs?
The Case Solution Starts From page 7
,ANALYSIS
1. What are the risks of Asahi Shuzo establishing its first overseas brewery? What are the
benefits of opening the New York brewery?
As long as Asahi Shuzo can continue to produce Dassai in Japan and export the finished product overseas,
producing the sake at home is sufficient, and the company does not need to acquire foreign-manufacturing
expertise and can avoid the expense of establishing operations outside of Japan. However, given the current
limited volume of Yamada Nishiki in Japan, significant shipping costs, tariffs, and growth in overseas sales,
establishing an offshore brewery might be the solution for addressing the company’s global strategy. Asahi
Shuzo’s long-term goal has been to reach a 50:50 revenue ratio between the domestic market and the
overseas markets, and to shift the overseas portion to 90 per cent over time. To achieve this, the overseas
operations must eventually be expanded. However, production outside Japan may pose numerous risks to
Asahi Shuzo, as outlined in the following section.
e
Risks
pl
The potential risks of Asahi Shuzo establishing its first overseas brewery in New York include:
•
m
Different taste/quality: Asahi Shuzo has heretofore used only Yamada Nishiki to produce Dassai, and
not any other kind of sake rice. All Dassai labels bear the phrase “Yamada nishiki 100 per cent,” and
Sa
Asahi Shuzo has worked to improve the quality and number of farmers who harvest this premium rice.
However, Yamada Nishiki is not available in the United States. Therefore, Asahi Shuzo would need to
n
tio
lu
•
So
•
The Case Solution Starts From page 7
, e
pl
m
Sa
7. How many years will it take for the New York brewery to recoup its construction costs?
The construction costs of the New York brewery have reached ¥8 billion (US$58.4 million) in March 2023.
n
Students may estimate the number of years based on some assumptions, including the growth rates of Asahi
Shuzo’s overseas sales and the sake market in the United States.
tio
Asahi Shuzo’s overseas sales have been ¥3 billion in 2018, ¥4.125 billion in 2019, ¥3.75 billion in 2020,
¥6.75 billion in 2021, and ¥7 billion in 2022 (see Exhibit 2). The compound average growth rate (CAGR)
lu
for the past five years is 18.46 per cent.
Given that 40 per cent of Asahi Shuzo’s overseas sales comes from the United States, the US sales for 2022
So
can be calculated: ¥7 billion × 40 per cent = ¥2.8 billion. The New York brewery’s Dassai Blue successfully
launched in September 2023, and if it contributes 30 per cent of Asahi Shuzo’s sales in the United States,
The Case Solution Starts From page 7
, EXHIBIT -1: BENEFITS VS. RISKS OF AN OVERSEAS BREWERY
Benefits Risks
• Elimination of cost of exporting Dassai from • Inability to maintain the same quality of Dassai
Japan means that prices don’t get inflated. without Yamada Nishiki.
• •
•
•
•
•
•
•
•
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•
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EXHIBIT -2: CONCEPTUAL STRUCTURE OF US CONSUMERS’ SAKE
Sa
PURCHASING DECISIONS
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The Case Solution Starts From page 7
, EXHIBIT -11: NEW YORK BREWERY SALES FORECAST (IN ¥ BILLIONS)
Table 1
Year 2023 2024 2025 2026 2027 2028 Total
NY Brewery Sales 0.9951 1.1788 1.3964 1.6541 1.9595 2.3212 9.5049
Year 2023 2024 2025 2026 2027 2028 Total
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NY Brewery Sales
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Table 2
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The Case Solution Starts From page 7
CASE STUDY SOLUTION
e
pl
SYNOPSIS
m
Sa
The Japanese sake market has been shrinking for the past 40 years, primarily due to consumer preferences
shifting to other types of alcohol such as wine and beer, along with the aging of sake-drinking consumers.
Despite the declining market, Asahi Shuzo Co., Ltd. (Asahi Shuzo), a family-owned brewery from a small
village in Yamaguchi, has grown rapidly by selling only one brand: Dassai. The company’s sales exceeded
n
¥16.5 billion in 2022,2 which is 165 times more than their sales in 1984. Hiroshi Sakurai, the current
tio
chairperson of Asahi Shuzo, has successfully transformed a brewery with no money, skilled labour, or
market share (at one time on the verge of bankruptcy) into a powerhouse in the sake industry.
By 2016, Asahi Shuzo has expanded into 20 countries, becoming one of the top-10 breweries in Japan.
lu
While the brewery has enjoyed growing sales in Japan, its overseas revenue constitutes only 10 per cent of
its total revenue. With the goal of a 50:50 revenue ratio between sales brought in from the Japanese market
So
and sales brought in from overseas markets, Hiroshi Sakurai’s son Kazuhiro, the president and fourth-
generation owner of Asahi Shuzo, decides to build the company’s first overseas brewery in New York in
2017. Due to delays resulting from COVID-19, the construction cost of the brewery balloons from its first
estimate of ¥1 billion to ¥8 billion as of March 2023. The New York brewery was scheduled to open in
April 2023. Is overseas production going to positively impact the Japanese premium sake brand? What are
the challenges of being made in the United States going to be for Dassai? Is building a brewery in the United
States the right decision for Dassai’s global strategy?
OBJECTIVES
The Case Solution Starts From page 7
,• Understand how country-of-origin contributes to product value and consumer perception, especially
for a premium brand or brands considering offshore production.
• Explain the range of marketing and strategy issues that need to be addressed in order to produce a
nationally branded product in a foreign country.
• Define the challenges of managing the quality of high-end alcoholic beverages in a foreign country.
• Explore critical factors for companies in deciding whether to enter a new market and how doing so
may affect brand equity, as well as its unique selling proposition (USP).
• Understand how a business achieves value innovation by utilizing the eliminate-reduce-raise-create
(ERRC) grid.
e
pl
m
Sa
n
tio
lu
So
ASSIGNMENT QUESTIONS
1. What are the risks of Asahi Shuzo establishing its first overseas brewery? What are the benefits of
opening the New York brewery?
2. How important would the “Made in Japan” designation be for consumers outside of Japan?
3. Does Dassai have the potential to become a premium brand comparable to the French premium wine brands?
4. What product, price, distribution/placement, and promotion strategy (marketing mix) would you
recommend that Asahi Shuzo use to promote Dassai in the United States?
5. For Asahi Shuzo’s first overseas brewery in the United States, how should it position its new products
as being made in the USA?
6. Analyze the reasons why Dassai has been so successful in Japan based on the ERRC grid.
7. How many years will it take for the New York brewery to recoup its construction costs?
The Case Solution Starts From page 7
,ANALYSIS
1. What are the risks of Asahi Shuzo establishing its first overseas brewery? What are the
benefits of opening the New York brewery?
As long as Asahi Shuzo can continue to produce Dassai in Japan and export the finished product overseas,
producing the sake at home is sufficient, and the company does not need to acquire foreign-manufacturing
expertise and can avoid the expense of establishing operations outside of Japan. However, given the current
limited volume of Yamada Nishiki in Japan, significant shipping costs, tariffs, and growth in overseas sales,
establishing an offshore brewery might be the solution for addressing the company’s global strategy. Asahi
Shuzo’s long-term goal has been to reach a 50:50 revenue ratio between the domestic market and the
overseas markets, and to shift the overseas portion to 90 per cent over time. To achieve this, the overseas
operations must eventually be expanded. However, production outside Japan may pose numerous risks to
Asahi Shuzo, as outlined in the following section.
e
Risks
pl
The potential risks of Asahi Shuzo establishing its first overseas brewery in New York include:
•
m
Different taste/quality: Asahi Shuzo has heretofore used only Yamada Nishiki to produce Dassai, and
not any other kind of sake rice. All Dassai labels bear the phrase “Yamada nishiki 100 per cent,” and
Sa
Asahi Shuzo has worked to improve the quality and number of farmers who harvest this premium rice.
However, Yamada Nishiki is not available in the United States. Therefore, Asahi Shuzo would need to
n
tio
lu
•
So
•
The Case Solution Starts From page 7
, e
pl
m
Sa
7. How many years will it take for the New York brewery to recoup its construction costs?
The construction costs of the New York brewery have reached ¥8 billion (US$58.4 million) in March 2023.
n
Students may estimate the number of years based on some assumptions, including the growth rates of Asahi
Shuzo’s overseas sales and the sake market in the United States.
tio
Asahi Shuzo’s overseas sales have been ¥3 billion in 2018, ¥4.125 billion in 2019, ¥3.75 billion in 2020,
¥6.75 billion in 2021, and ¥7 billion in 2022 (see Exhibit 2). The compound average growth rate (CAGR)
lu
for the past five years is 18.46 per cent.
Given that 40 per cent of Asahi Shuzo’s overseas sales comes from the United States, the US sales for 2022
So
can be calculated: ¥7 billion × 40 per cent = ¥2.8 billion. The New York brewery’s Dassai Blue successfully
launched in September 2023, and if it contributes 30 per cent of Asahi Shuzo’s sales in the United States,
The Case Solution Starts From page 7
, EXHIBIT -1: BENEFITS VS. RISKS OF AN OVERSEAS BREWERY
Benefits Risks
• Elimination of cost of exporting Dassai from • Inability to maintain the same quality of Dassai
Japan means that prices don’t get inflated. without Yamada Nishiki.
• •
•
•
•
•
•
•
•
e
•
pl
m
EXHIBIT -2: CONCEPTUAL STRUCTURE OF US CONSUMERS’ SAKE
Sa
PURCHASING DECISIONS
n
tio
lu
So
The Case Solution Starts From page 7
, EXHIBIT -11: NEW YORK BREWERY SALES FORECAST (IN ¥ BILLIONS)
Table 1
Year 2023 2024 2025 2026 2027 2028 Total
NY Brewery Sales 0.9951 1.1788 1.3964 1.6541 1.9595 2.3212 9.5049
Year 2023 2024 2025 2026 2027 2028 Total
e
NY Brewery Sales
pl
m
Table 2
Sa
n
tio
lu
So
The Case Solution Starts From page 7
