Japanese lenders are tapping into the common feature of whisky and other fine spirits that take time to mature, to extend distillers financing. One approach even fuses the centuries-old art of sake brewing with blockchain technology to create non-fungible tokens (NFTs) that allow brewers to access cash that typically would not be available until after years of maturing in a warehouse.
NFTs are unique digital assets that can represent anything from art to music to sports memorabilia. They are stored on a blockchain, a distributed ledger that records transactions and ensures their authenticity and security. NFTs can be traded on online platforms and have gained popularity in recent years as a way of creating value and ownership for digital creators.
Whisky as collateral for long-term loans
One of the lenders that is offering loans backed by whisky is Shinsei Bank, which has partnered with Tsuzaki, a distiller based in Oita Prefecture. Tsuzaki operates the Kuju Distillery, which produces single malt whisky and other spirits. The distiller has been aging its whisky in oak barrels since 2018, but it takes at least three years for the whisky to be ready for sale.
Shinsei Bank has agreed to lend Tsuzaki up to 300 million yen ($2.7 million) over 10 years, using the whisky casks as collateral. The bank will appraise the value of the whisky based on its age, quality, and market demand. The loan will help Tsuzaki expand its production capacity and invest in new equipment.
The bank said it is the first time in Japan that whisky has been used as collateral for a long-term loan. It also said it plans to offer similar loans to other distillers in the future.
Sake NFTs as a way of raising funds
Another innovative way of financing for the spirits industry is the use of sake NFTs, which are digital tokens that represent ownership of a specific batch of sake. Sake is a traditional Japanese alcoholic beverage made from fermented rice.
One of the pioneers of sake NFTs is Tamagawa Sake Brewery, which has been producing sake since 1842 in Kyoto Prefecture. The brewery has teamed up with LayerX, a blockchain technology company, to create NFTs for its premium sake products.
The brewery said it will issue 88 NFTs for each batch of sake, which will be stored in wooden barrels for at least three years. The NFT holders will be able to claim their bottles of sake when they are ready, or sell their tokens on an online marketplace. The brewery said it hopes to raise funds for its operations and also increase the awareness and appreciation of its sake products.
The brewery and LayerX said they have applied blockchain technology to ensure the traceability and authenticity of the sake NFTs. They also said they have used environmental-friendly methods to reduce the carbon footprint of the NFT creation and transaction process.
A growing market for Japanese spirits
The use of whisky and sake NFTs as a way of financing reflects the growing market for Japanese spirits, both domestically and internationally. According to a report by Euromonitor International, a market research firm, Japan’s spirits market was worth $9.4 billion in 2020, up from $8.6 billion in 2015. The report also projected that the market will grow to $10.3 billion by 2025.
The report attributed the growth to the increasing popularity of Japanese whisky, which has won several awards and accolades in recent years. The report also noted that Japanese consumers are becoming more interested in craft spirits, such as gin and vodka, which are produced by small-scale distillers using local ingredients.
The report also said that Japan’s spirits exports have increased significantly in recent years, reaching $383 million in 2020, up from $94 million in 2015. The main destinations for Japan’s spirits exports are Taiwan, China, South Korea, and the United States.
