An investigation by The Times stated that large quantities of Scotch are being 'laundered' by Far Eastern drinks firms in a scheme designed to feed the global demand for the Asian spirit.
However, a lack of legislation in Japan means that the practice is entirely legal.
Sales of Japanese whisky have rocketed over the past decade, not just in Europe and America, where a decision by Whisky Bible writer Jim Murray to name a Yamazaki as his "World Whisky of the Year" led to a surge in demand in the category, but also in Japan itself, where, thanks to a TV show about Scottish woman Rita Cowan, interest in domestic whisky has risen dramatically since it was first aired.
NHK’s Massan told the story of how Rita - who is now considered to be the 'mother of Japanese whisky' - and her husband Masataka Taketsuru, the founder of the renowned Nikka Whisky Distilling Co, married in 1920 after meeting while he was studying organic chemistry at Glasgow University, learning the secrets of making Scotch before returning to Japan together.
Featuring the first non-Japanese woman to star in one of NHK’s morning dramas, the show was a ratings success, leading to a whole new audience for the domestic whisky market.
• READ MORE: Play celebrates couple who launched Japan’s whisky romance
Renowned spirits writer Dave Broom, who has a lot of experience with the Japanese market, added that a lack of stock of mature whisky coupled with this recent surge in interest has led to a real problem for Japanese whisky makers who have become a victim of their own success.
Explaining the lack of Japanese stock, he said: "From the 1980s onwards, the industry either closed distilleries or went on to short term working and they now admit they were either too slow or too nervous to move back to full-time production in line with the rising interest in whisky around the world and that period of low production was longer than it should have been."
He added that the country’s loose regulations governing whisky permits blends of imported and domestic whisky to be sold as being ‘Japanese’.
"Around 2000, Japanese exported whisky for the first time, but they still had a crisis in their stock levels - so their reputation is growing, demand is growing but there isn't enough whisky and so you have a few opportunists jumping in and realising there are no regulations so they can exploit it. "
Dave's research went on to reveal that HMRC data shows that currently, 27 Japanese firms are importing bulk Scotch, while SWA figures highlight that between 2013 and 2018 there was a four-fold increase in bulk shipments to Japan.
An unnamed Scotch industry executive told The Times it was considered an "open secret" adding that it wasn't good for consumers as there is a "lack of transparency".
This point is mirrored by Dave, who adds that with the issue of transparency is becoming increasingly important to consumers, this could become a real problem for Japanese whisky going forward.
"It's exposed the need for regulation in Japan, I think a lot of us writing about Japanese whisky were perhaps a little naive in that we assumed that Japanese whisky was regulated in much the same way Scotch is.
"The lack of clarity is damaging for the Japanese whisky industry, you're beginning to see people who love Japanese whisky feel cheated because they are now beginning to believe all Japanese whisky is doctored - which isn't the case - but there is no regulation and because there's no regulation it's open to exploitation.
"Large parts of the industry, from the smaller startups to the bigger companies like Suntory, are being very vocal about the fact that this situation needs to change."
Makiyo Masa, founder and director of dekanta, one of the most prominent specialist retailers of Japanese whisky online, stated that the report didn’t really feel like news to them, since it’s an issue which has challenged their business for quite some time.
Ms Masa added that recent news indicating that progress has been made, so they are feeling quite positive for 2020, she said: "We aim to arm our customers against being misled by this type of marketing.
"We believe we have a duty to our clients to be as transparent as possible. As such we make sure that we gather an appropriate amount of information, wherever possible, from distillers and blenders before putting their product online. If their expression does contain a large portion of whisky from overseas it will be labelled as a world blend and will say so in the product description.
"It is encouraging to see more producers being transparent about what’s in the bottle and making use of the term ‘world blend’, though there is still a long way to go.
The Japanese whisky expert added that dekanta are hopeful that Japanese whisky ‘laundering’ will soon be reduced in scale as 2020 will see the establishment of the Japanese Whisky Association, by the Japan Whisky Research Centre, she said: "This will be the Japanese equivalent of the Scotch Whisky Association, with the goal of establishing an industry-approved definition of Japanese whisky.
"We’re looking forward to hearing more about this definition, and how the new Japanese Whisky Association will shape the landscape of Japanese whisky in the future."
Speaking of the Scotch Whisky Association, the SWA are clear on their stance towards such "passing off" practices, stating that though there have been exports of Blended Scotch Whisky and Blended Malt Scotch Whisky in bulk to many countries around the world for many years, Scotch whisky would be robustly protected from any attempts to tarnish or "unfairly take advantage" of the Scottish industry's brand.
Adding that some of this bulk is then mixed with locally produced spirit, they stated that such mixed spirits have been sold for many years and are entirely legitimate, however, they cannot be described or promoted as Scotch Whisky.
A spokesperson for the SWA said: “The SWA's responsibility lies with ensuring no product is sold as Scotch Whisky which is not 100 per cent Scotch and in addition to HMRC’s Verification Scheme, we have developed a range of protections over the years that ensure that Scotch Whisky is recognised as whisky produced in Scotland according to its specific requirements across our extensive export markets. These measures include GI status, trademark registrations and recognition in local legislation.
“The SWA will continue to take action all over the world to stop the sale of fake or misleadingly labelled products that unfairly take advantage of the quality and reputation of Scotch Whisky.”
They finished by saying that Scotch whisky being labelled as Japanese whisky is a matter that the SWA legal team would investigate.
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