New drink guzzling beer market
By Hans Greimel
Associated Press
TOKYO — Beer has gone flat in Japan.
Associated Press
Once the mainstay of factory workers after a hard day's work and the social cement of the office crowd, beer is quickly losing its loyal following — and not because the Japanese don't relish tossing back an icy cold one.
Ryota Okumoto, Matsuya Department Store beer sales adviser, shows two brands of happoshu — a new beer-like beverage low in alcohol. The inexpensive drink has stolen 30 percent of the Japan beer market.
Thanks to a tax loophole, happoshu — a new, low-alcohol beverage that looks and tastes like beer — is nearly half the price.
That happoshu has stolen 30 percent of the beer market underscores how economic hard times are tightening purse strings even at the expense of a drinking tradition dating to 1876, when German brewmasters helped found Japan's first brewery.
"If the price were the same, I'd take real beer every time," said Motohiro Suzuki, a self-described "everyday beer drinker," as he cracked open a can of happoshu on his walk home from work.
Cost-conscious consumers sent beer shipments tumbling 12 percent last year while happoshu shipments soared 42 percent. Now beer's No. 1 rival is getting even cheaper as Japan's brewers are waging a happoshu price war just in time for the summer drinking season.
Sapporo fired the latest shot last week, dropping the price of one happoshu offering by the equivalent of 8 cents to $1.04 for a 12-ounce can. That compares with $1.73 for Sapporo's bottom-rung beer.
Sapporo's cuts matched recent ones at rivals, Suntory, Kirin and Asahi.
Happoshu, which means "fizzy liquor" in Japanese, is the unlikely product of Japan's heavily regulated economy. It was first introduced in 1994 by Suntory as a way of dodging a hefty tax on beer, which the government defines as containing more than 66.7 percent malt. The tax accounts for up to half a beer's price.
Happoshu skimps on malt and loads up on corn syrup, rice or sugar, thereby qualifying for a much lower tax. All the major brewers quickly introduced their own brands.
"Basically it was an invention of the beer companies," said Yoko Fujii, a beverage analyst with J.P. Morgan in Tokyo.
At first, it was a hard sell in a country that prides itself on quality brew and where real beer is ubiquitous — from rooftop beer gardens at upscale department stores to street-side vending machines.
But as the economy worsened — unemployment stands at record highs of about 5 percent — consumers gradually lapped up happoshu's refreshingly low price.
Beer companies spurred sales by making happoshu's initially lighter, sweeter taste more bitter like beer. They also rolled out hip promotions targeting young people — such as one TV spot for Suntory that features Kotaro Koizumi, the sporty 23-year-old son of Prime Minister Junichiro Koizumi.
By 2000, happoshu accounted for 22 percent of the beer market, and some analysts say it could bubble up to 40 percent this year, especially with prices falling.
Beer companies hope the price wars won't last long. Happoshu's profit margins are razor thin compared to beer, and Japan's brewers have all seen earnings erode.
"I can't say why we're doing it except to say all other companies were doing it and winning customers," Sapporo spokesman Naoto Kinoshita lamented about the recent cuts. "People like the price."
Despite happoshu's growing popularity, there's little fear beer will disappear. Restaurants still prefer to serve it as a more highbrow, fuller-bodied companion to food — something to savor in its own right, not just a cheap buzz.
Increasing talk about hiking the happoshu tax to the level of beer — by Koizumi's own ruling party — could wipe out the reason for picking up a six-pack in the first place.
