Japan: Government move to protect small liquor shops could further damage Japan’s beer market

A move by a group of lawmakers to protect small neighborhood liquor shops could end up further drying out the beer market in Japan, the Nikkei Asian Review reported on June 2.

The revised liquor tax law took effect on June 1, leading to higher beer prices at some major retailers and triggering much grumbling among beer lovers.

One supermarket in Tokyo’s Adachi Ward raised the price of a six-pack of 350-milliliter cans of beer by 150 yen ($1.35).

“The situation facing beer is a very severe one because sales stop suddenly when prices rise even by a few yen,” said the employee in charge of alcoholic beverages at the supermarket.

An 80-year-old woman who buys three six-packs of beer a week said the law might force her to switch to the harder stuff.

“I am searching for the cheapest beer by going to different supermarkets in the neighborhood,” she said. “I may cut back on beer and change to shochu.”

The revised liquor tax law is designed to help small mom-and-pop retailers compete against large supermarkets and discount liquor shops that have attracted customers with lower prices.

The revisions essentially ban sales of beer products at prices that are less than the costs involved in retailing them. Business operators that egregiously violate the law will not only be publicly named and fined, but some could also lose their liquor sales licenses.

And to show it is not messing around, the National Tax Agency plans to establish a specialist post in July to monitor liquor sales in connection with the revised law.

Major breweries have paid rebates to retailers to encourage them to sell their beer at discounted prices. Some breweries have already cut back on these rebates in light of the revised law.

At the same time, ambiguities in the law have retailers scratching their heads over what would constitute an illegally low price.

For example, personnel costs must be included in calculating the sales price. That calculation might be easy for neighborhood shops but not for major supermarkets with various sales corners.

A group of ruling Liberal Democratic Party lawmakers bent on protecting neighborhood liquor shops pushed for the revisions. The bill was passed in May 2016, a few months before the Upper House election.

Beer lovers may feel that they and their wallets are being unfairly targeted.

The Anti-Monopoly Law already contains provisions that ban sales at prices below cost.

Other retail sectors, such as grocers and electronic shops, face competitive pressure from major outlets that regularly offer large discounts. But those sectors have not received the same protection offered to neighborhood liquor shops.

Some beer retailers have managed to offer low prices by engaging in normal business practices, such as finding new wholesalers or supply routes. But such efforts to lower prices could also end up being targeted by the revised law.

The higher prices will do little to turn around the fortunes of the beer market.

Sales have fallen for 12 straight years in the beer sector, which included real beer, low-malt “happoshu” and zero-malt third-category beer.

06 June, 2017