Japan: Suntory Ltd announced Wednesday, October 13, it will allow wholesalers and retailers the freedom to set prices of its beer and "happoshu" low-malt beer products from January, according to Kyodo News. Suntory currently conveys its suggested prices to retailers and wholesalers. Suntory will also stop offering gift coupons that can be exchanged for a pair of large beer bottles or canned beers, the company said, adding it will honor outstanding gift coupons in circulation. Suntory will revise the system of rewarding wholesalers that post strong sales performances with financial incentives, it added.

The decisions follow similar moves by Kirin Brewery Co. and Asahi Breweries Ltd. Asia Pulse said on October 14 Japan's four major breweries are preparing to scrap the practice of paying rebates to wholesalers based on sales volume in January 2005. In addition, three of the companies -- Suntory, Kirin Brewery Co. and Asahi Breweries Ltd. -- will eliminate manufacturer's suggested retail prices and wholesale prices. Sapporo Breweries Ltd. is the exception.

Some believe that these practices contribute to the intensifying price competition in the industry. In adopting new business practices, the breweries aim to promote the establishment of prices that reflect costs for wholesalers and retailers. Now that all four breweries have formulated proposals for change, wholesalers will enter into full-scale negotiations with retailers on new ways of setting prices. The development has set the stage for a possible rise in retail prices.

15 October, 2004