Japan: Japan brewers may offer wider variety of products following changes in liquor tax rules
The Japanese beer market may start seeing a wider variety of products following changes in the country's new liquor tax rules, which went into effect at the beginning of October, the Nikkei Asia reported on October 28.
Japan employs an unusual taxation system for beer, in which the tax rate falls into three categories, with the highest levies on standard beer and lower ones on low-malt beer, called happoshu, and no-malt beverages, known as third-tier beer or "new genre" beer. The system has led to intense competition in the lower-taxed categories.
Starting this month, Japan lowered the tax on standard beer from 70 yen to 63.35 yen per 350 milliliters, while raising the levy on new genre beer from 37.8 yen to 46.99 yen, matching that of low-malt happoshu, which remained unchanged, according to the Ministry of Finance.
Asahi Group Holdings has emerged a beneficiary of the tax changes due to its product mix, according to Makoto Morita of Daiwa Securities. Standard beers accounted for around 60% of the company's beer sales volume in 2022 compared with only 25% for new genre brews.
In contrast, new genre beer accounted for above 40% of beer sales volume at Kirin Holdings and around 70% at Suntory Holdings.
Asahi shares have risen 30% as of Friday, October 27 since the previous year. By contrast, Kirin shares have been relatively flat, rising only 5%. Beer and beverage maker Suntory Holdings is unlisted.
Tomonobu Tsunoyama of Mitsubishi UFJ Morgan Stanley said that since the first tax revision three years ago, companies have expanded the share of standard beer in their product mix, a trend that is also expected to continue with this month's tax revision.
According to Asahi, which boasts Japan's top-selling beer brand, Super Dry, following the tax revision in October of 2020, the beer market has seen the number of beer can buyers rise 14% to around 45.9 million people as of June 2023, compared with around 40.1 million in September of 2020, before the revision.
"With the alcohol tax revision in 2020, we have continued to release new beer products," an Asahi spokesperson said.
Earlier this month, the company released a new beer called Asahi Super Dry Dry Crystal, with an alcohol content of 3.5%, lower than the usual level of around 5%.
The tax revision is affecting the craft beer industry as well.
From Oct. 1 to Oct. 11, Yoho Brewing saw a 110% rise in shipment volume for retail distribution of their most popular standard products compared with the previous year, according to a Yoho spokesperson. The brewer sells Yona Yona Ale, one of the most widely recognized craft beer brands in Japan.
"We have high hopes," said a Yoho spokesperson in comments to Nikkei Asia regarding Japan's craft beer market. "With more attention on beer than before, we believe that there will be more interest in craft beer as well."
As for new genre beer, consumers had already stocked up ahead of the tax hike.
In September, before the tax revision, Aeon saw sales of new genre beer rise 20% compared with the same month last year at its domestic stores, a spokesperson told Nikkei Asia.
30 October, 2023
