THE JAPAN NEWS

 

TOKYO (Bloomberg) — Japanese brewers are discovering a new way to tap the lucrative market of working adults: Get them tipsy more quickly and efficiently.

This domestic segment is becoming more important to beer makers Kirin Holdings Co. and Sapporo Holdings Co. as Japan’s famously aging population — the oldest in the world — drinks less. They have released canned drinks with up to 9 percent alcohol by volume, which is the highest it can be without being pushed into another tax bracket.

The brewers are promoting the ready-to-drink (RTD) segment in Japan, looking for ways to expand sales as demographic changes and a trend of consumers diversifying their drinking habits has led domestic beer consumption to fall two years in a row.

“It’s because consumers are getting more value for their money. They can get drunk without spending too much, I think that is the products’ biggest appeal,” said Euromonitor analyst Akari Utsunomiya. “There’s a deep-rooted tendency to save money among Japanese consumers.”

The companies are going after consumers such as salarymen, as businessmen are known in Japan, and working women short on time. Executives say there is a desire among some drinkers to get more bang for their buck when imbibing. As a result, the high-alcohol segment is growing almost twice as fast as the ready-to-drink canned mixed alcohol business overall.

Beer sales decline

Japan’s domestic beer doldrums echo the picture globally, with beer sales falling as wine and spirits revenue grows. That’s led beverage companies to come up with products targeted to specific demographic groups.

Brewing giant Molson Coors Brewing Co. in the U.S. has released fruity-tasting beers targeted to 21- to 24-year-olds in a bid to attract young drinkers. In Japan, companies are focused on a slightly older demographic, as the population dwindles and fewer people turn 20 — the legal drinking age — every year.

RTD beverages have typically been the less expensive choice for drinkers in Japan as they are subject to a lower tax rate than beer. The drinks in the segment mostly consist of canned chuhai, made with flavored mixer, and shochu — a spirit distilled from potatoes, grains or other food bases. In the past these drinks typically contained 4 percent to 6 percent alcohol by volume compared with the now more prevalent 9 percent drinks.

The value of the market for RTD drinks with 8 percent to 9 percent alcohol content has nearly doubled to ¥125 billion ($1.14 billion) from 2013-2017, according to market research firm Intage SRI. Comparatively, the RTD market grew by about 31 percent in value.

Soon-to-be retiree Shiro Abe is part of the consumer base fueling that growth. The value of the higher alcohol drinks resonates with him. “For an old man, getting drunk cheaply and quickly is very nice,” Abe, 58, said in Tokyo after drinks to celebrate his retirement.

Global drinks makers see Japan as a good market to test concepts. Coca-Cola Co. last month started sales of a lemon-flavored chuhai drink, the first for the giant. Kirin intends to build a new domestic factory to increase production for canned mixed drinks.

Beermakers say they have been pushing high alcohol drinks recently because they’ve adapted the taste to better suit consumers — less sugary and without the burning bite of some spirits.

Japan’s largest brewers all have begun marketing an 8 percent or 9 percent chuhai product. Among them are Suntory Holdings Co.’s Zero Strong, Asahi Group Holdings Ltd.’s Mogitate — which has shochu mixed with fresh fruit juice — and Sapporo’s Relax, which is flavored with fruit vinegar. The companies also have been marketing pre-mixed cocktail drinks such as whisky-and-soda highballs.

“We’re increasing our variety of offerings within ready-to-drink. These types of products are gaining traction in the market,” said Sapporo Beer President Hideya Takashima in April.