Japan’s brewers swop beer for cocktails

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br JAPAN-BREWERS Reuters Cans of Suntory's ready-to-drink Strong Zero vodka tonics are displayed at a supermarket. Japanese brewers will release their largest choice of canned cocktails this summer to offset a decade of declining beer sales as Japan's younger generation becomes more health-conscious. Photo: Reuters

Tokyo - Japanese brewers will release their longest-ever line-up of canned cocktails this summer as fizzy concoctions come to the fore in efforts to offset a decade of declining beer sales.

Brewers such as Kirin Holdings have long tried to retain drinkers by making ever-cheaper, beer-like beverages. But changing tastes among Japan’s youth have seen beer drinks giving up fridge space to highballs, white-wine spritzers and pineapple-flavoured rum cocktails.

These so-called ready-to-drink (RTD) cocktails, like the cheapest beer-like drinks, fall into a low-tax category of Japan’s complex liquor tax regime and can be priced far lower than traditional tipples. This has helped them become the top introduction to alcohol among 20-somethings, according to a survey from brewer Suntory Holdings.

In response to rising popularity, Suntory plans to release a record 23 canned cocktail labels from June to August compared with 17 last year. Asahi Group Holdings launched a hot seller in May, and Kirin announced a new range last month.

The increased choice meant “this will be an important summer to further boost demand in RTDs”, Suntory managing director Shinji Yamada said.

Demand was likely to be so strong that Suntory planned to raise output of its Strong Zero series of canned cocktails by a tenth this summer, and might increase production capacity for next summer, Yamada said.

The ready-to-drink market has almost doubled since 2001 whereas traditional beer sales have nearly halved, data from Suntory showed.

Sales of beer have slimmed as once-universal drinking binges among office workers go out of fashion and Japan’s increasingly health-conscious youth develop a taste for drinks containing fewer calories.

Brewers have tried to stem the decline by lowering prices. By reducing the malt content, brewers have created beer-like drinks which could be priced less because they qualified for lower tax rates.

In Japan, beer is taxed based on malt content. The lowest-taxed beer-like drinks – dubbed “third beer” – are made with little malt or malt alternatives. In contrast, distilled spirits such as the cocktail ingredient vodka are taxed at higher rates based on alcohol content.

Due to a peculiarity in Japan’s decades-old tax regime, however, ready-to-drink cocktails are taxed at the same rate as third beer, provided alcohol content does not exceed 9 percent, giving the drinks the appeal of both variety and price.

Suntory’s Strong Zero vodka tonic, for instance, is priced at ¥152 (R16) for 350ml compared with ¥260 for its beer The Premium Malt’s.

This year, ready-to-drink sales are likely to increase by 3 percent to 13 million cases compared with a 1 percent decline in beer, according to Suntory.

The brewer, which controls more than a third of the market, aims for ready-to-drink growth of 3.8 percent.

On the heels of Suntory is Kirin, which is looking to grow its ready-to-drink business by 8.4 percent this year with the help of its new Bitters line.

Late-comer Asahi stormed the market in May in the quickest-growing category of “strong” RTDs, where alcohol content is at least 8 percent. The brewer aims to ship 2.5 million cases of a highball made with distilled drink shochu by the close of this year.

“We sold 450 000 cases by the end of May,” an Asahi spokesman said. “So we’re off to a good start.” – Reuters


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