BEER IN JAPAN: ASAHI, KIRIN, SAPPORO, SUNTORY, LOW MALT AND THIRD CATEGORY BEERS

BEER IN JAPAN

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Japan dropped to 7th place in 2007 from 6th in 2006 in the world rankings of beer consumption. Japanese consumed 6.28 million kiloliters of beer in 2007, down 0.03 percent from the previous year. In the 1990s, Japan was the world’s fifth largest beer consumer.

Beer is the popular drink in Japan. It accounts for half of all alcohol consumption. The average Japanese annually consumes 53.9 liters (13.5 gallons) of beer, compared to 131.1 liters in Germany, 83.6 liters in the United States.

Top beer producers in 2003: 1) China (25.1 million kiloliters, 17.1 percent of the world’s production, 7 percent increase from the previous year); 2) the United States (23.08 million kiloliters, 15.6 percent of the world’s production, 1.6 percent decrease from the previous year); 3) Germany (10.53 million kiloliters); 4) Brazil (8.52 million kiloliters); 5) Russia (7.57 million kiloliters); 6) Mexico (6.64 million kiloliters); 7) Japan (6.53 million kiloliters, 4.2 percent of the world’s production, 6.5 percent decrease from the previous year). [Source: Kirin Brewery]

Beer first appeared in the mid 1800s. It was introduced from Europe and looked down upon for a long time. The first brewery, Spring Valley in Yokohama, was opened in 1869 by an American, William Copeland, and still produces beer today. At first beer was consumed mainly by foreign traders and seamen. Beer gained in popularity after World War II and surpassed sake as the No. 1 alcoholic drink in the 1960s.

Total shipments of beer and beerlike drinks fell 2.8 percent in 2010 to 459.17 million cases, a record low for the sixth consecutive year despite a scorching summer which usually translates to heavy beer drinking.

Good Websites and Sources: Beer in Japan Blog beerinjapan.com ; Japan and Its Beers realbeer.com/edu ; Micheal Jackson’s Beer Hunter on Japan ; Wikipedia article Wikipedia ; Brewers Association of Japan brewers.or.jp/english ; Addresses and Links for Breweries raketnet.nl/beercollection ; Japanese Beer Companies Asahi Beer asahibeer.co.jp ; Kirin kirin.com ; Suntory suntory.com ;Sapporo Sapporo

Links in this Website: DRINKING AND ALCOHOLIC DRINKS IN JAPAN Factsanddetails.com/Japan ;BEER IN JAPAN Factsanddetails.com/Japan ; SAKE AND SOCHU Factsanddetails.com/Japan ; TEA AND NON-ALCOHOLIC DRINKS IN JAPAN Factsanddetails.com/Japan

Japanese Beer Market

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In the late 1990s and the early and late 2000s the top selling beer in Japan was Asahi Super Dry.

A lot of advertising for beer and other alcoholic drinks is geared towards women, A government survey of women aged 20 to 24 in 2009 found that 90.4 percent of those asked had consumed at least one alcoholic drink in the previous year, compared to 80 percent in 2003. For men 83.5 percent had a drink in 2009, down from 90.4 percent in 2003.

The price of a 350ml can of beer is ¥218 at a supermarket and ¥300 from a vending machines. A case sells for between ¥3,800 and ¥4,000 at a liquor store or supermarket. Beer vending machines used to be present on almost every block. Now they are not as plentiful as they once were.

Beer sales have been flat or declining in recent years. Beer sales were down about 10 percent in 2008 from a peak in 1994. Many blame he trend on increased health conciseness, a weak economy, aging population and unwillingness of young people to spend their hard-earned cash on beer. One university student told Reuters, “I rarely ver drink. I don’t like the taste of beer. I do a lot of sports and I think beer is fattening. I hate the way it settles in the stomach.”

Beer shipments reached a record low in August 2009. August is typically the month that beer companies record their highest sales of the year but unseasonably cool temperatures kept beer drinkers from working up a thirst. The result: low sales. Shipments of beer and beer like drinks hit another record low in the first quarter of 2010, declining 5.7 percent from the same period the previous year. The decline was attributed to the recession and the decline of alcohol consumption among young people.

Competition is very fierce among the beer companies. Competition also comes from sochu-based fruit-flavored “cocktails.” One beverage analyst told Reuters, “Beer has been walloped by cheaper and perceived healthier alcohol drinks.” To boost sales beer companies have been targeting women with promotions and television advertising aimed at them. Kirin gas developed special canned cocktails aimed at them. Suntory places ads for its Diet Nama in women’s magazines.

Beer shipments fell 2.7 percent to a 17 year low in 2008 of 482.6 million cases.

Japanese Beer Companies

Japan's big four brewers---Kirin, Asahi, Sapporo and Suntory---control 96 percent of Japan's beer market. In 2009, Kirin was the top beer company in terms of shipments (with a 37.7 percent share compared to Asahi’s 37.5 percent share) while Asahi was No. 1 in sales, outselling Kirin by 200,000 cases. Asahi was No. 1 in beer sales with its mainstay Super Dry being the top seller. Kirin was the leader in the low-priced “third-category” category with beerlike drinks like the “Nodogoshi Nama” brand.

Asahi was leader in 2010 with a 37.5 percent market share, with Kirin in second, with a 36.7 percent share, followed by Suntory with a 12.9 share and Sapporo with 12 percent share.

Asahi was the top brewer in Japan in 2008 for the 8th year in a row. It held a 37.8 percent stake compared to 37.2 percent for Kirin, 12.4 percent for Sapporo and 11.8 percent for Suntory. Asahi’s No. 1 ranking was attributed to the success of its Style Free sugar-free, low-malt Happoshudo. Asahi shipped 188.24 million cases in 2007.

Competition between Asahi and Kirin is very close. In 2006 Asahi edged Kirin for the No. 1 spot for beer and beerlike drinks with sales of 187.3 million cases for Asahi and 187.1 million cases for Kirin. The difference, 300,000 cases, is less than what each of them sells in a day. Kirin led Asahi in the first half of the year but Asahi came back on the strength of new products in the happoshu and third beer sectors.

Kirin success was attributed to the success of Enjuku low-malt drink and Nodogoshi beerlike non-malt drink. In 2004 Asahi’s market share was 5.2 percent higher than Kirin. In 2005 the gap was narrowed to three percent. The gap was lowered further in 2005 when Nodogoshi Nama was introduced and it quickly dominated the 3rd beer, near beer or beerlike non-malt drink category.

With the market shrinking at home Japanese brewers are increasingly looking to Asia for new deals and partners. Suntory wants to spend $2.3 billion on mergers and acquisitions in Thailand, Vietnam and Indonesia. Sapporo has acquired a large stake in Pokka, a major drink company in Japan that is a major drink supplier in Malaysia, Thailand and Singapore. In January 2011, Kirin made a deal with a major Chinese soft drinker maker under the umbrella of the China resources Enterprises group. In March 2011 Kirin took over the major Vietnamese drink firm Interfood.

Asahi

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Asahi was founded in Osaka in 1889. It became part of Dai Nippon, Japan’s first beer giant, in 1906. After World War II, Dai Nippon was split in two. Asahi was a minor player in the beer business until Super Dry was introduced in 1987.

Asahi developed the first outdoor fermentation tanks and sold the first canned beer in Japan. The guy who developed conveyor belt sushi restaurant reportedly got the idea after watching the bottling process at an Asahi factory. Asahi Breweries made its first beer in 1892. In 2011, the company announced it would revive the 1892 beer for a limited period. Using the original recipe, Asahi will brew the beer it says is slightly darker and more bitter than its mainstay Super Dry brand. The classic beer went on sale in November 2011. A 350-milliliter can sold for about 215 yen, and a 500-milliliter can about 280 yen. Asahi will make the equivalent of 150,000 20-bottle cases of the retro brew. [Source: Yomiuri Shimbun, October 14, 2011]

In 2005, Asahi recalled 1.6 million bottles of nonalcoholic beer after claiming it had less calories (10) than it really had (19) per 100 milliliters.

A large Asahi brewery, located 57 kilometers from the crippled Fukushima nuclear power plant, was shut down by the March 11 earthquake. It opened again in May. Radiation detectors were used to ensure product safety. Asahi resumed production at its earthquake-damaged plant in Fukushima in September 2011. The company installed radiation detectors to make sure the beer produced at the plant was well within safety limits.

Asahi Foreign Acquisitions

In 2010 Asahi bought P&N Beverages Australia, Australia’s 3rd largest beverage company, for ¥27.2 billion. In July 2011, it announced it paid $202 million for P&N Beverages water and juice divisions and $107 million for New Zealand fruit juice producer, Charlie’s Group.

In August 2011, the Yomiuri Shimbun reported, “Major retailers are stepping up efforts to compete with leading beer manufacturers by developing and marketing low-priced house-brand beer. In recent years, these retailers have been increasing their sales of low-priced beer and beerlike beverages as the domestic beer market shrinks. Supermarket chain operator Aeon Co. started marketing its own beer product, Topvalu Barreal Lager Beer. Aeon's new product is the nation's first private- brand regular beer. The 350-milliliter can of Barreal beer is priced at 158 yen, about 20 percent to 30 percent cheaper than rival products marketed by major beer companies. Aeon has said it aims to sell 100 million cans a year.” [Source: Yomiuri Shimbun , August 10, 2011]

In August 2011, Asahi said it was buying Independent Liquor of New Zealand for ¥97.6 billion, or $1.3 billion, as the Tokyo-based beverage maker looked to increase its sales overseas to make up for a shrinking market at home. Asahi said that it would buy all outstanding shares of Flavoured Beverages Group, the parent company of Independent Liquor, from the private equity firms Unitas and Pacific Equity Partners, adding the Woodstock Bourbon and Vodka Cruiser labels to its family of drinks. Suntory was also interested in Independent Liquor.

In July, Asahi said it reached an agreement to Permanis, Malaysia’s second largest soft drink maker and seller of Pepsi, 7-Up, Gatorade and Tropicana in Malaysia, for ¥ 21.6 billion.

Kirin

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Kirin grew out of Spring Valley, Japan’s first brewery. Foreign-owned until it was bought by Mitsubishi in 1970, it has 14 breweries and is named after a mythical animal from China that appears ob the label and was part horse and part dragon and appeared to the mother Confucius before the great sage was born.

Kirin was the No. 1 beer company from 1953 to 2001 when it was replaced by Asahi. That year Asahi sold 2.75 million kiloliters, or 217 million boxes of beer and happoshu while Kirin sold 2.55 million kiloliters, or 201.2 million boxes. A box contains 20 bottles or cans.

Kirin is Japan’s largest beverage maker. It has annual sales of ¥2.3 trillion. It retook the No. 1 position in beer and beerlike beverages in the first quarter of 2009, with a 37.7 percent share and sales of 34.2 million cases, compared to a Asahi’s 35.8 percent share and sales of 32.71 million cases.

Kirin’s plant in Sendai was badly damaged by the earthquake and tsunami in 2011. As a result it had to suspend the sales of nine brands of canned beer and beer-like drinks. Kirin reopened its earthquake-and tsunami-damaged plant in Sendai in July 2011. Beer was flowing again in September.

Kirin sold its 10 billionth can of Nodogoshi Nama beer-flavored beverage in October 2011.

Kirin’s Foreign Acquisitions

Kirin has stakes in many other companies, including a 20 percent stake in the Philippine brewer San Miguel. In October 2007 Kirin bought a controlling share in drug maker Kyowa Hakko Kogyo. The next month it bought an Australian dairy and juice maker from San Miguel for $2.6 billion, a move largely seen as a way for the company to make up for declines in the Japanese beer market.

Kirin tried to buy Australia’s top soft drink maker, Coca-Cola Amatil, for $4.8 billion in 2009 but the deal fell through. If it had been successful it would have been the biggest take over bid by a Japanese brewer. Kirin was successful however in its bid to buy 43.25 percent or San Miguel in the Philippines for $1.2 billion. Kirin owns 46.1 percent of Australian brewer Lion Nathan in 2009 and wanted to buy the rest of the company for $1.6 billion. It and Asahi are competing against one another to sell canned beer in Russia.

In November 2011, the New York Times reported: Kirin said it had agreed to pay $1.35 billion for the outstanding stake in the Brazilian beer maker Schincariol Participacoes e Representacoes it does not already own as part of the company’s expansion into emerging markets. Under the terms of the deal, Kirin will purchase 49.54 percent of Schincarioral, Brazil’s second largest brewer, to add to its existing 50.45 percent stake in the company that it acquire in August. [Source: Mark Scott, New York Times, November 4, 2011]

The announcement ends three-months of dispute after shareholders in Schincarioral previously raised concerns about the acquisition by Kirin. “This additional acquisition will not only enhance Kirin’s governance over Schincariol as a wholly owned subsidiary but will also help Kirin further increase the competitiveness of Schincariol in the fast-growing Brazilian market and generate synergies with Kirin,” the Japanese company said in a statement. In August 2011 Kirin said that it would buy a controlling stake in Schincariol, a Brazilian beverage maker, for $2.53 billion. Many investors were unimpressed by this deal, saying that Kirin was offering too much. Schincariol minority shareholders vowed to block the deal.

Sapporo and Suntory

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Sapporo and Suntory battle over third place in the Japanese beer market.. In 2008 Suntory had the edge with 12.4 percent while Sapporo held a 11.8 percent share.

The Sapporo Beer brewery is in Japan's oldest. It was founded in 1876 and was part of Dai Nippon for a while. Suntory is known as much for its sake and whiskey as its beer. It also makes soft drinks such as oolong tea. In 1994 it released Hops, the country’s first low-malt beer.

Suntory has annual sales of ¥1.5 trillion. It is an unlisted company controlled by its founding family. Nearly 90 percent of its shares are held by Kotobuki Realty, an Osaka-based real estate company managed by Suntory’s founding families.

Sapporo’s real estate is worth twice as ,much as its beer business, In February, 2008, Steel Partners, a hedge run by American Warren Liechtenstein, launched a hostile take over bid of Sapporo beers for ¥1.55 billion. Sapporo rejected the bid, saying it may harm shareholders interest. By that time the hedge owned 16 percent of the company and wanted to buy 66.6 percent of the company. After the offer was rejected Steel Partners raised it buyout price. Steel partners wants Sapporo to shed it unprofitable soft drink and restaurant businesses and focus in its core alcohol and real estate operations.

Sapporo is checking out a tie-up with Asahi to counter a U.S. buyout plan. Guinness was marketed in Japan from 1964 to 2009 by Sapporo. In 2009, Kirin began marketing it,

Suntory is Japan’s second largest non-alcoholic beverage producer and is a producer of popular whiskies. It has plans to expand through mergers and acquisitions of domestic and foreign food manufacturing companies. Suntory began as a whiskey producer and started making beer in 1963. The Suntory family owns 90 percent of Suntory. The company had sales ¥1.3 trillion in 2008, the first Suntory made a profit from its beer division on the success of “Premium Malts” beer-like beverage.

Kirin and Suntory Merger?

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In 2009 Kirin and Suntory entered into merger negotiations to create one of the world’s largest alcoholic beverage company . According to the terms of the merger: 1) the brand names of Kirin and Suntory would remain; 2) the Suntory family would be the company’s largest shareholder; and 3) the CEO and President would be the current heads of Kirin and Suntory.

In February 2010, it was announced that the merger deal fell through due to disagreements over the ways the stock was to be divided between the two companies and management independence. The main problem was a failure to resolve the issue of the Suntory family shares. The Suntory family wanted to hold more than a third of the company’s shares which would give them veto power over company decisions. Kirin offered the family a share ration below one third and refused to budge.

The new company had been expected to be inaugurated in 2011. If the merger had taken place it would have created one of the world’s largest beverage companies with a 50 percent share of the Japanese market for beer and other drinks and annual sales of ¥3.8 trillion. Even if the deal happened the new company could face had problems with Japan’s Antimonopoly Law.

Overseas Acquisitions and Investments by Japanese Beer Firms

To cope with the shrinking domestic market due to the declining population, Japanese beer companies started to acquire and invest in companies mainly in emerging Asian nations in the late 2000s. [Source: Times of London]

Suntory has invested in Orangina Sweppes of France (about ¥300 billion); Cerebos Pacific of Singapore (about ¥85 billion); and Frucor Beverages of New Zealand (about ¥75 billion). [Ibid]

Asahi has invested in Tsingtao Brewery of China (about ¥60 billion); Permanis Sdn Bhd of Malaysia (about ¥20 billion); and Sweppes Holdinsg of Australia (about ¥75 billion). [Ibid]

Kirin has invested in San Miguel Brewery of the Philippines (¥131.6 billion); Fraser & Neave of Singapore (¥84.6 billion); Lion Nargon of Australia (about ¥600 billion); and Schincaroil of Brazil ( ¥303.8 billion). [Ibid]

Japanese Beer Firms Struggling with Their Overseas Investments

While Japanese beer companies started to acquire and invest in companies mainly in emerging Asian nations in the late 2000s, Western rivals expanded the size of companies through mergers between major companies, and started acquiring minor beverage brands in emerging countries using abundant financial resources from around 2000. Consequently, Japanese companies lagged behind their Western rivals in businesses in such countries, left with no choice but to battle for a dwindling number of independent beverage makers in these countries.

Kazumichi Shono wrote in the Yomiuri Shimbun: “Major domestic beer companies are in a quandary over poorly performing corporate acquisitions and enormous investments they have made promoting mainly in emerging countries. These companies are lagging behind their Western counterparts in expanding overseas businesses, making it difficult for them to benefit from acquisitions of overseas companies. They also have failed to produce sufficient results from the investments. [Source: Kazumichi Shono, Yomiuri Shimbun, August 21, 2012]

In July, Thailand's major beverage maker Thai Beverage Ltd. acquired a more than 20 percent stake in Singaporean counterpart Fraser & Neave Ltd. (F&N), becoming the firm's largest shareholder. Previously, Kirin Holdings Co. cited F&N as a key for its soft drink business in Southeast Asia after Kirin Holdings agreed on a capital and business alliance with F&N and acquired a 15 percent stake in the company in 2010. The move by Thai Beverage was a bolt out of the blue for Kirin Holdings. At present, Thai Beverage is believed to be interested only in F&N's beer business. However, if Thai Beverage increases its stake in F&N, Kirin Holdings could be forced to review their business strategy in Southeast Asia. [Ibid]

In Japan, there have been similar cases in which two or more Japanese companies invested in the same foreign company. For example, Suntory Holdings Ltd. announced in June 2012 it agreed on a business tie-up with major Chinese firm Tsingtao Brewery Co. in the Chinese province of Jiangsu and Shanghai. Asahi Group Holdings Ltd. already had a 20 percent stake in the Chinese company, but Asahi and Tsingtao Breweries have failed to produce visible results through the tie-up. The latest announcement by Suntory means that the capital ties between Asahi and Tsingtao mean virtually nothing. Outwardly, Asahi Group Holdings appears undaunted. "We expect [the business agreement between Suntory and Tsingtao] will raise Tsingtao's corporate value," an executive official at the firm said. In the future, however, battles for Tsingtao between Suntory Holdings and Asahi Group Holdings could intensify. [Ibid]

The are also questions about the amounts paid by Japanese beer firms for their foreign acquisitions. In 2011, Kirin Holdings acquired major Brazilian beer and beverage maker Schincariol for about $3.6 billion. Some observers say that while Kirin Holdings knew it was an expensive acquisition, it was regarded as a good bargain because of the Brazilian firm's reputation. [Ibid]

However, the impact of such enormous investments are unclear. U.S.-based rating company Moody's Japan K.K. downgraded its rating on Kirin Holdings in October 2011 due to the poor cost-benefit performance of the firm's overseas investments. Kirin Holdings posted consolidated operating profits of 142.8 billion yen in the business year ended in December 2011. Operating profits from overseas businesses were 15.3 billion yen, accounting only for about 10 percent of the firm's entire operating profits. [Ibid]

To cope, Japanese beverage companies shifted their strategies to boost involvement in overseas companies in which they had already invested. For example, Kirin Group will establish a new domestic integrated beverage company called Kirin Company, Ltd. in January 2013. The new firm is slated to concentrate on the domestic beverage business, whereas Kirin Holdings will focus on overseas business. It will halve its workforce to about 100 employees, who will work on strengthening the earning capacity of overseas companies in which it is invested using a few select employees. [Ibid]

Asahi Group Holdings, meanwhile, started a personnel training system under which young employees are dispatched to overseas companies it acquired. Suntory introduced a similar system several years ago. "We've concentrated so much on domestic businesses that we have done almost nothing about the overseas companies we have acquired," an executive at Kirin Holdings said. [Ibid]

Types of Beer in Japan

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There are three categories of beer and beerlike drinks: 1) regular beer; 2) happoshu low-malt drink; and 3) Third beer, near beer or beerlike drinks made without malt.

Among regular beer drinkers, Japanese are most fond of lager. According to the Encyclopedia of Beer, “most of the lager are ultra-clean, hi-tech versions of golden international Pilsners, using rice in the mash.” The Japanese were pioneers in developing dry beers and fine-filtered beers.

Popular brands include Asahi’s Super Dry, Kirin Lager, Kirin Classic Lager. Asahi and Kirin make black beers and stouts. Asahi black beer is sweet and reddish brown. Kirin’s black beer has a smoky flavor. Sapporo makes a black beer with dark German malts and rice.

Super Dry was the original dry beer. Brewed as a response to taste surveys that showed beer drinkers wanted a smooth, light-tasting beer, it set off a dry beer trend around the world in the late 1980s and early 1990s and helped pull Asahi out financial problems. Super Dry is a Pilsners that is fermented longer than normal and thus has a higher alcohol content and less beer than other Pilsners. Dry refers to the parching effect after the beer has when it is consumed, leaving drinkers wanting another beer.

Premium beers such Asahi Super Yeast, Kirin Golden Hop and Sapporo’s Yebisui sell at about ¥40 more per bottle than regular beer and have selected ingredients and special brewing methods.

Suntory’s Premium Malt was the first Japanese beer to win an award at the Monde Selection international liquor and food competition in Brussels. The beer gets its rich flavor from having twice the hops and 1.2 times more malt that usual beers.

In 2009, Sapporo began marketing “space beer” made with forth generation barley grown and stored in space aboard the International Space Station. A six back sold for about $100. The idea is to prepare for the future when astronauts will need some refreshment on long missions such as ones to Mars.

A price war was set off when a ¥100 third-category beer was introduced by Aeon supermarkets. Suntory responded with its own ¥100 beerlike beverage.

Alcohol-free beers such as Suntory’s “All Free” have been selling well, particularly among drivers worried about getting nailed for drunk driving.

In July 2011, Kirin introduced beer “on the rocks”---a new brand of beer meant to be drunk over ice, which does not weaken its taste or aroma. Marketed under with the name "Ice + Beer," the brink is made using sweeter-smelling hops and special yeast to create a richer fragrance. The brewer also increased the amount of malt extract used in production, leading to a deeper-colored beverage. Kirin was inspired by the recent trend of drinking wine or sake over ice, and also thought consumers would prefer colder drinks this summer due to electricity-saving efforts that could see reduced use of air conditioners. A 350-milliliter can will cost about 217 yen. [Source: Yomiuri Shimbun, July 1, 2011]

Low Malt Beer

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Happoshu (low-malt brew) are beer-like beverages that have almost the same alcohol content as beer and taste like beer but are different enough that they get away without being taxed as much and are therefore much cheaper than beer. Low malt-brew is popular among low-income people. Around 97 percent it is consumed at home.

The first Happoshu product was Suntory’s Hops Nama, released in 1994. Sales rose steadily for happoshu until 2003 when it accounted for 40 percent of the beer and beerlike drink market. After the tax was raised happoshu market share fell off to 17 percent in 2010.

The difference between low-malt brew and beer is that low-malt brew has a malt content of below 25 percent and beer has a malt content above 67 percent. The price of a 350ml can of beer is ¥218 (including a ¥78 tax) while a similar size can of low-malt brew is ¥152 (including a ¥47 tax). Low-malt brew were cheaper when it was taxed ¥37 a can.

Low-malt beer was firs introduced in 1994 by Suntory. By 2001 it accounted for about a quarter of all beer and beer-like drinls sold in Japan. A low malt content has traditionally been associated with beers with low body but advanced brewing technology has improved the taste of such beers to such an extent that there is a minimal taste difference.

Some happoshu tastes pretty good. In some taste tests people who drank them said they taste better than beer. In May 2003, taxes on low-malt brew were raised to about two thirds the level of beer. Sales dropped significantly. Sales dropped further when Third-Category beers were introduced.

The Niigata-based Echigo beer Co has produced a low-malt beer using tomatoes. The “beer” is red in color and combines a sweet taste of tomatoes with the bitter taste of hops. The equivalent of one tomato is used in a 330-milliliter bottle. Because tomatoes are low in sugar and high in fiber, fermentation is more difficult than with malt and more filtration is needed. The beer was developed with the help of a pub owner that was known for mixing tomatoes with his beer.

Third Category Beer

So-called Third Category beer-like beverages such as Draft One and Super Blue, are cheaper than conventional beer and happoshu low-malt beer. Draft One is very popular. It uses protein extracted from peas, corn or soy beans as its main ingredient instead of malt. It took Sapporo four years to develop the drink. Its long run success will be determined by whether or nt it can maintain its low tax status.

A typical can of Third Category beer-flavored drink cost ¥131 (including a ¥24.2 tax), compared to ¥152 (including a ¥47 tax) for a can of Happoshu and ¥218 (including a ¥78 tax ) for can of beer. The saving is significant. A Third-category beer drinker can buy three cans brew for he price of two cans of regular beer.

In June 2009, Suntory and Japanese retailer Aeon announced they would sell a ¥100 “third-category” beer that retails of ¥100 a can. The price is 30 percent less than similar drinks and less than half the cost of real beer.

The beer-like drinks have a light, easy-drinking taste and are popular with women and people in their 20s. Clear Asahi, for example, is touted for its clean aftertaste. Some people even prefer them to regular beer.

One beer afficionado who participated in a taste test of beers and beer-like drinks said Draft One “tastes like leftover wine. Fruity smell. Like juice.” Another said the beerlike drinks are “an abomination created by alcohol tax laws that are seriously destroying the beer market to reward inferior products regardless of the alcohol content.”

In March 2009, third category beers accounted for 30.1 percent of total beer product sales in Japan as customers became more cost conscious in the economic crisis in 2008 and 2009. Regular beer accounted for 46.8 percent of sales and happoshu, 23.1 percent.

Micro-Breweries and the International Beer Market in Japan

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A lot of micro-breweries sprung up in Japan after April 1994, when Japan reduced the brewing requirement for licensed beer producers from 528,000 gallons a year to about 16,000 gallons. Micro-breweries account for about 4 percent of the beer market even though their beer sells for around $9 a bottle in bar.

A stout made by the A.J.I. microbrewery in Mino, Osaka Prefecture was named the World’s best stout for the second year in a row at the World Beer awards, a British beer contest. The organizer of the event said that “MinoBeer Imperial Stout” has a “silky texture with a sweet rounded malt opening.” Echigo Stout from Echigo Beer in Nigata, Japan has been described as “a bigger, bolder cousin of Guinness with a more intense roasted-coffee flavor.

Micro-brewed beers for Hokkaido include Northern Red Fox Ale and Brown Bear Ale, named after animals native to Hokkaido, and 1,000 Year Hakskapu Ale, flavored with a tart berry native to Hokkaido and Siberia. Some micro breweries were opened by sake breweries. The large beer companies have responded to challenge by micro breweries by releasing their own regional beers and opening up brew pubs.

Japanese brewers have been moving aggressively into foreign markets. Kirin has joined forced with Lion Nathan, Australia’s No. 2 beer maker, to win a share of the Asian beer market. They are focusing on China, Taiwan and Southeast Asia. Suntory sells beer in Shanghai. Asahi has invested in soft drinks in China.

Japan is the leading destination for American beer, accounting for 24 percent of the United States's beer exports. The four best-selling American beer producers in Japan are Anheuser-Busch, Miller, Coors and G. Heileman (producer of Schmidt's and Lone Star). The Budweiser frogs appeared on Japanese television. One Japanese company decided to compete head on with Anheuser-Busch by selling Buddy Beer, which has a Budweiser-like label.

Hydrogen Beer in Japan

Beer with fizz produced by hydrogen gas rather carbon dioxide became popular at some bars in Tokyo in the late 1990s. Hydrogen, like helium, causes people that breath it to talk in a high voice. It also is flammable. A popular activity at bars among hydrogen beer drinks was to talk funny and shoot cigarette-ignited blue flames from the mouths.

Some bars even sponsored flame-throwing competitions. One man drank 15 bottles of beer and produced a massive ball of fire but lost the contents because the flame was deemed low quality, The man was so outraged he hurled blue fireballs at one of the judges, singing her eyes and burning off her eyebrows and eyelashes. In the process of getting thrown of the bar the man swallowed a burning cigarette which caused the hydrogen in his body to explode, burning his stomach and damaging is esophagus and larynx to such a degree he was unable to talk.

Electric and manually operated beer pumps sell well in Japan. They create a frothier beer, which some people regard as better tasting. It is difficult to create a frothy head by pouring beer into a glass. The machines sell for between ¥1,000 and ¥40,000.

Image Sources: 1) Hector Garcia 2) xorsyst blog 5) 6) Doug Mann's Photomann vending machines in Japan blog, Japan-Photo.de

Text Sources: New York Times, Washington Post, Los Angeles Times, Daily Yomiuri, Times of London, Japan National Tourist Organization (JNTO), National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

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© 2009 Jeffrey Hays

Last updated January 2013

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