Japan’s brewers hope revised beer tax will boost pandemic-hit sales
Japan | Brewers reeling from the drop in on-premise sales will get some relief from the long-awaited revisions to the liquor tax system that were implemented in October 2020.
For decades, Japan has had a complex taxation system for beer, based on malt content instead of alcohol. It meant that beer with more malt was taxed and priced higher. As of October, the government is starting to bring taxes of different varieties of alcoholic products more in line with each other, which should make some beers more affordable for consumers.
In the first half of 2020, overall beer sales in Japan declined 26 percent by volume, while “new genre beers” (which contain no malt and are priced lower) increased 6 percent, according to data compiled by Kirin. The negative trend continued in August. Sales in volume terms were down 18 percent at Sapporo, 12 percent at Suntory and 8 percent at Kirin. Asahi Breweries, which has switched to only report turnover, logged a 20 percent drop in value sales.
Homemade competition
The covid-19 pandemic has wiped out a sizable source of revenue for the country’s brewers, as people spent less time eating and drinking out. Before the coronavirus crisis, almost half of Asahi’s best-selling brand Super Dry was sold through the on-premise, where it doesn’t have to compete with low-malt happoshus or “new genre beers”.
To lure price-conscious consumers, Asahi, Kirin and others have put out a slew of cheaper low-malt beers or “new genre beers”. Consumers have flocked to them, shifting drinking habits perhaps more than even the brewers expected.
As reported the website japantimes.co.jp, taxes on high-malt beer will be lowered by JPY 7 (USD 0.07) per 350 ml, a cut that Asahi and Kirin intend to pass on to consumers. Although restaurants and retailers get the final say on pricing, it is likely that they will fall in line.
Still, high-malt beer will continue to be more expensive than low-malt beer, or “new genre beers”, although taxes on “new genre beers” will go up by JPY 9.8 (USD 0.10) per 350 ml. Eventually, the taxation will adopt a single tax for the three types of beer in 2026.
The question is whether that will be enough to lure customers back to beer proper, as the pandemic has also made people more aware of cheaper alternatives.
