Business is brewing in Japan

From mouthful-sized cans in vending machines to beer made from soy
beans, Japan's beer breweries are continually coming up with innovative
ideas to draw consumers. With endless variety in every flavour, size and
price range, there's no denying beer is big in Japan.

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Beer in Japan
Like so many Australians, the Japanese are big fans of beer. The beverage accounts for almost two-thirds of the nine billion litres of alcohol consumed in Japan each year, making it the nation's most popular adult drink by a wide margin. Whether as an after-work drink at the local izakaya (traditional Japanese pub) or a cool refreshment during Japan's hot summer, beer is the drink of choice for many Japanese, both men and women. However appealing this may be to the amber-loving Aussie, there are as many differences as similarities between beer consumed here and afar, as jstyle reports:

 

History of the Japanese beer industry
Beer began as a true import product to Japan, with Dutch traders opening the first beer hall for sailors during the Edo Period. And it was an American, William Copeland, who established Japan's first brewery in 1870s Yokohama. Catering to a burgeoning expatriate community, Copeland later sold his brewery to a Japanese company that would go on to become the beer brand Kirin - the oldest of Japan's modern brewery giants.

Around the same time as Copeland's venture, a man named Seibei Nagakawa returned from studying beer-making in Germany. In 1877, Nagakawa produced the first Sapporo Lager from a new brewery in Hokkaido. With the backing of entrepreneurs, the product spawned the Sapporo Breweries Company.

As beer became increasingly popular in Japan toward the end of the 19th century, more breweries were established and competition increased. By the early 20th century, beer halls had appeared in every major city and the beverage secured its place on menus across the country. Today, beer is more common in Japan than even the traditional sake, a sure sign that the Japanese have embraced the amber liquid as their own.

The Big Four
In Australia, almost every large brewery is owned by one of two conglomerates - Foster's Group and Lion Nathan. In contrast, the Japanese beer industry is a story of ongoing struggle between four large companies - Asahi, Kirin, Sapporo and Suntory. Known as "The Big Four", these breweries are in constant market competition.

In particular, the two largest companies - Asahi and Kirin - are forever fighting it out for the top spot. For many years Kirin was the industry leader but in 2001 Asahi Breweries edged out in front and has held the top spot for seven consecutive years. However, with latest industry figures showing Asahi with a 37.9 per cent market share and Kirin with 37.8 per cent*, it is clear the rivalry is far from over.
(*figures from January 2008).

In the Japanese market, all competing companies make comparable products at similar prices. Special offers and discounts for bulk purchases are rare compared to Australia. In Japan, however, price is often seen as equating to quality - such that lower prices can sometimes harm rather than boost product sales. Further, the small size of the average Japanese home means that people often do not have space to buy in bulk.

Instead of trying to increase market share through lower prices, beer companies in Japan search for evermore innovative marketing ideas.

Seasonal products
The Australian beer market is dominated by well-known products with established names such as Tooheys and Victoria Bitter. In Japan, things are rather different. Although each company has a few staple products, the beer market is characterised by a large number of seasonal products and relatively common changes in product-packaging.

This strategy has developed from the cultural custom in Japan to celebrate seasonal changes, which are more marked than in Australia. Each season has associations with particular foods, fashion...and now beer. The arrival of autumn in Japan is heralded with the appearance of Kirin's "Akiaji" (taste of autumn), a slightly stronger brew that is sold in cans printed with beautiful autumn foliage. In winter, Akiaji disappears from shelves, making way to another seasonal beer, Sapporo's "Fuyumonogatari" (a winter's tale).

Summer and winter in Japan are also gift-giving seasons, known as ochugen and oseibo respectively. People buy gifts for friends and colleagues as a symbol of appreciation and gratitude, and gift-sets flood store shelves as companies capitalise on this custom.

The breweries are no exception and rows of beer in special gift-boxes are found everywhere during the gift-giving seasons. As well as these regular seasonal releases, companies frequently launch limited-edition products or offer already-established products in new sizes or packaging.

Visitors to Japan are often amazed at the omnipresence of beer and the wide range available. In addition to liquor stores, beer can be found in supermarkets, convenience stores, station kiosks and even vending machines, which sell beer in a myriad of sizes and containers ranging from tiny 135mL cans to 1000mL versions. On a constant quest to impress consumers with something new, the Japanese beer industry knows no end to variety.

Pseudo-beer
Beer in Japan attracts the second-highest tax rate in the world, which makes it relatively expensive compared to other countries. This has posed a challenge for beer companies and has led to the development of a range of "pseudo-beers" unique to the Japanese industry.

The tax rate is decided according to the percentage of malt in the product. Beverages containing more than 67 per cent malt are taxed the highest rate, and the tax progressively decreases for products in lower categories - 50-67 per cent, 25-50 per cent and less than 25 per cent. In order to be labeled "beer", a product has to contain more than 67 per cent malt, while any brewed-malt beverage containing less than this amount is classified as "happoushu" (meaning "sparkling spirits").

In 1994, Suntory released a variation of beer called "Hop's Draft". Containing only 65 per cent malt, it fell into a lower tax bracket, which meant that it could be sold at a lower price than standard beer. Kirin and Sapporo followed suit with their own versions, and in 2001 Asahi entered the market with "Hon-nama Draft". These low-malt alternatives to beer taste similar to the real thing but cost less, making them popular among budget-conscious consumers. The Japanese government responded by raising the tax on beverages containing 50-67 per cent malt to the same level as beer. Breweries then further reduced the malt content and today there are "beers" on the market containing less than 25 per cent malt.

In 2004, a decade since the happoushu tax battle broke out, Sapporo launched Draft One - a beer-like drink made from pea protein instead of malt. Other breweries have since released their own legume-based alcoholic beverages, which have collectively been named "daisan no biiru" (third-type beer) in the Japanese media. Since they contain no malt and so are not taxed, a can of third-type beer is cheap. The style also appeals to Japanese consumers as it contains fewer carbohydrates than regular beer and is marketed as a healthier alternative.

Pseudo-beers such as happoushu and third-type products currently make up almost half of total beer sales in Japan, a clear indication that the breweries are on to a good thing.

Japanese beer in Australia
Japanese beer companies began exporting their products in the late 1990s to countries all over the world, including Australia. These days it is common for bars, restaurants and bottle shops to stock a selection of international and imported beers, catering to the increasingly diverse tastes of consumers. Asahi Super Dry, Otaru, Sapporo Draft, and the new Kirin - the only Japanese beer brewed in Australia - are among those finding great appeal in Australia.