Raw Japan

Slices of Japanese business, politics and life

Cheap brews soothe econ blues

July 28, 2009

Cheap beer-like drinks are in fashion as suds lovers try to hold onto their daily treat while saving money to ride out tough economic times. Sales of these drinks have been very strong and beer makers are aggressively marketing their products, all of which is just going to further dent the market share of beer, which has been in steady decline for years.

Nowadays, a 350ml can of regular beer will set you back about 210 yen ($2.20) in Japan, while low-malt ”beer-like drinks” go for around 130 yen. 

Under Japan’s tax code, beer is defined as having a malt content of two-thirds or more of the raw material and carries a liquor tax of 77 yen per 350ml can. The tax on the new drinks is only 28 yen, since they use no malt. Instead the beer makers use pea protein or other materials to create a beer-like taste.

JAPAN-BEER/

Total shipments of malt-free drinks jumped 30 percent in June, industry data showed, while those of beer were almost flat.  Today, malt-free drinks account for nearly 30 percent of what used to be the beer market.

The brief history of beer-like drinks is that of a hide-and-seek game between breweries and tax authorities, which have desperately tried to protect sacred tax revenue. In 1994, Suntory released a drink with 65 percent malt content, pioneering a category called “happoshu” (literal translation = sparkling booze), offering a cheap alternative to beer. But two years later, the government, after seeing the growing popularity of such “tax-saving” drinks, lifted taxes on low-malt alcohol beverages, prompting breweries to release new products with even less malt to flee the cheaper liquor tax category.

But the taxman just wouldn’t give up. The government raised liquor taxes again in 2003 so that the ultra low-malt booze would not enjoy much of a tax advantage. Then came malt-free drinks, brewers’ answer to the tax authorities’ tenacious chase.

As a beer purist, I’ve been sticking to real beer, but I tried a couple of popular brands of malt-free drinks recently for this blog. To be honest, they tasted too light and didn’t have much flavour to me.

But when I I told one of my colleagues what I thought, she replied: ”Of course, that’s how you should feel.” A regular drinker of beer-like drinks, she added: ”Don’t drink them like beer, drink them like something totally different, like carbonated alcohol drinks. Then they’re not so bad as a dinner companion.”

Photo credit: REUTERS/Toru Hanai

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •