But brewers hope price war over low-tax drink won't last. Tokyo Beer
has gone flat in Japan.
Once the mainstay of factory workers after a hard day's work and the
social cement of the office crowd, beer is quickly losing its loyal following
- and not because the Japanese don't relish tossing back an icy cold one.
Thanks to a tax loophole, happoshu, a new low-alcohol beverage that looks
and tastes like beer, is nearly half the price. The fact that happoshu
has stolen 30 percent of the beer market underscores the way economic hard
times are tightening purse strings even at the expense of a drinking tradition
dating to 1876, when German brewmasters helped found Japan's first brewery.
"If the price were the same, I'd take real beer every time," said Motohiro
Suzuki, a self-described "everyday beer drinker," as he cracked open a
can of happoshu on his walk home from work. "But
if it costs more, why drink it?"
Cost-conscious consumers sent beer shipments tumbling 12 percent last
year while happoshu shipments soared 42 percent. Now beer's No. 1 rival
is getting even cheaper as Japan's brewers wage a happoshu price war that
is heating up just in time for summer. Sapporo Breweries Ltd. fired the
latest shot last week, dropping the price of happoshu by the equivalent
of 8 cents to $1.04 for a 12-ounce (36 centiliters) can. That compares
with $1.73 for Sapporo's bottom-rung beer. Sapporo's cuts matched recent
ones at Suntory Ltd., Kirin Brewery Co. and Asahi Breweries Ltd.
Happoshu, which means "fizzy liquor" in Japanese, is the unlikely product
of Japan's heavily regulated economy. It was introduced in 1994 by Suntory
as a way of dodging a hefty tax on beer, which the government defines as
containing more than 66.7 percent malt. The tax accounts for as much as
half of a beer's price.
Happoshu skimps on malt and loads up on the less esteemed ingredients
of corn syrup, rice or sugar, thereby qualifying for a much lower tax.
All the major brewers quickly introduced their own brands. "Basically it
was an invention of the beer companies," said Yoko Fujii, a beverage analyst
with J.P. Morgan in Tokyo. "Consumers were becoming increasingly price
sensitive in the weak economy."
At first, it was a hard sell in a country that prides itself on quality
brew and where real beer is ubiquitous, from rooftop beer gardens at department
stores to streetside vending machines that cater to housewives and students.
But as the economy worsened - unemployment stands at a record high of about
5% - consumers gradually lapped up happoshu's refreshingly low price. Beer
companies spurred sales by making happoshu's initially lighter, sweeter
taste more bitter like beer. They also rolled out hip promotions targeting
young people, such as one TV spot for Suntory that features Kotaro Koizumi,
the
sporty 23-year-old son of Prime Minister Junichiro Koizumi. By 2000,
happoshu accounted for 22 percent of the beer market, and some analysts
say it could reach 40 percent this year, especially with prices falling.
Beer companies hope the price wars will not last long. Happoshu's profit
margins are razor-thin compared with those of beer, and Japanese brewers
have all seen earnings erode. "I can't say why we're
doing it except to say all other companies were doing it and winning
customers," Naoto Kinoshita, a Sapporo spokesman, said about the recent
cuts. "People like the price."
Despite happoshu's growing popularity, there is little fear that beer
will disappear. Restaurants still prefer to serve it as a more highbrow,
fuller-bodied companion to food. And a measure being increasingly talked
about by Koizumi's party - raising the happoshu tax to match the beer levy
- could wipe out the reason for picking up a six-pack of the alternative
brew in the first place. As Suzuki said, "I also drink happoshu because
beer contains more tax, and I hate paying tax."