Beer Monopoly




    International Reports






Posted November 2014

Philemon and Baucis in Japan

Beer in Japan │Economic stagnation, a rapidly ageing population and consumer money hoarded, rather than spent, are usually blamed for the declining demand in the Japanese alcoholic beverages sector. If that sounds like what could lie in store for Old Europe, shouldn’t Western brewers take a long hard look at Japan?

There is a lovely Japanese illustration by an unknown artist in the French magazine Le Tour Du Monde, published in 1867. It has an old man with a long beard carrying a rake over his shoulder and politely talking to a graceful kimono-clad lady with a fan and a besom. They stand next to a picket fence under a tree, obviously taking a break from their chores, while a tortoise shuffles past. Interestingly, the illustration is entitled “Philemon and Baucis”. Hello? What on earth have this elderly couple from ancient Greek mythology got to do with Japan? Philemon’s and Baucis’ is a story of true love that lasts forever. Because, when their time is up, the gods render them a favour and turn them into intertwining trees. At first I wondered if this blatantly false title is a typical example of Western Orientalism – the imposition of a Western icon onto Japan, whose culture the 19th century European bourgeoisie found so strange yet alluring. However, in this case, the French editor of Le Tour Du Monde got it right: The Japanese original may have been called “Masakazu and Akiko under an umbrella pine”, but in Japanese art both the pine and the tortoise have long been used as symbols for virtue, steadfastness, longevity, and even immortality, much like Philemon and Baucis in our cultural heritage. Now, who can fault the editor of Le Tour Du Monde for penning a snappy caption that explains it all?

I was reminded of Philemon and Baucis when looking at a presentation which the U.S. retailer Walmart gave to investors in Japan in 2013. Of the three consumer photos in that presentation two showed seniors. One had a silver-haired couple standing in front of the vegetable racks, keenly studying the leeks on display, while another had an old biddy being helped at the till. Only one photo featured a young woman pushing a pram between two long rows of shelves.

It’s highly unlikely that these images were randomly chosen by Walmart’s spin-doctors. Japan, a country of 127 million inhabitants, has the oldest population of any nation, with almost one in three people (32 percent) already aged 60 or older. In Europe the figure is 22 percent, in the U.S. it’s 18 percent. However, unlike the U.S. or Europe, where the elderly are comic stock figures, usually derided for wearing sagging track suits and slobbering food down their fronts, Japan reveres its silver birds: each year on the third Monday in September it celebrates “Respect for the Aged Day”, a national holiday, “to honour older citizens who have contributed to the society for many years and celebrate their longevity”.

No doubt, Japan is greying fast. Many in Japan shrug off the problem of ageing, says The Economist. That is partly because the elderly continue to live comfortably on their vast hoard of savings. Almost a third of the nation's household wealth, some ¥ 450 trillion (USD 4.2 trillion), is in the hands of those aged 70 and older, according to The Economist.

Walmart thinks it has found ways and means to prise the elderlies’ money from under their futons so that they will shop with them rather than with their fragmented retail competition. Alas, there is no such hope for the country’s alcohol producers. No matter how hard they have tried, the best-agers are loath to spend it on booze, which is one of the reasons why alcohol consumption has been in decline for two decades. That old age and alcohol don’t really go together well is an established fact in the whole of the developed world. But in Japan, the decline in alcohol consumption has been exacerbated by the country’s shrinking labour force, especially those in the 20 to 34 age bracket, due to a decreasing birth rate. The working age population used to be the main consumer group for beer and the contracting labour force implies reduced beer consumption. Indeed, the highest level of beer consumption was registered in 1994 (55 litres per capita) says Euromonitor, a market research outfit, after which the labour force started dwindling, which corresponds to the drop in beer consumption to under 45 litres per capita in 2013. The undeniable fact that Japan is at the forefront of an “age invasion”, which has become the commonplace explanation for its beer market decline, however, should not blind us to other factors, which have compounded negative trends, namely idiosyncratic regulations and tax regimes.

The sad thing is that beer has gone down although Japan ranks amongst the most tolerant countries when it comes to alcohol as such. The consumption of alcohol is socially acceptable, unlike in the West, where the PC police have successfully pressured governments to clamp down on it. None of that appears to be the case in Japan. In fact, the country seems awash in booze. Just think of Japan’s near ubiquitous vending machines, which to most tourists’ surprise you can find on almost every street corner, outside office blocks, or lined up at bus stops. With hardly any vandalism recorded, there are about 5 million machines in operation, the highest per capita in the world (one per 25 inhabitants), delivering just about anything you can think of, including used (!) women's knickers said the UK’s newspaper The Telegraph in February 2014. However, rumour has it that said machines have almost all now been taken out of service, removing, ahem, temptation. For propriety reasons, it should be pointed out that the majority of vending machines (over 2 million) sell soft drinks, but two years ago there were still about 30,000 vending machines knocking around selling beer and sake, says the Japan Vending Machine Manufacturers Association. Despite their large number, these automats only account for about 0.01 percent of total beer sales. Still, imagine vending machines dispensing spirits in the streets of London or Berlin with no one controlling the buyer’s age. No, this is unimaginable because the ensuing outcry would make people’s eardrums tear as far away as Sydney.

What is more, Japan’s beverage manufacturers literally spoil consumers for choice as they shower them with product innovations – like innovations you have never seen before anywhere else. For example, in the early 1990s, when RTD coffee-drinks were unheard of in Europe, you could already buy coffee in cans from coin machines that would self-heat once a mechanism was activated. It was an expensive caffeine fix, but still. On the beer side of things the Japanese have had Ice Beers; Dry Beers; Premier-Cru Hops; Beers Over Ice; Barley from Space (no really!!) and of all (im-)possible beer concoctions the wildest ever: beer + milk. Last year, Kirin excelled itself by introducing its Ichiban Shibori Frozen Draft, a frosty brew with an ice-cream-like head of frozen foam drawn from a special tap.


Mixing it up

While the beer segment has continued to see some innovation, it’s really been the chu-hi category which has witnessed the most razzamatazz. Chu-hi (or chi-hi) is a huge category and basically the Japanese version of Western alcopops. First launched 30 years ago, chu-his are usually made with shochu, a local spirit, and carbonated water flavoured with fruit and added sugar. Alcohol content varies from 2 to 9 percent ABV. Not enough that they are cheap, they also come in cans with so many gaudy colours and fancy doodles that I had to pinch myself that they are genuine when I flicked through their images on the web. Good grief! Does no one worry in Japan that these drinks may corrupt the young and turn them into slovenly drunks? That, at least, was the big worry over in the West and the reason why governments decided to tax them out of existence a decade ago. Yet, in Japan they seem to be all the rage, already sharing the cold shelf with beer in supermarkets in equal measure. Volumes in 2013 were around 25 million hl, which is – and here my heart missed a beat when I found out - about half the size of the beer market. Not enough, chu-his are growing at around 5 percent per year, says Canadean, whereas overall alcohol is forecast to continue going south.

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