Japan’s major beer breweries scramble for a place in canned cocktail market

By Tingmin Koe

- Last updated on GMT

Canned cocktail products are driving sales for Japan's traditional beer breweries. ©Getty Images
Canned cocktail products are driving sales for Japan's traditional beer breweries. ©Getty Images
Traditional beer manufacturers Asahi, Suntory and Kirin are extending their presence into the canned cocktail market.

Just last month, both Kirin and Sapporo have launched new canned cocktail products.

The former launched Kirin the Strong – a vodka-based cocktail with alcohol content of 9% aimed at men in their 40s to 50s, and the latter launched Rirakusu – cocktail which uses fruit juice based vinegar with 8% of alcohol content, aimed at housewives and working ladies.

On the other hand, Suntory already has a line-up of four different flavours of canned cocktail that will be launched from May 8 to June 19, according to its website. 

Known as chūhai in Japanese, canned cocktail is traditionally made with shochu, a distilled beverage, sparkling water and flavourings. Price wise, it usually cost 130 to 210 yen.

Asahi, the biggest player in Japan’s beer industry, last year reported a 3.6% year on year growth in its other alcohol beverages category, which includes ready-to-drink (RTD) low-alcohol beverage such as canned cocktail.

To achieve its targeted year on year growth of 4.8% in 2018, Asahi is pinning its hope on Mogitate, a canned cocktail which brought a 13% increase in its first-half sales of canned cocktails to 18.1 billion yen when it was first launched in 2016.

Akari Utsunomiya, research analyst at Euromonitor International commented that there has been "intensive product development"​ for canned cocktail, despite the fact that overall alcoholic drinks demand has been shrinking due to Japan’s ageing population.

"The success of RTD in Japan is driven by its combination of economic, convenience, and product diversity. RTDs matches with modern consumers - who are busy but want to enjoy economy priced alcoholic drinks for many occasions – growing demand of “Ienomi” home drinking culture, party, on the way of business trip (eg. Shinkansen) with diverse offerings."

She added that the success of canned cocktails is also due to its diverse range of products targeted at both male and female consumers. 

"The success of RTDs is partially supported by welcoming female consumers, who tend not to prefer bitter taste of beer, or strong taste/ABV of sake, shochu and other spirits to sweeter or fruity flavors in alcoholic drinks."

In contrast, shipments of beer fell for the 13th straight year in 2017 to 404 million cases, down 2.6% from 2016, according to Euromonitor.

For Asahi alone, beer domestic sales have dropped 8% during Jan to Mar 2018 as compared to the same period last year.

In their financial reports, both Asahi and Suntory acknowledged that the total market for the beer category in Japan and the beer market in Japan excluding non-alcoholic beer-type beverages are both forecast to shrink by about 2% from 2017. 

Foreign brand joins competition  

Growing demand for canned cocktail has enticed foreign brand to join in the race.

On 28 of this month, Coca-Cola Co. will be launching​ three types of lemon-flavored canned cocktail exclusively in Kyushu. Alcohol level in the products ranges from 3% to 7% by volume, selling at a suggested price of 162 yen.

“We haven’t experimented in the low-alcohol category before, but it’s an example of how we continue to explore opportunities outside our core areas,”​ said Jorge Garduno, president of Coca-Cola’s Japan arm.

Garduno also revealed that the Japan business unit launches an average of 100 new products a year, and in the face of fierce market competition, “experimentation is almost like a day-to-day ritual.”

According to him, the entry is “a modest experiment for a specific slice of our market”.

Popular since 20 years ago

As early as 1998, the market size of canned cocktail was already equivalent to 18.5 million cases of twenty-four 250ml cans, according to a report from The Japan Times.

When Suntory introduced its 350-ml Super chūhai for 140 yen in 1999, combined canned cocktail sales for the year shot up by 90% as compared to the previous year, with 1999 sales coming to the equivalent of 35 million cases.

Within three years’ time, the figure soared to 42 million cases in 2000 and 50 million cases in 2001.

Impact of legislation change

Japan authorities introduced the Standards for Fair Trading of Alcohol Beverages (the “New Standards”) of the revised Liquor Tax Law and Act on Securing of Liquor Tax and on Liquor Business Associations, which went into effect in June last year.

With the enforcement, the price of beer at supermarkets has increased by 10 to 20 per cent.

As such, increased retail price might have led to decrease in beer sales, and more preferring RTD cocktails, since the latter belongs to a low-tax category.

In its financial report, Kirin also acknowledged that market for beer products overall shrank “because of the enforcement of Standard for Fair Trading of Alcoholic Beverages and impact of unseasonable weather”.

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