‘In a bind’: Japan alcohol sector voices concerns for industry growth after being battered by new round of COVID-19 restrictions
The government first put 14 prefectures in Japan under a ‘quasi-state of emergency’ earlier this year in response to rising COVID-19 case numbers and the emergence of the Omicron variant, which led to the reinstatement of measures such as stopping the serving of alcohol at an earlier hour and a ban on large-scale events.
These measures were supposed to be lifted on March 7, but have since been extended for at least an additional two weeks in several major prefectures including Tokyo, Osaka and Hokkaido.
This was Japan’s second implementation of a state of emergency and large-scale COVID-19-related lockdown in the past year, with the peak of strictest measures having been enforced around April to May 2021.
“During last year’s emergency, the alcohol ban made restaurants and bars stop serving alcohol at 8pm – this time around it’s 9pm which is slightly kinder,” local cider firm inCiderJapan owner and cider industry expert Lee Reeve told FoodNavigator-Asia.
“The thing is that bars and restaurants receive subsidies to close early, and opt to do so – but not us. We can’t close as there are no subsidies, and so we are the most heavily impacted. In 2020 there were still temporary takeaway licenses issued which helped somewhat – but these did not appear since the 2021 lockdown, which lasted until October.”
Reeve also told us that as soon as the state of emergency was lifted in October, the alcohol industry leapt right back into action and November was an extremely strong rebound month that showed them light at the end of the tunnel - a light which lasted until the new emergency measures this year.
“The feeling is basically one of ‘Oh my gosh here we go again’ and many people are in a bind again – due to the pick-up last year, there were many events planned for the first quarter of 2022 involving alcohol,” he said.
“Now everyone doesn’t know what to do, and there are fears of product going to waste and the financial impacts, and it’s a bit of a downer as we don’t know how it will affect industry growth now when it all seemed so positive not too long ago. There was a lot of positivity for 2022 which has now just fizzled out.”
He highlighted that many Japanese alcohol firms have moved to innovate their products and formats in order to adapt, such as installing canning machines as opposed to selling only from tap (which was a norm before) so as to reach at-home drinkers, shifting to online sales and developing non-alcoholic beverage options.
“There’s only so much that actions like shifting to e-commerce can help with in terms of sales [if the format is not suitable] – consumers will only spend so much online, and the competition which was already fierce before has now become even fiercer,” said Reeve.
“It’s why many firms that initially started their COVID-19 adaptation strategies with a sole focus on digital sales have now mostly backed away, and are now concentrating on doing their own bottling or canning so that consumers can bring their products back home to drink. Previously, canning or bottling was very much seen as a craft industry thing – now it’s a standard practice.”
That said, as long as the industry has to live in the fear and shadow of alcohol bans due to COVID-19 restrictions, it will remain difficult for large-scale growth to take place at any rapid pace.
“All we can hope for now is that the government can get a handle on Omicron and curb its spread, so that the industry can, hopefully, rebound to continue on the trajectory we saw recently,” said Reeve.
“This rebound would apply to all alcohol sectors, from beer to wine to cider to spirits. But at the same time Japan, which in general is very cautious, is likely to be moving forward with even more caution now, knowing that there was trouble before and really wanting to avoid that again.”
Adapting to survive
Not even big names in the Japanese alcohol industry, such as beer giant Kirin, have been left unscathed by the restrictions, and have had to make a variety of changes to adapt to alcohol retail in a COVID-19 environment.
“We’ve had to make some changes such as creating new beer keg sizes to cater for lower on-premise sales, and developing a new tap to accommodate craft beers, which rose sharply in popularity amidst the pandemic,” Kirin Holdings Corporate Communications representative Ataka Takashima told us.
“In addition, Kirin Holdings CEO Yoshinori Isozaki has also highlighted that moving forward, Kirin does not only want to just be a beer company, but a more multi-faceted one, closer to Nestle in terms of product variety.
“Within this, our focus will first be on using beer fermentation technology to develop health and wellness products – we’ve already developed some such as immunity support product iMuse (a winner of the Immune Support Product of the Year in the NutraIngredients-Asia Awards 2021) and in collaboration with FANCL to use matured hop extracts as an ingredient for mild facial cleansing oil.”