2 Alcoholic Beverages (Beer, Wine, Whisky, etc.) - ASEAN-Japan ...

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C-2. Alcoholic Beverages (Beer, wine, whisky, etc.) both for business use and home use, due to the failure to recruit new consumers into the aging market, decreased demand by businesses due to the economic depression, as well as the popularity of low-price and low-alcohol beverages. As a bright spot in the whisky market, single-malt whisky using 100% malt from a single distillery can be considered. Demand has expanded for several years among 30-year-old males. Since 2004, one major manufacturer after another has developed campaigns and began sale of premium single malts. According to Suntory, the largest whisky manufacturer, imported single malts underwent a smooth transition following this trend, with a total of 64,000 boxes (1 box =12 bottles) in 2005, a 116% increase over the previous year. This has become the focus of business demand, and the consumption at hotels and standing-bars, etc., is also expected to lead to more female customers. The major beer manufacturers in Japan are seeking to establish comprehensive alcohol enterprises, by actively pursuing business partnerships and buyouts domestically and internationally. Kirin Beer acquired global distributorship of “Four Roses”(U.S.A), and domestic distributorship of liquor handled by Pernod Ricard (France), as well as direct handling of "Chivas Regal" (England), by merging its subsidiaries which had functioned as importers. Also, Asahi Beer has made strategic moves to recover its leading status in the whisky market, such as acquisition of Nikka Whisky as a complete subsidiary, and by exchanging contracts with Maxxium Worldwide (Holland) in Japan. (3) Distribution System and Business Practices in Japan Distribution of alcohol can only be carried out by anyone or an entity that has obtained a liquor sales license based on the Liquor Tax Law. Since the relaxation of requirements for a general liquor retail business license as of September 2003, stores handling alcohol expanded to include supermarkets, convenience stores, drug stores, etc. Furthermore, businesses in a wider range have entered the alcohol sales business, even unrelated business types, such as electrical household appliance stores seeking to attract more customers, rental video shops, gasoline stations, transport companies which have a delivery network to general households, and pizza delivery chains. While growth can be seen in the aggregate demand in the entire alcohol market, competition has increased along with the expansion of the distribution channel. In response to these conditions, major beer manufacturers in Japan seek to establish alcohol businesses that can handle not only beer and happoshu, but also wine, shochu, spirits, chuhai, whisky, liquor, etc., as well as seek to establish comprehensive alcohol enterprises by actively pursuing business alliances and buyouts domestically and internationally. Also, efforts by food and alcohol wholesale dealers towards joint tie-ups and mergers for comprehensive wholesale functions have become noticeable. [Wine] Domestic wines are normally distributed from the wine maker through primary liquor wholesalers, secondary liquor wholesalers to retailers, then finally to consumers or commercial users such as restaurants, bars etc. Most of these wines are made by blending with imported bulk wines and must. A variety of channels are available to the imported wines, including direct imports by Japanese wine makers, indirect imports via specialized trading companies, or joint imports. Some leading wholesalers and large retailers buy direct from abroad and distribute through their own sales channels, bypassing importers altogether. Also some wine specialty importers sell directly to consumers. Japanese wine makers often serve as the sole import agent for leading brands of French and Italian wine. Many major trading firms, which previously imported bulk wine and bottled wine according to the intention and strategy of the manufacturers and wholesale dealers, have begun to concentrate on wine importation and sales under their own brand. Also, website shopping over the Internet has spread throughout Japan and is expected to continue to expand in future. Marketing Guide for ASEAN Exporters to Japan 188
Commercial liquor vendors Fig. 2 Distribution channels for imported wine Overseas wine makers (of bulk wine) Japanese wine makers Primary wholesalers General liquor stores Food service establishments Secondary wholesalers Discount liquor stores Consumers C-2. Alcoholic Beverages (Beer, wine, whisky, etc.) Overseas wine makers (of bottled wine) Liquor retailers Import trading company Supermarkets, department stores Convenience stores [Beer] According to industry viewpoint, while half the demand for beer is for household use and the other half is for business, most of the demand for happoshu is for household use. After the relaxation of regulations for a general alcohol retail license as of September 2003, stores handling beer and happoshu steadily increased, although they are reluctant to newly handle wine and whisky. New licenses were acquired not only by traditional liquor discount stores and general liquor stores, but also by supermarkets and convenience stores. Although beer and happoshu have a low profit margin, their ability to attract customers is attractive, and as such, competition along these channels is expected to intensify in the future. Regarding beer sales, as of January 2005, Kirin Beer no longer employs the three grade price system, traditionally comprised of the shipping, wholesale, and retail levels, in an effort to equalize business transactions in response to previously excessive cost competition and the problem of rebates that was associated with it, and to ensure fair profit by intermediary distribution. Kirin also discontinued volume rebates associated with sales volume, and function rebates based on services in the distribution function, and switched over to an "open price system." With the adoption of this new transaction system, wholesalers along with manufactures requested retailers to raise the delivery price, but most major supermarkets and general merchandise stores refused to do so. According to Kirin Beer, 90% of the companies accepted new delivery prices, but the sales quantity is estimated to have remained at 60%. In this environment, most imported beer and overseas brand beer produced in Japan, have a stronger tendency to focus business demand in sales and at general merchandise stores in big cities and restaurants. The strategy is to first pioneer restaurants that will accept their own brand, next develop their own brand image and solidify the customers, and then gradually expand into the household market. Meanwhile, draft beer in the barrel has been effective in opening up the business market and useful for differentiation at restaurants. [Whisky] Regarding the channels of distribution of imported whisky, overseas manufacturers set the licensed import route, and parallel importers set the parallel import route. Parallel-import volumes are affected by market conditions, including overseas distribution volumes and exchange rates. In recent years, the trend has been downward. According to industry sources, retail outlets for whisky are divided among commercial liquor vendors (30%), discount liquor stores (25%), ordinary liquor stores (16%), supermarkets (15%) and convenience stories (12%). Channel competition is increasing. Marketing Guide for ASEAN Exporters to Japan 189
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