Japan's Liquor Tax Law Revision "Third Beer Tax Rate Increase"... Will the Beer Market Reshape?

Stockpiling Continues Amid 'Third Beer' Tax Increase
Beer Companies Adopt Various Strategies for Survival

The Japanese government announced that it will enforce a revision to the Liquor Tax Law, which raises the liquor tax on third-category beer starting from the 1st of next month, signaling significant changes in the Japanese beer market. As production of third-category beer, which has enjoyed popularity due to its relatively lower tax rate compared to beer or happoshu, is expected to decline, manufacturers are closely monitoring market shifts.

According to the Asahi Shimbun on the 27th, prices of Japan's "third-category beer" will uniformly increase from the 1st of next month due to the tax hike. Under the revised Liquor Tax Law, the tax per 350 milliliters (ml) for third-category beer will rise from 37.8 yen to 46.99 yen. Conversely, the tax on regular beer will be reduced from 70 yen to 63.35 yen, while the tax on happoshu remains unchanged.

In Japan, alcoholic beverages in the beer category have traditionally been divided into beer, happoshu, and third-category beer according to the Liquor Tax Law. Third-category beer refers to alcoholic beverages made using ingredients such as soybeans instead of barley or malt, which are used in regular beer, or beverages made by mixing distilled spirits with happoshu. Even before the tax increase, Asahi reported that some large supermarket stores have seen lines of customers stockpiling third-category beer.

Until now, third-category beer in Japan has been classified as "other brewed liquor" or "sparkling distilled liquor," resulting in lower taxes than regular beer and thus being supplied at cheaper prices. Emphasizing that it does not use barley or malt, it was marketed as "low sugar" and gained popularity among people in their 20s and 30s by promoting its "unique taste." Consequently, the happoshu market, which competed on low price, shrank while the third-category beer market expanded.

However, due to the impact of this tax increase, Japanese beer companies anticipate changes in the beer market and are revising their strategies. Broadly speaking, they are expected to shift focus from happoshu and third-category beer, which no longer have price appeal, back to strengthening traditional beer.

Suntory has been preparing for this change early. In April, Suntory launched a new beer product priced about 10 yen lower than competitors such as Asahi's "Super Dry" and Kirin's "Ichiban Shibori," aiming to compete on price.

Asahi plans to target people in their 20s and 30s who prefer low-alcohol beverages. As part of the Super Dry series, Asahi will release "Dry Crystal," which lowers the alcohol content from the usual 5% to 3.5%, on the 11th of next month. Asahi also predicted, "As liquor taxes unify in 2026, the number of beers on retail shelves will increase." They revealed that this new product aims to attract younger consumers who do not usually enjoy beer.

Sapporo Beer will also release a beer next month with 70% reduced carbohydrates. It aims to preserve the characteristic beer taste while catering to health-conscious customers.

Kirin, on the other hand, is pursuing a polarization strategy by focusing entirely on premium craft beer. A Kirin representative stated, "Since COVID-19, a culture has emerged where people do not hesitate to spend money on delicious things. We intend to target that demand."

This content was produced with the assistance of AI translation services.