Decline in Japanese alcoholic beverages

The Japanese alcoholic beverages sector has been on a steady decline and is expected to reach $44.72bn by 2014 compared to $48.75bn in 2009, according to the new research by Datamonitor, an independent market analyst firm. Several factors are affecting the sector and driving trends in this market.

“The slowdown in Japanese economic growth, a shrinking population base and restrained consumer spending are the key issues which are depressing demand in the Japanese alcoholic beverages sector,” says Gaurav Marchanda, Datamonitor Consumer Markets Analyst and author of the report Market Insights: Alcoholic Beverages in Japan.

“Another contributor to this trend is the declining population in the lower age groups of 20-34 years, and the lower tendency of this age group to consume alcohol,” said Marchanda.

The consumption of alcohol is socially acceptable in Japan; however, significant taxation alongside rising health concerns related to the product are other factors depressing sales in the alcoholic beverages category, mainly on beer and whiskey.

“Brandy and whiskey products (with the exception of single malt scotch) tend to have an old-fashioned and outdated image association, which affects the appeal of the product among younger age groups who are easily influenced by the rising cocktail and liquors culture in the country,” adds Marchanda.

The development of the cocktail trend in the Japanese market has been a major driver of growth in the tequila and liqueur categories. On the other hand, a few categories are exhibiting strong growth in the otherwise depressed Japanese alcoholic beverages sector scenario. “Although in terms of absolute sales volume the category is still small, it grew by around 7.7%, mostly driven by the emerging cocktail trend in Japan.”

Evidently, consumers are moving away from core products like beer and happoshu and are experimenting with newer products and diversifying their product range.

“In the coming year, companies need to be focused on the acquisition of new brands and the offer of new and fresh-tasting alcoholic beverages, if they are to grow in the slowly changing Japanese alcohol sector.”

Going forward, at an overall level there is little growth potential foreseeable for the Japanese alcoholic beverages sector as most major markets are expected to continue struggling. Manufacturers can only grow their market share by focusing on specific product categories or segments that are growing within the sector.