Wednesday, June 26, 2013

More or Less?

Some interesting trends in the Japanese craft beer market.

Imports of U.S. Craft Beer
Figures from the U.S.-based Brewers Association show that Japanese imports of U.S. craft beer rose by 57 percent in 2012
the sales amount of all beer imports rose to 5.49 billion yen in 2012 (from 5.41 billion yen in 2011)
the volume of beer imports fell in 2012 to 40.7 million liters (from 42.4 million liters in 2011).

So, sales of U.S. craft beer are rising rapidly, and sales of imports from all countries are rising slightly, yet the overall total of imports is declining. This seems to mean that U.S. craft brewers are taking a larger share of the Japanese market, while the volume of imports is decreasing. Perhaps old stand-bys in Japan, such as Budweiser and Heineken, are losing ground to craft breweries.

Japanese Craft Breweries Expanding
Japanese craft beer production rose by 7.7% last while sales at Japan’s biggest breweries fell. In fact, the five major brewing companies have seen sales declines in each of the past eight years.

Both large and small Japanese craft breweries are ramping up production.
One expert believes that Japan in the midst of a “second microbrew boom.”

Yo-Ho Brewing Co., the biggest craft brewery in Japan, has seen a year-on-year sales increase of 40 percent. The company, founded in 1996, is one of the survivors of the first craft beer bust and plans to increase production and double its sales in 2013.

Baird Beer, one of the most highly regarded Japanese craft breweries, and also quite visible on U.S. store shelves, is currently building a new facility that should greatly expand its production.

Brimmer Brewing K.K., which started business only two years ago, is planning to triple its capacity in 2013.

A final factor: the yen has weakened against the U.S. dollar by around 15% in the past six months. Ideally, this should help Japanese craft beer makers export their brews, while also making imported beer more expensive and hence less attractive to Japanese drinkers.

A few thoughts:

Japanese craft breweries' sales comprise only 1% of the beer market in Japan. In 2012, American craft beer makers had 6.5% of the U.S. beer market by volume and 10% of sales, and those percentages are still growing.

Japanese craft beer fans seem not to mind the high price of beer as much as Americans do. Many commonly pay 1,000 – 1,200 yen ($10-12) per pint, and they will likely continue to do so. Also, they will probably not drink any less if prices rise or drink much more if prices drop.

Also, except for their novelty factor, Japanese craft beer makers have not yet distinguished themselves enough to really stand out on the crowded shelves of large beer stores in the U.S. Not next to wild and crazy and (yes) very tasty brews from Belgium, Scandinavia, and the U.S. Perhaps more marketing is called for? Or perhaps the recent favorable move in the yen/dollar exchange rate will help? On recent visit to the U.S., I noticed several bottles from one of the Japanese breweries mentioned above gathering dust in a liquor store discount bin. When I asked the manager about this, he replied that they were so expensive to import that he had to price them too high and could not sell many.

Finally, many friends have noticed that the quality of Yo-Ho’s flagship brew, Yona Yona Ale, has declined over the past year or so. Making more yes, but not better, or even as good. Boom or bust?