FUKUOKA - Japan will unify liquor tax rates on beer, happoshu and other beer-like beverages from October 1, lowering the tax on regular beer while raising it on cheaper alternatives in a reform expected to reshape prices and competition across the domestic beer market.
The liquor tax on a 350-milliliter can of regular beer is currently about 63 yen, compared with roughly 47 yen for happoshu and so-called third-category beer. From October 1, the tax will be standardized at 54.25 yen for all three categories.
The change amounts to a tax cut of about 9 yen per 350-milliliter can of regular beer and an increase of about 7 yen for happoshu and third-category beer.
Consumers have already begun reacting to the approaching change. At a supermarket in Fukuoka City's Higashi Ward, a special section near the entrance has been piled high with cases of happoshu and third-category beer, accompanied by signs warning customers that taxes will rise.
The store expanded the section in September to meet last-minute demand before the increase. Staff said some customers have been buying two or three cases of the same brand at a time.
Sales of happoshu and third-category beer at the supermarket have risen to about 1.4 times the level of a year earlier, reflecting their popularity with consumers seeking lower-priced alcoholic drinks.
Some shoppers said the narrowing price gap could encourage them to switch back to regular beer. One customer said that if the prices become similar, regular beer would become the preferred choice, while another pensioner said third-category beer had been the main option until now because of its lower cost.
The tax cut on beer also applies to products supplied to restaurants and bars. From October, the tax reduction is expected to lower the cost of a keg by about 500 yen.
For restaurants, however, the savings may be outweighed by broader cost increases.
One restaurant serving about 200 glasses of draft beer a day said it does not plan to lower menu prices even after the beer tax reduction. The business is facing higher prices for ingredients as well as a sharp increase in the cost of carbon dioxide used to push beer from kegs.
The restaurant said the purchase price of carbon dioxide is expected to rise by more than 5,000 yen from October, more than doubling in some cases. With food and utility costs also increasing, the reduction in beer costs alone is not enough to offset overall expenses.
Draft beer remains one of the restaurant's key products, however, and the business plans to keep its current selling price unchanged.
The October reform marks the final stage of a gradual overhaul of Japan's beer taxation system that began in 2020.
Historically, tax rates differed according to ingredients, malt content and production methods. Those differences encouraged brewers to develop lower-tax alternatives to regular beer, particularly happoshu and later third-category beer.
Beer sales in Japan peaked in 1994, as the economy was entering a long period of slower growth. Since then, regular beer sales volume has fallen by roughly 60%.
From around the mid-1990s, major brewers increasingly developed lower-priced beer-like drinks designed to reduce both liquor taxes and production costs while retaining a beer-like taste. Happoshu and third-category beer expanded as regular beer sales declined, helping fill the gap in the market.
The government later concluded that large differences in tax rates were influencing both sales volumes and product development. It therefore decided to gradually narrow the gap in an effort to restore what it described as greater fairness in the tax burden.
Since 2020, taxes on happoshu and third-category beer have been raised in stages while the tax on regular beer has been gradually reduced. The process will culminate on October 1, when the rate is unified at 54.25 yen per 350 milliliters.
The change is expected to shift competition among brewers away from tax-driven product design and toward taste, quality and branding.
Major manufacturers have already begun redeveloping products that were previously sold as third-category beer, increasing their malt content and repositioning them closer to regular beer.
Products including Suntory's Kinmugi, Sapporo's Gold Star and Asahi's Clear Asahi are among brands affected by the wider industry shift. Brewers are seeking to preserve lower price points while adjusting recipes and product classifications to compete under the new tax structure.
Suntory, for example, has indicated that it intends to keep Kinmugi at around 195 yen for a 350-milliliter can while using the product to stimulate demand in the beer market.
The reform is likely to benefit consumers who have viewed regular beer as an increasingly expensive occasional purchase, making it somewhat easier to choose traditional beer for everyday drinking.
For consumers who have relied on happoshu or third-category beer because of their lower prices, however, the change represents an effective increase in costs.
That contrast has also raised questions about the fairness of applying the same tax rate to products traditionally bought by consumers seeking cheaper alternatives. While the government has emphasized equal treatment of similar alcoholic beverages, lower-income households may feel the effects of the tax increase more strongly.
The October 1 change is therefore expected to alter not only retail prices but also the way breweries design and market their products, potentially bringing regular beer and lower-priced alternatives into much closer competition.
Source: KBC NEWS in JAPAN
