Follow Us:

Not so bitter beer tax laws

Masahiro Sato |

After returning to Tokyo from London 15 years ago, what I missed most was the ale I used to drink in London pubs. Japan is a major beer-consuming nation — the seventh-largest in 2016 — but Japanese beer back when I returned mostly meant pilsner varieties like Asahi Super Dry. Only a few types of ale, which were all imported from Britain, were available at the time, and they were very expensive.

According to Kirin Brewery Company, Ltd., Japan’s second-largest beer producer, 5.46 million kiloliters of beer and quasi-beer were produced in 2015. The four biggest beer companies — Asahi, Kirin, Suntory and Sapporo — were responsible for almost 99 per cent of production.

The leading product of these four companies is pilsner beer. For the past 10 years or so, they have been increasing production of German-type pilsner made from only water, malt and hops, but their main product is still American-type pilsner that also contains starch, rice or other cereals.

Why have pilsners been so popular in Japan? This nation has few, if any, bars that stop serving food after lunch in the manner of the typical British pub. When people drink beer at bars or restaurants, they normally order food as well. Anyone who has tried ale beer knows it doesn’t necessarily go well with food because top-fermented beers, like ale, have a strong taste that can spoil the flavor of food.

In contrast, Japanese pilsners generally focus on smoothness as they go down the throat, and they are designed to complement the taste of food. Anyone who has tried Asahi Super Dry will understand what I mean.

Until 1994, the Liquor Tax Law stipulated that companies had to produce 2,000 or more kiloliters a year to receive a beer producer license. That year, the minimum volume was reduced to 60 kiloliters. With the revision, many companies from outside the liquor industry, including hotels, entered the beer production business. There was a time when so-called locally brewed beer was in vogue, and microbreweries nationwide began popping up one after another.

However, according to an expert, the boom had passed by 2003. This is because many of the new beers were pilsners that, while rare, lacked a distinct taste.

Sixty kiloliters is equivalent to about 105,000 British pints (about 568 milliliters). A certain amount of capital, established sales channels and other strengths are required to consistently sell this amount of beer. After the local beer boom passed, many companies got out of the business.

The stereotypical notion that “beer means pilsners” has gradually faded since around 2012, when the craft beer boom that originally started in the United States spread to Japan. Today, about 200 microbreweries in Japan produce original beer, though their share of the total market is still less than 0.5 per cent.

Another revision of the Liquor Tax Law came into force on June 1 this year. The revision restricts price wars, mainly fought between supermarkets, to protect small liquor stores, including family-run businesses. After the law’s enforcement, the price of beer at supermarkets has increased by 10 to 20 per cent.

Generally, beer produced by microbreweries tends to be more expensive than mass-produced beer. The recent revision could have the unexpected effect of making craft beer more competitive by reducing the difference in price between craft and mass-produced beers.

In 2020, the liquor tax on quasi-beer, which contains less than 66 per cent malt, will be increased. In 2026, the same tax rate as “real beer” will be applied to it. Today, the liquor tax on quasi-beer per 350 milliliters is ¥47 (about US$0.42), while the tax on normal beer is ¥77. The tax on “third beer” — beer-like drinks that contain no malt — is ¥28.

Long-term economic stagnation has unfortunately boosted the popularity of quasi-beer and beer-like drinks, which cannot compare with real beer in terms of taste. The tax increases may also boost production of craft beer and transform the beer scene in Japan.

In 2015, the average individual consumed 42.3 liters of beer in Japan, 71 liters in Belgium and 67.7 liters in Britain. If beer diversifies, consumption will grow, which in turn is expected to further spur diversification and quality improvement.

Since returning to Tokyo once more, this time in April 2015 after four years and five months in London as a reporter, I have not felt the same longing for British beer. This is because India Pale Ale (IPA) brewed in Japan is now available. I hope bitter ale, which is kept at room temperature, becomes easily available in the near future.

The writer is Editor, Japan News. This is a series of columns on global affairs written by top editors and columnists from members of the Asia News Network and published in newspapers and websites across the region.