Strategy needed to tap into Japan’s sluggish and shrinking alcoholic beverage market

By Kacey Culliney

- Last updated on GMT

Related tags: Alcoholic beverage

Strategy needed to tap into Japan’s sluggish and shrinking alcoholic beverage market
Drinks manufacturers need to be strategic to succeed in the struggling Japanese market, paying attention to the trend for gourmet and healthier beverages and the younger generation’s preferences, according to an industry report.

The Datamonitor report, ‘Alcoholic drinks in Japan’ said that the shrinking market can be attributed to a combination of factors including a poor economy and changing lifestyle trends.

It said, however, that multinationals have injected money into joint ventures and reorganisation of product portfolios in a bid to succeed in the market.

“The increasing number of joint ventures suggests that in order to gain further share, multinationals feel the need to take better control of their brands, rather than just merely granting distribution rights to local players,”​ it said.

It added: “Multinational brand owners have a better understanding of their brands compared to their local counterparts, and should be able to convey the appeal of the brand to consumers more effectively.”

Trends offering growth opportunities

Datamonitor identified a trend towards ultra-premium brands in Japan, with ‘exotic’ and ‘authentic’ brands experiencing growth in 2010.

It also found that products with health-appeal had performed well and strong focus had been placed on developing low-calorie beers to cater to this increasing demand.

The report stated that in a shrinking market, manufacturers need to look at the younger generation, it added that they are the key to the future success of the industry.

“The largest challenge that the alcoholic drinks players in Japan face is how to cultivate new drinkers, especially the younger group, to support the future market,”​ it said.

The challenge of a younger generation

Younger consumers are also not drinking as much and are trending towards a healthier lifestyle and these factors have led to the alcoholic beverage market seeming less attractive to this generation, the report said.

It did however identify a preference to sweet drinks among the younger generation, with cocktails and ready-to-drink beverages a first choice over beer.

It added: “Manufacturers must understand these factors first, and build strategies around them if they are to be effective in countering the shrinking market.”

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