Michael Knoth and Jonas Borrit were awarded the Danish Brewmaster Association’s travel scholarship in 2016 and travelled to Japan in March 2017 to visit a number of large industrial brewers, several small craft breweries, sake distillers and other industry related people. As tradition has it, the travel grant is accompanied with an obligation to document the outcome of the travels in an article for the SBR, and we’re happy to bring you this article, giving a comprehensive view on the current status of the world of beer in Japan, here. Michael is Production Manager at famous craft brewer Mikkeller, while Jonas is heading the Food & Beverage business unit in the global engineering company NIRAS.
Authors: Michael Knoth and Jonas Borrit
Since the late 1800s, Japan has been recognized for its high-quality pilsner production in a strong cohesion with the country’s extremely high standards on their culinary scene. For many years, the Japanese beer was enjoyed in Japan only, while new products mainly were oriented towards upgrades of their famous pilsner brands. Following the world-wide sushi epidemic starting 20-30 years ago, the knowledge about Japanese beer as well as local brewers’ desire to expand their volume globally increased. Even though 98% of the beer market today is controlled by the big four (Asahi, Kirin, Suntory and Sapporo), it has turned out in recent years that the Japanese market, like most other beer markets in the World, is experiencing a craft beer revolution. So while the big players focus on growth in the global market, the local market is changing. It was this dynamic combination of globalization and localization that inspired the authors of this article to investigate the Japanese beer market.
A brief history of Japanese brewing
The beer brewing history in Japan is actually quite young and is claimed to have begun in 1853 with Koumin Kawamoto, a doctor of Dutch medicine, brewing a number of test batches based on the description in a Dutch brewing book. However, the brewing industry really began some 20 years later when Hokkaido Kaitakushi Beer Brewery (Sapporo, Hokkaido) became the first brewery under governmental management. Three of the four major Japanese breweries (Asahi, Kirin and Sapporo) we know of today were all founded in the 1880s with Kirin being the first (1885 – at that time Japan Brewery Co). Suntory, the fourth, was founded in 1899.
Even though hops were discovered growing wild on the island of Hokkaido, there was a strong German influence from the beginning with Japanese brewers both travelling to Germany learning more and obviously bringing back German techniques and styles as well as importing German ingredients and engineering skills. In the 1950s, a minor liberation from German influence took place, as the Japanese beer brewers started developing lighter recipes, which is still the case today – Japanese beers are considered to have a significantly higher drinkability with lower bitterness than the origins.
However, German influence is still present today as the education of Japanese brew masters, to some degree, still takes places at German brewing schools such as Weihenstephan.
Strong competition in the traditional pilsner segment
With a 98% share of the Japanese beer market, the traditional four large brewers are fighting for every share of the declining beer market. Even Asahi with its 38% market share is experiencing the competition with a recent decline in its premium brand Super Dry, which is why a lot of efforts are put into marketing and special editions such as the Sakura (cherry flowers) version illustrated in the article picture. The vast experimentation in packaging types and labels is in hefty contrast to the brewer’s almost religious approach to brewing processes and technology, in which even the smallest experimentation requires extremely thorough planning and testing. This approach undoubtedly (we tasted it) gives a world-class pilsner quality, with the downside of a slow route to market and thus less product agility, including product variety. It is interesting to witness this market share fight within a segment that is declining when the learning from other mature beer markets around the world facing a declining pilsner segment has shown that major brewery groups which are only participating in the “pilsner fight” and not focusing on other beer styles that are actually growing will be missing out. There might be a lesson learned as to why craft brewers do not worry about the pilsner volume but more or less have taken ownership of all the “new” beer styles.
The Japanese beer consumers
As we experienced during our visit and looking into the habits of beer consumers in Japan, there are many similarities to Western countries, perhaps with extra focus on the strong tradition of going out for a beer after work in Japan, which normally takes place at izakaya (Japanese pubs) where colleagues share a bottle or two of the traditionally large bottles of pilsner (50 cl +). The high freshness requirements experienced in the Japanese kitchen also affect the Japanese beer drinkers. A recent trend is to buy a glass of beer from a keg instead of a bottle, which has a more “long shelf life” image. In many other places, kegs would traditionally have a high risk of infection/taste change due to lack of cleaning, but here the extremely high standards of the Japanese kitchen in general have the positive effect that the keg beer actually does taste fresher than the bottled. This could also be the reason why the amount of imported beer is not very big in Japan, with Heineken and Corona being the main players in this category.
Like many other nationalities, the Japanese consumers have also started to look elsewhere in their beverage consumption, resulting in a slightly declining beer consumption in recent years (approx. 0.5% pa). Main replacement is the FABs (Flavoured Alcoholic Beverages), which have an increasing share of the younger-generation consumers, but also non-alcoholic beverages such as soft drinks and dairy drinks are rising in popularity. Looking at which beer styles are increasing in volume, it is interesting to see that strong beer has experienced double-digit growth mainly due to the sugar-free/low carb trend. However, most volume growth is experienced in the craft segment, in which beer styles such as IPAs, porter/stouts and wheat beers are experiencing increased attention.
Asahi HQ – Shaped like a glass of beer accompanied by Flamme d’Or
The Blooming craft segment
Like in all other matured beer markets around the world, the Japanese craft beer scene is also slowly gaining success as a steadily growing part of the beer consumers are looking for new and interesting beer-drinking experiences. Even though it still might look like early days compared to the front-runner, the US craft beer market, Japan has actually been a forerunner on the East Asian craft beer market for many years. This is mainly due to having an “audience” with purchasing power and the fact that craft brewing in general suits the traditional Japanese culture of craftsmanship and perfectionism which is seen when cooking food and producing beverages.
Asahi Super Dry Spring Edition – Sakura
Japanese brewers’ entry into the global market
In talking to all four of the big brewers, we learned that in their hunt for continued growth, and perhaps a more Japanese-style to spread company risk, they have shown increasingly high globalization activity over the last decade. Asahi has been the most active with its acquisition of Schweppes Australia (2009), a 20% stake of Tsingtao Brewery (2009), New Zealand juice maker Charlie’s (2011), New Zealand alcoholic beverage maker Independent Liquor (2011), and, in Europe, Grolsch, Peroni and Meantime (2016) followed earlier this year by the 7.3 billion Euro acquisition of 11 breweries in central Europe, including Pilsner Urquell from the Czech Republic, Poland’s Tyskie and Lech, Hungary’s Dreher and Romania’s Ursus – a total production volume of approx. 30 m/hl annually. However, Asahi is not the only one looking for overseas investments, exemplified by Suntory’s 2009 acquisitions of the Australian-based Frucor Group and the Europe-based Orangina Schweppes Group.
In addition to this, the Japanese craft brewers have slowly started to make their appearance on the global beer scene as well. The first Japanese craft brewers are now being invited to high-profiled craft beer festivals outside Asia; this is, of course, due to the fact that some of them brew outstanding beer and the fact that there’s a growing demand for Japanese craft beer.
This demand is probably strongest among the huge number of up-scale sushi restaurants around the world that now choose to introduce their customers to other kinds of Japanese beers.
As seen in other mature beer markets, the younger generation’s global outreach and general resistance towards traditions are putting pressure on the “old-fashioned” pilsner producers and their brands. As a reaction to this trend, Kirin President Senji Miyake was quoted earlier this year as saying “We beer makers were caught in our own trap. We’ve been engaged in just making pilsner-type beers while getting locked into a price-cutting war, and as a result, beer has become like a commodity”. Facing this fact, and probably as a reaction to the decreasing Japanese beer consumption, the four giants are trying to adapt, which can be seen in their recent investment in craft breweries as well as rolling out own richer “premium” brands, and even starting their own brewpubs (such as Kirin’s Spring Valley pub concept).
As an example of such changes, Asahi recently released a dark porter and a pale ale under its craftsmanship brand, and last year they bought craft brewer Meantime Brewing, London as well as Mountain Goat Brewing, Melbourne. Sapporo announced earlier this year that they would soon launch a pricier craft label to help “get rid of the fixed image of the Sapporo beer brand”, and, in August, it was announced that they had bought San Francisco’s Anchor Brewing, one of America’s original craft breweries. In addition to this, Kirin last
year took a major step within the world of craft brewing when procuring a 25% stake in Brooklyn Brewery, New York.
The future perspectives of the Japanese beer market are predicted to include a continued diversification in the local market, while growth will mainly be pursued by global acquisitions. With the announced reduction in beer tax combined with the upcoming 2020 Olympic Games investments, tourists and global brand attention, the outlooks are indeed positive for the Japanese brewers – both big and small. 乾杯!! (Kanpai!!)
We would like to thank the Danish Brewmaster Association for the scholarship that made this visit possible, together with all the breweries and other people in the industry we visited during our visit.
Five Tokyo beer tips
- Pigalle beer pub (2-15-8 Taishido, Setagaya, Tokyo)
- Boat trip to visit Asahi HQ (design by Philippe Starck) – e.g. Tokyo Cruise Company
- Running sushi with local beer (e.g. Sushi Daidokoya, Dogenzaka, 2−15, Shibuya, Tokyo)
- New York bar at the Hyatt Hotel, have a beer on the 52nd floor if you enjoyed the movie “Lost in Translation”
- Mikkeller bar (Dogenzaka 2-19-11, Shibuya, Tokyo)
About the authors
Jonas Bjørn Borrit has a master’s degree in economics and supply chain management from Copenhagen Business School. He has been working for NIRAS since 2007, in the beginning focusing on optimization projects in the beer & beverage industry. Recent years he has focused on different management positions currently as Vice President, Food & Beverage.
Michael Knoth is educated Chemical Engineer from the Technical University of Denmark (1997) and has a Master Brewer Diploma from the Scandinavian School of Brewing (2000) as well as one-year study at Weihenstephan, Germany. Since 2016 Michael has been the Production Manager at the Danish craft brewery Mikkeller.