New beer boom
Investment in craft beers rises to meet growing demand
The record throngs of international tourists visiting Japan have failed to jolt the country’s department stores out of a slump.
Sales at outlets including Takashimaya Co and Isetan Mitsukoshi Holdings Ltd nationwide fell 6 percent in August, the biggest drop since March 2015, said the Japan Department Store Association. In the same month, arrivals of tourists from outside the country surged 13 percent, according to Japan National Tourism Organization data.
A stronger yen has made Japan more expensive for tourists, while deflation and negative interest rates have sapped consumer confidence, making it harder for department stores to increase sales. That pessimism was reflected in the Bank of Japan decision last month to do more to combat deflation by shifting its policy framework from expanding the money supply to controlling interest rates. Japan’s core consumer prices fell in July at the fastest pace sinceMarch 2013.
“The BOJ may find it difficult to achieve its inflation goal in the near term,” said Thomas Jastrzab, a Bloomberg Intelligence analyst. “If it manages to stoke consistent inflation this could serve as a catalyst to boost retail sales.”
The biggest department stores need the boost. Revenue at Isetan Mitsukoshi, Japan’s largest department store operator by market value, probably fell for a fourth straight quarter in the three months ended on Sept 30, according to analyst estimates. Sales at Takashimaya fell about 3 percent in August, after a 0.3 percent decline in the quarter endedMay.
Takashimaya, Isetan and rivals have featured more goods popular with tourists and have added staff to accommodate the rise in a bet it could help drive a rebound in sales. Local news media have called the shopping style of tourists from China bakugai or “explosive buying.” The moves didn’t prevent sales at stores overall from sliding.
Department stores are losing customers to drugstore chains such as Sundrug Co andMatsumotokiyoshi Holdings Co, which offer discounted cosmetics and perfumes to foreign visitors who are seeking bargains as the strong Japanese currency crimps their travel budgets, said Jastrzab.
Isetan Mitsukoshi said tourists these days prefer cosmetics, children’s clothes and other everyday items such as pillows over watches and consumer electronics. “Spending habits by Chinese tourists have changed slightly,” said
marketing specialist, said: “Consumption of beer is highly associated with how consumers perceive the product as a label of wealth and lifestyle. Two decades ago, beer was regarded as a luxury drink, but as consumers are getting wealthier, now many think it is lowend, or just a very affordable drink in summer.
“If beer brewers want to win the new generation of consumers, they have tomake the latter regard beer as a seaonneutral, all-year drink for various occasions and scenarios.”
Agreed Zhang Wutao, a Shanghai-based beer dealer withMaoquan Trade Ltd. Premium beers are now consumed more widely than ever, after a tennis session, at rockand-roll concerts, beach resorts and wedding banquets, he said.
“Some beer brewers are offering buyers tailor-made products like souvenir bottles and cans for specific events like town halls or celebrations to mark completion of a project,” said Zhang.
For their part, consumers say premiumization of beer products increases variety and makes drinking exciting.
Liu Yang, 32, sales manager with a robot components supplier, said beer, for long, has been widely acceptable, thanks to its low alcohol level, compared with wines and China’s white rice liquor. But many banquets do not include it in their menu any more because beer is considered too cheap.
Zhang said: “When other people drink wine, or white rice liquor, in a crystal glass, you don’t want to be seen having a beer poured from a 600-ml bottle. When beer becomes a premium drink in terms of both quality and price, you have one more option when you drink with other people. Drinking premium beer together could help build rapport, a relationship that is not too casual or not too distant.”
A Chinese tourist (right), inspects a wrist watch at a Laox Co store in the Ginza district of Tokyo.
A technician inspects a craft beer production line at a brewery in Yiyang, Hunan province.