New beer boom

In­vest­ment in craft beers rises to meet grow­ing de­mand

China Daily (USA) - - FRONT PAGE - By BLOOMBERG in Tokyo

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.

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