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The shrinking alcoholic beverage market and the future of the non-alcoholic market

The alcoholic beverage market has shrunk by more than 25% since the peak period of 1992.

According to the National Tax Agency's Liquor Report, the alcoholic consumption per adult in 2020 is

- 21.63% decline compared to 1989.

- A 26.33% drop compared to the peak year of consumption, 1992.

In response to this fall, the National Tax Agency has issued a public call for measures to stimulate the demand among young people (20-39).

In 2020, the year-on-year figure is -3.97%, which is the fifth year since 1989 that there has been a drop of around 3%, following 1997, 2003, 2008 and 2014.

What has driven the decrease of the alcoholic consumption?

Let’s see what happened in each year.

1997: Triggered by the Asian currency crisis, the Japanese economy has stacked and many bankruptcies have happened. In addition to this, the consumption tax raised from 3% to 5% and the Health Insurance Act has been amended, which increased copayment from 10% to 20%.

2003: Outside of Japan, Iraq war broke out and the outbreak of SARS was confirmed in China. Inside of Japan, Drunk driving has been more severely penalized.

2008: The financial crisis triggered by the Lehman collapse has spread to Japan. Moreover, again the Road Traffic Act has been amended, which made Drunk Driving more severe punished.

2014: 2014 was year of the Tax. The consumption tax increased from 5% to 8% and plus the local consumption tax also raised from 1% to 1.7%. In Africa, Ebola virus disease has spread out, whose news increased the Japanese health awareness.

2020: The Covid raged all over Japan, which brought voluntary stay home and increased the health awareness.

So, considering above, we could easily see the three factors: economic factor, health factor and social factor.

Given these three reasons, we should take into account the change of the taste preference.

Compared with 1989 beer consumption, the volumes have gotten less than half. On the other hand, the crat beer market has established its position in the market. The demand of some brewage except beer increases.

The booming non-alcohol market of 40 million people

Meanwhile, the non-alcoholic market continues to grow.

Major beer manufacturer Asahi Breweries and Dentsu Digital have established the joint venture SUMADORI in 2022, which shows they strengthen their presence in no / low alcoholic beverage market (*low alcoholic beverage means the alcoholic drink with less than 3.5%). Furthermore, Asahi have declared that 20% of their portfolio turns into no / low alcoholic beverages by 2025.

There are currently 40 million people in Japan who do not drink alcohol, and the market is estimated to be worth 80 billion yen as of 2021. At present, the market is still small compared to the alcoholic beverage market, but it has grown by 15 billion yen in the last five years and is expected to become a growth industry.

Within the non-alcoholic category, beer-based beverages are still strong, with Suntory's non-alcoholic beverage report showing that more than 75% of the market is oriented towards beer-based beverages.

Given the current Covid situation, the war in Ukraine and the rising cost of raw materials, the downtrend in alcoholic beverage market is expected to continue. On the other hand, considering that the global non-alcoholic trend led by the international liquor manufacturers has not reached to Japan yet, further boosts can be easily expected in the near future.


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