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DRINK UP: Legal Revision Boosts Whiskey Sales July 10, 1998 Whiskey sales are booming in Japan in the wake of a May 1998 revision to the Liquor Tax Law. The revision, which brought tariffs more in line with those levied on other distilled liquors, followed a similar tax reduction in October 1997. Lower prices are being passed on to consumers, who are drinking more these days. May whiskey sales by two major manufacturers jumped 20% to 30% from the previous year. The nation's economic slowdown is dragging down sales at restaurants and drinking establishments, but the tax cut seems to be having an effect as people drink more at home. Getting Glasses in People's Hands The current tax revision has its roots in a 1995 decision by the World Trade Organization, which ruled that the lower tax rate applied to shochu, a domestic liquor, was an obstacle to fair whiskey imports. The WTO requested that Japan reduce the discrepancy in rates applied to shochu and other spirits. In line with this, the gap has been narrowed: The May revision dropped the tax on a 700-milliliter bottle of 80-proof whiskey by 100 yen (71 cents at 140 yen to the dollar) and hiked that on a standard 1.8-liter bottle of 50-proof shochu by 83 yen (59 cents). Suntory Ltd., the largest domestic liquor maker, has dropped the price of its 750-ml 10-year "Reserve" by 120 yen, to 2,230 yen (86 cents, to 15.93 dollars). Meanwhile, Takara Shuzo Co., the top shochu maker, has raised the price of a 720-ml bottle of its "Jun" brand by 33 yen, to 746 yen (24 cents, to 5.33 dollars). The rise in whiskey consumption stems partly from the tax cuts, but also from the advertising and sales drives kicked off by whiskey makers to coincide with the introduction of lower tariffs. In one marketing move carried out the night before the reduced taxes kicked in on May 1, Suntory sent out an army of sales personnel 6,000 strong to assemble whiskey displays in liquor stores. The company also conducted a mass mailing, targeting some 1 million people with news of the lower prices. Suntory has also introduced new products to boost sales, introducing a product it calls "a dinner whiskey that goes well with Japanese cuisine." The whiskey maker has taken its campaign to the airwaves with
a series of television commercials starring Sanoyama, the ex-sumo
wrestler from Hawaii known as Konishiki until he retired in November
1997. These ads, which show whiskey as an enjoyable part of life,
are successfully boosting sales, helped by Konishiki's popularity.
Other marketing ploys include point systems, patterned after airlines'
mileage plans, that let drinkers earn credit toward valuable goods
with their purchases. Liquor makers are said to be planning new
campaigns all the time, including public tours of distilleries
and free samples of their more pricey offerings. Even makers of shochu, who were dealt a blow by the hikes in the taxes on their product, are holding their own. They see the contraction of the customer base following the first tax hike in October 1997 as having been negligible. One major shochu maker notes that while shipments did shrink in May following the second rate increase, June saw figures return to normal; the maker is even forecasting year-on-year growth for July. It seems that shochu, long considered Japan's "working-class" drink, has not lost its competitiveness. In both the whiskey and shochu markets, whether companies stand or fall rests on how well they are able to adapt their products to consumer preferences. Makers of alcoholic beverages are taking "low cost" and "drinkability" as their watchwords, and seeing higher sales among younger consumers as a result. Competition in the market looks likely to grow hotter still.
 Edited by Japan Echo Inc. based on domestic Japanese news sources.
Articles presented here are offered for reference purposes and
do not necessarily represent the policy or views of the Japanese
Government.
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