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Asahi, Kirin to raise beer prices in Japan

December 4, 2007
By Ken Worsley


After 18 years without a price increase (other than taxes), Asahi Breweries has announced that it intends to raise the prices of its beer by 3-5 percent from March 1, 2008. According to Asahi’s press release, increased raw material costs (including, “Malts, corns, aluminum and paper materials”) have forced the brewer to hike its prices, despite ongoing steps to increase efficiency.

Asahi is not alone, however. Kirin Breweries also plans to raise prices, though they will pull the trigger one month earlier than Asahi.

We doubt there will be any discounts for case purchases coming into effect any time soon.

Note: In case you’re really worried, Asahi assures us that all imports will not be affected by the price hike. This includes you Lowenbrau drinkers. I was never very good at German, but I always assumed “Lowenbrau” to be derived from the German words “Lowen” - as in, “Something low on the taste chart” - and “Brau” - as in, “A made-up word that sounds like a European version of ‘Beer’ or ‘Brew.’” I could be wrong there.

Edit: For a perspective on how the Japanese public feels about these price hikes, please see the translated opinion poll in a post entitled Impending beer price hike in Japan over at What Japan Thinks.

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Comments

21 Responses to “Asahi, Kirin to raise beer prices in Japan”

  1. Jose on December 4th, 2007 10:03 pm

    I’d love to know what they’ve done in terms of efficiency, though given the competition I don’t doubt that all the companies do as much as they can. When oil prices come back down, will the high prices stay?

  2. Yes Way Jose on December 4th, 2007 10:18 pm

    I agree with you on that one. A while ago when they raised prices on drinks in vending machines from 110 to 120 it was similar. They were crying about the exchange rates however the exchange rates went back to where they were and of course the prices haven’t changed.

    Oil is trading at about 89 bucks right now but should actually be around 40 bucks given supply and demand. The rest of that is panick.

  3. Ken Worsley on December 4th, 2007 10:56 pm

    I would be skeptical that prices would come back down, especially given the blanket pricing we tend to see in the industry. I thought it was interesting that JAL announced an increase in fuel surcharges for international flights but ANA held off on it - the first time they have not acted in tandem.

    I don’t think any of them are willing to undercut with prices because it’s just too damn dangerous. A price war could inflict serious damage on the industry’s earnings. They must assume it would be worse than the risk of having lower sales due to price increases.

  4. Jose on December 5th, 2007 1:12 am

    It does seem as though there is cartel pricing going on, and I’ve always assumed it was either semi-legal or a blind eye was turned toward it. The newspapers are allowed to fix prices. Anti-competitive practices seem to be the bread and butter in a lot of industries, probably in baking and dairy as well.

  5. Yes Way Jose on December 5th, 2007 9:13 am

    Speaking of fuel price surcharges, didn’t JAL and a couple of other airlines just get a fine for adding unnecessary fuel charges abraod? I think they did.

  6. Paul on December 5th, 2007 2:08 pm

    Jose,

    It does seem as though there is cartel pricing going on, and I’ve always assumed it was either semi-legal or a blind eye was turned toward it.

    Price cartels are (or can be) legal, though I have no knowledge whatsoever of one existing in the beer industry. It exists in newspapers for sure. I think that the government has to give approval, and then the cartel is allowed to exist. There is a law that allows the newspaper industry to fix their prices in collusion, but I don’t think there are many of these laws and I’d bet that there is none in the beer industry.

  7. Ken Worsley on December 5th, 2007 3:11 pm

    Yes Way Jose,

    JAL was hardly alone in that one: http://www.asahi.com/english/Herald-asahi/TKY200710080034.html

    British Airways and Korean Air were busted as well. I wonder what beer they serve in the cabin?

  8. Yes Way Jose on December 5th, 2007 6:09 pm

    Thanks for posting that website. I found it but can’t get this damn google bar off of
    my computer so I didn’t know the URL.

    There are lots of industries around the world with “unspoken” cartels. Believe it
    or not in America, “cereal” is one of them.

    I am sure the one in Japan is similar to that. They don’t need to have price wars on it because they keep the imports out of the stores or charge huge prices for them. Go to the inconvenience store and you’ll find that you have a HUGE choice of about X number of Japanese beers.

  9. WG on December 6th, 2007 12:42 am

    By ‘beers’ do you mean brands? If so, I’d agree. There are what, six brands to choose from? Each one makes its regular, a premium, a seasonal, and one or two varieties of that happoshu nonsense. In the end, the regular, premiums and seasonals all basically taste the same and no one is ever on sale. The six pack price is single can times six. Case price is single can times 24. Given that they all taste like Budweiser, what’s the price difference? How much is a 6 pack of Bud or a case going for these days?

  10. Yes Way Jose on December 6th, 2007 8:57 am

    Protectionism at its finest! Bud in Japan is made by Kirin. Kirin pays a licensing fee to Bud in the U.S. Don’t know how much it goes for in the U.S.

  11. Matt on December 6th, 2007 1:03 pm

    I’d say $4.99 for a 6 pack of Bud in the US. Cans, that is. Japanese beer prices come out to about $8.50 for 6 Super Drys. Much of that difference has to be raw materials costs and inefficiencies. But Bud has no other way into the market other than to license to Kirin. It’s not even the real product.

  12. WG on December 6th, 2007 5:23 pm

    What Japan Thinks had a post on this. Most people say they won’t change their beer-buying habits:

    http://whatjapanthinks.com/2007/11/30/impending-beer-price-hike-in-japan/

  13. Garrett on December 6th, 2007 11:04 pm

    Where do you shop in the States, Matt? $4.99 for a six pack of cans seems a bit on the steep side. I’ll admit I haven’t been in the US for a couple of years now, but two years ago, $8 would get you half a case of pretty much any domestic in bottles. I wouldn’t drink Bud unless I were threatened, but it was even less than that.

    Likewise, $8.50 is a bit cheap for a six pack of Japanese beer. The cheapest six pack I’ve ever seen is 1,090 yen, which would be around $9.90. An average price would more likely be just over 1,200 yen.

  14. Ken Worsley on December 7th, 2007 12:33 am

    WG, thanks for the link. I think I’ll edit that one in the post. It’s definitely worth checking out!

  15. SK on December 7th, 2007 1:53 pm

    Matt’s Bud price seems high to me too, but when you think about it, the 6 pack price in Japan has to be more than double that of the US. But how much of that is taxes? Anyone have a breakdown on those numbers?

  16. Yes Way Jose on December 7th, 2007 8:43 pm

    Beer prices will skyrocket around the world soon because there isn’t enough barley. All the barley is being snapped up for fuel usage. In the next few years the prices in Europe will probably be up about 30%. The demand from China is also raising the prices. Just simply demand is outstripping supply. So, all the alchy’s out there better start learning how to make moonshine.

  17. Olivier on April 2nd, 2008 12:11 pm

    Ken,
    Thank you for this piece of info, I work in the spirits business in Japan and we did increase our prices in 2008. Raw material , demand from China, yes and a poor exchange rate (not affecting Japanese brewers but al other imported intems) are the main reasons. Unfortunately except for sparkling wines, the market has been pretty depressed, wine and shochu boom have been softening and corporate expenses are decreasing , so people are really starting to maximize their consumption.
    If you allow me I would just add that Löwen in German does not mean low but Lion and bräu is not made-up word, it’s a German word that stands for brewing, there are other languages than English you know.
    Regards

  18. Ken Worsley on April 2nd, 2008 12:32 pm

    Oliver, thanks for your comment. The part about “Lowenbrau” was sarcastic - definitely not meant to be taken seriously. I was joking with the words. I’m sorry that a joke made you feel insecure and defensive. That was unintended. It was meant to make you laugh at its sheer silliness.

    there are other languages than English you know.

    And I speak several of them.

    Loosen up.

  19. Olivier on April 2nd, 2008 12:53 pm

    Sorry for not getting it right then… but I am too used to the opposite, don’t worry I did not feel insecure nor defensive, just a bit sad.

  20. Ken Worsley on April 2nd, 2008 1:11 pm

    Oliver, understood - I’m used to the opposite as well! Thanks for the points on the market. It has been my understanding that the beer makers are struggling and consumption has been declining, especially amongst youth - and a declining population won’t help that situation. Though, I do think people ought to drink less or not drink at all anyway…

  21. oGenki desu ka on October 27th, 2009 1:37 pm

    And it’s getting even worse, prices in Japan are soaring http://www.communitrip.com/japan/costs.html it’s not that great living here any more

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