Japan: A dispute over beer prices between alcoholic beverage wholesalers and retailers continues with no end in sight, puzzling consumers with different prices in shops, Kyodo News commented on March 01. The dispute was triggered early this year by the abolition of a rebate by beer brewers. Alcoholic beverage wholesalers have asked retailers to raise beer prices, but major supermarket chain stores are rejecting the demand.

Kazuhiro Sato, an executive director of Kirin Brewery Co., said, "I think considerable time will be required" before the problem is resolved.

Beer brewers used to ship beer after providing the suggested retail prices to wholesalers and paid them a rebate according to the volume of sales. The rebate was for reduced prices at large retailers, such as major supermarket chain operators and discount stores. But four beer brewing companies have raised shipment prices by abolishing the rebate and suggested retail prices, causing turmoil between wholesalers and retailers.

The brewers abolished the rebate for fear of bargain sales of their products. Until the early 1990s when the beer market expanded, a hike in the market share led to increased profit, and the brewers asked wholesalers to expand sales with a rebate. But the collapse of the bubble economy brought sluggish market growth and wholesalers cut prices in anticipation of a bigger rebate, causing panic selling. To normalize sales, the brewers abolished the rebate.

Wholesalers have asked retailers to raise prices to offset the rebate cut in negotiations, which wholesalers hoped to end by mid-February. About 70 % of retailers have accepted the wholesalers' request, but major supermarket chain operators, helped by price cuts through the rebate, have rejected the request. "We cannot explain to consumers," said an executive of Aeon Co., a major supermarket chain company. Three different prices for the same brand of beer have appeared. Some retailers have raised prices, and others are leaving them as they were, while there are convenience stores selling beer at list prices.

A Tokyo discount store, which raised the price of a beer case (24 cans of 350 milliliter of beer) by 100-300 yen in early February, said sales have dropped about 10 percent. The situation is worse, compared with wholesalers which have been offsetting losses in beer sales with profits from other alcoholic beverages and food.

There were 1,800 wholesalers across the country in the early half of the 1990s, but the number is now 800. Meidi-Ya Co., a distinguished major wholesaler kept posting losses until the end of the February 2004 business year, for the ninth consecutive year, and was brought under the wing of Mitsubishi Corp.

The brewers have created a monetary system to push wholesalers' investments in place of the rebate but the amount is small. "Unless beer trading is normalized, wholesalers face a crisis of extinction," said an executive at a wholesaler.

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