04 November, 2005

Japan: Sapporo to suffer 30% sales drop if government raise tax on beer-like beverages

Sapporo Breweries Ltd. would suffer a 30 percent drop in the sales of its "third-category" beer if the Japanese government will raise the tax on the beer-like beverage, Masaru Fukunaga, the brewer’s President announced Kyodo on November 2.

Sapporo Breweries "resolutely opposes" the eventual tax increase which would "cause a substantial blow to our management," Fukunaga said. Fukunaga predicted a 30 percent sales fall as Sapporo Breweries suffered a drop of the same margin in sales of "happoshu" low-malt beer when it became subject to a higher tax in May 2003.

Third-category beers are using ingredients other than malt and wheat and thus are subject to lower liquor taxes. The low-priced beverage accounts for more than 30 percent of Sapporo Breweries' shipments of beers and beer-like beverages including happoshu.

The Finance Ministry considers the tax rate on third-category beers by reclassifying taxes on alcoholic beverages.

Noting that Sapporo Breweries spent five years to develop a third-category beer, Fukunaga affirmed: "A company cannot survive if a tax is raised simply because its product sells well. The ministry's review of the liquor tax should start with a cut in the beer tax which is high by international standards”.

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