Japan: Japan beer industry association is against any tax increase on

The Japan beer industry association told the Financial Times it was against any tax increase on 'third beer' products and said the government needed to conduct more discussions regarding its plan to reduce the number of liquor taxation categories from 10 to four. The Brewers Association of Japan on Tuesday protested the Liberal Democratic Party.

Koichiro Aramaki, president of the association and also of Kirin Brewery Co., indicated that the industry will consider raising the price of the third-category beer if the tax hike takes place. Aramaki, however, said it will be hard for the industry to cut the price of beer as the tax cut on beer is very low.

In a bid to remove various taxation loopholes in Japan, the ruling Liberal Democratic Party (LDP) is considering a sharp reduction in the number of liquor taxation categories, a report by the Financial Times revealed on December 13. The four proposed categories are: alcoholic beverages made by fermentation; beer-like beverages; spirits; and liqueurs and others.

Japanese beer is currently taxed based on the amount of malt used in the product, which has allowed the big brewers to introduce cheap low-malt beers called happoshu. More recently, a cheaper non-malt 'third beer' product made from soybeans and other products has emerged.

While regular beer consumption in Japan has been declining for about nine consecutive years due to the rising popularity of wine, sake and other alcoholic beverages, sales of the cheaper 'third beer' have mushroomed since the product was introduced at the end of last year.

The company expected to suffer most from a tax hike on third-category beer is Sapporo Breweries Ltd., as third-category beer shipments account for more than 30 percent of the company's entire shipment of beer and other alcoholic beverages.

Kirin, which has the largest share of the third-category beer and beer markets, will suffer only slightly from the tax increase.

Asahi Breweries Ltd. is expected to suffer less because its shipments of beer surpass those of third-category beer.

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