BREWING IN in Japan Ð present The story of and the ‘Third Way’

RIGHT: Suntory How the imbalance of customers having a alcohol duties imposed by good time. This is a Japan’s government was summer party on a boat in bay area. In challenged by innovative Japan, it is the custom to techniques. have a seasonal party often outside drinking beer or . In the By Kazuo Natakani spring, it is a party Suntory Brewing Co. Japan under the cherry blossoms, summer on the boat, autumn near s elsewhere in the world, there the mountains watching is a large imbalance in alcohol the leaves of the maple A duties in Japan. Beer is heavily taxed trees changing colour (220yen* per litre at 5%ABV), while and in winter maybe drinking hot sake whisky and shochu (white spirit sold watching the snowy around 25%ABV) are only 50 yen scenery. per litre adjusted to the same strength as beer. Wine of 14%ABV is even lower at 26 yen but sales volumes are small. Traditional Japanese sake In December 1994, so-called about 70yen/litre compared to beer. (usually 17%ABV) made from rice Happoshu was launched by Suntory The market price of Hop’s (350ml has a flat rate of duty at 35 yen Ltd. The idea of this new category can) was 180 yen, much cheaper in irrespective of strength but sake product took advantage of ‘cheaper comparison with the 220 yen of beer makers are quite small and the tax with lower malt ratio’. The tax and so immediately attracted many government protects these charged on beer or similar alcohol beer drinkers. Since then, five businesses with lower tax rates. beverages in 1994 is shown in Table brewing companies have been Shochu used to have a much lower 1. ‘Happoshu’literally means competing strongly with each other 220 yen = $1.87 * duty than whisky but now they are foaming (Happo) and alcoholic in developing a lot of new products. or £0.94. the same. Shochu (white liquor) sales drinks (shu). So it is usually had been rising and whisky dropping translated as “carbonated alcohol Tax changes (Fig.1) so the government has a beverages”. Suntory’s new product In 1996 the malt ratio of happoshu history of taxing alcoholic beverages named Hop’s was classified in was changed from 25Ð66.6% to according to their sales volumes and Happoshu category No. 2 whose 25Ð50% and the tax was raised by the rates often change. Japan’s malt ratio should be 25Ð66.6%. 21.7 yen/litre. As the result, the tax brewers fought this policy by Actually the malt ratio of Hop’s was on Suntory’s Hop’s would naturally developing two rather different types about 65%, only 1.7% less than beer rise if the malt ratio was fixed at of beer. category, but the tax was cheaper by 65%. In 2003 happoshu tax was raised Fig. 1 Relative pure 100% alcohol consumption of again by 29.3yen/litre and the various alcohol Liquor Tax Bureau made further strict regulation on the use of barley beverages in Japan 80% type raw material in the ‘others’ Others category (the cheapest tax category). 60% Wine The use of not only malt but also Whisky and brandy barley, wheat, oats etc was banned in White liquor this category. Yet the tax of this 40% Sake category was left unchanged. Beer In 2006 the tax of third beer type 20% drinks was increased up to the same level of ‘Liquor under 8%ABV’and

Total 100% ABV alcohol consumed in addition, strict rules were 0% introduced about further 3 9 development of new products in this 9 1 1994 1995 1996 1997 1998 1999 2000 2001 2002 category. Year In 1995, Sapporo Brewing

The BREWER & DISTILLER INTERNATIONAL ¥ Volume 3 ¥ Issue 5 ¥ May 2007 ¥ www.ibd.org.uk 54 and future trends FAR LEFT : The happoshu products from the four main breweries in Japan.

LEFT: The third way products.

Company launched “Drafty” in the own products brewed using local category of Happoshu No. 3 which fruits or other materials. The basic malt ratio must be under 25% but at brewing technology of this category the same time a small portion of malt is almost the same as beer. must be used. In 1996 Suntory also launched Super Hop’s in the Happoshu 2: Suntory’s Hop’s, the Happoshu No. 3 category. Other first beer-like product in happoshu brewers followed by launching category, was brewed in almost the products in the same category - Orion same way as a normal beer where Brewing Company in 1997, Kirin in the grist used because its 1998 and Asahi in 2001. malt ratio was 65%. There were no In 2003, Sapporo launched Draft technological problems. As this One in the ‘others’tax category category’s malt ratio is now limited without using any malt, barley or to below 50% and the tax advantage wheat at all. Since then the other is small, no product from any major three companies have also developed company is in the market. their own products in this novel category. In addition, new products in Happoshu 3: Sapporo’s Drafty, the ABOVE: The main premium from the four companies. liquor category type have been second happoshu after Hop’s but the developed by just blending beer or first one in happoshu category 3 was BELOW: Inside and outside Suntory’s Musashino plant.. happoshu with distilled alcohol brewed with under 25% malt ratio because the tax of liquor is also much and grain adjunct (corn or rice) cheaper (about 80 yen/litre) as long dominated which was as the alcohol content of the product technologically much more difficult, is kept under 8%ABV. especially the filtration of the wort Such development of various beer- due to the presence of less barley type new products by brewing husk. Suntory’s Super Hop’s was companies has always been also brewed under 25% of malt ratio competing with the government but the difficulty in wort filtration policy of maintaining a steady was overcome by using already income from liquor taxes. Later, saccharified sugar syrup. Kirin’s people called the product of the malt Tanrei in the same category free and liquor categories as ‘third improved the flavour by using some beer type drinks’to differentiate from dehusked barley together with sugar happoshu which became known as syrup because raw barley or wheat ‘second beer type drinks’. was considered as the adjunct. In most cases some enzymes such as Brewing Technology proteinase, β-glucanase and Happoshu 1: In Japan the raw amylases are used in the mashing materials which can be used in beer process when barley is used as production are quite limited. For adjunct. The use of barley has the example, Hoegaarden the white beer effect of stablising the fermentation from Belgium is classified as by supplying more nutrients (amino happoshu (category 1) because acids) to the wort. coriander or orange peel is not permitted in the beer category. As Others (Third beer-type drinks): the tax of this category is the same as The recipe of ‘third beer type drinks’ beer, actually very little happoshu in is completely different from this category is produced in Japan. happoshu because the use of any Some micro breweries have their barley type raw material was

The BREWER & DISTILLER INTERNATIONAL ¥ Volume 3 ¥ Issue 5 ¥ May 2007 ¥ www.ibd.org.uk 55 BREWING IN JAPAN

Table 1 Change of liquor tax of beer and beer type beverages since 1994 (Yen/litre)

Beer Happoshu Others Liquor >66.7%* >66.7% 66.7-25% <25% Alc.<8% Alc.<8% 1994 222Yen 222Yen 152.7Yen 83.3Yen 69.1Yen 79.4Yen 1996 222Yen 222Yen** 152.7Yen** 105.0Yen 69.1Yen 79.4Yen 2003 222Yen 222Yen 178.1Yen 134.3Yen 69.1Yen 79.4Yen 2006 220Yen 220Yen 178.1Yen 134.3Yen 80.0Yen 80.0Yen * Malt ratio ** Malt ratio was changed - category 1 >50% and category 2 25-50%

Figure 2 right: Recent banned. The most serious problem market share of beer, was how to supply protein for foam happoshu and others and amino acids for yeast nutrient. 100% category. Sapporo developed Draft One, the first product in this category, using 80% hops, sugar syrup, protein derived from peas and caramel. In this process mashing is not necessary. 60% Mostly raw materials can be mixed in the wort kettle. Kirin and Asahi 40% used soy bean protein instead of pea Others and Suntory used corn protein. In Happoshu most cases yeast extract was also 20% Beer used to supply enough amino acids. Caramel was used for adjusting the 0% colour of the products. Almost all 2002 2003 2004 2005 2006 food additives can be used to produce happoshu or third beer type Year drinks, which is the big advantage to adjust or design the taste and flavour of new products. Table 2: Chemical analysis of Suntory’s typical products

Market Trends Analytical Parameter Premium Beer Happoshu Third type The market share of each category Original Ex (w/w%) 12.5 12.1 10.4 greatly depends on the price, that App.Attenuation (%) 82.0 90.0 95.8 means the change of liquor tax has Alcohol (v/v%) 5.3 5.7 5.2 led to changes in the market share of Bitter (BU) 29.0 18.0 19.0 each category. Colour (EBC) 8.0 7.0 8.3 Fig 2 shows the market share of T-N(mg/100ml) 76.0 31.0 10.0 beer, happoshu and other beer type T-Polyphenols (ppm) 195 70 13 alcoholic beverages over the last five Ethylacetate (ppm) 17.4 15.5 7.0 years. The market share of beer has Amylacetate (ppm) 1.3 1.0 0.6 n-Propanol (ppm) 8.4 9.2 3.1 dropped to about 55% since the first i-Buthanol (ppm) 7.6 10.4 8.4 tax changes in 1994. Happoshu and Amyl alcohols (ppm) 51.8 44.9 38.9 other ‘beer-like’drinks are now competing in lower price beer Figure 3 right: market. The appearance of beer type drinks in liquor category is also due Premium Beer Organoleptic profile Fullness chart of Suntory’s to the relatively cheaper tax of liquor. typical products. The chemical analysis of premium Happoshu beer, Happoshu and third type of Drying Malty Suntory products are shown in Table Third Type 2 and their organoleptic flavour profile is in Figure 3. Sour Hop aroma The future of the market Since 2005, more changes have taken place in Japanese beer market. Suntory’s ‘The Premium Malt’s’ Bitter Toasty brewed in Musashino Brewery won the Grand Gold Medal at the Monde Selection 2005. Suntory used this achievement to feature the high Sweet Estery quality of The Premium Malt’s in their marketing activity. The Mild

The BREWER & DISTILLER INTERNATIONAL ¥ Volume 3 ¥ Issue 5 ¥ May 2007 ¥ www.ibd.org.uk 56 In 2003 Sapporo launched Draft One in the ‘others’tax category without using any malt, barley or wheat at all. Since then other ‘three companies also have developed their own products in this novel category. In addition new products in liquor category type

have been developed by just blending beer or happoshu with The author Kazuo Nakatani graduated distilled alcohol because the tax of liquor is also much cheaper from Kyoto University with a Masters degree in (about 80 yen/litre) as long as the alcohol content of the product Biochemistry in 1974. He then joined Suntory Ltd is kept under 8%ABV. and worked in the Beer Laboratory in the field of fermentation receiving PhD in Biochemistry from On the other hand, the market Kyoto University in 1985. Kirin share of third beer type drinks has In1989 he was promoted 250 also increased by 20%. The regular to the general manager of Institute of Beer Brewing Asahi beer and happoshu lost their market ’ and moved to the 200 Suntory share by 2.5% and 10% respectively. Tonegawa Brewery as the This means that the trend amongst General Manager in 1997. Sapporo consumers is shifting to the He was appointed the

) president of Suntory 3 150 extremes, that is, cheapest category Shanghai Brewery in 2002

10 and highest. This is not only limited returning to Japan as a to beer but also the same trend is board member of Suntory l(X 100 Ltd. in 2005. He is now K observed in the motor car market and television sets. COO of the Quality Assurance Division. 50 The premium category beer is During his research career expected to build its market share he received the year by year. This trend will also be Presidential Award of 0 related to the life style of Japanese MBAA both in 1980 and 2004 2005 2006 1996. He also developed people over the next 20 years or so. various new beer products The ‘baby boomers’– children born and happoshu. Year from 1947 to 1949 have reached the You can reach him on: age of retirement. These folk are [email protected] Figure 4: Recent market trend of premium beer in the Japanese beer market. expected to support the premium category beer in their daily life after Japanese beer consumer reacted to compared to the previous year. Two having retired. In the future, this marketing and the sale of The years consecutive awards of Grand happoshu and third beer-like drinks Premium Malt’s increased by 230% Gold Medal in Monde Selection are expected to remain in the market in 2005. In 2006 other brewing have pushed The Premium Malt’s to but are unlikely to increase so much. companies also promoted their the second position in the premium That is, until the Japanese premium beer, so the sale of the category next to Sapporo’s Ebisu government start tinkering with the premium beer increased by 58% (Figure 4). duty rates again.

IBD Younger Member of the Year Award

Do you care passionately about the UK • Media attention in The Brewer & Distiller leadership, personal commitment and brewing and distilling industry? International enthusiasm for the sector. Can you become an ambassador for your Application forms can be found on the IBD company, your industry and the IBD? The top ten movers and shakers selected by website www.ibd.org.uk or contact the IBD Whatever your job or your qualifications, if the Awards Committee will be listed in The Registrar, Jessica Clark at IBD HQ. you work within the industry you could Brewer & Distiller International. The IBD become the IBD Younger Member of the Year Younger Member of the Year will be awarded 2007. to the individual who most clearly The successful nominee will receive: demonstrates passion for their profession and for the IBD. The purpose of the award is The Institute of Brewing & Distilling • Brewing/Distilling study course nominated to identify and support outstanding younger 33 Clarges Street, London, W1J 7EE by the IBD people working in the industry. The Awards Tel: +44 (0) 20 7499 8144 • Invitations to attend a number of Committee of the IBD will access various Fax: +44(0) 20 7499 1156 prestigious events qualities in the applications including www.ibd.org.uk

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