Chocolate low-malt beer makes me sad

As a beer drinker (though I am really liking wine these days), this announcement was truly shocking:

I’ve said it before and I’ll say it again — what a sad state of affairs! If I saw this at the store I might be forced to buy it for the novelty value, but apparently it’s only being offered online. Oh well.

This new chocolate low-malt beer (happoshu in Japanese) makes me sad, mostly because of the implications of the company’s decision to make chocolate happoshu instead of chocolate real beer.

What started as a clever way to get around a tax hike in 1994 has today resulted in low-malt happoshu and no-malt “third beer” gaining recognition among the Japanese public as cheaper, viable alternatives to the real thing. In my own life, it is typical to see housewives at the local Ito Yokado buying dinner with a cheaper beer alternative, either for the husband or to drink together (I do a lot of the grocery shopping).  How did things come to this?

According to the National Tax Agency, beer has long been Japan’s drink of choice. As far back as 1970, twice as much beer was consumed as Japanese sake. But for a long time, Japan has had a 40% tax on beer sales, higher than other advanced nations (UPDATE: in 2006 it was lowered slightly but remains high). This was never a problem when Japan’s economy was growing, but a tax change in the post-bubble year 1994 triggered events that would transform the local convenience store beer cooler:

Japan’s alcohol tax system divides beer-like malt beverages into four categories based on malt content: 67% or higher, 50 to 67%, 25 to 50%, and less than 25%. An alcoholic beverage based on malt is classified as beer if the weight of malt extract exceeds 67% of the fermentable ingredients. Since Suntory‘s introduction in 1994 of Hop’s Draft, containing 65% malt, a market has emerged for low-malt, and recently, non-malt beer substitutes.

With alcohol tax revenues decreasing as a result of happoshu’s popularity, the Japanese government eventually raised the nation’s tax on low malt beers. In 1996, the tax for products containing 50 to 67% malt was raised to that of beer. Brewers followed suit by lowering the malt content of their products. Today, most happoshu contains less than 25% malt, putting it in the lowest tax category of low-malt beer. In recent years, Japanese brewers have released dozens of brands in attempt to increase their market share. Many of these are marketed as more healthy products, with reduced carbohydrates and purines. Another trend is to use unmalted barley, such as in Sapporo’s Mugi 100% Nama-shibori.

Beer-flavored beverages collectively dubbed “the third beer“(第三のビール, dai-san no bīru) by the mass media have been developed to compete with happoshu. These alcoholic products fall under categories not yet as highly taxed. The third beer beverages either use malt alternatives, or they are a mix of happoshu and another type of alcohol. When comparing 350 ml cans, the third beer brands can be 10 to 25 yen cheaper than happoshu.

Effect on total consumption

These new, less tasty types of beer have grown in importance over the years. Third beer sales overtook happoshu for the first time in 2008, amid a record bad sales year for the beer and beer equivalent industry as a whole. Together, happoshu and third beer sold almost 90% as many cases as real beer (226 million vs. 256 million). In a matter of years, Japan may be drinking more loophole beer than the real thing. The bad sales were attributed to to price hikes (due to high commodity prices in the first half of 2008) and a general shift among consumers away from beer to other options or no drinking at all (due to being too old or a part of the supposedly vice-free younger generation).

Over a longer term, consumption of beer peaked in 1994 at 7 million kiloliters and fell 53% by 2006. The combined beer + happoshu + “other alcohol” numbers went from 7.09 million kL in 1994 to 5.9 million in 2006, a dip of around 18%. from the peak.

However, according to the tax authorities, overall alcohol consumption peaked in 1996 and fell 9.2% by 2006. It is clear that the decline of beer etc. was the biggest drag on the total, as no segment of the industry stepped up to take beer’s place. Beer’s share of total alcohol consumption declined from 73% in 1994 to just 66% in 2006. While shochu and liqueur (mostly chuhai aka shochu “alcopop”) and wine grew over that period (and sake, whisky, and brandy actually declined significantly), there is still nothing approaching beer.

Effects on drinking behavior, conclusion

The rise of happoshu came amid a major recession for the Japanese economy and the first instance of deflation for a developed economy in the postwar era. Just as the 1990s saw the rise of 100 yen stores and Uniqlo discount apparel, these near-beers are the product of downward price pressure and a relative impoverization of a wide swath of Japanese consumers.

This dual taxation appears to have created a similar dual structure in how people drink their beer. According to What Japan Thinks, while around three quarters of those surveyed drink at home, the overwhelming drink of choice was Happoshu: “over one in six of the total population drink happoshu almost every day!” So while a minority will drink beer or other alcohol, it’s clear that my observations of housewives at Ito Yokado aren’t just coincidence — as far as I can tell, the justification for drinking happoshu is that it’s cheap and tastes just good enough to be had with dinner.

The existence of these choices isn’t by itself a bad thing. I am not aware of the tax scheme in the US, but liquor stores are filled with nasty alternatives to good beer (some happoshu brands are much better than Schlitz, just to name one example). The only thing that angers me is that the tax policy has pushed the beer companies to pursue a decidedly low-quality product line in order to avoid their tax bills, to the point that it dominates their marketing such that even their novelty products are happoshu. Could it have been possible to negotiate an overall lower tax on beer that would maximize both quality and tax revenue?

Ultimately, the tax wars over beer ended up hurting everyone involved, concludes a helpful summer 2008 report by Shigeki Morinobu, a former tax regulator who was personally involved in the process between 1993-97. Annual tax revenues from beer and derivatives fell from more than 1.6 trillion yen in 1994 to 1.1 trillion yen in 2007, an enormous drop of 32%. The beer market has shrunk significantly, as detailed above.

Morinobu, in translation and with my full-throttled agreement:

And what about the consumers? The tax debate resulted in low-malt beers overflowing the store shelves. The flavor of beer-type drinks grew worse and worse, which constitutes perhaps the biggest factor behind the trend away from beer drinking, especially prominent among young people. Seen this way, it is clear there are no winners in this war over beer taxation.

In Germany, anything with less than 100% malt cannot be considered beer. Japan, too, should return to the root of the problem and recognize that creating good beer will increase beer’s overall consumption volume and in the end boost national tax revenues. This summer, I prefer to drink 100% malt, real beer.

26 thoughts on “Chocolate low-malt beer makes me sad”

  1. Agreed! It’s terrible. But the beer tax laws have been around for so long, that I don’t think they’re going anywhere soon. I think they were put in place back when all the small beer breweries in Japan (there were tons!) were forced to conglomerate back in the early 20th Century.

    Are they still referred to as 第三ビール? I don’t think I’ve seen that for a while. I think it’s その他リキュール now?

    And the one good thing is that 地ビール have gotten so big in the last few years, that a lot of the breweries are putting out higher quality stuff, too – Asahi’s 熟選, Kirin’s Premium 無濾過, Suntory’s Premium Malts. The only certain thing about these beer companies is that if there’s a market, they will tap it. (And Yona Yona showed up in my local AM PM a couple weeks ago!)

  2. Great post.

    I have to wonder if happoshu hasn’t become the “home beer”, with more expensive options favored when people go out.

    All of these developments can also be seen in the context of women becoming more serious drinkers – which also caused the rise of “chu-hi”. Lots of Japanese women I know think that “real beer” has too strong a taste and like “happoshu” better. Isn’t it also lower calorie? Of course, we don’t need a survey to tell us who usually buys the “home beer”….

  3. I can’t stand happoshu. It took me years to get to the point where I actually like good beer, but that stuff is still well below my line of tolerance. Comparison between the Japanese and American liquor market is interesting. Both have seen HUGE growth in “alcopop”, which I believe started in America with the recently deceased and often-mocked Zima, but has recently been filled with a huge array of products that are very similar to chuhai, but I imagine are made with a different variety of cheap grain alcohol. I’ve been liking nihonshu more, and for some reason recently I seem to end up getting a lot of the cloudy unfiltered stuff- sometimes called makkori, nigori or doburoku although I’m not quite sure what the difference is, except that the first is a Korean word.

    I don’t know much about the situation anywhere else, except I guess Taiwan where most people drink Taiwan Beer brand beer or imported stuff, but doesn’t seem to have a market for the horrible stuff.

  4. Come to think of it, the McWine trend evident all over is probably even more disturbing than Happoshu.

    Roy, have you tried “Kubota”? Nice for the price.

  5. Well, Japan-made grape wine is truly vile stuff. But I do see more moderate quality moderate priced wine around in Japan, the same European, Californian or Australian wine you could buy for say $8-20 in the US. What I do NOT see in Japan is fortified wine – truly an American classic. On a similar note, we also have so-called “malt liquor” which is basically the same thing as happoshu, except made to be REALLY cheap and with basically no regard for taste. Like, a forty (40 oz bottle) goes for a buck. But I’m not sure that any of that beats out the pure ghetto factor of Japanese sake in a baby food jar. (I’m looking at you Ozeki.)

    I’ve had Kubota a few times and it is not bad.

  6. Yellowtail and the like are fine and all… but they have forced better wines to increase to “niche” prices and people call them McWines because they are all the same – which takes a bit of the fun out of drinking wine.

    I’ve had Onigoroshi straight out of the carton and Colt 45 (some friends and I decided to start doing Malt Liquor Mondays, lasted exactly one week)… so I hear you.

    The real ghetto thing is Suntory Red whiskey in a 3 litre plastic jug. Ah, good times….

    Oh yeah, “spirytus rektyfikowany” – the 190 proof Polish stuff that you (used to?) can buy in Japan. Now that’s an adventure I’m never going to have again.

  7. Yeah, “spirytus” is evil stuff.

    Also, I wonder where Bud Light, Coors Light, etc. would be classified on the Japanese beer scale. I know for sure that they aren’t 100% malt, so, when you think about it, your average konbini in Japan might have more 100% barley malt beer than a corner store in the States.

  8. Light beer aside, I think that Bud and Coors are pretty bad – is this a general consensus here (lots of good US beers, however)?

  9. I know it’s a pale imitation of the real thing, but I’m not sure happoshu is really that evil. Sure, it isn’t real beer, but then again are the standard products made by the Japanese breweries really that different in this regard? They may taste great, and god knows they are welcome on a summer’s day by the river, but because they are ram packed full of chemicals (including taurine, I heard once but cannot confirm) it only takes two or three cans of the stuff put out by the big four to give me a thumping great hangover the following morning. Naturally made 地ビール is the obvious alternative but last time I was in Japan that stuff still wasn’t on tap in most pubs by far. Have the large breweries put out a 100% natural big-brand beer along the lines of other major breweries overseas?

  10. The Japanese liquor tax rules are horrendously complicated. In fact, if you go to a sizable bookstore and find textbooks for the tax advisor (zeirishi) exam, the volume for the liquor tax will be the thickest by far — much fatter than corporate tax or property tax.

    Article 3 of the Liquor Tax Act (text: defines all the different legal terms for alcohol, including “mirin,” “spirits,” “liqueur,” and my personal favorite “その他の醸造酒” (“other brewed liquor”).

  11. There’s actually a fair amount of izakaya or bars in Kyoto that have the local 京都1497 brew, although it’s still very much a small minority.

    Bud and Coors are pretty bad stuff. Not bottom of the barrel if we include “malt liquor” but as far as proper beers go, not good. It seems like the US has had a sort of revolution in local beer making over the past decade or two, and now you can find a pretty wide variety of local brews all over the place-or at least around any major population center. The NY/NJ area has a fair number, but I was blown away in Seattle. They have so much variety up there that you don’t even see national brands.

    “The real ghetto thing is Suntory Red whiskey in a 3 litre plastic jug. Ah, good times….”
    I saw that in the Liquor Mountain around the corner. Did NOT buy it though.

    I have not been dumb enough to drink spirytus, but I once saw a girl take a tiny sip of it and then grab a glass of vodka to wash the taste out of her mouth. This was at a bar in Kyoto maybe 4 years ago but I can’t recall seeing the stuff around lately.

  12. Part of the point I was trying to make is that down-market beers that are even *nastier* than Miller High Life are taking up the brewers’ attention, and that’s what is unhealthy. While there has been a growth in so-called premium products over the past couple of years (a late attempt to cater to the growing wealthy class), the focus remains on nickel-and-diming the consumer to death.

    Sparkling Hops, a happoshu that comes in a solid green can, might have been an even better example of this ghastliness than the chocolate flavor. The commercials, featuring half-white Burning Productions talent Wentz Eiji in a suit drinking happoshu from a champagne glass, position the product as the *upmarket happoshu*, a headache of a contradiction in terms if there ever was one. People buy it without even realizing it’s happoshu, in which case ignorance may be bliss, but not for me.

    (On a side note, I got to see the latest press conference live since I am special)

    Many businesses face the challenge of working out a dual price structure — most profits come from those who don’t care about the price and pay more, but you don’t want to exclude the bargain hunters since every extra sale helps cover costs. The Chinese and Thais do it through an excrutiating bargaining process, Toyota and Sony do it by charging less to American customers than in their home countries, McDonald’s does it by offering different sizes and fancier sandwiches, and beer companies do it by offering low-end products to poorer customers. But in Japan the taxes have warped this system and caused the shelves to overflow with pure nast, as we say back home.

    I am actually not at all picky about beers and know zilch about micro-brews. People make fun of me in the US for ordering Miller Lite on tap (whatever, it’s easy to drink). But when I am in Japan I like to drink good Japanese beer, so to see it degraded like this is just a shame, to paraphrase Phil Collins.

    Also, on the hangover issue — I notice that canned J-beer is a big hangover risk but not so much on tap. Yet another good topic for future poking around.

  13. “I am actually not at all picky about beers and know zilch about micro-brews.’

    I don’t know much about beer- I just know what’s stank.

  14. I’m curious – has anyone here had Crunk Juice (cognac and Red Bull)? That sounds like a killer, but I kinda wanna have one….

  15. For some reason, canned Asahi Super Dry seriously screws me up after 500ml or so. But I’m fine with pretty much any beer on tap (including Asahi), and with any other kind of beer in a can. Perhaps it has something to do with the bare aluminum.

  16. Great post. This tax structure is indeed infuriating as it effectively promotes a “race to the bottom” in terms of quality among the major brewers, since they have an economic incentive to devote more R&D to creating popular happoshu rather than real beer. I am heartened, though, by the fact that the world of Japanese craft beer seems to be growing, though, as more people discover the joys of beer that is both “real” _and_ flavorful. In the last year or so a dozen or so new beer bars devoted to good beer–domestic and foreign–have popped all around Tokyo and even in the suburbs. I can only hope that the continued growth of Japanese craft beer will lead all involved–brewers, consumers, and tax officials–to rethink the usefulness of happoshu as a separate alcohol tax category.

    This leads to a point of clarification–Suntory Malt’s is the only “regular” Japanese real beer that is all malt. Kirin Ichiban Shibori, Asahi Super Dry, and Sapporo (Black Label) all make us of adjunct ingredients, typically rice, corn, or a combination of the two. Using these adjuncts makes the beer cheaper to produce since barley malt is more expensive. (I was happy to hear that Kirin is launching a “new” Ichiban Shibori this spring that will be 100% malt.) It’s only when you move up to the “premium” real beers that all malt becomes the standard–Suntory Premium Malts; Kirin’s The Gold, Nippon Premium, and Heartland; Asahi Prime Time; and the Ebisu series from Sapporo.

  17. pettis, great to see a beerologist among us. Which of the premium beers do you recommend?

  18. Pettis: Don’t forget Kirin Classic, which I believe is 100% malt and actually quite good.

    Premium Malts is the hoppiest and my personal choice, although recently I’ve been going with the Meiji Lager or, as mentioned above, Yona Yona Pale Ale – I just wonder how long my AM PM will continue to stock it.

  19. Unless I’m quite mistaken (which would not be the first time), “malt liquor” in the US is defined on the basis of alcohol content. Of course, in the US, that could be a state-by-state thing as well.

    To add to what Pettis said: with the exception of Asahi’s Premium beers, the dividing line between regular beer (Asahi Super Dry, Kirin Lager, Kirin Ichiban-shibori, Sapporo Black Label, etc.) and premium beers (Yebisu in all its varieties, Suntory Premium Malt’s, etc.) seems to be ingredients. With the exception of Suntory Malt’s, the regular beers are made from a combination of wheat, rice, and corn starch, with the corn starch being the ingredient that smacks of going for the cheapest possible ingredients. Malt’s and the Premiums (other than Asahi’s) are made with wheat, hops, and water. I doubt they’re sticking to the Bavarian Reinheitsgebot on the Premiums, but at least it’s not beer made in the manner of soda-pop.

    Adamu, isn’t Sparkling Hop a third-type?

    I love the can-listing of some third types as その他の酒. Why even bother to explain what the swill is?

    If it makes you feel any better, Adamu, Kirin, as part of its “chilled beer” line, which includes Premium 無濾過 – the finest mass-produced beer available from any of the Big 4, recently released (or re-released, I’m not sure) a Chocolate beer. Not great, but not awful.

    Year by year, the number of domestic microbrews available in liquor stores and department stores increases, and there are some really good ones being made. As mentioned above, Popeye in Ryogoku is a great place to sample offerings from around the country. Even better, it’s within walking distance of a run-down izakaya in Asakusa-bashi, whose name escapes me, where the price for a chu-joki of Sapporo recently climbed from 50 to 100 yen. Big, huge place. Cheap, bad food, too.

  20. Yep, there are loads of places you can get good crat beer at.
    Popeyes now has around 70 beers on tap. Usually guaranteed to find at least something you’ll like there. Though it’s getting more and more expensive. Some beers into the 1500yen range.
    For craft beer, Popeyes is the obvious choice, along with Bulldog in Ginza (reasonably priced, when they haven’t ran out of their guest taps) or the nearby Towers (smaller stnading only but some interesting beers). Shibuya has the Aldgate (British style but with about 19 taps, all decent beer), the Griffon (large selection of hard to find brews), Cataratas (quite expensive, though), Amusement (also not super cheap and tends to have the big foreign beers). Yokohama has the Thrash Zone (great little bar with 9 taps – American West Coast and Japanese craft beer), Cheers, Craft Beer bar.
    Don’t forget The Nakameguro Taproom. Their beer is allmade by the same craft bbrewery in Numazu (Baird Beer) but it’s pretty good. There’s an IPA fest going on now, with 10 special IPAs on offer.

    Happy hunting.

    There’s definitely a good choice of good quality craft beer available in Japan, but it’s getting more and more expensive. One jsut has to ask if alcohol is the b all and end all. If so, then happoshu is here to stay. Personally, I choose taste, flavor and principles – but a bit of alcohol doesn’t hurt, either.

    As for buying beer in the store, I recommend Tanakaya at Mejiro. Best selection in Japan, I reckon. Also Sugaya, near Kajigaya station (well, 2km).

    YonaYona is possibly the best value for money beer on the market. 260 yen a can and tastes damn good too. Also, it’s a significant brew, as the guy from Yaho brewing was one of the few who kickstarted the real ale boom that is sweeping the craft beer scene. Yonayona is one of their first and I do like almost everything that Yaho brewing creates.
    The Ginga Kogen weissen and wheat beer is also not bad (but stay away from their pale ale).

    That chocolate ‘beer’ ranks up there with the likes of the ‘space’ beer, made with some ingredients that spent time in space. So that makes it space beer? The company boss’s comments on that beer were also priceless. It showed that he had absolutley no idea of what beer was.

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