Asian Business Essay Example | Topics and Well Written Essays - 1500 words

Asian Business - Essay Example According to the Brewers' Association of Japan (2004), Syozaburo Shibutani started beer brewing and marketing in Osaka during 1872. Beer importation dates back to as early as the Meiji period through the foreigners who came for the development of the Hokkaido (Japanese Sake 2006) though it was only during 1886 when the quantity of domestically produced beer exceeded the level of imports. Nowadays, global brands of beer continue to target the Japanese market while local production is concentrated on breweries who are capable of manufacturing 60K1 of beer (Brewers' Association of Japan 2004). The Japanese beer industry is estimated to be 3.2 trillion yen in value (approximately US$27.3 billion, based on 2001 amounts) indicating the wide popularity of beer in the country. The large market for beer is also evidenced by the fact that beer consumption accounts for 50% of the total alcoholic beverages consumption in volume and 70% in value (The Japanese Beer Industry 2003). There is a huge market for beer in Japan as the country belongs to the biggest beer consumers in the world. During 2003, the country's annual per capita consumption reached 13.4 gallon, making Japan the fourth largest beer consumer worldwide (Impact Databank 2004). The Japanese beer industry is currently comprised of two subsectors namely, regular beer and low malt beer. The regular beer subsector constitutes beer products with 67% or more barley malt content. The low malt beer category is unique to the Japanese beer industry. The creation of this subsector is attributed to the lower tax levied on beer with lower malt content. Typically, products on the low malt subsector has a 25% or less barley malt content having a liquor tax rate which is lower by 40% and has a retail price which is cheaper by 35% relative to regular beer. The low malt subsector has captured a large market in Japan and has experienced double-digit growth since its establishment in 1994. It currently holds 44% of the total beer shipments while approximately 60% of it is consumed locally. Just recently (2003), the low malt subsector was faced with a 28% rise in taxes while regular beer's taxes remained unchanged. This together with product maturity is expected to pull demand for low malt beer (The Japanese Beer Industry 2003). The structure of the Japanese beer industry is oligopolistic in nature with the four major national brewers in Japan accounting for 97% share of the total market. There are still however, foreign brands and local microbrewers who battle for the remaining market share. The major producers of beer in the country are Asahi Breweries (38%), Kirin Brewery (36%), Sapporo Breweries (14%) and Suntory (11%). Asahi Breweries recently dislodged Kirin as market leader due to the wide popularity f its Asahi Super Dry beer. On the other hand, the second largest player Kirin is moving into the production and marketing of non-beer products and becoming an "all-round beverage player." Sapporo lacks competitive advantage while Suntory's beer business profitability is in question (The Japanese Beer Industry 2003). Problems Encountered Victoria Bitter's move of market diversification targeting Japan will surely be met by certain problems and difficulties. Some of the probable problems are cultural, while others are more business in nature. Japanese are known to be very loyal to their culture which keeps them from adopting Western ways. Instead, they maintain their own way of doing business