The firm says such products are becoming more popular among consumers and manufacturers due to its low tax rate.
“Because of forthcoming consumption tax increase, consumers tend to buy cheaper products such as the third category beers,” Mika Harada, Senior Manager of the Public Relations section said in response to queries from FoodNavigator-Asia.
Japan had previously announced that the consumption tax would increase from the current 8% to 10% on Oct 1 this year.
In addition, the firm hopes to build on its existing strength in the regular beer segment.
“We have a strong brand in the regular beer category. Even though the beer drinking population is shrinking, our brand ‘Black Label’ is getting popular among the young generations. Therefore we will continue to focus on it,” she said.
“Black Label” saw four consecutive years of sales growth. Since 2015, sales have been growing by at least 100% each year.
Last year, “Black Label” also shot to the second most popular spot amongst all other beer brands amongst consumers in their 20s, according to True Data supermarket panel. In 2016 and 2017, the product only came in at the 7th and 6th place respectively.
On the other hand, it is important to note that although the tax rate is lower for happoshu (quasi-beer) and the third category beers, the government has plans to flatten the tax rate across all beer categories by 2026, which will close the price gap between the different beer categories.
The government plans to impose a similar tax rate by reducing the tax on beer and increasing the tax on happoshu and third category beers in stages, The Japan Times reported.
Lawsuit
Last month, the Tokyo District Court dismissed Sapporo Breweries’ request for a US$105m tax refund of its third category beer Goku Zero.
Sapporo Breweries first sold Goku Zero in June 2013 as a third category beer. The firm suspended shipments of Goku Zero in the following year after the authorities said that it might fall under another category of beer that came with a higher liquor tax rate.
The firm later sought the return of US$105m tax paid in additional liquor tax after determining that the original product was a third category beer that came with a lower tax rate.
Since July 2014, the firm also changed the production process of Goku Zero and sold it as a happoshu beer.
In the latest development, the court decided that the product could not be classified as a third category beer.
In response, the firm said in a statement that it would determine how to respond to the matter based on the review of the judgement and consultation with the legal counsel.
It also claimed that there was no impact to the company’s business performance.