Betting on beer: Asahi believes regulatory changes and global events will spur domestic and international category growth
Asahi recently announced its Q2FY2023 financial results, reporting 5.8% year-on-year revenue growth to JPY1.25tn (US$8.7bn) and 9.0% year-on-year profit growth to JPY102.9bn (US$716mn).
These positive results have spurred the company to revise its FY2023 profitability performance upwards significantly, with core operating profit now targeted at JPY254bn (US$1.77bn) or 3.2% growth year-on-year.
“Even in this environment of severe cost pressures, Asahi has continued to maintain and expand our competitive advantage in each region, as well as increase profitability,” Asahi President and CEO Atsushi Katsuki said in a briefing on the latest financial results.
“Especially in Japan, business performance is steadily recovering owing to the expansion of on-premise sales and the growth of core brands.
“This steady growth is mainly attributed to enhanced average selling prices through the implementation of prudent pricing strategies and our premium strategy.”
Riding on this positive news, Asahi also believes that even better things are on the way for the firm this year particularly in the beer category, owing to a combination of regulatory and economic factors.
From a regulatory perspective, beer taxes in Japan are scheduled to see a drop in October 2023 to JPY181 (US$) per litre, from the existing JPY200 (US$) per litre, and this reduced taxation is expected to open the door to reduced product prices which will pique the interest of alcohol drinkers looking for affordable drinking options.
This change is part of the government’s ongoing six-year liquor tax review from October 2020 to 2026 to standardise beer-like product taxation in the country, which will eventually see beer taxes drop to JPY155 (US$) per litre from the original JPY220 (US$) per litre before October 2020.
“Asahi will accelerate the growth of the beer category this year, fuelled by the liquor tax revisions coming up in October,” he added.
“[This will] include the launch of new products – [in this past quarter we have already launched] premium products such as Asahi Shokusai in convenience stores and Asahi Nama Beer to expand new beer users, and more will be launched to further stimulate beer demand after the liquor tax revisions.”
Looking beyond Japan, on the global front Asahi has also embarked on various initiatives to strengthen its beer business including sponsorship of the Rugby World Cup 2023 in France this year.
“The Rugby World Cup 2023 will commence in September with Asahi Super Dry as its official beer,” Katsuki said.
“We hope this will be an opportunity to showcase the brand’s value to consumers worldwide [and] ride on the brand’s ongoing commercial success in global markets.”
Asahi Super Dry is considered a top priority of the firm’s global brand portfolio. This product saw 24% year-on-year growth in sales internationally across its major markets in Asia, Europe and Oceania.
Portfolio enhancements
Apart from beer, Asahi also has its eye on expanding significantly in its non-alcoholic beverage business especially in the local Japanese market.
This was seen by the many changes the firm made to its portfolio over the last quarter, and its launches of relevant non-alcoholic beverage products.
“We have moved to enhance our product mix in terms of both packaging and value, such as with the use of small PET bottles for more products as opposed to large PET,” stated the firm.
“We also launched the Asahi Sou green tea brand as a new value proposition to our consumers, and in H1FY2023 alone the sales volume for this was 2.66 million cases – this has led us to adjust our sales target for FY 2023 upwards to six million cases now.”
Asahi also stressed that it is actively expanding the use of labelless packaging in the country - in the first half of the year, it saw a 24% in products within its portfolio using these; as well as a 9% growth in the number of products based on a health proposition.
