Japan’s alcohol businesses are shifting to non-alcoholic beverages to attract Gen Z

TOKYO, Sept 12 (Reuters) – Bucking the age-old stereotype of hard-drinking college students, Manaka Okamoto considers the next day’s schedule before opening a bar.

“If I have to get up in the morning, and I think, ‘Oh, I have to stop drinking,’ then when I’m drinking alone, I’ll go for a non-alcoholic drink to feel like alcohol,” Okamoto, 22, said at a Tokyo restaurant. “And of course, when we’re hanging out with friends who don’t drink, it’s nice to have something to toast to.”

The popularity of low- and non-alcoholic beverages has increased worldwide, accelerated by the pandemic, which has led many people to become more health conscious. The segment’s global market value will increase to less than $10 billion in 2021 from $7.8 billion in 2021, according to researcher IWSR.

The impact has been particularly pronounced in Japan, where the population is shrinking and young people are drinking less than in previous decades. Only 7.8% of Japanese in their 20s were regular drinkers in 2019, compared with 20.3% of that age group in 1999, according to government surveys.

Faced with declining revenue from alcohol sales, Japan’s tax bureau launched a competition in July to seek ideas on how to stimulate demand among young people.

Japan’s major beverage makers are also looking abroad for growth. Domestic beer leader Asahi Group Holdings told Reuters last month that it sees North America as a key market. Suntory Holdings Group is looking to expand its bottled cocktail business there. Read more

At home, the companies are creating new ways to improve the drinking experience for those who drink.

On a recent afternoon in the entertainment district of Roppongi, a group of mostly young women gathered at an alcohol-free “beer garden” in the shadow of one of Tokyo’s tallest buildings.

Beer gardens are a summer tradition in Japan, but this one – promoted by Suntory and broadcaster TV Asahi – skips the beer, offering patrons a funky, non-alcoholic wine lineup instead.

“Consumers don’t just enjoy alcoholic beverages. We think they value more the connection that occurs when they drink, or want to enjoy the atmosphere of the place where they drink,” said Masako Kura, general manager of Suntory.

Competitor Kirin Holdings Co also offers non-alcoholic wines, cocktails and beers. The company said sales of its booze-free beer more than doubled in the three months to June compared with a year ago.

Sapporo Holdings Ltd ( 2501.T ) said domestic sales of low-alcohol and non-alcoholic beer rose 20 percent in the half year to June, while sales of bottled beer fell 4 percent.

The newly opened Sumadori Bar in Shibuya – a play on the Japanese word for “smart drink” – offers sophisticated and delicious cocktails that can be made without alcohol or up to 3%. Asahi-led venture CEO Mizuho Kajiura says it provides an environment where everyone can drink together.

Kajiura worked in Indonesia for two years and said his experience in the predominantly Muslim country gave him an appreciation for creating welcoming environments for non-drinkers.

“The purpose of this bar is to value the non-drinking customers to come here with people who are happy to drink,” Kajiura said. “I think if other restaurants and bars understand our purpose, they will get more customers.”

Reported by Irene Wang, Tom Bateman, Akiko Okamoto and Rocky Swift. Editing by Jerry Doyle

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