Can Japanese beer become “Asia’s” beer?

Asia is divided into East Asia, Southeast Asia, South Asia, Central Asia and West Asia.  Recently, the word “Asia” often appears in the Japanese media, but it generally refers to East and Southeast Asia.  The companies hoping for business success in this “Asia” are Japan’s beer manufacturers.  In a report announced last year by the Kirin Institute of Food and Lifestyle, Asia has overtaken Europe as the world’s number one beer consumption market, which is likely due in large part to the huge presence and influence of the number one beer consumer in the world, China.  Beer consumption is also steadily increasing in other Asian countries and European and American companies are taking notice.  The head of Suntory recently appeared on Japan’s NHK television and spoke about the company’s plans to sell premium beer in Asia.  Suntory’s competitor, Asahi Beer, is strengthening its partnership with Denmark’s Carlsberg in order to grow its Super Dry brand into Asia’s number one premium beer.

Although sales of Japanese beer and beer brands outside of Japan are relatively small, these brands are a popular subject for European and American bloggers and there are numerous reports by research companies.  Europeans give Kirin high marks and Americans Asahi.  Naturally, they like beers with a flavor similar to their own country’s beer.  Many European and Americans in Japan like Yebisu beer and recently there are some who like Suntory’s The Premium Malt, which they say has a smooth taste.  Even in Asia, people have a good image of Japanese beer, particularly Asahi Beer’s Super Dry.  Because Asians tend to eat out often, they often order beer at restaurants and are apparently disappointed when Super Dry is unavailable.  Asahi Beer’s push to increase sales in Asia is clearly good news for these customers.

However, becoming Asia’s number one premium beer may be a difficult road.  In order to become a brand that customers select simply because they “like it” will require time and competition with known European and American beer brands that have developed sales in Asia, as well as the growing number of local brands.  *Because there are partnerships and tie-ups, calling it “competition” may be incorrect.

What is the key to Japanese beer becoming Asia’s beer?  It might be obtained from the experiences learned from Japan’s current situation.   In Japan, the number of people consuming beer is decreasing and low-malt beers and beer-like alcoholic beverages are becoming more popular.   Although price is an issue, people are also selecting these drinks because of their lower sugar, purine and alcohol content to prevent against diseases such as metabolic syndrome, obesity, diabetes and gout.  The rapid growth in Asian countries means that diets are also drastically changing.  According to reports from the 5th Asia-Oceania Conference on Obesity, the number of diabetes patients is increasing at a staggering rate.  Even within Asia there are different ethnic groups, which means that the occurrence of disease from obesity apparently differs. Estimates from the International Diabetes Federation in 2007 showed that India had the world’s greatest number of diabetes patients at 41 million, followed by China at 40 million.  This may not seem like a huge number given China’s total population, however it is accelerating not only in China, but in other Asian nations as well.  One possible reason could be that many diets in these areas now include oily, high fat and high-calorie cooking and fast food.

In the rapidly growing Asia, there are apparently fewer people who are conscious of their daily health.  However, in the near future, this is likely to change as more people start to place health as a priority.  If we think about what growth in Asia really means, Japanese companies will need to take the responsibility of looking at Asia and its future before they begin marketing.

The land of the vending machine

Japan is the vending machine capital of the world.  Whether you’re in the middle of Tokyo or the Japanese countryside, you are never far from one of these popular and ubiquitous machines. According to the Vending Machine Manufacturers Association, Japan has the highest number of vending machines per capita, with about one machine for every 23 people.  Major beverage manufacturers including Coca-Cola, Kirin, Suntory, Asahi, Pokka and DyDo operate most of the millions of vending machines.  Japan’s high population density, limited space, and low rates of crime and vandalism make vending machines incredibly popular.  So what makes Japanese ones so unique?

First, they are everywhere (mostly outdoors).  You won’t find one on every corner; you’ll find three or four (or more) on every corner, street, station, train platform (and in some trains), office building…even on the top of Mt. Fuji.  Second, they sell just about anything you can imagine from the normal to the unique to the bizarre.  The majority of vending machines sell non-alcoholic beverages, mainly soft drinks, tea, juice, energy drinks and coffee.  Other items include cigarettes, alcoholic beverages, ice cream, instant noodles, rice, disposable cameras, batteries, fresh flower bouquets, cooked food, umbrellas, magazines, etc.  Companies are also using vending machines for PR or branding and marketing purposes.  (See picture of Dole banana vending machine found in Shibuya.)

Third, they are technologically advanced.  Vending machines here light up, play music, talk (some in the local dialect), have screens with advertisements, sell hot and cold beverages in the same machine, etc.  Manufacturers are constantly coming up with new technologies and innovative ideas.  Coca-Cola is introducing a new LCD touch panel to “make them more fun” and give advertisers a way to interact more with customers.  Hitachi is apparently inventing a vending machine that uses near-infrared light to scan your finger vein to identify a customer.

While vending machines in Japan are convenient, clean and reliable, the sheer number of them running 24 hours a day means a lot of energy and a huge impact on the environment.  Going green is a big trend in Japan today and vending machines are starting to change as well.  Although the number of machines doesn’t seem to be decreasing, some operators are taking steps to be “greener.”

-Coca-Cola introduced its “eco-ru/solar” vending machine, which has solar panels and uses energy-efficient LED lighting, heat pump, HFC-free refrigeration and vacuum insulation.

Fuji Electric created the E3 vending machine, which also has a solar panel.  In the cooler months, this machine grows moss on its sides as insulation.

-Dydo & Pokka donate part of drink sales to forestry and other ecology projects.

In some Western countries like the United States vending machines are becoming more and more obsolete.  They generally sell non-alcoholic beverages (often just one type) or snacks in offices, hotels, hospitals, airports or cafeterias.  While there are some specialized vending machines used for PR or marketing purposes, they are extremely rare.

Although there are differences in culture (i.e. vandalism, shopping habits, etc.) the advances in Japanese vending machines mean that they are becoming more convenient, energy efficient and practical for a wide variety of uses.  Perhaps Japanese vending machines (such as ones used in place of cashiers or attendants at quick serve restaurants, kiosks or parking areas) could be introduced into other countries and cultures in the future.

Terence Oliver – Pioneer of Japan’s “brand” business

Contributed by Ayako Fuse

I once heard a certain scholar say, “Japanese think thought is something that comes from beyond the sea.”  A “brand” is also just something from across the sea.  Earlier this month, Terence Oliver, the chairman of Interbrand Japan, resigned from the company where he is credited with spreading and establishing “brand” and “branding” as a business in Japan.    During my time at Interbrand, I was fortunate to work with Mr. Oliver and learned many things from him and the company, some of which I want to share in this entry.

Mr. Oliver started the company more than 30 years ago from Interbrand’s predecessor.  At that time, CI (corporate identity) development was popular, but the word “brand” was unknown to Japanese corporations.
In the beginning, the company’s main business was naming development, as both Interbrand and Interbrand’s predecessor were naming specialists.  When I was at Interbrand, there were mountains of old naming project files, all of which were safely kept and stored.  Mr. Oliver told us that naming files were assets from the company’s beginning and to store them carefully.  At that time, I didn’t completely understand why this was necessary.  I felt that keeping paper files was an old way of doing things and that they should be quickly stored as digital data instead.  Looking back, I think Mr. Oliver might have wanted us to learn that “Rome wasn’t built in a day.”  During the company’s early days, team members worked extremely hard on brand penetration projects and sales.  Each and every project was what built Interbrand Japan.

At my company orientation I was told, “the most important part of a “brand” is naming.  This is because if the naming changes, the brand takes on a different existence.”  Like a person, a brand’s name isn’t something you can easily change.  We were also told that while copywriting is important to naming, it is also necessary to think about what it should do in order to build a name into something of value.

Today Interbrand is a global, renowned brand consulting company.  I’m sure that things have changed from when I started with the company.  As an Interbrand “graduate,” I have always and will continue to hold onto the knowledge and words I received from Mr. Oliver as I continue to take on branding.

*Note: Interbrand now uses the term verbal identity for naming, etc.

Upscale, modern fast food

These days the effects of the global recession are being felt more and more in Japan.  Although you can still find plenty of new buildings and shops opening up around Tokyo, there are just as many stores and businesses closing down, even well-known brand name shops, shopping complexes and restaurants.  As mentioned in other posts, Japanese consumers are spending less and saving more.  While more people are exchanging 300 yen cups of coffee and fancy pasta lunches for McDonald’s 100 yen coffee and value lunch sets, the fast food industry is still struggling like the rest.  To bring in customers, fast food chains are introducing new products and services and lowering prices.  However, some chains are going a step further and also trying an interesting and different strategy: upscale and modern.

McDonald’s

In April, McDonald’s Japan unveiled a new upscale, chic concept store in the Shibuya area of Tokyo.  The traditional exterior was replaced with a sleek, modern façade.  McDonald’s traditional colors of red and yellow are out, and black, earthy colors and wood are in.  The idea behind these new stores is to attract those who have never used them before, as well as create a luxurious, modern and comfortable space to not only eat, but relax, work, or chat, similar to a Starbucks or a café.  To create a more relaxed and comfortable environment, stores are non-smoking and have fewer seats.  There’s a new uniform; LED monitor menus; display screens with advertisements; imported European sofas and chairs; a mixture of high counters with bar stools and low tables and chairs; soft lighting and modern light fixtures; café-style background music; and interesting wallpaper, murals and signage.  Although the menu is the same as the traditional McDonald’s, the prices are slightly higher to compensate for the added customer service.

On a recent visit to one of these new stores, the usual Shibuya McDonald’s rowdy high school crowd was gone and in its place a calmer group of businessmen and young women relaxing, reading and chatting.  This must be what McDonald’s is aiming for, but it’s a little odd that this concept was started in Shibuya, the youth center of Tokyo.  McDonald’s plans to open 13 of these “black” McDonald’s.

KFC

Right next door to one of McDonald’s new restaurants in Shibuya is Kentucky Fried Chicken Japan’s own “next-generation store,” which opens this week.  To commemorate its 40th year in Japan, KFC is renewing everything from the design to the menu to staff uniforms.  The concept is “The new chicken experience” with a “Tasty & Healthy” themed menu.  Although you can still buy the original fried chicken, the featured items are the non-fried, oven-roasted chicken meals.  There are also “healthier” sandwiches, salads and new drinks that you will only find at this store.

Like its neighbor, KFC is also targeting a new customer.  Instead of being an afternoon student hangout, KFC wants this shop to be a clean, modern, casual café to not only enjoy chicken, but relax and spend some time.  KFC is targeting young women (late teens to 20s) who care about details and want to be healthy.  The new store features a silver façade (the Colonel logo is still there); LED digital signs around the entrance; and digital menu/advertisement monitors above the registers.  The red and white interior is clean and modern and designed to look like a large open kitchen with modern furniture, light fixtures, bar stools and stainless steel communal tables.   KFC is traditionally a take-out heavy chain and with this new concept, the company hopes people will stay a while and enjoy the environment.  This is the first store of its kind not only in Japan, but in the world.  KFC plans to open 100 of these new stores around Japan over the next 3 years.

Subway

Subway Japan has also jumped on the bandwagon with a new concept store of its own.  Located in Tokyo’s Marunouchi business district, the new store hopes to attract health-conscious diners with its fresh, organic vegetables grown in the store.  The “Yasai Lab” (or Vegetable Lab) is a glass case in the center of the 20-seat store where lettuce is grown under fluorescent and light-emitting diode lamps.  Lettuce grown in the store will supposedly produce 20 heads of lettuce each week, enough for 100 servings or 5% of the lettuce used in the store.  Subway is hoping that its “in-store production for in-store consumption” service will attract consumers who are worried about food safety and want a healthier lunch option.  They plan to set up two or three of these stores around Tokyo.

Burger King

Burger King Japan recently opened its 32nd restaurant (its new flagship store) in Roppongi.  With a concept of “relaxing,” the modern and chic space is meant to be a place where customers can go to eat, enjoy themselves and simply relax.  Plus, there’s an added bonus: customers can take a “music shower” at various “sound spots” around the restaurant by using an iPod or iPhone.  Your music will apparently be “showered” out of an umbrella-shaped speaker above your table.

Japan’s department stores

One of the best examples of Japan’s rapidly changing consumer behavior is the Japanese department store.  Not so long ago, these major establishments were the ultimate symbols of luxury, quality and the very best in Japanese customer service.  It’s where, even today, you can expect to find everything from the finest luxury brand goods to some of the world’s most expensive fruit.  Japanese department stores are well-known for their impeccable amenities as well as their super-polite and service-oriented staff.  Elevator ladies push the buttons for you and sales staffs wrap all your packages like fancy presents.  You can sample some of the finest Japanese and foreign sweets and then make ticket or travel reservations and visit an art exhibition upstairs.

Falling fast

However, sales at Japanese department stores have been falling for years.  The things that once attracted shoppers are now driving them away.  Department stores are seen as overpriced, lacking in variety and merchandise, too focused on women, overly extravagant and out of touch with today’s consumers who want value, availability and convenience.  Japan’s worsening economy, increased competition from lower priced retailers (domestic and foreign), changing views on spending and new ways of shopping are major threats to the department stores who have failed to keep up.  While the stores may be crowded on weekends, most people are looking, not buying.  The basement food floors remain popular, but many visitors never go above ground.

Changes in shopping

Today, Japanese are much more likely to shop online, visit shopping malls outside central Tokyo, and buy from large discount specialty retailers (electronics, men’s suits, furniture, etc).  They are also giving fewer summer and year-end gifts that were traditionally purchased yearly at department stores.  In order to stay in business, department stores have had to come up with new strategies and services including merging with other stores (Daimaru & Matsuzakaya, Isetan & Mitsukoshi); closing European and US stores and concentrating on Asia (particularly China); remodeling flagship and large city stores; targeting new or different customers (shops for men or young people); leasing space to popular, low-priced brands (Forever21 in Matsuzakaya Ginza, Uniqlo in Shinjuku Takashimaya).  Daimaru Matsuzakaya is selling secondhand items from 250 brands on a special website and Seibu sells 7 Premium private-label food products of its parent company, Seven & I Holdings Co..  Will these moves be enough?

Isetan

Among the many ailing department stores, Isetan seems to be one brand that is fairing a little better than the rest.  Isetan has the reputation of being one of the more fashion-forward and innovative department stores and has worked hard to differentiate itself and widen its appeal.  Their Shinjuku flagship store features a huge selection of the latest, hip Japanese and foreign brands (not just European luxury brands), has an entire building dedicated just to men, and an unrivaled and expansive basement food floor.  They also plan to introduce their own lower-priced brand in regional stores.  (However,even after visiting the Shinjuku store, which is clearly more popular than other nearby and nearly-empty competitors, it is still difficult to differentiate between the dozens of stores or to understand why the Isetan brand does well.)

Saved by the Chinese?

Recently, hundreds of thousands of Chinese have been coming to Japan not to sightsee, but to shop.  With suitcases full of cash, these shoppers are here to purchase expensive brand name goods, electronics and cosmetics in mass quantities.  While it’s difficult to measure if this trend will have any real impact on the industry or Japanese economy, it is definitely welcomed by the struggling stores who are hiring Chinese-speaking staff and accepting the Chinese debit card, China Union Pay to cater to these new customers.

Japanese department stores are clearly in big trouble.  Luxury, tradition and polite service are no longer enough to bring in customers.  These stores have to become more innovative and adaptive to the changing behaviors and attitudes of Japanese shoppers, which although difficult may be exactly what they need.