Japan today eased controls on liquor sales that had protected family-run businesses from competition, prompting new license applications from convenience store chains that plan to use beer sales to lure more customers.
7-Eleven Japan Co, the country's biggest convenience store and its largest rival Lawson Inc say they will sell liquor at more stores because it helps draw customers from rivals. Kirin Brewery Co and other brewers are vying for the new shelf space to build their share of the country's shrinking beer market.
"It will allow convenience stores to increase revenue, because they will steal customers from other retailers," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments Ltd, which manages the equivalent of US$8.5 billion in Japanese equities.
The change is unlikely to bolster beer sales in Japan.
Rather, it means convenience store chains will become bigger customers for Japan's beer makers. Kirin and rivals including Asahi Breweries Ltd are seeking closer ties to the retailers, including making exclusive brands for sale in their stores.
Today's revision abolishes a regulation limiting the number of alcohol licenses issued based on the population of a given area. The rule had the effect of preventing new retailers from gaining approval to sell liquor where older family run businesses already existed.
"We are aiming to get licenses for all our stores," said 7-Eleven spokeswoman, Mayumi Ito. The retail chain, which is 51 percent owned by Ito-Yokado Co, Japan's largest supermarket operator, has more than 10,000 stores, 70 percent of which sell beer and other alcoholic beverages.
Lawson Inc, which runs about 7,700 shops nationwide, also plans to increase the number of outlets with liquor sales licenses next year. The company, an affiliate of Mitsubishi Corp, Japan's largest trading company, aims to raise the proportion of such stores to 80 percent of its total in the year starting March 1 from 63 percent, according to spokesman Takashi Fujii.
FamilyMart Co, the country's No. 3 convenience store operator with 6,045 stores, said it plans to sell liquor at four-fifths of its stores by the year ending Feb. 28, 2005, compared with about two-thirds now.
For the brewers, forging business ties with these retail chains may help them cope with sliding beer sales.
"We have to make this into a business opportunity," Kazuyasu Kato, general manager of alcoholic beverages at Kirin, said in an interview. "We don't expect any improvement in the beer market. The key will be to engage the convenience stores and supermarkets that will be the major players of the future."
Competition among brewers has intensified in recent years because a weak economy and aging population dampened demand for beer. Cool summer weather and higher taxes accelerated the decline. Beer shipments by Japan's five major breweries dropped 12 percent in July. The easing of regulations may mean thousands more outlets for their products.
"The change to licensing laws may add another 25,000 stores to the 170,000 outlets in Japan already selling liquor," said Shinichi Gosho, manager of sales development at Kirin Brewery Co, Japan's second biggest beer maker.
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