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Mon, Jul 12, 2004 - Page 12 News List

Killer heat wave in Japan boosts sales of beer, A/C units

AFP , TOKYO

Customers pass by a store selling air conditioners and electric fans in Tokyo on Friday as temperatures soared over 35 degrees Celsius in Japan. Heat waves are baking many parts of Japan, and thirsty customers are rushing to grab a beer, summer clothing and new air conditioners.

PHOTO: AFP

A killer heatwave baking much of Japan may have claimed seven lives and caused dozens of people collapse this month but for many, rising temperatures mean rising sales -- and cool profits.

Thermometers have topped 35?C in many cities, but the heat is perfect for manufacturers, retailers and service industries whose profits last year were hit by an unusually cold summer and prolonged rain.

"Its good that the hot summer has started early to promote sales and that temperatures are not at record highs, which would make people too lethargic to spend," said Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management.

He expects the hot weather to push up Japans GDP by 0.2 percentage point in the current fiscal year to March, barring a sudden fall in temperatures.

The consensus of economists on summer-factor contributions to the annual GDP is in a range of 0.1 to 0.3 percentage point, according to a recent survey by the Nihon Keizai Shimbun business daily.

In the beer market, where a rise of 1?C will boost shipments by 1 million bottles, major breweries are raising output to meet soaring demand.

Asahi Breweries saw its combined sales of beer and happoshu, a beer substitute, jump 40 percent from a year earlier in the first eight days of the month.

Close rival Kirin recorded a 13 percent gain in its beer shipments early this month from a year earlier and will boost operations at nine of its 11 factories, adding at least one Saturday this month.

The sunny weather with average precipitation will prevail in many parts of Japan through late September, according to the forecast last month by the Meteorological Agency.

This has brought air conditioners and electric fans to the storefront at many retailers, with spending boosted by recovering salaries and restored summer bonuses. At Bic Camera discount chain, air conditioner sales in the first week of the month doubled from a year earlier.

This retail sector has also seen strong demand for digital and flat-screen television sets and DVD recorders ahead of the summer Olympics in Athens.

Department stores and supermarkets are benefiting from the heat and humidity in a wide range of consumer items from short-sleeved shirts, shorts and bathing suits to parasols, sunglasses and sunscreen spray.

But retailers pointed out that the summer weather alone would not sustain high sales figures.

"Even low prices are not good enough. Your merchandise either has to be the latest fashion or be good for health," said Kazuko Itakura, spokeswoman at Ito-Yokado, the second-largest supermarket chain in Japan.

Relying on the weather is also a tricky business because even a slight dip in temperatures can make people feel it is cooler than it really is and cap sales, she said.

The hot summer should be a bonus, said Peter Morgan, chief economist at HSBC Securities, Japan.

But in forecasting the overall health of the worlds second-largest economy, he said the bigger picture is about how external demand will continue supporting Japanese firms profitability, particularly exports to China.

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