Asahi Breweries Ltd and Suntory Ltd, Japan's first and fourth-largest brewers, said they will sell low-malt beers that match rivals' 7 percent price cuts to tap growing demand for cheaper brews.
Asahi Breweries, which last year became the last of Japan's top four brewers to sell low-malt beers, will start offering "Honnama," now the nation's second-best selling low-malt beer, at the discounted price of ?135 for 350ml cans on June 21, the company said in a statement.
Japanese brewers are cutting low-malt prices and selling new brands to grab share in Japan's ?3.3 trillion (US$26.8 billion) beer market that shrank in value for three years. While brewers' lower-price strategy erodes profits, the price war publicity attracts recession-wary consumers, boosting sales, an equity manager said.
"Price Cuts are a minus for profit due to narrower margins," said Yoku Ihara, an equity manager at Retela Crea Securities Co. "Still, this is a positive move as brewers' fierce battle draws attention to consumers."
The market for low-malt beer, which typically retails for a third less than regular beer because of a tax loophole, is growing as consumers seek bargains amid Japan's third recession in a decade. Shipments of low-malt beer surged 16 percent in April from a year earlier, marking the 71st straight monthly increase.
Asahi Breweries shares rose as much as 15 yen, or 1.3 percent, to 1,215. Kirin Brewery Co rose as much as ?14, or 1.4 percent, to 1,050.
Low-malt beer, introduced by Suntory in 1994, accounts for an increasing share of Japan beer shipments, reaching 37 percent in April, 4.9 percentage points higher than the year earlier.
Suntory said today it will release "Super Magnum Dry," priced at ?135. The company has said it will start selling "Ad Nama" next month for ?128, Japan's cheapest low-malt beer.
Asahi and Suntory's discounts follow temporary price cuts on low-malts by the brewers in February and March.
The move comes after Kirin Brewery Co, maker of "Tanrei," the nation's biggest-selling low-malt beer, made temporary price cuts permanent by introducing a new product. Sapporo Breweries Ltd started sales of cheaper low-malt earlier this month.
"Our price cut is a response to a change in the low-malt market, as companies offer lower-price and multi-brands," said Asahi Breweries spokesman Toru Okajima.
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