Japan & Alcohol
Political: internally stable, minor regional security issues.
Economic: recent loosening of informal barriers for importers, but strong relationship with Korean products.
Societal: 99 million alcohol consumers due to non-gendered drinking habits and 20 y.o. age of majority.
Technological: unique supply chain flexibility requirements, social media marketing capability limited.
|Can you spot the odd one out?|
PEST Analysis for Alcoholic Beverages
Japan is a politically stable, multi-party democratic constitutional monarchy with a bi-cameral legislative system (CIA 2012). It is the world’s only country with a pacifist constitution, although it does currently have the 4th highest military expenditure (GFP 2011).This is mostly driven by security issues due to territorial disputes with neighbouring People’s Republic of China (China), Republic of China (Taiwan), Republic of Korea (South Korea) and the Russian Federation, as well as the threat of conflict with the Democratic People’s Republic of Korea (North Korea).
With a population of roughly 126 million, of which its labour force is 62.64 million strong (MoIA 2011) and only 2.88 million unemployed, Japan is a market with huge sales volume potential. It is the 16th largest beer consumer in the world (GMID 2002). Despite the bursting of the ‘Japanese bubble’ in the 1990s, Japan remains a strong exporter and in fact, due to the on-going recession (which to the Japanese has seemed to have generated a ‘lost generation’) Japan has become a much more economically friendly environment for foreign firms (Melville 1999). Melville (1999, foreword) argues that this is due in large part to Japan “starting to deconstruct some of its fortress of regulations”. Traditionally strong and deliberately byzantine import regulations have weakened over the last decade, although imported goods do tend to be sourced from within East and South-East Asia, and in particular it must be noted that trade and cultural relations with neighbouring Republic of Korea have rarely been stronger. These bilateral economic ties have accelerated over the past few years and can be seen to explain the huge upswing in importing of many low to medium end food and drink products. The following graph’s indication of increased sales volume but reduced sales value is demonstrative of how the import market is being flooded with cheap South Korean goods and is an interesting indicator of the current economic situation in Japan.
Korean Influence in Alcohol Imports GRAPH: See F. 7-11 (page 15) and F. 7-3 (page 16).
Japan is an East Asian country with a unique culture based on powerful native belief systems of Shintoism and Bushido influenced by India (Buddhism), China (Confucianism), and the West* (nationalism, imperialism, democracy) (Nitobe 1900). This diverse and mixed heritage has led to Japan being described by many as a ‘country of contrasts’. From a market entry viewpoint for an alcohol beverage product, however, the most pertinent societal and cultural factors are the following:
- the legal drinking age is 20, the traditional ‘age of majority’;
- alcohol is an essential social tool with important community functions similar (though not identical) to the role of coffee in Arab countries, or tea in the United Kingdom;
- beer drinking is a non-gendered activity (doubling the potential market for such drinks);
- fruit-based alcoholic drinks are also non-gendered (doubling the potential market for such drinks);
- long working hours, and lifestyles built around them, mean that many Japanese drink alcohol every night of the week;
- drinking alcohol on public transport and in public places is socially acceptable (one of the main root causes for the rampant success of ‘Ready-To-Drink (RTD) products in Japan);
- as a country without a Christian heritage, there are no Sunday trading laws and alcohol is available from ‘konbini’ (convenience stores) 24 hours a day, 7 days a week;
- there is little-to-no class division within Japanese society (Nakane 1985) and as such, what can be marketed to one family or citizen can be marketed to all;
- dietary customs prioritising freshness, quality and seasonality of food and drink have multiple effects from the prevalence of independent local supermarkets, to the demand for extremely high variation of goods with a constant flow of new flavours and styles; and
- the near requirement of adults of working age to engage in effectively compulsory alcohol drinking sessions known colloquially as ‘nomunication’ (Melville 1999), a portmanteau of the Japanese verb to drink ‘nomimasu’ and the English noun, ‘communication’.
An important demographic feature of the Japanese population is that they have one of the oldest populations of any country with over 35 million people over 55 years old, this longevity often being attributed to a Japanese lifestyle and diet (Bennett and Blythe 2002). While the top heavy population may be cause for concern for the Japanese themselves, particularly those who must work harder and longer to support an ever growing population of elderly dependents, from an alcohol marketing perspective there are many positives: Japanese citizens have some of the highest life expectancies in the world, remain relatively healthy and active into their later years and have generally built up reasonable saving to support their lifestyles (of which, as discussed early, alcohol is an essential part) and once a customer is won over to a product, it is often for a lifetime. The key population demographic is that of their roughly 126 million population, around 99 million people are of a legal alcohol consuming age (CIA 2011).
*When discussing the countries of East Asia, developed or developing, the term ‘The West’ usually refers to developed nations with a European heritage. As such this report will use the term as not including Japan, although from a global perspective, Japan is often included in this ill-defined ambiguous culture-economic term.
|How can you help satisfy Japan's 99 million alcohol consumers?|
Despite Japan being known for its high technology exports, the use of technology within the country can seem to lag behind many foreign visitors’ expectations (Kerr 2002). The only relevant technological issues for marketing an alcohol product in Japan, however relate to data storage practices, distribution of goods and the role of the internet in marketing/sales. Despite being well known for its computers, many Japanese organisations from banks and the post office, to schools and private firms tend to use computers as a back up and paperwork still very much means work with paper (Morris 2002). This is commonly ascribed to a combination of labour laws that make it very hard for firms to fire employees, and the English-language centric nature of a lot of the software available to those organisations. True or not, the Japanese prefer a human touch to their administration, and this could lead to some interesting issues regarding the sharing of marketing and logistical data with any potential Japanese partner organisation. Distribution networks are very good in Japan, although high customer demand for constant variation in food products does mean that batch deliveries tend to be more frequent and of a smaller size than in many Western countries (Branch 2009), which certainly has implications for long global supply chains. The final technological point is that the internet, and its use in a sales and marketing role is extremely underdeveloped compared to other advanced economies. Various authors assert a number of technological, social and demographic reasons for this, but ultimately the result is that many recent developments in social media based marketing are not yet fully suitable to the Japanese internal environment.
NOTE: A full list of references is available on request, but for deeper reading the following resources are particularly useful: