In a new report, the analysts predicted that the value of the Japanese market will drop from $48.75bn in 2009 to $44.72bn by 2014.
Cause of decline
The reasons for the weak forecast are at once economic and demographic.
“The slowdown in Japanese economic growth, a shrinking population base, and restrained consumer spending are the key issues which are depressing demand in the Japanese alcoholic beverages sector,” said Datamonitor analyst Gaurav Marchanda.
More specifically, the Japanese population is shrinking and ageing. And even the young, concerned about their health and faced with significant taxation, are losing their taste for alcohol.
Within the sector, it is traditional drinks like whisky and beer that are struggling the most. Billy Murray advertising Japanese whisky in the film Lost in Translation has done little to make the drink more appealing to young people.
“Brandy and whisky products (with the exception of single malt scotch) tend to have an old fashioned and outdated image association, which affects the appeal of the product among younger age groups who are easily influenced by the rising cocktail and liquors culture in the country,” said Marchanda.
It is cocktail and liquor drinks that provide some respite from declining sales figures for participants in the Japanese alcohol market.
Pools of growth
For example, according to Datamonitor, sales in the tequila and mescal grew 7.7 per cent last year and liquors grew 4.6 per cent.
Faced with overall market decline and pockets of growth, Datamonitor said manufacturers are advised to focus on more promising specific product categories and segments.
“In the coming year, companies need to be focused on the acquisition of new brands and the offer of new and fresh tasting alcoholic beverages, if they are to grow in the slowly changing Japanese alcohol sector,” added Marchanda.
However, many of the growing segments of the market are still relatively small, leaving little opportunity for significant gains. For example, tequila accounts for only 0.02 per cent of the Japanese alcohol sector and liquors have a 0.7 per cent market share.