Japan Cuts Beer Tax in October While Raising It on Cheap Third-Category Beer

Japan Cuts Beer Tax in October While Raising It on Cheap Third-Category Beer

From October 1, Japan's tax on a 350ml can of beer falls from ¥63.35 to ¥54.25, while the tax on happoshu and third-category beer rises from ¥46.99 to ¥54.25. For the first time, all three pay the same tax.

Third-category beer is itself a product of the tax code. Japan used to tax beer-like drinks by malt content, with beer taxed most heavily, so brewers developed low-malt happoshu and later third-category drinks that use almost no malt, relying on bean-based ingredients or added spirits, and sold them cheaply thanks to lower tax rates. Before 2020, a can of third-category beer carried only ¥28 in tax, less than 40% of beer's ¥77.

The government began narrowing the rates in three steps in October 2020, and this is the final one. With the tax gap gone, the reason third-category beer was cheap disappears too. Suntory has already raised the malt content of its main product, Kinmugi, to at least 50% and now sells it as real beer, a shift the industry calls a "return to beer."

The households hit hardest are those that switched to cheaper drinks as prices rose, since each can now carries about ¥7 more in tax. For brewers, it is a chance to pull their lineups back into beer and charge more. The next question is whether consumers will pay a little extra for the real thing.

Source: Nikkei, Vino Joy News (Image: @ooLUCINOoo)