Liquor tax changes to kick in on Oct 1st: Here’s how it will affect beer prices

A heads up to aficionados of beer and beer-like beverages! On October 1st, the first stage in the reform of liquor tax laws will go into effect in Japan, which will mean a tax cut for beer and higher taxes for no-malt beer alternatives.

Beer drinkers will pay a little less starting on October 1st

Here are the changes that will take effect in the liquor tax starting on October 1, 2020:

  • Beer: Currently ¥77 for a 350-ml can. Will decrease to ¥70.
  • Happoshu: Currently ¥47. No change to tax.
  • Third-category beer: Currently ¥28 per 350-ml can. Will increase to ¥37.8.

Happoshu (発泡酒 happōshu, or “sparkling alcoholic beverage”), or low-malt beer, is a tax category that refers to a beer-like beverage with less than 67% malt content.

Third-category beer (or 第三のビール, daisan no biru) is a made with alternatives to malt, for example, pea protein, soy protein, or soy peptide and is taxed at a rate much lower than regular beer and happoshu. Apparently “third beer” has been booming, driven not just by budget-consciousness but also improvements in taste, since it was introduced by major brewers in 2004.

With coronavirus nesting behavior and heightened penny (hmm, yen) pinching, third-category beers have been even more popular with consumers.

Will the tax change make you buy less third-category beer?

However, with the October 1st tax change, retailers are a bit concerned. This is because, as can be seen from the summary above, the final price of third-category beer will increase by around ¥10 per can, or about ¥60 for a six-pack.

Currently, the difference in price for a can of beer and third-category beer is between ¥60 and ¥80. The tax increase for third-category beer will close this price gap, making third-category beer a little more expensive.

It remains to be seen how price elastic consumers will be.

In the meantime, it’s also good to know that this is just step one in the reform of the liquor tax law.

Step 2 will take place in October 2023:

  • Tax on a 350-ml can of beer will be further reduced from ¥70 to ¥63.35
  • Tax on third-category beer will further increase from ¥37.8 to ¥46.99

Step 3 will take place in October 2026:

  • Tax on all three types of beer and beer-like beverages will be unified at ¥54.25

Source: Nikkei newspaper, September 29, 2020 (in Japanese)

Lead photo: iStock