Suntory eyes American canned cocktails as young Japanese push away wine

Tokyo: Last year, Japanese beverage giant Suntory Inc. introduced a strong lemon beer to Australia, which quickly became a top seller in the canned cocktail market.

Now the company aims to replicate that success in North America, which is critical to its goal of becoming the global leader in the fastest growing alcoholic beverage segment.

Expansion overseas is also a matter of survival for Japanese beverage companies, which are facing an aging market at home and have moved away from alcohol among the young.

“Australia is a very important test market for the global strategy,” said Makoto Kitaura, Suntory’s senior general manager.

“If we are successful in Australia, there may be an interest in trying a new brand in other Western countries such as the United States, the United Kingdom. And we can see huge growth potential with the US market. “

The company leveraged a localization team to adapt its Japanese bestseller Strong Zero for the Australian market: limon tang was optimized and alcohol reduced from 9% to over 6% drinkable.

He also branded the canned cocktail in Australia, the 196 Double Lemon, which highlights the extreme cold that Suntory claims to use to extract flavor from fresh fruit.

“It sold out almost immediately after launch,” said Alana House, Sydney-based publisher of Drink Digest.

The drink, priced around $ 4.50 ($ 3.10) for an 11-ounce can, had the advantage of being considered a “cult” Japanese product, with a stronger flavor profile and alcohol content by volume. (ABV) higher, compared to 6 percent. He said 4.5 percent for the country’s typical beer.

The global canned cocktail market, created over 40 years ago by Japanese beverage producers with the drink known locally as “chu-his”, is now the fastest growing alcoholic beverage segment, as pandemic restrictions have forced more people to drink. Motivated to drink at home and cut down on high calorie drinks. like beer.

The market, known in the industry as ready-to-drink (RTD), experienced double-digit sales growth during the pandemic, and Suntory believes global sales of canned cocktails will reach 2020 levels. $ 60 billion in 2030.

difficult American market

The next and most important obstacle to Suntory’s global ambition is tackling the huge US market. The company already has a head start following the 2014 acquisition of Beam Inc., whiskey maker Jim Beam. The company created a global division of canned cocktails in March, and its U.S.-based team moved to Tokyo in June to collaborate on the strategy.

Hard seltzers dominate the US region, with top brands White Claw and Truly grossing about $ 10.8 billion in sales in the five years to 2021, said Euromonitor International, a market research provider.

Suntory made small forays into the US market through its Sauza cocktail collaboration with Boston Beer Company, which produces Trulli.

The company did not say which canned cocktails from its extensive catalog it expected to bring to the American shores. But Double Lemon will start as a drawback to rival Mike’s Hard Lemonade, which costs around $ 2.50 for a 12-ounce can. Mike became a runway hit following his debut 20 years ago, with marketing that some critics say attracted younger underage drinkers.

But logistics and taxes are big challenges. Suntory’s historical strength is in spirits, and alcohol distribution networks in the United States are narrow compared to those of beer and other malt-based beverages.

Meanwhile, canned cocktails that use a hard alcohol like vodka or gin are taxed at around 45 cents per can, while seltzers that use malt liquors are taxed at around 8 cents. Double Lemon, for example, uses shoku, a traditional Japanese liqueur usually distilled from sweet potatoes.

To further complicate the strategy, the market for canned cocktails is highly fragmented and adapted to local tastes, with differences in alcohol base, taste and consumption habits.

For example, yogurt-based drinks are popular in China, while versions like cider are sold in South Africa. The US market has opted for soft berry-flavored beers.

“What works in one market may not always work in another,” said Brandi Rand, analyst at IWSR Drinks Market Analysis. “It is a very difficult category to translate across borders. It’s not like selling an internationally known Chardonnay or vodka. “

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