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Beer Makers Raising '3rd-Category Beer' Output Ahead of Tax Hike

Posted on: Sunday, 16 April 2006, 15:00 CDT

By Kyodo News International, Tokyo

Apr. 15--TOKYO -- Major beer makers are stepping up the production of so-called "third-category beer," as they expect consumers to stock up on the beer-like sparkling drink ahead of a possible increase in retail price in line with a planned tax hike in May.

Behind the move is the memory of an about 30 percent surge in demand for "happoshu" low-malt beer in April 2003, ahead of a hike in the liquor tax for the product in the following month, officials of the makers said.

Kirin Brewery Co., the top producer of the third-category alcoholic beverage, is operating all its seven plants nationwide at full capacity without holidays, according to its officials.

"We want to prepare to prevent shortages for consumers," Kirin Brewery President Kazuyasu Kato was quoted as saying.

Sapporo Breweries Ltd., Asahi Breweries Ltd., and Suntory Ltd. have followed suit.

As part of their efforts to stimulate bulk buying of the third-category drinks, makers have created larger packages containing 48 350-mililiter cans, rather than the usual 24 cans. Free bonus gifts -- such as cooking oil, snacks or other food items -- also come with the purchase to attract consumers.

On May 1, as part of taxation reforms, the government will raise the liquor tax for the third-category beverage by 3.8 yen per 350 milliliters, while that on regular beer will be lowered by 0.7 yen.

To date, the third-category alcoholic drinks have posted brisk sales because they have been cheaper as a result of being taxed at a lower rate than regular or low-malt beer.

But after the tax hike, beer makers plan to raise their wholesale prices by 3.75 yen to 4 yen for a 350-milliliter can of "third category" beer.

If the tax hike is entirely passed on to retail prices, a pack of 24 350-milliliter cans of the third-category drink will be raised by 90 to 96 yen.

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Source: Kyodo News International, Tokyo

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