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Aeon, Other Retailers Not to Raise 3rd-Category Beer Prices

Posted on: Thursday, 27 April 2006, 09:00 CDT

By Kyodo News International, Tokyo

Apr. 26--TOKYO -- Major retailer Aeon Co. said Wednesday it will keep intact the retail prices of so-called third-category beer products after a hike in liquor taxes on the items next Monday.

Supermarket chain Izumiya Co. will follow suit, while discount store chain Don Quijote Co. will also stick to its current prices for the products at least for now.

Those moves might prompt other major retailers to follow their lead, industry observers say.

But major convenience store operators, including Seven-Eleven Japan Co., Lawson Inc. and FamilyMart Co., will carry out a 4-yen markup.

Price hikes are also planned by supermarket chains Daiei Inc. and Inageya Co.

Beverages classified as third-category beer are made from non-malt ingredients such as soy protein and thus are subject to lower liquor taxes than regular beer and "happoshu" low-malt beer.

The taxes on such beverages are at least 50 yen lower than those on conventional beer products and 20 yen lower than on happoshu products per 350 milliliters.

The government will raise liquor taxes on third-category alcoholic beverages next Monday by 3.8 yen per 350 milliliters. The taxes on regular beer will be lowered by 0.7 yen.

The tax increase looks set to impact the business of both makers and retailers of the third-category brew because these types of product have enjoyed brisk sales due to their lower prices compared with those of regular or low-malt beer.

Aeon will continue to sell the third-category brew at 110 yen per 350 ml by making up for the tax hike through reductions in transport and other distribution costs and will lower the prices of regular beer.

Industry analysts have been watching to see how retailers would react to the planned tax hike since major brewers earlier said they will raise prices 3.75-4.00 yen per 350 ml.

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Copyright (c) 2006, Kyodo News International, Tokyo

Distributed by Knight Ridder/Tribune Business News.

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Source: Kyodo News International, Tokyo

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