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Societal Influence and History: The Beer Industry of Japan

What is thought of when a when the word Japan is said? For many, having never been to or
studied the nation in depth, the ideas and things related to its culture may come to mind. The country has
many things unique to offer the world. This is, of course, includes nihonshu. But, in actuality, nihonshu
is fairly unpopular in Japan today. One could say internationally the drink gains more attention than it
does in the country of its inception. In fact, some Japanese sake brewers have recently turned to craft
beer, as seen with the Kiuchi family.1 Why did nihonshu become such a weak market, while beer steadily
grew?
Of course, there was a period of history where the opposite was true. However, today, beer can
be seen all over cities like Tokyo in Japan. Today, it is clear that beer dominates the market.
Furthermore, the beer available tends to only come from four major (some could say three) Japanese
companies; and has so for a long time. These companies are: Kirin, Asahi, Sapporo, and Suntory. With
the revival of local beer being able to be produced since 1994, of course other Japanese beer options have
come into existence, but they barely touch on the market share that these companies hold.
The main types of beer produced by the big four tend to be all the same: the adjunct lager. A
light, almost flavorless, mass produced beer. Furthermore, in recent decades, an even lighter product has
come out that tastes and looks like beer, but technically is not beer. This is called happoshu or third beer.
It is uniquely created by Japan to serve the needs of the companies and consumers it is sold to. It tends to
be weaker and cheaper in flavor and price. One can strongly assume that these are the reasons why it was
created. Furthermore, this trend also tells us about the majority and their way of thought in regards to
beer.
Why and how did a foreign drink become so popular in a land that cannot support the ingredients
to grow and produce a product at the scale seen today? Did the government have something to do with its
upbringing in society? Did big business advertise and sell it to people? Or did people find it to their
liking, and support the product from the ground up? In short, how did beer come to be such a large
influence in Japanese society?
Since the Meiji era, the country has been largely dominated by a central government. Its soft
authoritarian policies that were highly accelerated during the pre and inter-World War 2 eras and market
control cannot be ignored when first looking at this question. Furthermore, the government rapidly took
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in Western ideas at this time, and Japan began to shift drastically in many aspects. Given this
information, and the hierarchical, group focused nature of society, the top down theory tends to carry a
strong implication.
After analyzing the situation in depth, this turns out to be the case. Beer was supported both by
the government and keiretsu in addition to cartels within the industry itself. This began almost as soon as
beer started to kick off in Japan, but really took off after the Taisho era. Big business and the government
mended conditions so that a product like beer, which was beneficial for national financial growth, could
flourish. However, only the beer companies big enough to produce the big outcomes required for
immediate growth could benefit; this meant cutting out everything not of profit in order to foster these
companies products.
Was the choice leading to up to the support carried out by the will of the people, though? While
people played a part in the popularization of beer, they were not the driving force of the product. The
ultimate drivers were the beer industry cartels created by big business, and the support they received from
the government and keiretsu who supported them. Because the government gained much control over the
beer industry during the pre-war era via its policies, the beer industry became strictly run by monopolies
supported by the government. These power structures became rooted in the system, and despite the
occupations reforms, they lingered on.
Beer production rose and over took sake due to the nature of its ingredients in the time during the
war. During the war, beer changed in image and became a consumer focused product for the masses, no
longer a German modeled product aimed to impress other nations. With protection from the Ministry of
Finance, the competition was cut, the product was simplified and protected in order to be capitalized on
and rebuild Japan. Though, it is evident that this process was in the making long before the occupation.
History
Beginnings in the Meiji Era
Beer had its true beginning in Japan beginning with the end of the Tokugawa Shogunate.2 Despite
being brought in by some Dutch scholars via Deshima during the Shogunate, the product never really
expanded into the market. At the end of the Shogunate the country became open for trade, and therefore
able to import all sorts of Western products that became interesting. Of these, of course, was beer.
Initially, an expensive and odd tasting product to the general public, it grew out of cities like Yokohama
and Tokyo. 3 This was due to the poor state of roads in Japan until the 1960s. It was very hard to
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transport the product to distant areas, especially given Japans terrain. In addition, the rail system was
poorly developed. For these reasons, beer was not sold initially farther than areas of its creation.4
Furthermore, foreigners were primarily coming into this region and starting their own businesses.
Origins of Kirin
Kirin found its beginnings in Yokohama, as did many other small breweries in the area at the
time. The initial reason for its creation was to undercut the market against foreign import brands, which
were plentiful at the time in the area.5 In the area was a famous foreigner by the name of William
Copeland. Copeland decided to create a brewery, as foreign entrepreneurs were also not subject to the
national Alcohol Tax, due to the Unequal Treaties.6 The name of the first brewery was Spring Valley.
However, it would eventually go bankrupt in 1882 and be bought out.
His site and assets were purchased by the Japan Brewery Company, a group consisting of
European and Japanese investors. The original chair of the Japan Brewery was a man named James
Dodds, who was offered to be bought out by an important Mitsui official named Magoshi Kyouhei. This
was to be unsuccessful, however. Magoshi would eventually in 1892 as the Yokohama branch manager of
Nippon Beers Yebisu brand.7
Copeland continued relations with the Japan Brewery, but in 1889 he gave up on brewing, and
moved to South America in 1894. He made a return to Yokohama in 1902, but passed away shortly after
the visit. The Japan Brewery paid homage to him and covered all the funeral expenses, accrediting him
with fostering their firms creation.8 The Japan Brewery was able to acquire Copelands firm only due to a
way around the treaties currently in place. This was because foreigners and Japanese citizens were
forbidden to conduct business with one another in Japan. Therefore, a man by the name Thomas Blake
Glover, who was a special adviser to Mitsubishi, and a man named Mr. M. Kirkwood, who worked for the
Ministry of Justice in Japan, advised the investors to register their brewery as an English firm in Hong
Kong. This therefore allowed foreign residents the ability to live and work with Japanese, if they had a
passport. Also, they could sell their assets to Japanese and dispatch sales nationwide.9 Thus, The Japan
Brewery was heavily influenced by foreigners initially, and it began to import techniques from Western
nations, primarily from Germany. More importantly, it was initially already being tied to the government

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and zaibatsu.
Japan Brewerys first brew master was a German by the name Herman Heckert, from Hamburg.
He was to take up the post by July 5, 1887. Kirins CEO makes note that the brewmasters at this time
were strictly interested in providing Japanese with the most authentic quality and satisfying German taste
as possible.10 This was because the product had to compete with foreign imports. However, the company
was able to make gains due to Glover, the Mitsubishi advisor, who would advise the company to take
advantage of the Unequal Treaties. He also set the Japan Brewery up with a Japanese retailer, Meidi-ya,
as the prime distributor of the Kirin brand beer domestically.11 The early association with beer and the
zaibatsu is clear. Mitsubishi was interested in founding distribution firms for foodstuffs in Yokohama,
and had heavy connections to Meidi-ya since it was its founder. Mitsubishi even sponsored Meidi-ya
members to study business in London for six years.12
Kirin was to become a reputable brand by 1891. It aimed to be very foreign in nature, and began
imitating its unicorn off of the design from Guinness Stouts.13 Kirin would remain heavily foreign until
the introduction of Shibusawa Eiichi, the founder of the Tokyo Stock Exchange, as a main lineup in the
company in 1889. Kirins ties would deepen with Meidi-ya, and it would eventually become its sole
contract agency (tokyuyakuten keiyaku).
Meanwhile, Magoshi Kyouhei, the long time Mitsui employee, would turn his focus towards beer
and become the President of Nippon Beer by 1900.14 Nippon Beer being the company that would form
Dai-Nippon (Sapporo, Yebisu, Asahi). He was interested in merging Nippon with Kirin, but Dodds was
uninterested. At this time the current director of Meidiya, Koumei Genjirou was also interested in the
influence of foreigner directors on the Japan Brewery. He would discuss this issue in detail with the
president of Mitsubishi zaibatsu, Iwasaki Hisaya.
Eventually, and carried out in the top floor of Mitsubishi Joint Stock Company in Tokyo, a
decision by the shareholders for Meidi-ya to buy and reincorporate the Japan Brewery as the Kirin
Brewery Company, Ltd. was decided.15 Furthermore, Koumei would be the president of Meidi-ya.16 Thus,
from the beginning stages of Kirin, we see a tie with Mitsubishi beginning to form. Without Mitsubishis
sponsorship it is unclear whether Kirin could have been taken from foreign control. The firm would
support Kirin for many years to come.17
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Origins of Dai-Nippon

Dai-Nippon was a beer conglomerate that was the merger of Osaka, Nippon, and Sapporo Beer
companies. The conglomerate would dominate nearly 75% of the beer market until the United States
broke up monopolies after World War Two. Afterwards, one of the products would once again return to
its original name. Dai Nippon found its beginnings as Sapporo beer, and more importantly, it began as a
part of a government colonization program by the Home Ministry in 1873.18
Ookubo Toshimichi, the head of the Home Office, issued a memorial that encouraged industry
(kangyou kenpakusho), which was a critical strength he believed for the country. His famous saying,
fukkoku kyouhei, was expressed as part of this. In order to achieve a strong nation, security was essential,
and he saw industrial development in the wild area of Hokkaido as a way to achieve this.19 One of the
spearheads assisting Ookubos way of thought was a man named Kuroda Kiyotaka. Kuroda would
eventually become the minister of agriculture and Japans second prime minister. Kuroda took the advice
of a foreigner named Horace Capron that the government should begin cultivating American strains of
barley, wheat, rye, and hops on Hokkaidos rich lands. Kuroda took this suggestion and began to develop
agriculture plans in Hokkaido and capitalize it by establishing a beer brewery in Tokyo.20
Hokkaido was a very important location due to the ice it contained, and the need for it in the
storage and transportation of beer. Kuroda set the brewery to be made in 1876, approving the situation of
Hokkaidos plan. 21 The brewery had a rough start, however, despite the planning involved. It was unable
to harvest adequate hops and obtain enough bottles to begin making the beer. They had to import these
from foreign sources.22 Once the beer was produced, it would serve Japans most elite consumers, such
as government ministries and agencies. In addition it would also serve the leadership of the Japanese
Imperial Army.23 In particular, Sapporo Beer was taken by Kuroda to the Army while fighting Saigo
Takamori during the Satsuma Rebellion.24With the creation of the brewery by the government, to serve
government officials, it can be evident that people had very little say in the establishment of what would
be several of the leading companies today. The development was evidently top down from the start.
Eventually, the Hokkaido Colonization Office would be abolished and replaced by the Hokkaido
Government. The Office in Sapporo was sold to the Ookura Trading Company, which also held shares in
the Japan Brewery/Kirin. Entrepreneur Shibusawa Eiichi, also tied to Kirin, bought the beer plant from
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Ookura and reformed it to be Sapporo Breweries Company, Limited. It would pursue the Western image,
and hire a German brewmaster, as Kirin did.25
Sapporo would not continue for much longer on its own, however. As mentioned before,
President Magoshi Kyohei of Nippon Beer, had ties to Mitsui as the head of its Yokohama branch. Under
the aim to get rid of petty competition (Kagyu kakujou no kyousou) between beer firms, the expansion of
the overseas market, and to encourage the governments desire for self-sufficiency (jikyuujisoku) in
resources and manufacturing, Mitsui would enter a deal to help shape a new joint venture. The minister
of Agriculture and Commerce, Kiyoura Keigo, Magoshi , and Mitsui officials met to mediate the
negotiation of the creation of a corporate conglomerate.26 Under Magoshis leadership, Sapporo
Breweries, Osaka Beer (Asahi), and Nippon Beer (Yebisu) would merge to form Dai Nippon on March 26,
1906.27 With this Mitsui gained control over the brewers export sales; while Mitsubishi, who founded
Meidi-ya, maintained control over Kirins.
According to Sapporo, the purpose of the Merger was to achieve greater stability across the
market in Japan. However, Kirin contends this, claiming that the merger was self-interested. Dai Nippon
sought to create the largest, most productive, and geographically dominant firm in order to dominate the
market.28 By 1907, Dai Nippon maintained 72% of the Japanese domestic beer market, with Kirin at 20%,
and the remaining competition at 8%. Regardless of whose opinion was correct, it is clear that the path
for beer to become a big Japanese product was set. However, it would not gain a Japanese image to it for
some time.
Despite the growth of both Kirin and Dai Nippon, beer would remain a Western product, using
European ingredients, methods, and brewmasters well into the Taisho and Inter-war periods. Furthermore,
it would sell itself in newspapers and export itself as so.29 It is important to note that during this era, and
coming sections of this paper, many entrepreneurs were hurt by the governments goals for big business.
Only the strongest would be allowed to continue.30

Taisho Era

This period saw great growth for Japanese beer companies, or rather, those who were allowed to
survive. World War 1 began, and due to this, many European firms pulled out of the area. This included

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the beer industry. Japanese firms moved to take advantage of this situation rather quickly, and overall
Japans industrial growth propelled. Though, despite Japan entering conflict with Germany and European
firms pulling out, Japans beer Industry still maintained true to German processes and some brewmasters
remained due to reasons outlined in the following paragraph.31 However, for a brief period of time,
Kirins brewmaster was ordered home to aid in the war effort. This time gave Kirin some ability to play
with Japanese equipment, and alternative cheaper substitutes to the German method;32 thus, possibly
beginning the slow shifts towards a lighter, more Japanese known product. Kirin would regain its
relationship with the German brewing world after the war and maintain traditional brewing practices for
the most part.33
By World War 1 the leading breweries in Japan numbered four in total: Kirin, Dai Nippon,
Kabuto, and Teikoku Beer.34 Though, the share was truly only set between two as mentioned above, and
the latter would not last for much longer. Despite the growth of the companies, Japan still continued to
heavily rely on western ingredients for production, such as hops. The US Bureau of Foreign and
Domestic Commerce, in addition to a magazine known as the Western Brewer made note in 1915 that the
quantity and quality of Japanese produced hops were inferior, and that German produced the best. .35
Overall, though, Japanese brewers were rapidly expanding and branching with technology. Kirin
expanded south into Hyogo prefecture.36 It also went to acquire Orient Brewing, and took over their plant,
thus giving access to Tohoku, where the plant was located.37 These moves, one can assume, were also
important because they strategically focused on challenging Dai Nippons Osaka and Sapporo regional
dominance.
In the 1920s, the creation of the famous Yebisu Beer garden came into existence by Dai Nippon.
Launched in Ginza, the garden aimed to tell Westerners that it as the Only 1st Class Bar and Resturant in
the City. Beer had grown large in Japan, but not yet large enough to overturn the nihonshu market.
Furthermore, it had grown large in classes of people, overall. It is noted in an analysis made by the
Nomura Banking Corporation, that the consumption ratio was 7/1 (beer/sake), and that beer was
increasingly becoming more popular amongst poorer classes. 38 Though, the subject of nihonshu shall be
addressed more personally later.
What is largest about this era is the amount of narrowing down the industry took in terms of beer
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companies. Really it was only Kirin and Dai Nippon by this time, and the industry would continue to get
smaller. There are some very important reasons as to why this happened, which were largely due to
government tax, in addition to their involvement during the inter-war eras and big businesss continued
support. Also, this era also began what would be the beer cartel between Dai-Nippon and Kirin breweries.
In order to maintain control of both production and prices, the two would establish control over the
domestic market.39

Big Japan
Cartels Supported by Big Business
Throughout the 1930s, the creation of a powerful beer cartel was set in place in order to take
over the retailers who decided to constantly undersell one another and to beat out rival producers. By
1936, the two victorious firms coming out on top would be Dai Nippon and Kirin alone.40 It has already
been noted that Mitsui backed Dai Nippon, while Kirin had Mitsubishi backing it. What will be
addressed later is the government, which this section will build into.
The cartel between Dai Nippon and Kirin noticeably began to form in 1928. The aim was to fix
their respective market share and annual production in order to end the beer sales war.41 However, the
signs of it forming came from before. Already in 1923 the leading brewers had staged a friendly beer
conference (biru konwakai), and by 1928 they would enter into a three company agreement (sansha
kyoutei) on nationwide production sales. The three companies that joined this were Dai Nippon, Kirin,
and Japan Beer Springs. Sakura beer, formerly Teikoku, also joined as Kyushus only brewer.42
In order to break control that retailers had on prices, the four companies agreed to sponsor the
formation of the Tokyo Alcoholic Beverage Wholesalers League.43 Despite organizing however, they had
no real control over the shop-level retailers, and underselling continued.44 In 1932 the League met with
the Tokyo Alcoholic Beverage Sales Association with an aim to not deliver any products to underselling
retailers. However, both sides needed to keep beer moving, so the threat was turned down once again.45
The companies would need something more to support their desire to set terms in their favor.
Around this time, Magoshi of Dai Nippon fell ill. Before passing away, he gave his solemn
promise (katai yakusoku) that his firm would compete with Kirin on equal terms. This would be carried
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out. Before doing so, a desired merger with a smaller brewery, Japan Springs was planned. After he
passed away, Kato Takeo, the President of Mitsubishi Bank, would mediate merger talks privately.46
Takeo, with the Minister of Commerce and Industry, Nakajima Kumakichi, brokered the agreement on
June 21, 1933. The government gave its approval of the merger, conducted on July 19th. 47 Both the
government and Mitsubishis involvement with beer becomes blatant by this point. With this, only three
primary beer firms would remain. Sakura would soon be a similar target.
Dai Nippons agreement to create a formal beer cartel with Kirin was really triggered after Dai
Nippon took over Japan Springs. Cartels already existed throughout Japans steel, weaving, banking, and
machinery sectors.48 It is no surprise that they would find their way into the growing big business of beer.
Dai Nippon suggested to Kirin that they enter a comprehensive cooperative beer sales agreement
(bakushu kyoudou hanbai keiyaku). This would be supported by a new sales agency, the Cooperative
beer company. The next aim of the cartel was to take over the remaining breweries: Sakura and
Kotobuki-ya.49
The market share agreement read as follows:
1. Each company will invest 2 million yen in the established Cooperative Beer Sales Company, Inc.
2. Both companies will sell all of the beer that they produce through the new company
3. All advertising will be done via the sales company, and all expenses related to shipping will be
paid by the companies
4. Production will be based on each companys sales numbers: Dai Nippons share at 70.12% and
Kirin at 29.08%
5. If excess volumes are produced, compensation will be paid to the other party
6. The practical business of sales, such as the sales network, orders, special contract stores, etc will
be handled by each company
7. During the term of agreement, building new factories or improving existing ones without
consulting the other party is not permitted
8. The same is true for factories overseas
9. This agreement will remain in effect for a period of five years50
The cartel had been set, and soon after Kotobuki-ya would reorganize into the Tokyo Beer Company.
It would not last long, as Dai Nippon simply bought out all of its shares, which were transferred over to

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the Cooperative Beer Sales company. The Company kept the ratio at 70:30 (DN/Kirin), as agreed upon.51
With the creation of this cartel gave the rise to special contract sales network (tokuyaku hanbaimou),
of greater proportion than any other food or beverage producer. Special chain stores (tokuyakuten) went
from 212 stores in 1933 to 499 in 1938. The cafes and bars that became sponsored by the brewers also
grew in the 1930s.52 Beer was beginning to attract a regular large sales base that would continue to grow.
Finally, in 1935, Sakura Beer would enter an agreement between Dai Nippon, almost exactly the
same as outlined above with Kirin. With this, Sakura beer would be sold through a new sales firm, and it
was granted annual sales of one million boxes of beer. If this could not be met, the Cooperative Beer
Sales Company, owned by Kirin and Dai Nippon, would pay Sakura compensation.53 The fixing of
market shares is what drove the competitors out of business, it cannot really be refuted.54 By this time,
only Kirin and Dai Nippon stood at the top. After the government gained control over industry, Sakura
would be abolished when they forced a merger with it into Dai Nippon in 1942.55
The powerhouse that Kirin and Dai Nippon created would usher a new era of beer for Japan.
Mitsubishi zaibatsu became heavily associated with Kirin, and Mitsui with Dai Nippon. 56 Zaibatsu
played a large part of the industrys support in sales, but were they alone?

Pre-war Government and Laws

Beginning with the Meiji era, the government already had sights on the food industry as part of its
plans. Western eating and drinking habits were encouraged as determined by the government in order to
convince the Great Powers to accept the Japanese as peers and renegotiate the Unequal

Treaties.57

Furthermore, as noted earlier, it was part of the Governments agenda to build industry; hence the creation
of Sapporo to begin with. One reason behind the creation was security.58 What granted this security
though was financial, one can assume; financial in the form of taxation.
After the reversal of the Unequal Treaties in 1894 the government did not initially raise import
duties immediately, but in 1897 they passed a specific duty tax known as Law No.14 which raised the
tariff on foreign beer to 25%. However, this was not passed on other types of alcohol, due to their low

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popularity at the time, and beers apparent growth.59 In short, only once industries developed enough,
would the government make money off of them.
Furthermore, the government also implemented a domestic beer production tax in 1901, raised
again in 1904. This was huge, as the tax essentially killed the majority of Japans small breweries
overnight, since they were able to produce enough beer to meet the tax.60 Weak firms fell pray not to the
strong out of competition, but due to the tax policy by the Ministry of Finance.61 Japans government
sought to capitalize on the new advantage of domestic beer by taxing at the source, rather than point of
sale. The protectionist trade agenda selected for the largest, most capable companies can be seen here.62
The Ministry of Finance sent a clear message that only the strongest would continue to operate in the new
century.63 Competition for quality amongst entrepreneurs would only slow this down.
The government would continue to tax beer at higher rates far after this. Furthermore, as
outlined above, it would step in to mediate mergers between companies. The industry had many invested
players like Magoshi. He was not only Dai Nippons president, but also a member of the House of Peers,
and heavily connected to Mitsui.64 The connection between business, the zaibatsu, and government is
undeniable.
With the coming of the Pacific War, the government would up its involvement via the National
General Mobilization Law of April 1938. All of Japans economy and industries became state-directed
and state controlled. In 1940, the Ministry of Finance revised the Alcohol Tax as a means to regulate and
maximize its food supply. This system would remain in effect well into the Postwar Occupation era.65
The Ministry also put further restrictions on the ingredients used to brew beer.66 It is here that the once
strong German tasting product slowly began the process towards the light and weaker product of today.
In the pre-war era beer prices became fixed, and beer became classified as grade-B food stuff.
Since sake was made of rice, a grade-A foodstuff, it was necessary to use it for food only. With this, the
sake industry became unprofitable and by 1940 all brewers operations were terminated.67 It was this
moment where the government set it so that beer would overtake sake. Beers postwar fate to beat
nihonshu would be determined.

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The Demise of Nihonshu

As previously noted, nihonshu remained the favorable drink largely up until the war. Though, it
began taking a hit even in the Meiji era. Sake peddlers were to be eclipsed by urban stand-up bars selling
cold beer, which consumers quickly learned were more refreshing, and came in larger glasses.68 Though,
sake remained much less expensive, and still stayed popular amongst poorer classes during this time.69
It was a slow turn over, as beer grew bigger, sake began to be eclipsed. The study mentioned
above stating that the ratio between the two was 7/1 already showed that by 1922 beer was becoming
popular. However, sake remained the leading alcoholic drink for the average Japanese consumer. But as
living standards rose in the late 1920s and into the 1930s, the tides naturally began to turn.70 Largely
though, it could be argued, due to the government involvement in war, not due to preference. Much of
the rice was needed for the militarys efforts abroad, and the government began cutting the production by
1937. Having less sake available curbed consumers preference towards beer, and its production
continued to grow.71 With the mobilization law of 1938, this would be almost guaranteed. Many of
Japans Edo era brewers were hit hard, and this came as a huge psychological blow72
During this time, nearly half of the nations sake brewers were diverted or abolished. Compared
to the sake industry, beer brewers were treated rather gently.73 Beer could be taxed and used due to the
nature of its production, as outlined above. Sake would come back after the war, but it would never be
the same.
Beers production in 1955 to 1964 went from 400,000kL to 1.99 million kL. Sake had a market
share of 36.9percent in 1955 while beer held just 29.3 percent. In 1959 these numbers became reversed,
and by 1964 beer held 53.9% and sake held 34.6%. According to the Asahi nenkan, the reasons for beers
rapid increase had to do with the rise in Japanese living standards, the number of female consumers
drinking beer increasing, consumers tastes in alcoholic beverage shifting, and more homes equipped with
heaters.74
Had the government not shut down these nihonshu factories, and propelled beer during the war
era, it is heavily debatable whether or not beer should have ever overtaken nihonshu. Beer had been
around for a very long time, and for these numbers to shift so drastically, while at the same time the
government became heavily involved in both industries, one cannot ignore. Today, sake is suffering, and
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sits well behind even liqueurs in consumption75. With the rise of Cool Japan by Prime Minister Abe,
maybe the industry may see some sort of a comeback, but for now it seems to be very niche, as almost
beer was when it first came to Japan.76

Post-War Beer
Genuine beer competition died off in the mid 1940s. During this time beer companies had no
need to spend money on promotional campaigns or advertising, and fixed profits were guaranteed.77 Only
several beers would exist and nihonshu would be out of the market for some time. Furthermore, the
efforts of the Ministry of Finance to regulate beer recipes, production, distribution, taxation, and so on left
a deep impression on Japans surviving brewers, extending far beyond the war years.78The Ministry of
Finance controlled the issuance of brewing licenses, and for the next 50 years it would keep all but three
new firms out of the industry altogether.79
Between 1945 and 1949, the Ministry of Finance allotted 74.5% of available beer barley to Dai
Nippon and 25.5% to Kirin. This decision effectively fixed the market shares of the two to a similar level
that was determined pre-war.80 Furthermore, the Ministry of Finance supervised beer shipments under the
Beer Distribution Control Company well into the post-war.81With this, these two firms, plus the addition
of Suntory in 1962, would come to dominate the market entirely.82
Under the passing of Law 207, also known as the anti-monopoly law, Dai Nippon would be one
of the many Japanese firms to be broken up by the occupation.83 However, it is argued by the successors
of the company that its management anticipated this, and took almost anticipatory measures to split the
company into two.84 Despite some initial name changes eventually the companies of Sapporo and Asahi
came in to existence. 85
By this time beer became a brand. Mitsubishi came to drink Kirin exclusively, while Mitsui
came to drink Sapporo exclusively, and Sumimoto went to drink Asahi. Sumimoto even purchased shares
in Asahi to defend the company against a possible takeover in the 1960s. Sapporo states that during this
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http://www.japantimes.co.jp/life/2007/04/13/food/what-the-japanese-are-drinking/#.U8KIBfmSz0d
http://www.nytimes.com/2014/02/22/business/international/in-sake-japan-sees-a-potentialstimulus.html?_r=0
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time beer became the beverage of the masses (taishutekina nomimono). 86 Beer brands became powerful
symbols of professional identity and affiliation. And from 1960, beer continued to eclipse sake and leave
it far behind.87
The government maintained its system of pricing until June 1st 1964. After this, brewers regained
control over their pricing.88 By this time, Kirin had eclipsed its competitors and enabled it to set prices
that were able to rival its competitors costs. By the mid-1980s Kirin maintained 60% of the market,
Sapporo with 20%, Asahi 11%, and Suntory with 7%. Foreign brands were virtually unavailable outside
of fancy hotels in big cities.89
Despite the breaking up of cartels by the occupation, they, and their connection to the government
would soon return. The Ministry of Finance would act as a regulator between the four large breweries,
and encourage that no domestic competitors could enter the industry without a license (unless the
produced over 2,000 kL annually. Because of this, the retail price of beer would remain nearly identical
for more than 30 years. Furthermore, in exchange for protection against foreign imports, domestic barley
became used, despite being four times the price of the world average. This agreement was renegotiated
annually and went unwritten, for it would violate former the General Agreement on Tariffs and Trade
(GATT). 90
This would make a change however, as people began to become frustrated with the cartel of beers
and their fixed pricing. As a rebellion against the fixed prices, major retailers began offering discounts
for beer at their establishments.

The return of Craft Beer and the rise of Third Beer

Due to these rebellions, the Ministry of Finance at last opened up the market to other competition
in 1994 by lowering the minimum output to just 60kL for a beer license. With this came the rise of local
beer, and its slow reemergence in society.91 Though, the industry would still barely make a dent in the
market share of the big companies that already existed. At its highest point in the early 2000s, craft beer
took up only around 5% of the market.92Big beer surprisingly lost overall during this period of time.
However, it was not due to craft beer, but due to a new, even lighter product called happoshu, or third

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beer, which found its beginnings in the mid 1990s.93

Happoshu and third beer, show something very interesting about Japanese societys growing
trend with alcohol. Since Asahis creation of Super Dry in 1987 and beers moving away from strong
German taste in the Pacific War era, beer had become increasingly lighter and less flavorful. Now
happoshu and third beer were produced, due to escaping higher taxes, using less than 25% malts. What is
notable is that by 2001 the sale of this alcohol product accounted for 30% of the domestic beer market,
led by all of the big brewers. In 2005 it increased to over 40% of the market. Of course, since it grew in
popularity, the Ministry of Finance aimed to tax it even more, forcing the companies to make even lower
malt products, to not malt at all but soybeans and other alternatives.94
It is important to note that like fashion, consumer tastes in beer and beer-like products had
become seasonal by this time.95 Happoshu and third beer show that for most of these consumers, beer
became merely a beverage for clearing the throat, and thus beer-like beverages that taste similar are
becoming the cheaper option.96

The Consumer
Since the pre-war era, beer companies had used marketing tactics to target a larger audience.97 In
the 1920s and 30s, modern Japanese women modeled after Hollywood film actresses were heavily
used.98Today, we can see actors such as George Clooney in the carts of trains with a Kirin poster. Since
the war ended, however, the focus of beer companies changed. It was product out, marketing in. This
meant that beer recipes, ingredients, or brewing techniques were decidedly cut out and Japans consumers
were definitely in.99 Beer would turn into a consumer product, something that people wished to look into
the mirror of advertising and see themselves.100
Initially, beer was chosen by the government to target government officials and rich foreigners in
order to impress and reverse the unequal treaties. It was driven from the top down, and carried an
expensive image to it. By the time the war happened, however, beer had become a cheaper product, used
by the government to create revenues via its taxation. After the war, Kirin utilized unions to support its

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image101 and beer became a product for the masses, as noted previously by Sapporo.
The controlled distribution era and supply shortage forced brewers to produce a lighter, less
flavorful product. As noted by Kirin, this actually came to be preferred by consumers; especially, by
women and young people.102 During the postwar era, women steadily gained rights due to the reforms
made by the occupation. This atarashii sendai no josei had agreat deal of free time, and effect on beer.
Due to this one could see the rise of women drinking beer at beer halls and beer companies began to
target this.103 By the mid 1970s women were becoming seen more often drinking on television in dramas
and commercials, and alcoholism in Japan rose overall.104 In 1982, a study put out by Mitsubishi
Economic Research Institute stated that 85% of Japanese men and 60% of Japanese women were regular
beer drinkers. A significant shift from the time of pre-war.105
With the rise of women drinking, actors being used in advertising such as Harrison Ford106, and
other marketing tactics assisted with the support of the steady continuation of big business beer by the
government, we can see a trend as to how beer became such a commercial entity.

Interview with a Japanese Beer Bar Owner

In order to confirm what the research was telling me, I desired to interview an actual Japanese
person on this subject matter to see if his opinion matched. To do this, I interviewed a Takeshi Ishiguro,
or Guro-san, who owns a bar named Hops125 in Ebisu.
Guro-san runs a craft beer bar, and notes that it is only rich people who tend to drink the product.
Oddly enough, craft beer seems now very similar to what beer began as. The product is heavily taxed by
the government, expensive to import, and big beer companies continue to receive protection. For these
reasons, the product will remain expensive.
He makes note that while women drink craft beer, they do not tend to like bitter versions of it,
and therefore tend to choose lighter products. For this reason, amongst regular women, and even at his
craft beer bar, Asahi Super Dry is kept on the menu and became a favorable product amongst the
Japanese people. Women and men equally like it for its simple flavor.
According to Guro-san, women became much stronger politically after a Japanese law passed that
equalized gender working rights around 10 years ago. After this, super dry became even stronger since

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women had an equal say in the market. Women, he notes, are a large reason why beer increasingly
became lighter.
Furthermore, men with money still seem to prefer stronger products like Yebisu, and bitter craft
beers like IPAs. Moreover, younger people, due to their income, choose low alcohol percentage beer that
is cheap. Because of women, and more importantly, an imbalance between the age groups and wealth
distribution, we see a reason why happoshu and third beer are recently really catching on in Japanese
society.

Conclusion

Was beer a product chosen by the people, or was it carried out by the top down? This paper
argues much for the latter. From its beginnings it was given to the top of society and even created by the
government. Entrepreneurs were cut out early on, and by 1901, before the industry was large, and those
with power were allowed to continue to gain it.
Do people really prefer beer to nihonshu? This is can be debated, but what cannot be is whether
or not beer would have overtaken nihonshu as the national alcohol of choice had it not been for the
government. The government shut down all sake factories for nearly a seven year period of time. With
only two beer companies backed by zaibatsu, the government, and no competition, the government
allowed them to gain dominance not only over the market, but over peoples preference. Within less than
10 years, the markets reversed. Once people were driven to buy beer, and women gained freedom after
the war, they turned the product to fit their lighter preference.
It no longer became necessary to focus on the product, as the product preferred was cheap and
light. Marketing became a huge focus and people began to associate beer with celebrities and culture, not
as a quality product in creation.
So was beer chosen by the people? I think not. However, once it was given to them, they had no
problem conforming the product to fit their needs. Despite even this, it became lighter initially because
the government made it so. People just turned out to like it a bit more.