USA: Asahi Group Holdings pushing into the crowded US beverage market

Asahi Group Holdings is pushing into the crowded U.S. beverage market, placing its “premium” offerings and low-alcohol and nonalcoholic beverages front and center in a bid to differentiate itself, The Japan Times reported on April 1.

After hinting last summer at U.S. expansion ambitions, in January the drinks giant acquired Wisconsin-based Octopi Brewing as part of plans to produce its Super Dry beer in the U.S. and better cater to the American and Canadian markets. That move adds to the company’s existing breweries throughout Europe.

The aim of the company’s first U.S. brewery acquisition, according to Asahi, is to ramp up local production and boost its U.S. sales and marketing efforts. The company declined to directly comment on future mergers and acquisitions plans for the U.S. market, but views it as one that is ripe for growth.

Asahi’s chief executive said earlier this year that the company aims to quadruple overseas sales of its flagship Super Dry beer by 2030, although further takeovers in the U.S. market are unlikely to happen until next year.

Imported beer accounts for around 18% of beer consumed in the U.S., according to an industry body, the Beer Institute, and Japanese companies are hoping to claim a larger piece of the pie.

Other Japanese drinks companies are also making inroads in the U.S. Last year, sake brewer Asahi Shuzo, not part of Asahi Group Holdings, opened a brewery in New York, and next month it will begin selling U.S.-produced sake in limited quantities in Japan. Kirin has also sought U.S. growth after withdrawing from China and Myanmar.

For Japanese beer companies, there is work to do on more clearly defining their image. Mike Kallenberger, a senior adviser at brewing and beverage industry consultancy First Key, said aside from big mainstream imports such as Corona and Heineken, the majority of beers imported into the U.S. are typically associated with a specific occasion — in the case of Japanese beers, as a pairing to Japanese cuisine.

“Japanese beers are typically seen as lighter and more refreshing, which makes them very good for pairing with food. Beyond that, the current image may not be very distinct,” Kallenberger said, but noted that given the focus of Japanese brewers on the U.S. market, that perception will likely evolve.

Adam Rogers, research director for North America at drinks analysis firm IWSR, said that the recent success of Japanese whisky had “lent a positive, luxury halo to alcohol products from Japan,” which may prove a positive association for Japanese beer brands seeking to make inroads in the market.

The U.S. beer market itself is also evolving as appetites change. Craft beer sales by volume were stable in 2022 amid a 3.1% decline for beer overall, while retail sales of craft offerings increased 5.6% to $28.4 billion, according to industry group the Brewers Association.

Kallenberger said that while big beer players have dominated the market, the rise of craft beer over the last 20 years has shifted the dynamics in the market. Now, American consumers are “very receptive” to new offerings, giving innovative brands and those in “beer-adjacent categories” an opportunity to find an audience.

For example, beer-adjacent offerings — such as adult soft drinks and those with low or no alcohol — have gained traction in recent years. Indeed, NielsenIQ 2023 research found that growing focus on health and wellness was prompting alcohol brands to introduce low-alcohol or alcohol-free options. Premixed alcoholic beverages, which are often lighter, cheaper and available in an array of various flavors, have risen in popularity, but at the same time younger people across the board are showing less interest in drinking alcohol.

IWSR found that the percentage of Generation Z consumers in the U.S. abstaining from alcohol stood at 54%.

In Asahi’s home market, there has also been a shift away from alcohol consumption — IWSR found that Japanese Gen Zers had the highest level of abstention among the 15 markets surveyed, and that Japan has one of the highest low-alcohol market growth rates — and the drink-maker has already sought to accommodate this shift. Earlier this year, the company confirmed that it would not launch any new chūhai drinks — canned fizzy cocktails made from shōchū or vodka — with alcohol content of 8% or higher.

Asahi is also aiming to bolster awareness of its other offerings, eyeing growth opportunities in beer-adjacent categories in the medium to long term. The company aims to harness its “unique” positioning as a major beer producer, as well as its strengths in adult-targeted soft drinks and non- and low-alcohol offerings, it said.

The group noted that the U.S.’s track record of developing new categories and trends — such as with energy drinks — makes it a compelling market for the Japanese drinks brand and a base to experiment and innovate.

On that front, Asahi has established an innovation-focused investment fund in San Francisco with the aim of snapping up minority shares in U.S. startups with potential in the low- and nonalcohol segment. It will also invest in groups with technology of interest to the company.

While the group hopes that these experiments will inform its U.S. strategy, the aim is to also transpose these lessons back to Asahi’s home market.

“We plan to harness the ... ideas emerging from the U.S. market and incorporate them into our existing businesses,” the spokesperson said.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .