Japan: Major brewers giving investors plenty to cheer about

Japan’s major breweries are giving investors plenty to cheer about as their shares outperform the broader market on prospects of price hikes, more favorable taxation and a rebound in tourism, Bloomberg reported on May 2.

Asahi Group Holdings Ltd., Kirin Holdings Co. and Sapporo Holdings Ltd. have all climbed more than 9% this year, providing some of the biggest boosts to the Topix gauge that tracks the food sector. Asahi, the nation’s largest beverage company, has pushed its 2023 gain to 28% after unexpectedly announcing last month that it will raise prices.

The hike spurred speculation Asahi’s peers could follow suit as they face higher production costs. Continued changes in consumption taxes, meanwhile, are seen as positive for demand and profits, with levies on beer set to decline in October while those on lower-malt happoshu products rise.

“It will lead to improved profit margins,” said Satoshi Fujiwara, an analyst at Nomura Securities Co. in Tokyo. Lower-category “beers are getting more expensive and profitable beers are getting cheaper which is a positive trend,” he said.

A rebound in tourism to Japan has also improved the sector’s prospects, as the nation has now removed all travel restrictions that were put in place during the pandemic. About 1.8 million tourists visited Japan in March, compared with just 66,121 for the same period last year, according to industry data.

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