Failure Case Study: 1% Alcohol Drinks; The risk of innovation blurring the identity of alcoholic and soft drinks

1% alcohol beverages failed miserably in Japan since they were not different from low alcohol beverages and adult soft drinks.
Huge consumption of alcohol and related beverages was witnessed in Japan in past few years but demand and value of Japanese alcoholic drinks are expected to diminish in next five years leading to slowdown of the alcohol market of Japan.

Ken Research has recently announced its publication, “Failure Case Study: 1% Alcohol Drinks; The risk of innovation blurring the identity of alcoholic and soft drinks’’, which aims at providing in-depth market analysis of Japan’s alcoholic beverage market and deep understanding of consumer trends and attitudes that drive innovation. Further, it explains the product concept and positioning of 1% alcohol drinks and elucidates the causes of failure of such drinks in Japan. It also discusses the elements of alcoholic drinks that must be undertaken for future product development.

Market has been steady and major manufacturers have focused on flavored alcoholic beverages as one of the core categories. Major market players of Japan’s alcohol industry are Kirin Brewery Co. LTD, Asahi Breweries, LTD., Suntory and Sapporo Brewery, LTD. Major segments of alcohol beverage industry include beer, wine and spirits. Influx of many global alcohol brands can also be observed in the market as a consequence of globalization and reduced tariffs. Japan’s import of alcoholic beverages has also shown an upward trend recently.

1% alcohol beverage fiasco

Kirin and Suntory released canned alcoholic drink with 1% alcohol content, both using slogans that they allow consumers to enjoy alcohol without getting too drunk. But this rather turned out to be biggest fiasco in alcohol industry of Japan and production of both brands terminated shortly after their launch. Such drinks blurred the distinction between other low alcohol beverages and adult soft drinks. Since product developers cannot wary the gap between alcoholic beverages and adult soft drinks such product innovation turned out to be perverse in the industry.Alcoholic drinks like beer, wine and spirits are more popular in Japan which leads to a lower acceptance of1% alcohol drinks, leading to its failure.

Consumption and market trends

Japan’s consumption of alcohol reached new heights till 2013 wherein japan became largest consumer of beer in Asia and largest importer of spirits and second largest exporter of wine in Asia Pacific region. But, after 2014 a sort of pessimism can be observed in Japanese alcohol market. Even though consumption of alcohol is still enormous but growth of demand is not as high as it used to be. Many factors like reduction in consumption expenditure due to falling GDP and economic slowdown, contraction of population base, improving health awareness and rising taxes on alcoholic beverages is depressing demand for alcohol and related beverages.

Global trends

Alcoholic beverages are becoming immensely popular globally. Healthy growth in alcohol industry is expected attributing to rising demand globally. UK, France, Germany, Spain and Italy consumes 57% of globally produced alcohol.

Some key global trends are as follows: