In preparation for my trip to Japan, I read this book about the history of the Japanese beer industry. I like Japanese beer. Sure, it is light on flavor and practically indistinguishable among labels. But it hits the spot after a long day of walking and compliments almost any savory meal. The book not only covered the origins and evolution of Japanese beer but the historical events that shaped the industry. In reading it I gained an appreciation for the country’s foamy golden drink and culture of gritty resourcefulness.

1. Foreign Influences: The Origins of Japan’s Beer Brewing Industry, 1868-1906

• Beer industry in Japan began during Meiji era (1868-1912) after Tokugawa shogunate collapsed (1603-1867)
• Started by Dutch, English, German and American brewers in Yokohama
• Beer was initially very expensive, only for wealthy, and not as popular as sake
• Laws forbid Japanese citizens from doing business directly with foreigners
• During Tokugawa shogunate, Christianity was outlaws but Dutch agreed not to spread Christianity and were given exclusive access to port towns
• Later American, French, and English were allowed and brought penchant for beer
• Kirin Brewery (fka Spring Valley Brewery) was started in Yokohama, by a Norwegian named William Copeland (name adopted after spending time living in U.S.), was sued into oblivion by employee and later died in Japan.
• Kirin’s assets couldn’t be sold to Japanese directly, so formed LLC (Japan Brewery) in Hong Kong and purchased.
• Japanese breweries hired German brewmasters and used German hops, techniques, and equipment.
• Meidi-ya, affiliated with Mitsubishi, became sole sales agent for Kirin.
• Sapporo was founded in Hokkaido in 1876 as part of plan to bring more industry to area

  2. Keeping Up Appearances: Maintaining Beer’s German Authenticity, 1906-36

• During WWI, Japan still used German brewmasters, including some captured as POW’s
• Price war hurt domestic beer industry
• A merger between Osaka, Yebisu, and Sapporo appeared to be a solution to the price war, which became Dai Nippon (Greater Japan) Beer Company in 1906
• East Asian export market still dominated by English, German, and Dutch beer
• Started to shift towards growing own materials and sourcing own brewmasters, bought machinery from U.S. during prohibition
• Earthquake and weather posed challenges to the industry
• Advertised beer with original paintings featuring women in kimonos or Western wear
• In early 1930’s, started to work together to price fix.
• Sakura beer was jointly bought by Kirin and Dai Nippon

  3. Brewing Self-Sufficiency: Beer, Empire, and the Wartime Command Economy, 1937-45

• During war, beer was seen as way to raise money.
• Rice was rationed (and barley was not), giving beer an edge over sake.
• Hops were at risk because Germany couldn’t export and Japan restricted imports.
• Dai Nippon started growing hops and sold to Kirin and other Japanese breweries.
• Government started limiting consumption of beer by household by giving out tickets.
• Cooperative Beer Sales Company/Central Beer Sales Company established as unified distribution machine, decided which beer to ship where (distribution plan)
• Other groups established, like Japan Beer Brewers Association, which conducted research, adjusted labour relations, and lowered manufacturing costs, improved product quality, and gave other industry guidance.
• Alcohol Group Law gave authority to Finance Ministry. Brewers had to apply to finance Ministry for materials and Brewers Association negotiated with finance Ministry for ingredient allotments, production rations, on behalf of brewers.
• In 1943, Finance Ministry abolished labels and unified beer production under single brand - “Beer”
• Started to make and sell beer in Japanese colonies, Korea (Chosen), Taiwan (Formosa), China (Manchuria)
• Sakura was forced to merge with Dai Nippon
• Finance Ministry intended to health beer distribution entirely, but Japan’s defeat/surrender prevented this
• After war, establishments in colonies were taken by allied forces
• Requirement to return bottles and use standard bottle design survived war

  4. “The Taste of Home”: Beer as Postwar Japanese Commodity, 1945-72

• After Japan surrendered, it was occupied by Allied forces who controlled manufacturing. The beer industry was given more autonomy, though
• Dai Nippon and Kirin were the only brewers to survive the war, though lost all oversees assets and suffered from manufacturing restrictions, fuel shortages, ingredients shortages, and transportation problems
• Most industries had to pay wartime reparations, but beer industry as excused because of losses.
• Allied occupation drove demand for beer.
• Post-war beer was lighter than pre-war beer because of shortage of hops, grains, and bitters. But this became the preferred profile
• Kirin and Dai Nippon were ordered to liquidate shares and submit reorganization plans because government strove to breakup industries with too much concentration of power
• Dai Nippon was split into Nippon (Sapporo, Yebisu, Sakura) and Asahi (Asahi, Union, Mitsuya Cider)
• In 1949, Nippon and Asahi had 36.2 percent of Japan’s beer market and Kirin had 27.6 percent
• By 1950’s, working conditions for brewery staff improved, with good benefits, recreational facilities, and housing
• By 1964, beer claimed 53.9 percent of market and sake had 34.6 percent
• “The younger generation does not like sake. They like beer because the alcoholic content is not high. Sake is usually consumed with a small snack, such as raw fish. Drinking beer is more pleasurable because a snack is not necessary.” Kirin’s sales manager, 1958
• 1962, Suntory announced would enter beer market, previously making whisky (established in 1899

  5. Learning from Japan: “Orion Beer” and Okinawan Consumer Identity, 1945-72

• In postwar Okinawa, manufacturers struggled to overcome the view of island-made products as inferior to imported products
• In 1950’s, former soy sauce and miso maker started Okinawa Beer Company
• Hired former factory manager from Kirin
• For IPO, did tour around Okinawa looking for investors, big and small. But wouldn’t allow non-Okinawans to invest
• Consulted Army Corps of Engineers to make sure land for new brewery was solid enough to support weight of factory.
• Remained “Orion” which is a constellation of southern stars, representing Ryuku Islands
• Had to compete against other Japanese and U.S. breweries
• In 1972, control of Okinawa reverted to Japan

  6. Indigenous Brews: Innovation, Entrepreneurship, and Beer’s Continuing Evolution since the 1970s

• Nowadays, many foreign beers consumed in Japan are produced in Japan
• By 1972, Kirin held 60.1 percent of market.
• In 1971, Sapporo brought back Yebisu brand, which used no cornstarch or rice in brewing process
• In 1985, Asahi reorganized top and middle management in order to challenge the “elders group”, thus giving junior managers greater input on product development, which soon gave the firm a new strategic direction
• “Anyone over the age of 35 should not have a say in new product development. Older people are too opinionated and they tend to believe that they are always right, even when proven otherwise. More importantly, younger staff members are too scared to argue with such seasoned professionals, which leaves a lot of young talent and fresh ideas untapped. Young people must be encouraged to make products that they enjoy…In 1986, Kirin Beer had 63 percent of the domestic beer market. After Sapporo Beer, we were a distant third in the running. Back then, a Harvard University study predicted that if one company had such huge advantage in a market, the second and third companies would find it impossible to change the status quo. I listened carefully and disagreed. Sure, it was true that to increase the company’s market share by one percent we had to sell 97 million bottles. Even so, we all believed that we could make Asahi number one.” Asahi chair Nakajo Takanori, 2009.
• In 1987, Asahi introduced “Asahi Super Dry”, a beer that had sharper flavor and no aftertaste, making it better to drink with food
• Within a year, Asahi’s market share doubled to 20 percent and Kirin’s fell to 50 percent
• In 1988, Kirin introduced “Draft Dry Beer” to try to compete and in 1990 “Kirin Ichiban” (Number One), which was brewed with 100 percent malts and had a milder and smoother flavor than the original lager
• Asahi eventually eclipsed Kirin in 2001, with 37 percent of the domestic market
• In 1994, the Ministry of Finance lowered the output required to hold a brewing license, allowing more craft breweries to enter the scene (Echigo, Sumidagawa, Ohutsuka, Umenishiki, and Jibiiru sandaya were some of the first)
• Small-scale breweries were previously not allowed and associated with social problems, leading to a widespread taste for the common brands which eliminate yeast by heat pasteurizing or filtering
• Some breweries created low malted barley drinks to avoid taxes on any drinks that were 67 percent malt (e.g., Suntory’s “Hop’s Draft”). Taxes were later applied to any drinks with 50-67 percent malts. Breweries continued to make even lower malt drinks, known as third beers or happoshu