Care for some pineapple juice or fermented milk in your beer? Big Brewers Make Summer Wacky Beer Season in Japan

August 14, 2013, 6:51 p.m. ET

Big Brewers Make Summer Wacky Beer Season in Japan

Kirin and Asahi Test Innovations Like Soft-Serve Foam, Extra-Cold Brew and Beer Cocktails

HIROYUKI KACHI

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At a Kirin Ichiban Garden, a temporary restaurant in downtown Tokyo, a server offers two experimental summer brews from Kirin.

Care for some pineapple juice or fermented milk in your beer? Strange brews are on tap in Japan this summer, as the country’s biggest beer-makers—Asahi Breweries Ltd. 2502.TO -2.23% and Kirin Brewery Co.2503.TO -2.18% —experiment with novelty beers they hope will appeal to younger Japanese drinkers, particularly women, who prefer drinks sweeter than the average pint. The gimmicky concoctions are available mainly at bars and temporary beer gardens the companies have set up for the peak quaffing season in cities across Japan. The drinks are becoming a regular summer feature, a way for Asahi and Kirin to promote and test new-product ideas, the most promising of which can be sold more broadly later. Kirin is selling 12 cocktails featuring its Ichiban Shibori beer leavened with mixers like pineapple, grapefruit or tomato juice, as well as cassis or lemon liqueur. The company calls them Ichiban Shibori Two-Tone Drafts, for the layers of color created in the glass before the beer and mixer are stirred.Even more unusual is Ichiban Shibori Frozen Draft, which is beer topped with frozen foam dispensed like soft-serve ice cream from a special tap.

Asahi’s new offering combines premium Asahi Super Dry beer and Calpis, a syrupy Japanese concoction inspired by a fermented-milk drink from Inner Mongolia and known in the U.S. as Calpico. Asahi, whose parent company bought Calpis last year, is urging restaurants and bars that handle Super Dry kegs to add the beer cocktail to their menu.

This year, Asahi also is promoting super-chilled Super Dry Black beer served over ice in a glass with a squeeze of lemon and a sprig of mint.

Yasuko Machida, a 37-year-old nail artist, was sipping a beer mixed with blueberry liqueur on a recent evening at a Kirin beer garden in downtown Tokyo. “I drink very little beer. But this tastes good, since the sweetness helps lessen the bitter taste,” she said.

A few tables away, Daiki Ito, a 23-year-old student, was drinking the same beer-blueberry mixture. “I was interested in how it looks,” he said. “I like regular beer but this is easier to drink.”

The promotional fizz masks some grim demographics. As Japan’s population ages, the beer market is shrinking, with shipments down 1% in 2012 to 438 million cases, about 24% below the 1994 peak. No wonder Asahi and Kirin want to cultivate new drinkers.

“We would like to lay the groundwork for rejuvenation of our brands in Japan,” said Senji Miyake, president of Kirin’s parent company, Kirin Holdings Co., at a recent news conference. Frozen Drafts and Two-Tone Drafts are examples of the effort. “We are pushing along by inches.”

The summer experimentation began in 2010, when Asahi came up with the idea of chilling its Super Dry beer to a temperature of about 28 degrees Fahrenheit, close to the freezing point, and serving it at a temporary bar in Tokyo’s posh Ginza district.

The extra-cold, specially chilled drink proved so popular that Asahi brought it back and increased the number of so-called Extra Cold Bars nationwide to eight, with 400,000 customers expected this season. Asahi also has installed special equipment at 5,500 restaurants and bars across Japan for making the super-chilled beer.

Last year, Kirin fought back. It opened its own summer beer gardens serving Ichiban Shibori Frozen Draft beer with frozen foam, and it subsequently installed Frozen Draft taps in 2,000 restaurants and bars in Japan. This year, Kirin has also added a black beer and beer cocktails to the Frozen Draft lineup.

That push is leading the beer rivals overseas. Although both brewers have historically been domestically focused, Kirin has since 2007 spent more than 1 trillion yen, or more than $10 billion, on acquisitions outside Japan. Asahi has bought a liquor company and four soft-drink makers in Australia and New Zealand. The brewers also produce and sell beer in countries like China and the U.S., although that is a small percentage of their business.

Now they want to know if their summer creations will travel. Last week, Asahi opened the doors of its first overseas Extra Cold Bar in Seoul. In May, Kirin started selling Frozen Drafts at a summer beer garden in Taipei and installed frozen beer foam taps at some 160 restaurants in Los Angeles, Paris and Shanghai, among other places. Kirin aims to increase the number of outlets to 400 next year in 15 locations in Asia and Europe.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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