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U.S. canned cocktails await Suntory as Japanese market withdraws

U.S. canned cocktails await Suntory as Japanese market withdraws

The Japanese beverage company Suntory Inc. introduced a powerful, lemony beverage in Australia last year, and it swiftly rose to the top of the country’s canned cocktail market.

The company is currently working to repeat that performance in North America, which is essential to achieving its goal of dominating the fastest-growing market for alcoholic beverages globally.

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For Japanese beverage companies, survival is also a matter of safety as the domestic market ages and younger consumers turn away from alcohol.

According to Makoto Kitaura, a veteran general manager at Suntory, Australia is a crucial test market for the worldwide strategy.

If they are successful in Australia, the United States and the United Kingdom might be willing to try a new brand. And they recognise the enormous growth potential of the American market.

The company hired a localization team to modify Strong Zero, a popular beverage in Japan, for the Australian market. The lemony flavour was changed, and the alcohol content was reduced from 9% to a more manageable 6%.

In Australia, it also gave the canned cocktail the name “196 Double Lemon,” emphasising the blizzards-cold that Suntory says it employs to draw out flavours from fresh fruit.

The publisher of Sydney-based Drink Digest, Alana House, claimed that it sold out nearly immediately after going on sale.

The beverage, which costs approximately A$4.50 ($3.10) for an 11-ounce can, had the benefit of being regarded as a “cult” Japanese item, she said. It also featured a strong depth of flavor and greater alcohol by volume (ABV) level, at 6% as opposed to 4.5% for a regular beer in the nation.

As a result of pandemic restrictions that encouraged more people to drink at home and cut out higher calorie drinks like beer, the global canned cocktail market—which Japanese beverage manufacturers founded about 40 years ago with drinks locally known as “chu-his”—is currently growing at the fastest rate among all alcoholic beverage categories.

During the pandemic, the ready-to-drink (RTD) sector had double-digit sales growth, and according to Suntory, sales of canned cocktails will double further from 2020 levels to more than $60 billion in 2030.

The biggest obstacle standing in Suntory’s way from reaching its global goals is the enormous U.S. market. After acquiring Jim Beam whiskey manufacturer Beam Inc in 2014, the company has already made a name for itself. The business opened a worldwide canned cocktail branch in March, and its staff from the United States visited Tokyo in June to discuss strategy.

Market research firm Euromonitor International said that hard seltzers are the industry leader in the United States, with leading brands White Claw plus Truly generating roughly $10.8 billion in sales during the next five years through 2021.

Through its partnership with Boston Beer Co., maker of Truly, on the Sauza cocktail, Suntory has made some inroads into the American market.

The company didn’t specify which bottled cocktails from its extensive selection it intended to export to the United States.

However, Double Lemon would be at a disadvantage versus Mike’s Hard Lemonade, a stalwart rival that sells for roughly $2.50 for a 12 oz can. After making its launch 20 years ago, Mike’s quickly gained popularity thanks to marketing that some detractors claimed catered to young, underage drinkers.

The major obstacles, though, continue to be logistics and taxes. The U.S. distribution systems for spirits are more constrained than those for beer or other malt-based beverages, which has historically been Suntory’s area of strength. An analyst at IWSR Drinks Area Analysis, Brandy Rand, claimed that what is successful in one market might not always be successful in another. It’s a much harder subject to communicate across borders, Rand continued. It’s not like marketing Chardonnay or vodka, two well-known products on a global scale.

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