How a Japanese population crisis made Asahi one of the biggest brewers in Europe

A decade ago, when the legendary Japanese brand Asahi was trying to figure out how to break into the European beer market, it turned to a then unknown benchmark enemy: the premium Italian brand Peroni Nastro Azzurro.

Soon, however, Peroni’s sales would become a much more vital benchmark for the brewer when Asahi took over the brand in 2016.

Asahi Super Dry, the premium Japanese beer that appears in Asian restaurants and a growing number of pubs across Europe, has quietly made much bigger waves in the region thanks to its parent company’s many acquisitions over the past decade, cementing its position as important. striker from the continent.

The brewer expects revenues of €4.7 billion from Europe alone this year, a 5% increase over 2023, and a profit of €584 million. Europe is now Asahi’s biggest market outside of Japan, accounting for 27% of its sales in the first half of 2024.

Japan’s population crisis

Asahi’s venture into the European market was no accident, and one CEO, Atsushi Katsuki, says it had a lot to do with Japan’s ever-challenging aging population.

Japan’s working-age population has experienced a relentless decline over the past 30 years, with the number of people aged 15 to 64 falling from a peak of 87.1 million people in 1994 to 72.8 million in 2023. This decline in the working-age population has become an existential crisis for Japanese companies, including Asahi.

“If you look at the Japanese beer market, since 1995, the market has contracted at a rate of 1-2% per year, and we think this will continue,” Katsuki said. wealth on a visit to London.

In many ways, Japan serves as a precursor to the Western world, which is facing its own demographic crisis with a declining birth rate decades after it began to affect Japan. Meanwhile, however, Asahi is making hay while the sun shines on the European beer market.

For a successful but niche Japanese brewer like Asahi, the challenge of breaking into Europe’s lucrative but brand-loyal beer sector was considerable.

Japanese brewers have created popular innovations domestically to get locals to enjoy their beer. Asahi’s domestic competitor, Kirin Ichiban, introduced frozen beer to Japanese drinkers, which gives their beers a frozen top and helps keep temperatures below freezing while customers drink. Asahi experimented with its own subzero beers in the country.

“I don’t think it works if you have a unified global marketing strategy,” Katsuki said as he explained why these innovations haven’t made it to Europe.

Instead of conquering the Europeans with Japanese innovations, Asahi took a different approach, namely, if you can’t beat them, join them.

Asahi bought Peroni and Dutch lager Grolsch from AB InBev in a multibillion-dollar deal in 2016. The group then bought brewing assets from British brewer Fuller, Smith & Turner for £250m (then $326 million) in 2019.

There has been a strong shift towards ‘premiumisation’ in the spirits market in recent years, and beer is no different. Buying Peroni seemed like a natural next step in that premium evolution.

Indeed, as part of its strategy to increase global sales of Asahi Super Dry, Asahi used Peroni’s sales in London as a benchmark before the group acquired the Italian beer brand.

In reality, Asahi Super Dry and Peroni Nastro Azzurro seem to target the same type of consumer, two premium lagers that give customers an international feel when drinking.

“It’s true that the value proposition of these two brands are similar in that they offer this idea that it’s stylish, high-end, premium and refreshing.”

Katsuki said leaning into Peroni’s “Italianness” and Asahi’s Japanese ties were winning strategies that spoke to the feeling drinkers want to experience when they buy beer.

There were other benefits to working in Europe, says Katsuki, including strategies for managing profitability growth and building a popular brand.

Asahi is now the number one beer supplier in Poland, the Czech Republic, Romania and Hungary, while Katsuki says the group is “one of the biggest players” in the super-premium category in the UK.

The Temperance Movement of Europe

One trend Asahi expects Europeans to follow in Japan is a move toward frugality.

Asahi aims for 20% of its global sales to come from non-alcoholic and low-alcohol beverages by 2020, up from 7.7% today. In Japan, this figure is already around 15%.

Sales of low-alcohol beer in the UK grew faster than any other market last year, boosted in part by post-Brexit regulations that levy cheaper taxes on low-alcohol drinks. But it reflects a wider movement towards sobriety across Europe.

Katsuki says his company is seeing more diverse demand even in the low-alcohol and non-alcohol sector of its business, with consumers demanding more variety and flavored beers to quench their thirst.

“We can see that a non-alcoholic flavored beer becoming really popular suggests future growth in our adjacent beer category, as this provides an opportunity for those people who either choose not to drink beer or cannot drink beer. keep enjoying the drinking culture.”

European challenges

Challenges persist for the Japanese brewer in its bid to compete with native European rivals such as AB InBev and Carlsberg.

Last year, Katsuki highlighted the shortage of barley and hops as a serious risk to beer supplies in Europe. While Russia’s invasion of major grain supplier Ukraine has impacted supplies, the more existential risk comes from climate change.

The group is working with Microsoft to improve crop detection while diversifying its production, but climate change remains an unrelenting risk to Europe’s beer supply.

Another odd challenge that seems to have become an increasingly European affair is that of fake continental lager.

UK drinkers have been won over by Madrí, a Spanish-themed beer with tenuous ties to the country and produced entirely in the UK.

The trend prompted Estrella’s Spanish CEO to call out Madri, accusing the brewer of dishonesty while eating into his company’s market share.

Katsuki says he understands why there might be frustration among brewers and consumers with ambiguous beers nationwide.

“In a way, they probably think the producers are faking the origin of that beer,” Katsuki said.

“However, consider the impact of the climate crisis if you were to brew beer in Italy or Spain and ship it to the UK, that will increase CO2 emissions.” He added that imported beers do not have returnable bottles, further reducing durability.”

There are several expansion plans from Asahi. Its famous Nikka whiskey brand has been largely limited in Japan due to a long-term shortage of the vital liquid, meaning only 10% of its sales are outside Japan.

Katsuki says Nikka regularly receives inquiries from customers in overseas markets, and Asahi is developing a plan to improve production.

Either way, Europeans can expect to get used to a Japanese twist to their favorite drinks, even if they may not be aware of it.