‘Aggressive measures’: Kirin outlines plans for beer and sugar-free product innovation amid profits slump
Kirin recently announced its Q3FY2023 financial results, reporting a 6.2% increase year-on-year in revenue to JPY1.55bn (US$10.5bn) and a 4.7% increase year-on-year in normalised operating profit to JPY141.5bn (US$959.2mn).
Normalised earnings is a term reflected adjustments made to financial reports that eliminate the impacts of ‘one-off effects that may impact the net income’, according to the Corporate Finance Institute.
However, the company also simultaneously reported a decline of -30.3% year-on-year in profits before tax to JPY142.4bn (US$965.3mn), indicating that it is still significantly feeling the impacts of cost increases, despite having already utilised ‘aggressive marketing investments and price increase’ strategies.
In order to cope with these impacts and hopefully regain more consumer interest, Kirin Senior Executive Officer and General Manager of Corporate Strategy Hiroaki Takaoka said that the firm will be taking steps to improve its performance.
“From October and beyond, we will continue to take aggressive measures in each category to capture the changing demands of our consumers,” he told the floor when presenting the financial results.
“As many of you may know, the second revision of the liquor tax in Japan which will be implemented this October and the unification of liquor tax for the three categories of beer, happoshu and new genre scheduled for 2026 [are the] main topics in the Japanese beer market now.
“Our forecast predicts that even after the unification of liquor taxes, there will be a total of three price categories: Premium, Standard, and Economy, as well as a functional category.
“The most recent market forecast indicates that while there will be a shift to some extent towards premium and standard beers, a significant percentage of the economy and functional category will remain – so under these projections, we believe that having strong brands in all four categories ) will be a significant advantage in capturing demand
“To that end, we are working to strengthen our brand portfolio, and [as of September 2023] our beer products’ performance has been progressing as planned - We are seeing positive results, particularly in the recovery of the trend towards KIRIN ICHIBAN Zero Sugar, which has been a challenge for some time.”
The plan is for ICHIBAN to tap on its current positive trend to launch multiple new products to attract new users to the premium category, and also establish a solid position in the economy and functional categories with brands such as the HonKirin and Tanrei Green Label happoshu products.
RTD and sugar free a market to grow
Kirin also has its eye on further developing its RTD and sugar-free products, given the significant growth experienced with its RTD lemon vodka soda Kirin Hyoketsu Sugar Free.
“Kirin Hyoketsu Sugar Free saw an approximately 40% growth in sales volume year-on-year,” Takaoka said.
“In addition to the existing Hyoketsu Sugar Free, our new shikuwasa citrus product also performed well and contributed to the increase in sales.
“As a whole, the RTD alcohol category is expected to show strong growth in the future.”
The focus on sugar-free is unlikely to be limited to alcoholic innovation – in Kirin’s non-alcoholic beverages portfolio, core tea brands Gogo-no-Kocha and Nama-cha saw an approximate 5% increase in revenue year-on-year.
The Gogo-no-Kocha Muto (sugar-free) series saw an approximate 30% increase year-on-year in September after going through a brand refresh, signalling a strong likelihood of more efforts to come in the sugar-free tea space.
