Market share of beverage

5 majors occupy Japanese beverage market !?

The market size of beverages except alcoholic drinks in Japan is about 5.1 trillion yen(about 51 billion dollars) according to the report of Japan Soft Drink Association in 2018. This market in 2017 increased 0.4% from the previous year because of many sunny days. It is increasing slightly year by year.

The sales of tea, water, vegetable juice and specific health juice are increasing because many Japanese are preoccupied with a health trend. The sales of soda like Coke is decreasiong because of the same reason. On the other hand, the sales of energy drinks is increasing rapidly. "Red Bull" and "Monster Energy" are very popular among young Japanese in recent years.

In the Japanese beverages market, Coca-Cola Bottlers Japan has the top share of this market. Suntory Holdings has the second share, Asahi Group Holdings has the third share, Kirin Holdings has the fourth share and ITOEN has the fifth share of this market. In addition, Crystal geyser and Danone expand mineral water market.

There were Coca-Cola Esat Japan and Coca-Cola West Japan until 2017. They integrated their operations and established a new holding company Coca-Cola Bottlers Japan Holdings in April 2017. Its sales overcomes one trillion yen by only beverage except alcoholic drinks, and accounts for 27% of the beverages market. They integrated their operations to improve management and distribution efficiency because of aging society and rising distribution cost. Therefore, it expand alcoholic market in Japan. It developed and sold its first alcoholic drinks named Remon-dou in 2018.

Suntory has the second share of this market was found by Shinjorou Torii in 1899. Its sales is about 2.6 trillion yen in 2017, the sales of beverage segement is 1.2 trillion yen. The other is sales of alcoholic drink. Suntory's top sellers are green tea named Iemon, Oolong tea and Mineral water named South Alps' natural water. It is proactive in expanding overseas by M&A. It bought Orangina Schweppes of France in 2009 and Jim Beam of USA in 2014. Its overseas sales accounts for 40% of total sales.

Asahi Group Holdings has the third share of this market, its sales in 2017 is about 2.1 trillion yen. Its top sellers are soda named Mitsuya cider, blended tea named Jurokucha and sparkling water named Wilkinson. In addition, Asahi bought CALPIS(CALPICO) from Ajinomoto Co. in 2012. Especially, the sales of Wilkinson is increasing year by year because of Highball hit from 2009. Japanese Highball consits whiskey and soda. Many people buy Wilkinson to drink Highball because Wilkinson is hard sparkling water. The sales of Wilkinson became 10 times for 10 years.

Kirin Holdings has the fourth share of this market, its sales in 2017 is about 2.0 trillion yen. It started in 1907 by succession of Japan brewery Company which is the first beer company in Japan. Kirin's top sellers are green tea named Namacha, black tea named Gogo-no-Kocha. Itoen has the fifth share of this market, its slaes in 2017 is about 500 billion yen. It is well known as the first comapny which make canned oolong tea and green tea. Its top sellers are green tea named Oi Ocha, Barley tea.

Japanese beverage companies are proactive in expanding overseas because of Japanese aging society. On the other hand, they often plan to merge domestic companies. In the past, Kirin and Suntory negotiated toward business integration in 2009. They failed in negotiation in 2010, but they might restart that again in the future. There will be progress in restructuring of Japanese beverage industry.

Coca-Cola Bottlers Japan(TYO:2579), Suntory Beverage & Food Limited (TYO:2587), Asahi Group Holdings(TYO:2502) and ITOEN(TYO:2593) are listed on the Tokyo Stock Exchange. Foreign investors can invest in Coca-Cola Japan and Suntory on NYSE by ADR(American Depositary Receipt). They can also invest these companies through many ETFs, iShares MSCI Japan ETF(EWJ), Wisdomtree Japan Hedged ETF(DXJ) and more. Many Japanese companies increase their sales and profit with weak yen. If investors want to hedge an impact of fluctuations in foregn exchange rates, they should invest currency hedged ETFs, Deutsche X-trackers MSCI Japan Currency-Hedged Equity Fund(DBJP) and iShares Currency Hedged MSCI Japan ETF(HEWJ).