Good question too about those jumbo cans of beer – where have they gone? Maybe convenience don’t want to stock them because they take up too much space. Or maybe the Japanese have tended to party less since the 1990s …

As for “third-category beer” (with no malt at all), Australian Customs apparently tested some products recently for “malternatives” and concluded that they were not beer. But this review does not seem to have affected “Smirnoff Platinum”, a new product that sells for much less than say vodka-based “Smirnoff Ice Double Black” (with similar alcohol content) precisely because tax on beer-based products is now half that on “alcopops”, raised last April to diminish their popularity among young drinkers. But Health Minister Nicola Roxon has said:

“I will take a dim view of anyone seeking to exploit current tax arrangements. It’s about time the producers of alcopops and malternatives considered the impact these drinks have on the community rather than just their profit margins.”

[“Smirnoff Platinum beats alcopop laws”, The Daily Telegraph, 17 January 2009, http://www.news.com.au/couriermail/story/0,23739,24929101-23272,00.html

So, we seem to have similar behaviour by producers (and consumers) in Japan and Australia, responding to tax rate differentials. But a greater (expressed) concern in Australia with implications for public health rather than protecting the tax base, as the government tries to use tax rates to keep young people away from sweeter alcoholic beverages.

I wonder how Japanese health experts have responded to the popularity of sweet “chu-hai” alcopops in Japan, mostly based on shochu, and whether that market development was also a response by shochu manufacturers to the adverse WTO ruling in the shochu-whisky case.

By the way, JETRO Sydney has just circulated a report on Japanese brewers’ recent investments into the beverages industry in this part of the world, including also Suntory’s October 2008 acquisition of Frucor, NZ’s second largest non-alcoholic drinks manufacturer: http://www.jetro.go.jp/australia/topics/20090107716-topics.

Also, I don’t think the European Commission will be very much interested in filing another case in the WTO about the Japanese beer. They “won” in the previous dispute with Japan over shochu, but what did they gain from their victory? The tax discrimination between shochu and other distilled liquor was eliminated, as requested by the EC. Fearing that raised tax on shochu would dampen their sales, the Japanese shochu distillers started a clever marketing campaign, emphasizing the subtle differences of tastes in micro-distilleries (not unlike those in Scotland) and shifted to high-end products. The resulting shochu “boom” in Japan brought large profit to them. What about the Scotch distillers? Contrary to their expectations, the reduced price of Scotch (as the result of the tax reduction) actually had negative impact on their sales. I suspect that this was because Scotch whisky (like Johnny Walker and Chivas Regal) was typically used as corporate gifts. Ironically, it was important that they carried high price tags. The shochu boom didn’t help either. As the WTO panel correctly pointed out, whisky and shochu are substitutable and/or directly competitive products. If the consumption of shochu goes up, the consumption of whisky goes down. So, overall, the European Communities did not gain much out of this costly litigation.