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Food & Beverage

Suntory takes signature ready-to-drink cocktails to Taiwan

Japanese distiller tries to woo beer drinkers with flavored 'alcopops'

Research suggests demand for RTDs will grow steadily in Asia, and Suntory Holdings is positioning itself to cash in on fresh demand. (Photo by Ryoma Kashiwagi) 

TOKYO -- Beverage maker Suntory Holdings will serve up a new alcopop for Taiwanese drinkers as it tries to build on its success in Japan of ready-to-drink beverages.

The push into Taiwan, which begins Wednesday, reflects the latest attempt by a Japanese drinks company to expand the scope of canned cocktails to attract consumers who typically shun traditional alcoholic drinks.

The RTD beverage category has doubled in Japan over the past decade, while the domestic beer market shrank in 2019 for the 15th straight year.

Suntory has been in the Taiwanese market for a decade. It is competing with U.K. spirits group Diageo, which holds about 20% of the RTD market, and local maker Paolyta, with about 37% in 2018. Suntory's share is 16.8%, according to Euromonitor International.

Suntory is targeting male beer drinkers over 30 years old with its -196 C Strong Zero beverage. The company sold 690,000 cases of RTDs in Taiwan last year and is targeting sales of 60,000 cases this year for its Strong Zero brand.

Research by Euromonitor suggests demand for RTDs -- flavored alcoholic beverages, alcopops and premixes with about 5% alcohol -- will grow steadily over the next few years in Asia. The company expects the global market to hit 5.9 billion liters in 2023, up 29% from 2019, with the Asian market up 37% to 2.1 billion liters.

For beverage companies, the RTD market offers a cost-effective way to reach consumers. Kiyokazu Shibukawa of EY Advisory & Consulting noted that "the number of players has increased significantly in the RTD market, as the drinks don't require brewing or distillation."

He also said that while young people are drinking less than previous generations, they are still buying beverages such as low-alcohol RTDs.

Suntory hopes to make Asia a strategic region, saying it will expand in countries familiar with Japanese culture and food.

"Most RTD manufacturing plants are located in Asia [and] many beverage companies are eager to expand business in the region as the transportation cost is low," Shibukawa added.

Suntory became the world's third-largest spirits maker after its acquisition of U.S. distiller Beam in 2014, lifting the beverage group's revenues by 2% to 2.3 trillion yen in 2019, boosted by strong sales of its coffee drinks.

Despite current growth, Suntory is more concerned about faltering demand at home, where young people are drinking less, increasing the urgency to expand abroad. Other Japanese beverage makers are facing the same challenge.

Asahi Group Holdings, Japan's biggest brewer, completed the acquisition of Anheuser-Busch InBev's European business for $10 billion in 2017, and last year extended its overseas reach with the $11-billion purchase of Australia's Carlton & United Breweries, also from InBev.

Meanwhile, Japan's second-biggest brewer Kirin Holdings is diversifying into the health and well-being sector, despite being pressured by a U.K. activist investor to focus on its core beer business.

Last year, Kirin acquired a 30.3% stake in cosmetics and health food maker Fancl and took over Kyowa Hakko Bio's biochemical business.

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