Government regulations and microbreweries in Japan

Abstract

This paper provides an analysis and a brief historical overview of the development of Japanese beer industry, encompassing both microbreweries and the major brewing companies that have been dominating the market. The growth of beer sector has been accompanied by the development of sectoral tax and regulatory policy. Reviewing the long-term trend of beer industry and of relevant taxation/regulations through macro-perspectives and detailed case studies, we found that the protective licensing policy and high burden of taxation have historically favored large firms, although the deregulation of 1994 enabled the naissance of microbreweries. Nonetheless, microbreweries, facing severe price competition and low profitability, are found to be on the decline over the past two decades. Craft beer has become a boom in Japan since 2014; however, major four breweries started to enter the craft beer market, leaving microbreweries’ future situation unpredictable.