Japanese beverage makers struggle in SE Asian markets

Major Japanese beverage makers are struggling to gain a foothold in emerging Asian markets with a product that is a hit back home-green tea.

Green tea products flavoured with honey and strawberry tend to be popular in those countries, where people prefer sweetened flavours. Furthermore, Japanese makers have not been able to compete with local companies in terms of brand recognition.

The Japanese companies have been aiming to develop new markets through such strategies as demonstrating that their products offer health benefits.

In a store in central Bangkok, green tea products lined the shelves. Some of their labels were printed with "Ryokucha" (green tea) in kanji characters while others featured pictures of Mt. Fuji.

In Thailand and some other Southeast Asian countries, increased health consciousness has led to a green tea boom in the last several years.

Two local firms, including the country's No. 1 beverage maker, Oishi, together hold a market share of more than 50 per cent. Meanwhile, Japanese companies account for only a few per cent.

"In Thailand, we're not happy unless there's sugar in it," said a 30-year-old woman working for a local information technology company. "Oishi ads are everywhere and it's a familiar name to us."

In the past, Japanese makers tried to release green tea products with added sugar to suit local tastes. In 2006, Kirin Beverage Co. released its Namacha product line with added sugar, and in 2011, Suntory Beverage & Food Ltd. released similar products.

But in both cases, sales failed to grow and the companies discontinued the products in 2012.

In the Vietnamese and Indonesian markets for tea products, the situation is similar, with Japanese makers holding a total market share of just a few per cent. Though their prices have been set at similar levels to those of local makers, the Japanese companies appear to be facing "walls built by taste buds".

"There's a deep-seated preference for green tea products that contain a lot of spices and sugar, which we like to call 'quasi-green tea'", an official of a major Japanese maker lamented. "So the delicate aroma and flavours of Japanese-style green tea are not well appreciated [in the countries]."

As a result, Japanese companies have been aiming to make their mark with products other than green tea.

Suntory applies technologies used in its Kuro Uroncha (Black oolong tea), which is a hit in Japan and designated as a food for specified health use.

In September, Suntory launched its "Tea +" product line, which contains polyphenol extracted from oolong tea leaves. Polyphenol can reduce the tannic quality of tea and minimise fat absorption.

Suntory plans to release similar kinds of products in Vietnam and Indonesia.

Kirin also began sales of functional beverages in Vietnam in 2011.

This year, Asahi Group Holdings Ltd. established a joint venture beverage maker in Indonesia with a local company. With the joint venture, Asahi plans to establish a full lineup of tea, juice, drinking water and many other kinds of beverages.

Sapporo Holdings Ltd. holds an about 70 per cent share in Singapore's tea product market, thanks to its Pokka brand. Based on its experience in the Singapore market, Sapporo hopes to popularise its brands in other Southeast Asian countries.