Photo: REUTERS file
business

Asahi says Korean beer boycott cost it ¥3 billion last year

27 Comments

Japanese beer and beverage maker Asahi Group Holdings said Friday a South Korean consumer boycott of Japanese goods cost it around 3 billion yen ($27.32 million) last year.

“The impact is continuing in the current year,” Atsushi Katsuki, a senior Asahi executive told reporters. In addition to lost sales, the company was having to dispose of unsold beer which were past their expiry dates, he said.

Tensions between the two countries escalated after a South Korean court in 2018 ordered Japanese companies to compensate Koreans who were forced to work for Japanese occupiers during World War Two. Japan later retaliated by restricting exports of high-tech materials to South Korea.

Before the boycott, South Korea had bought 61% of Japanese beer exports. Asahi Super Dry was the most popular import brand in South Korea, according to Euromonitor.

Asahi Group’s operating profit in 2019 fell 4.9% from a year earlier to 201 billion yen, hit also by a higher yen. The company expects a 1% rise to 203 billion yen in the current year, missing the market’s forecast for 242 billion yen, according to Refinitiv data.

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27 Comments
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In addition to lost sales, the company was having to dispose of unsold beer which were past their expiry dates, he said.

This is unforgivable! Worst crime ever committed against beer!

13 ( +15 / -2 )

On top of it Korean beer is terrible. What are they going to drink now?

12 ( +22 / -10 )

They should have sponsored events with that beer instead of wasting it....

13 ( +13 / -0 )

That's because it's overpriced and the greedy corporate execs failed to listen to their marketing people even if it meant cutting prices to break even vs total failure and now crying about it. Poor planning.

-1 ( +6 / -7 )

Another proof of the total ignorance on marketing in Japan.

as one person remarks here with just a tiny bit of creative thinking this beer could have been used for events, university party, donations. It was a unique opportunity for Asahi but they could come up with nothing better but to destroy it. Yes, it would have meant even a bit less sales as free beers means not sold beers but the marketing, branding, CR or PR gains would have made it worthwhile.

if the destroyed beer was in Korea, even a better opportunity but it would have required some more marketing skills. Of course if you count on Dentsu for your creative thinking...

even this senior executive doesn’t have the sense to keep this out of the public eye. Promote him to chief marketing exec. He has all the qualities

3 ( +8 / -5 )

Its Koreas loss. Asahi is huge, and losing $27m or so is a tiny drop in the bucket. There is no end of markets around the world with their hands up screaming to be sent delicious Super Dry.

This is unforgivable! Worst crime ever committed against beer!

Agreed 100%! I would have helped them out with that!

3 ( +13 / -10 )

The company expects a profit rise of 1 % ?

wait a minute

1) we will see about 500.000 less Chinese visitors per month in japan

2) the Japan population will decline by 600.000 people just in 2020.

3) the Korean boycott continues

4) exports to China will not increase

5) domestic consumption was on a continuous decline anyway

so, more profit can only come from cost cutting, doubt Asahi is any better at that than marketing

9 ( +13 / -4 )

Lets not forget that Japan never retaliated anything; it was just an export control so that those pesky Koreans won't export key semiconductor materials to North Korea because, you know, North Korea has a really big semiconductor industry lol

15 ( +19 / -4 )

as one person remarks here with just a tiny bit of creative thinking this beer could have been used for events, university party, donations. It was a unique opportunity for Asahi but they could come up with nothing better but to destroy it. Yes, it would have meant even a bit less sales as free beers means not sold beers but the marketing, branding, CR or PR gains would have made it worthwhile.

No-one's driving...

Jeff KoToday 09:16 am JST

Lets not forget that Japan never retaliated anything; it was just an export control so that those pesky Koreans won't export key semiconductor materials to North Korea because, you know, North Korea has a really big semiconductor industry lol

And it's looking like a catastrophic failure as South Korean industry has just turned round and begun to make its own materials:

http://www.asahi.com/ajw/articles/13072992

Fighto!Today 08:47 am JST

Its Koreas loss. Asahi is huge, and losing $27m or so is a tiny drop in the bucket. There is no end of markets around the world with their hands up screaming to be sent delicious Super Dry.

This is unforgivable! Worst crime ever committed against beer!

Agreed 100%! I would have helped them out with that!

As comical as ever. I thought you true-blue Aussies wouldn't give a XXXX for tasteless, gassy beer made from rice?

-3 ( +6 / -9 )

This is a very good example of how consumers are not only looking at the product, but also the ethics and sustainable business practices of a company and its brand. Gone are the days that corporations can count on just making a good product, they also need to show they implement sustainable business practices.

If I was the CEO of a global beverage company such as Asahi, I would have worked on showing Asahi is not a Japanese company but a global company, and set up a licensing deal with a Korean beverage company. Asahi could still could do this.

0 ( +2 / -2 )

Japanese beer companies are making a killing.

Buy a 12 pack of imported Asashi, Kirin, Sapporo in Hawaii for $8.

A case at Costco for for $15.

Beer never on sale in Japan.

7 ( +9 / -2 )

Japan later retaliated by restricting exports of high-tech materials to South Korea.

No, for the 1,000 time, they didn't restrict anything. The disingenuousnes shown by Reuters/AP/AFP etc is a component of anti-Japan propaganda. The question is why. Why are they continuously misrepresenting the normalisation of exports of those sensitive materials? The fact is that South Korea can (now), and has always been able to obtain those three sensitive materials. This is not a "restriction". Before the normalisation, they could get those materials on a fast tracked basis (the only country in Asia that enjoyed such a benefit from Japan) because at that time South Korea was regarded as a trustworthy export market. However, Japan requested further information from South Korea about where those sensitive materials that could be used in weapons manufacture eneded up, or who the 'end user' was. South Korea refused to provide that information for over 3 years (and still hasn't) so Japan decided South Korea was not trustworthy enough to remain on the fast tracked export approvals list of countries for those materials, so they were removed from the list. All that did was require South Korea to go through NORMAL export procedures that could take up to 90 days instead of around 1 week.

How did South Korea react? Rather than admit they had re-exported those sensitive materials to North Korea breaking the trade sanction against that country, they cried foul and enacted a nationwide boycott on Japanese products. The overall effect of this on Japan (as stated in this article) is minimal, as it could be likened to getting hit by multiple open handed slaps, rather than one heavy punch to a sensitive area. But read any propaganda by the South Korea press and they would have you believe that they took a massive punch from Japan because of a wartime disagreement on forced labour. So according to South Korea, they have been impacted by Japan **so much buy the normalisation of export procedure on these three materials, that they had to retaliate with a nationwide boycott of Japanese goods.**

The insidious nature of the South Koreans in this matter has damaged relations with Japan immensely. The only thing South Korea can do is enter talks with Japan and capitulate on their anti-Japan position which they've fostered since 2015. They have done that in recent talks (although not come to any positive conclusions as yet). So the continuing disingenuous trash reporting by these news outlets makes one wonder what is their agenda in all this.

Alfie NoakesToday  09:36 am JST

And it's looking like a catastrophic failure as South Korean industry has just turned round and begun to make its own materials: http://www.asahi.com/ajw/articles/13072992

You call South Korea making their own sensitive materials that can be used for weapons manufacture which they will continue to export to North Korea (the whole reason Japan enacted normalisation of export procedures in the first pklace) in defiance of trade sanctions a 'catastrophic failure'?

What is actually happening is that South Korea are setting themselves up to be caught red-handed by the WTO and US aiding and abetting a Rogue state's weapons program, which will in turn cause South Korea to receive their own trade sanctions!

You really must take a step back and see what really happening here.

7 ( +14 / -7 )

What a waste! I will GLADLY take any expired beer you have on hand.

4 ( +4 / -0 )

"1) we will see about 500.000 less Chinese visitors per month in japan

2) the Japan population will decline by 600.000 people just in 2020.

3) the Korean boycott continues

4) exports to China will not increase

5) domestic consumption was on a continuous decline anyway

so, more profit can only come from cost cutting, doubt Asahi is any better at that than marketing"

All of which will be offset by Japan's overseas investments.

Japan's "fate" resides in it's humongous profits from direct investment abroad; nothing to do with declines in the domestic market. Japan exports capital and technology, building real factories and employing millions around the world; not tourism as some JT "brains" remind us daily.

As long as the world (not China) does not sink, neither will Japan.

People need to do more research.

-3 ( +7 / -10 )

AlfieNoakes - "..As comical as ever. I thought you true-blue Aussies wouldn't give a XXXX for tasteless, gassy beer made from rice?.."

Actually Asahi is a Big Brand name in Australia marketing a full range of it's drinks both alcohol & non alcohol.

It has a large manufacturing base and Super Dry is the largest selling Asian beer in Australia. It has a positive image as a quality dry beer.

It is although still dwarfed by the giants with many of these - XXXX, Tooheys, Hahn, Boag etc - strangely enough being owned by none other than Kirin.

13 ( +13 / -0 )

Actually Asahi is a Big Brand name in Australia marketing a full range of it's drinks both alcohol & non alcohol.

It has a large manufacturing base and Super Dry is the largest selling Asian beer in Australia. It has a positive image as a quality dry beer.

Well, you learn something new every day. Thanks for that. It just shows the power of advertising, doesn't it.

-2 ( +2 / -4 )

Its Koreas loss. Asahi is huge, and losing $27m or so is a tiny drop in the bucket. There is no end of markets around the world with their hands up screaming to be sent delicious Super Dry.

I think you are exaggerating a bit here, cobber.

6 ( +10 / -4 )

USD27m is a drop in the bucket for Asahi. And it was a completely useless boycott on SK's part since all they had to do was provide the requested export information to get back on Japan's White List.

5 ( +13 / -8 )

Japan's "fate" resides in it's humongous profits from direct investment abroad; nothing to do with declines in the domestic market. Japan exports capital and technology, building real factories and employing millions around the world; not tourism as some JT "brains" remind us daily.

As long as the world (not China) does not sink, neither will Japan.

People need to do more research.

How about those Japanese living in Japan employed by small or medium sized businesses? If it is all good why is the Japanese government try so hard to promote tourism? Why increase the sales tax? Why allow more foreign workers into Japan? The you so call 'humongous profits' from direct investment abroad do not benefit everyone living in Japan. Also if China sinks than the global economy will face a disaster. It is you who needs to do more research.

2 ( +5 / -3 )

You kinda have to wonder sometimes, how long someone could possibly play the victim card for.

12 ( +13 / -1 )

If you look at Asahi’s annual report their revenue in for beer in FY 2018 was around 941 BIllion Yen so this is 0.3% of annual beer sales.

i am in full agreement with those who see this as wasteful and would have also chipped in to dispose of some beer

-1 ( +1 / -2 )

I got a lot of negative feedback.

do people actually like Cass and Hite?

They are terrible

0 ( +2 / -2 )

do people actually like Cass and Hite?

They are terrible

My beer snob mate says Asahi is terrible.

As a whisky drinker, I don’t think I’m in a very good position to judge. Asahi is very gassy though.

1 ( +2 / -1 )

Those who say the amount of sales loss in Korea is negligible have no idea how business entity is valued. Let's say company ABC has an annual sales of 10 million dollars in country DEF. That adds about 200 million dollars to the ABC's market cap in the most conservative metrics. To have that much revenue gone to zero causes all kinds of troubles, especially when the company is buried in debt, which Asahi is.

2 ( +3 / -1 )

"How about those Japanese living in Japan employed by small or medium sized businesses? Why increase the sales tax? Why allow more foreign workers into Japan? "

ANY country/economy has residents who need to work, Japan included.

No exceptions allowed.

"why is the Japanese government try so hard to promote tourism?"

Tourism is 7.4% of Japan's GDP.

Tourism % of GDP:

UK: 9% of GDP

France : 9.7%

"Darling" South Korea:

"Tourist, trade figures with South Korea grim reading"

http://www.asahi.com/ajw/articles/AJ201911210066.html

"What were you saying about Japan again?The you so call 'humongous profits' from direct investment abroad do not benefit everyone living in Japan."

It's NOT me saying; it's the World Bank.

You NEED more research! 

"if China sinks than the global economy will face a disaster. It is you who needs to do more research."

China is ONLY ONE destination for Japan's MASSIVE foreign direct investment.

China collapsing will have an effect but Japan DIRECT investment is EVERYWHERE you can think of. The World must collapse first taking Japan along with it.

Why do you think Japan has been in "recession" since the Plaza Accords" but still has the World's third largest GDP?

One example for you: Japan is one of the biggest foreign employers and investors in the UK. Mind you, they're heavily invested in Capital goods and Finance. Did I hear you shouting tourism?

Thought not.

Japan is the World's LARGEST FOREIGN CREDITOR!

Over 20 years on the trot. And counting.

There is a reason for that.

Conclusion:

More research is in order for you.

-2 ( +2 / -4 )

@Peeping_Tom

Japan is also one of the most indebted nations in the world!

I noticed the tax rate in Japan recently and the other increases-did you?

Know anyone getting higher wages?

Part time jobs at a high over full time jobs

Etc etc

Japan is on the brink to sink.....

-2 ( +1 / -3 )

And what overseas investments does the ordinary Japanese possess?

1 ( +1 / -0 )

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