Japan’s beverage can market rebounds

A traditional Japanese vending machine

David Hayes surveys the steady recovery of Japan’s beverage can market, which is seeing continued growth in bottle cans, vending machines, and through foreign investment in the country 

 

All images courtesy of David Hayes 

he recent popularity in Japan of chuhai spirits cocktail drinks in aluminium bottle cans, and a rebound in canned soft drinks consumption after the easing of Covid-19 social distancing restrictions, has helped lift demand for two-piece beverage cans in the country over the past year. This is helping offset some of can manufacturers’ lost sales due to earlier government lockdowns in 2020 and 2021. 

Growing consumer preference for canned beverages instead of PET bottled drinks is another cause for can manufacturers’ cautious optimism, as an anti-plastic packaging sentiment gradually develops in Japan. 

The country’s combined two-piece and three-piece can market is estimated at about 27.4 billion cans per year, with aluminium cans accounting for more than 70 per cent of total can use. 

In 2021, Japan’s two-piece can market was estimated at about 20.6 billion cans, up fractionally from 2020 and its government-imposed lockdown, according to market research firm, Statista.com. 

Toyo Seikan Group, Japan’s largest producer of two- and three-piece cans, recently announced that total packaging business income from metal cans, along with its plastic, paper and glass packaging products, generated JPY 500.39 billion in net sales in the financial year ending 31 March 2022 (FY2021), up 1.1 per cent year-on-year, and JPY 11.28 billion in operating income, down 18.3 per cent year-on-year. 

The group also stated in its FY2021 financial report that “Sales of metal packaging products increased from the previous year,” due to an increase in sales of alcoholic beverage cans for chuhai cocktails and a rebound in sales of cans for soft drinks.

Among its metal packaging-related interests, Toyo Seikan Group also reported growing demand for its contract beverage filling services, as more beverage companies in Japan and elsewhere in Asia look to outsource their product filling needs to reduce their own capital investment and operational costs. 

Overseas interests of Toyo Seikan include investments in US packaging machinery manufacturer, Stolle Machinery Company, and beverage filling businesses in Thailand and China that booked new orders from clients for tea drink-filled packaged products last year. 

Toyo Seikan produces two- and three-piece cans, and 18-litre cans in five factories in Japan, as well as two factories in Thailand – Bangkok Can Manufacturing Co Ltd and Next Can Innovation Co Ltd. 

The group’s Japanese can making facilities include the Ishioka plant in northeastern Ibaraki prefecture, where work has reached the mid-way stage implementing a major JPY 8 billion three-year investment scheme to upgrade beverage can manufacturing facilities that is due for completion in March 2023. 

Associated domestic beverage can-related facilities in Japan include Toyo Seikan’s beverage filling plant in Sendai in Miyagi prefecture, while the group also operates overseas beverage filling plants in Ayutthaya, Thailand and Changshu, China. 

Meanwhile, Toyo Seikan’s mid-term management plan to 2025 includes initiatives to enable the group to expand its domestic and overseas two-piece, can-related business activities. 

Coffee bottle cans are popular with Japanese consumers

Bottle cans

Toyo Seikan’s bottle can sales have not only been lifted by the popularity of chuhai cocktail drinks, but also by small Japanese sake bottle cans.

The FY2021 financial report notes that Toyo Seikan has developed its Tsume-Taro small-size can filling equipment rental service in partnership with Agnavi Inc, which sells various brands of Japanese sake in single serve, two-piece cans. 

Toyo Seikan supplies sake breweries with its single serve small-size sake bottle and regular cans, as well as its filling equipment, which is designed to serve small client needs, such as those operating rural sake breweries. 

Japan’s chuhai cocktails in bottle cans boom has also been helped by the growth in home consumption of alcohol. Sales of chuhai spirits in bottle cans began to take off early in 2020, just as the Covid-19 crisis was about to break. 

Previously sold in regular SOT beverage cans in a variety of flavours, the current chuhai in bottle can fashion trend was started by Asahi Breweries, which decided to launch a new recipe of intense lemon-flavoured chuhai, to extend its cocktail range. To differentiate the new lemon chuhai cocktail on shelves in convenience stores’ drinks cabinets from its competitors’ chuhai offerings in regular SOT beverage cans, Asahi chose a bottle can design. 

Asahi’s new lemon chuhai was an immediate success, and soon after, all Japan’s other major alcoholic beverage companies followed suit and launched their own new lemon chuhai products, also choosing bottle can packaging. 

Vending machines

Convenience stores and vending machines in Japan were most affected by the pandemic, but canned drink sales are once again accelerating as office workers and on-the-go consumers make their return. 

Japan has the world’s highest density of vending machines, with some four million vending machines of all types installed countrywide at the end of December 2021, according to the Japan Vending Machine Association. 

Just over half of Japansese vending machines – some 2.25 million – sell beverages of some type, among which 1.99 million beverage vending machines sell soft drinks in cans and PET bottles, while 20,400 vending machines sell beer and liquor, mostly in cans. 

Japanese vending machines are advanced; some machines selling beer and liquor, for example, switch off from 23:00 to 05:00 to stop underage drinking. In addition, an ID card and other identification need to be presented for an alcoholic beverage purchase to be made. 

New vending machines are equipped with computerised controls, memory and Wi-Fi network links. The machines can count their stock level and order extra cans when stocks are running low. Some are also built with several internal storage compartments so that, based on expected sales patterns for different days of the week, only cans expected to be sold on a particular day are chilled. Cans not expected to sell that day are kept unchilled, reducing unnecessary electricity use and energy costs.

Canned drinks in a Japanese supermarket

Foreign investment

Meanwhile, Japan’s beverage can industry has recently attracted foreign investor interest, with New York-listed Apollo Global Management of the United States buying Showa Aluminium Can and Universal Can, two smaller two-piece can manufacturers, during the past 18 months. 

Apollo’s interest in the two can manufacturers is thought to lie in plans to run the two companies more efficiently and thus more profitably when combined; Apollo also has more than 20 years’ experience of supporting aluminium-related industries. 

Apollo launched its recent can making acquisition venture spree in January 2021, signing an agreement with Showa Denko K.K. to buy Showa Aluminium Can Corp and its rolled-aluminium Showa Denko Sakai Aluminium subsidiaries. 

Established in 1969, Showa Aluminium Can began manufacturing 350ml two-piece cans two years later, becoming the first Japanese company to produce aluminium beverage cans. 

Showa Aluminium Can currently manufactures about 3.5 billion aluminium beverage cans annually at three locations in Japan, most of which are beer cans and cans for other alcoholic drinks such as chuhai alco-pops.

With can sales growth potential limited in Japan, Showa Aluminium Can has invested in three two-piece beverage can plants in Vietnam through its group company, Hanacans Joint Stock Company. Hanacans completed construction of its third plant in July 2020, opening a 1.3 billion cans per year capacity factory at Vungtau in southern Vietnam, bringing its total cans per year production in the country to 3.3 billion.

In November 2021, Apollo announced that Showa Aluminium had agreed to buy Mitsubishi Materials Corporation’s Mitsubishi Aluminium Co and Universal Can Corporation, jointly owned by Mitsubishi Materials and Hokkan Holdings, a leading Japanese packaging group. 

Universal Can is believed to be Japan’s largest producer of coffee drinks cans, owning six can making plants that cover the whole country, including two factories which produce aluminium bottle cans and regular beverage cans. Production facilities include 14 aluminium can lines, featuring three 1,600 cpm bottle can swing lines that can also be used to produce regular cans. 

Shortly before being acquired, Universal Can introduced a new bottle can for energy drinks and craft beers. Made with a standard neck diameter, the new bottle can has a larger than the usual body diameter.

Universal Can’s annual production is believed to be almost six billion cans a year, including over one billion bottle cans, mainly used for coffee drinks. All of its bottle cans and regular beverage cans are printed in eight colours, the industry standard for aluminium cans in Japan. 

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