Why did 1% alcohol drinks fail to captivate the Japanese beverage market?
Japan's flavoured alcoholic beverage market has seen high growth and the competition for new product development has been fierce. However, the resulting innovations did not always receive a great response from consumers. Eloise McLennan reviews the failure of 1% alcohol drinks identified in Canadean’s latest case study by Mitsue Konishi
Products with 1% alcohol did not offer the benefits of either soft drinks or alcoholic drinks. Image courtesy of zarzamora
Developing a better understanding of why certain products and campaigns succeed while others underperform is a highly important learning process in the drinks industry. According to Canadean, the failure rate of new product launches in the fast moving consumer goods industry is estimated to be around 80%, which means that learning from the mistakes and failures of product development can be just as beneficial as learning from the success of a product.
In March last year, Japan's two key manufacturers, Kirin and Suntory, launched ready-to-drink alcoholic beverages containing only 1% alcohol – Kirin Butterfly and Suntory The O.N.E. Although the beverages temporarily grabbed consumer attention in Japan, the concept is not considered to have an ongoing appeal with consumers.
Both brands felt that they had identified an opportunity to use very low-alcohol RTD beverages to fill a gap between alcohol-free beverages and 3% alcohol drinks in the RTD cocktail market, and used slogans and marketing that suggested that consumers could enjoy the drinks without getting too drunk. However, only three months after its launch, Kirin announced it was to discontinue production of Kirin Butterfly. Suntory's The O.N.E was also withdrawn.
Alcohol content tailored to the lifestyle needs of consumers
Initially the 1% alcohol products gained the interest of Japanese consumers as previously there were no big brands of alcoholic drinks with 1% alcohol content. According to Canadean, the concept appealed to a majority of Japanese consumers who have a degree of interest in things that are new and different.
In Japan, a reported 62% of consumers who buy premixed alcoholic drinks and cocktails say they occasionally buy something different, while 23% often experiment with buying new products, according to Canadean. To try and capitalise on this low and non-alcohol trend, Kirin and Suntory implemented nationwide promotions for the products, However, the 1% alcohol beverages struggled to generate repeat custom among the consumers who tried them. Consumer interest in 1% alcohol drinks flagged due to many other products having more appealing product attributes, among both other alcoholic drinks and adult soft drinks that cater to a variety of different occasions and lifestyles.
Kirin's target audience for Butterfly was consumers in their 20s. According to the company, this consumer group drinks infrequently compared to other age groups; although these young consumers like drinking, their lifestyles are highly varied and they cannot spend time getting drunk, as they are too busy with work and hobbies. The company identified that some of these consumers are resistant to the concept of getting drunk, and they are also highly concerned about the effects of alcohol on work the next day. According to Kirin, the selection of pack size for Kirin Butterfly was designed to appeal to consumers who saw the conventional RTD cocktail drink size (350ml) as too big. Due to the target audience, Kirin Butterfly's promotions focused on amusing concepts such as using manga images and funny stories in TV commercials, and the company released an app designed to appeal to young people's sense of fun.
Meanwhile, Suntory The O.N.E targeted a wider audience than Kirin. The company stated it had found that 1% alcohol content drinks fit with changes in Japanese consumers' lifestyles, using examples such as more women being in work and more men raising children. The 1% alcohol content reduces the risk of inebriation or hangover, which it was hoped would appeal to a variety of consumer groups with different lifestyles. Suntory used packaging with a more premium image than Kirin's offering, and employed two distinctive characters in its promotions: in the TV commercial, a middle-aged man and a young woman, both played by well-known actors in Japan, were shown drinking the product in a sophisticated bar.
Soft drinks vs alcoholic drinks: the risks of merging beverage sectors
One lesson to be taken from the 1% alcohol drink launches is that products with a very low alcoholic content can lose their identity as alcoholic drinks, without being accepted as adult soft drinks. Butterfly had a cider base and came in three original flavour variants, while The O.N.E had two original flavour variants based on either a mix of spirits or fruit wine.
Blurring the lines between alcohol and soft drinks presented an issue in the sale of these beverages, as both products were still alcoholic items – albeit low-level alcoholic drinks – but offered neither the effects of alcohol nor the benefits of non-alcoholic soft drinks. According to Suntory, sales of alcohol-free drinks have been steady since 2012, and since the company entered the alcohol-free drinks market in 2010 with its beer-flavored soft beverage and mock cocktails, sales of alcohol-free drinks have seen a significant increase in Japan.
Using well-established soft drinks as the basis for alcoholic drinks can be highly appealing and improve the customer experience. However, 1% alcohol content seems to be unable to offer the benefits of either soft drinks or alcoholic drinks. For example, one major benefit of alcohol-free beverages is that consumers can drive after consuming them; however consumers in Japan are not allowed to drive after consuming a 1% alcohol beverage.
In fact, the positioning of these products as allowing consumers to enjoy an alcoholic drink without getting too drunk could be seen to encourage casual drinking, a concern which was raised by Japanese police who warned consumers not to drive after any alcohol consumption, specifically referencing Kirin's and Suntory's products.
There is concern that children may mistakenly consume such beverages in the home, believing it to be a soft drink. While the concept of making soft drinks adultified with alcohol does have opportunities, the packaging design must make it very clear that the product is alcoholic.