Japanese sake brands displayed at a supermarket in Taipei in this photo taken on Aug. 26.
By Gloria Cho, Shingo Kurokawa
TAIPEI, NNA – Japanese sake demand in Taiwan is likely to increase as the government cut tariffs on 15 agricultural and fishery products and processed foods in late July, possibly prompting demand for the rice wine among Japan-savvy consumers in the island.
The tariff reductions took effect on July 26, halving the tax rate on sake and other alcoholic beverages to 20 percent from 40 percent.
Lower levies may push imports of such beverages, including sake, to rise by an estimated 5.2 to 7.4 percent in volume terms, Wei Tsung-tse, associate research fellow and director at the Japan Center Sub-Committee under the Chung-Hua Institution for Economic Research, said in an email interview with NNA.
He said he estimates that import costs will go down by around 14 percent, resulting in lower retail prices for sake. Taiwan’s Ministry of Finance predicts retail prices in Japanese sake will drop 10 percent.
Huang Ching-lan, associate researcher at the Taiwan Agricultural Science and Technology Resources Logistics Management Association, agreed that the measure will possibly boost imports of Japanese sake, leading to price falls in the rice wine and greater awareness of Japan’s traditional alcohol products in Taiwan.
Taiwan is the world’s fourth-largest buyer of Japanese sake, importing 1.35 billion yen ($12.7 million) worth in 2018, up 42.4 percent from a year earlier, according to Japan’s Ministry of Finance.
The tariff cuts were in response to a prolonged request for a tax reduction on Japanese liquors by the Japanese Chamber of Commerce and Industry Taipei since 2008 as the Japanese business community in Taiwan hopes to facilitate trade and investment between the two major trading partners, including more openings of izakaya (Japanese-style) restaurants in the island.
But traders are not as happy as consumers who may enjoy sake at lower prices.
“Many small and medium importers in Taiwan are likely to seize the chance to increase the volume of imports over a short term,” Shiroji Maeda, a consultant from Mercuries Liquor & Food Co., told NNA. “But I don’t think slashing the tariffs will be enough to effectively stimulate the market,” he said.
Srin Lin, a representative from Use Electronics Co.’s food and beverage business division, is also cautious about a possible downturn in sales, saying “the tariff reduction will, in turn, result in intensified competition and shrinking profits.”
In Taiwan, a number of small traders source a wide variety of sake in small volumes, Maeda said, adding businesses will face harsh competition as before, especially in the middle- and upper-price segments.
Despite a drop in procurement costs, none of the sellers will lower their retail prices, as they may need to further narrow their profits, he said.
Wholesalers of Japanese sake, particularly in the low-priced category, are less likely to mark down prices for restaurants, their main clients, as they already suffer meager margins, he added.