The Great Shift in Japanese Pop Culture - Part One

In five parts, how marginal subcultures took over a Japanese pop culture with no central core nor leading-edge.

Whether or not the country truly suffered something as dire as “lost decades” for the last twenty years, Japan has certainly seen a dramatic change in its social fabric since the bursting of the bubble economy in the early 1990s. Japanese incomes have plummeted since their peak in 1997. Meanwhile companies are shifting more and more job openings to “non-regular” and temporary positions, meaning fewer young workers can even get their foot in the door to future middle-class earnings. Few are confident about their future economic security.

Back when the Japanese economy was strong in the 1980s and even the mid-1990s, Japan arguably had the world’s most vibrant consumer culture. Now in the face of unemployment uncertainty and declining wages, consumers are cutting back, and in response, the marketplace has rapidly shifted from premium goods and services to supplying cheaper substitutes.

So what has this meant for Japanese pop culture? Consumer spending on culture has declined almost parallel to wage decreases, and most markets — music, publishing, fashion — started to slowly implode even before the Internet decelerated demand for analog goods.

The shrinking of cultural markets does not just mean less culture in Japan, however. The hollowing out process has had a distorting effect on the content of the actual culture being produced and distributed. As regular consumers exit the market and leading-edge consumers are forced back underground, “marginal segments” with highly concentrated buying power — particularly, the otaku, yankii, and gyaru — have taken a leadership position in setting tastes and trends. Over the course of this five-part series, we explain this process and also demonstrate the degree to which Japanese pop culture now caters to specific niche audiences rather than reflecting a “mainstream” set of values. Japan may have become the world’s first consumer market without a mass core — and this has significant implications for the future of its cultural exports.

Part One: Incomes and Consumer Expenditures in Decline

Lower incomes, lower allowances

Average Japanese incomes have taken a huge hit over the last 13 years. This chart shows the degree to which salaried employees’ incomes dropped since their peak in 1997. The most significant declines came after 2008’s so-called “Lehman shock,” and even with the slight uptick in 2010 and expected for 2011, wages are still not back to 2008 levels. As Shukan Bunshun calculated, the end result is a loss of ¥220 trillion in lost or declining salaries in the last 12 years (Japan Times). Not all Japanese employees are salaried, of course, but these measures best demonstrate the state of Japan’s middle and upper-middle classes.

Meanwhile the size of the middle class is likely shrinking due to a shift of corporate positions from “regular workers” to “non-regular workers.” Non-regular workers are not guaranteed steady income increases, and therefore, often make 40% of a regular worker salary doing essentially the same job. In 1990, the share of non-regular workers was 20%; in 2007, it was 34% (ref). This has especially affected younger Japanese moving into the workforce for the first time.

Furthermore things have been difficult in the last decade for lower and working class families in Japan, especially the elderly. The number of families receiving government welfare benefits has skyrocketed in the last decade, returning to levels last seen in the early 1960s, before Japan’s “economic miracle.”

Lower incomes mean less discretionary spending. Japanese wives traditionally control the family budget, and in these tenuous times, they are giving less to their husbands as “allowances.” A survey recently found that these allowances are at their lowest point in three decades — ¥76,000 in 1989, now at ¥36,500. Accordingly, men are going out after work less and spending less when they go out. We could assume that parents and grandparents are subsequently giving less to their children in allowances and gift money, although the data suggests that these allowances have not fallen particularly hard. This may be balanced out by the fact that grandparents and parents are able to concentrate smaller payments on fewer children in light of steeply declining birthrate.

Lower expenditures and more inferior goods

With lower incomes and low confidence about future earnings, Japanese consumers have been demanding less expensive products. Many enterprising companies such as clothing brand Uniqlo, beef bowl purveyor Sukiya, and fast food chain McDonalds have reorganized their businesses to provide consumers with the cheapest possible goods. These companies have either taken dominant positions in the market — Uniqlo’s so-called hitorigachi “winner takes all” — or seen record profits like McDonalds.

The proliferation of discount retail and restaurants does not necessarily mean that Japanese people are living worse lives. Deflation has finally brought once sky-high Japanese prices for everyday items in line with Europe and the United States. For example, Uniqlo — which is “extremely cheap” in the eyes of most Japanese — sells relatively high-quality garments at the price American customers expect to pay at a mid-range brand like The Gap. In many ways, deflation has empowered Japanese consumers to get more for their dwindling yen.

What is troubling, however, is the market’s move towards meeting consumer demand with inferior goods. Inferior goods, economically-speaking, are goods that see demand increase as incomes fall. In these instances, consumers choose poor-quality, substitutes for a preferred item. Instead of buying a normal good like fresh deli ham, consumers go for a cheaper, less satisfying product like Potted Meat Food Product. If given limitless choice, the consumer would obviously choose the normal good over the inferior one.

In the case of Japan over the last decade, we have seen a significant rise in popularity of inferior goods and a decrease in demand for premium goods. Japan’s most notable inferior good of the moment is “third-category beer” — a beer-like beverage with nearly zero malt content that sells for slightly less than real beer. Japanese consumers facing no economic constraint would choose Japan’s most iconic (and not particularly expensive) mass market beers such as Asahi Super Dry or Kirin Ichiban Shibori over third-category beer. So what does it say about the consumer market when Japan will soon have a majority “fake beer” market for malt-flavored beverages? Even with falling demand for beer-like drinks, third category beer is seeing growth. This is a sign that the consumer living standard considered normal just a decade ago has fallen dramatically into a new “basket of goods” that would once have be seen as only appropriate for the relatively destitute.

This income-driven demand for cheaper goods is thus changing how companies prioritize production and marketing. Suntory — with a product line that ranges from cheap hooch Tory’s to global award-winning Yamazaki single-malts — has ceased to promote its mid-range whiskeys such as Suntory Old and focuses its mass media campaigns almost exclusively on the cheapest products that can be mixed in low-price highballs. Until recently, Tory’s was a post-war relic that had generally disappeared as the country grew rich, but now Suntory buys extensive train advertisements for this whiskey, which costs only ¥1080 for a 700ml bottle. The company has also invested heavily into entire TV campaigns around the slightly higher-grade but still cheap Suntory Kakubin with stars Koyuki and Kanno Miho.

On the other end of the spectrum, luxury sales in Japan have essentially collapsed. Middle-class Japanese shoppers — buying in Japan and abroad — once made up the single largest global market for European luxury goods. Now China is set to overtake Japan in terms of luxury demand. Although the market for import apparel and accessories peaked in the mid-1990s and department stores — one of the main sites for luxury consumption — have suffered a structural and steady decline since that time as well, the top global brands such as Louis Vuitton, Gucci, and Prada managed to achieve strong prolonged growth within a nominally shrinking market.

Since 2008, however, most of the luxury brands have seen serious drops in sales. And even with luxury’s bounce-back around the rest of the world, Japan experienced a continued decline in sales until a slight uptick very recently. Louis Vuitton and Gucci bags were once the mainstream standard for middle-class (and even lower middle-class) women, but judging from the streets of Tokyo, young women now prefer furoku canvas bags that come for free inside of a magazine. There have been signs of slight luxury business recovery in recent months, but this can mostly be explained as Japan’s upper class going out to shop again and Chinese consumers visiting Tokyo. Luxury goods will likely never again be a part of the middle-class “standard.”

Japan, of course, was always an exception here: Young clerical workers with low incomes generally do not put themselves in debt to buy handbags intended for the very rich. Still, this is another example of how Japanese consumers have completely changed their lifestyle expectations regarding consumption over the last decade. In the next part of the series, we will see how lower incomes and reduced expenditures have directly impacted markets for cultural goods.

Next time: How markets for cultural goods have imploded in the last decade.

W. David MARX
November 28, 2011

W. David Marx (Marxy) — Tokyo-based writer and musician — is the founder and chief editor of Néojaponisme.

40 Responses

  1. John Says:

    “Uniqlo sells relatively high-quality garments …” Uniqlo sells clothing made of the cheapest, thinnest possible materials. It is clothing that starts to show its “age” after only a few washings. it is extraordinarily low quality stuff, though journalists who apparently never shop there continue to buy into Uniqlo’s extraordinary marketing hype.

  2. W. David MARX Says:

    I have bought some really rotten things at Uniqlo (a pair of chinos that literally hurt), but the sweaters in particular hold up pretty well and last a long time. Maybe it’s because you don’t wash them.

    You can make the case that product quality has declined in Japan. Shibuya 109 brands are notoriously low quality and have been very popular over the last few years. And foreign fast fashion brands have been on the rise.

  3. Timothy Says:

    Agreeing with everything above, why do companies/brands continue to expand i.e., open new retail doors and enter Japan; looking for sales & profits where there are none?

  4. zoltan Says:

    Great article but I have many questions that might be premature….
    Will the series touch on culture as a form of export (Cool Japan)?

  5. W. David MARX Says:

    The brands who have entered recently and been most clearly successful are H&M, Forever 21, etc. — i.e. brands that cater to the new culture of lower incomes. Those are the chains that I see expanding. Chains that sell premium goods have either curbed expansion or are being cautious.

    The case of Ginza — which was once a premium goods mecca but now a site for Fast Fashion — is a good example of this transformation.

    Will the series touch on culture as a form of export (Cool Japan)?

    Yes, the final installment will look at implications for export.

  6. Brad Says:

    Good analysis. While it is not the entire story, this goes some of the way in explaining the decline of the Japanese video game industry as well. Too much pandering to the fringe, niche audiences and not enough mainstream innovation.

    I look forward to the rest in the series.

  7. rr Says:

    John, going to have to disagree.

    While “relatively high-quality” might be leaning a bit towards the positive spectrum, your experience is definitely not the common consumer perspective.

    Uniqlo clothes last long enough for the consumer’s who shop there. If you’re bringing “value” into question, we need not ask you, we can simply look at Uniqlo’s performance/growth over the last few years. The people who shop there, including myself, seem quite satisfied with the value=quality/cost and that is why we return.

  8. M-Bone Says:

    Concerning children’s allowances – the Japanese birth rate actually hasn’t declined that much since 1990, the big drop came between 1970 and 1990 when it dropped by half.

    Decline of the Japanese game industry because of niche pandering… didn’t happen – Nintendo is arguably Japan’s last great mainstream culture producer and by far its most successful export pop culture producer ever. Of games released between 2000-2009, 20 of the top 25 worldwide bestsellers were Japanese (18 Nintendo and 2 Sony). This ratio is quite similar to 1990-1999.

    I’m not sure why we should be so concerned with pop culture export strength anyway. These are all very, very low employing industries. For raw cash, numbers at sale points overseas are likely to kick only around 10% of that number back to culture producers in Japan, and most of that is likely to be invested back in higher growth environments overseas anyway. In terms of economic benefits, I think that simply having pop culture advertise Japan overseas (as with those Chinese tourists everyone is banking on) at a marginal profit and making money from tourists who travel to Japan is the best that can be hoped for for “the nation”. The number of foreign visitors to Japan has increased from about 2,000,000 in 1985 to 8.7 million in 2010 (if each of them buys one drink from a vending machine that’s about $10 million US) – even with a skyhigh yen – so in this sense at least, “Japan Cool (enough to visit)” is real. Let’s just hope that the 2011 turn down is an exception.

    My tourist tangent raises what might be an important question – niche culture products might not sell abroad in Nintendo numbers, but does it net the kind of people people who are committed enough to actually visit Japan and drop 400,000 yen travelling around? Much of the tourist increase has been Korean and Chinese, but I imagine that they have diverse interests and are exposed to “traditional” Japan as much through Japanese cultural exports as anything.

  9. W. David MARX Says:

    Nintendo is arguably Japan’s last great mainstream culture producer and by far its most successful export pop culture producer ever.

    Nintendo faces a real crisis, however, on whether people keep buying proprietary hardware to play their games. Nintendo has already announced that they will never, ever make a smartphone app. This could change, but they don’t seem to be moving the same direction as the rest of humanity.

    niche culture products might not sell abroad in Nintendo numbers, but does it net the kind of people people who are committed enough to actually visit Japan and drop 400,000 yen travelling around?

    It has to be the right kind of niche products. We’ll see if that is true in the next installments. Also: Japan Cool is operating on a lag. So much of the good will towards Japan is based on ’90s culture rather than current culture.

  10. Brad Says:

    I will admit the sales numbers do not back up my statement, but I was talking mostly about the perceived quality of games originating from Japan, especially during the current generation of systems, rather than number of units shipped. Personally, I can state that the company I work for places far less importance on Japanese developed games in the US & (to a lesser extent) European market than they did in previous generations.

    Further, it is obviously in Nintendo’s best interests (at least for now) to keep their IP on their own hardware. Releasing on smartphones would not be a smart move for them while they can still sell millions of DS games at $30 a piece. This may not be true in the possibly near future.

  11. @ortospace Says:

    I disagree on the beer market analysis. 3rd category beer costs not slightly but significantly less than “real” beer. And by significantly I mean 30% to 50% or even less, than Asahi/KIrin/Suntory “nama” beer.
    Mass-market beer is not “not particularly expensive”, but *very* expensive in Japan. Especially when you consider that alcohol in Japan is more often than not ingested with the only objective of getting drunk. When you shop at a supermarket, any other spirit has a better “alcohol-ROI” than beer. At restaurants/izakaya/bars it can be different, but I haven’t seen any restaurant (yet) serving 3rd cat beer.

  12. W. David MARX Says:

    My last estimate was that Asahi Super Dry is like ¥200 a can, and third-category beers are about ¥120 a can. (I saw one at Seiyu that was ¥87 a can.)

    So yes you are right in terms of actual % difference, but I think ¥80 is not that big of a deal if you have a middle-class income.

  13. MattA Says:

    @ortospace

    Great point. I hadn’t really thought about it before but you are absolutely right. A 30-pack of Miller or Budweiser goes for something like $20 in the USA, which averages out to a under 70 cents a can. I don’t think it’s possible to find Asahi Super Dry for less than around ¥180 a can even in bulk.

    But that said, I think David’s broader argument stands. Happoshu is the “moé” of alcoholic beverages: unlike Asahi Super Dry or Kirin Ichiban, I don’t there’s any chance of it taking off abroad. In this it fits in nicely alongside similarly un-exportable anime, videogames, and other “big in galapagos — I mean Japan — but nowhere else” phenomena of the economic moment.

  14. zoltan Says:

    The videogames argument is true if you take a look at the numbers outside of console gaming. Social gaming and MMORPGS are dominated by Non Japanese developers. Sure, they might be some Gree game that sold a lot but that be mostly in Japan – the Galapagos effect.

  15. W. David MARX Says:

    A couple of points (which I should have really made the original piece, but oh well):

    1. That’s a really good point above that beer has always been much more expensive in Japan than elsewhere. In fact, beer was a “premium good” for most of its post-war history. In the 1960s, families had beer around the house for “special occasions” but it wasn’t an every night kind of thing. The working classes drank the clearly inferior good Hoppy — non-alcoholic hop-flavored soda mixed with shochu — until about the 1970s. At that point, beer became the “standard” despite remnants of premium pricing. (Hoppy, of course, has come back in recent years as a Showa nostalgia drink. MattA and I drink it a lot but it’s basically no cheaper than beer at this point, and way more expensive than happoshu or third-category beer.)

    2. Since Japan had a very effective “classless” narrative for a long time, many premium goods — department store shopping, luxury bags, buying albums etc. — that were only really meant for the upper echelons became “middle class.” That meant that people who really couldn’t afford it were pushing themselves to live up to this slightly impossible standard. When the economy was good though, it was “doable” even if it hurt a little.

    Once wages started to decrease and a new generation of youth were not only broke but had no bearing for this old ridiculous consumer standard though, things went back to a more natural, sustainable level.

    So no one shops at department stores anymore for goods they can buy elsewhere for cheaper. And they are adjusting the price they want to pay for beer-like drinks down to a more fitting level. That means they’ll take rank fake beer instead of real beer.

    3. At the end of the day though Japan’s excellence at consumerism stemmed from over-spending and over-investment (both financial and mental) of every day people into the goods they purchased. This created a robust market for consumer goods but was maybe not sustainable then, and certainly not now.

    4. The Japanese industry based a lot of its profits on selling goods considered normal in other countries as “premium goods.” The ¥3000 CD is a great example. It’s set up so that wealthy people buy the CDs and other consumers rent. But now normal people are refusing to pay that amount, and the industry is in crisis. Being able to over-charge, however, made these companies not so pressured to be competitive and now the day of reckoning is here. Uniqlo had to break “all the rules” to do what it’s doing.

  16. Chuckles Says:

    Its basically 3rd world consumption.

  17. W. David MARX Says:

    Not sure what that sarcasm adds: Japan is still a rich nation when compared to the third-world. And the point of today’s installment is not to say “boo-hoo, Japan” but to set up the background for tomorrow’s explanation of markets for cultural goods imploding.

  18. Janne Says:

    I have seen at least two studies that show that happoshu and third-category beers are actually preferred over “real” malt beer by many younger people, women especially. They find traditional beer too bitter and thick-flavoured and prefer the lighter taste of the new types. So while price certainly comes into it, it’s not the only factor; changing tastes also play a part.

    That would arguably be the case with Tory’s as well. Highballs are again much lighter and easier to drink than whisky shots, and it makes little sense to pay for higher-grade whisky for a mixed drink.

    I have more than enough income to buy my clothes wherever I want but do most of my clothes shopping at Uniqlo. The quality is good enough (and in my experience there is no straightforward relationship between brand and quality); it looks good mixed and matched with anything else; and the shopping experience is easy and effortless, with little of the snobbery of higher-end stores.

  19. W. David MARX Says:

    These are all slight justifications. Few were making these same choices when incomes were growing higher and higher.

  20. M-Bone Says:

    Brad, I see what you are saying, but could it be that before 2000 there really were not a lot of good non-Japanese games being developed for consoles at all and we simply saw the hollowing out of the US PC market and the transition of that creative ferment, which was there all along but not compared to Japanese games because they were considered “different media”, to consoles?

    I’m not sure that the quality argument really holds either – when you look at the Gamespot Game of the Year from 2000-2010, six of them are Japanese games. The perception of quality argument seems to be solid, however.

    Nintendo really should have its own tent pole games and do some different apps as well. Why not have the next 3D Mario for Wii2 and some kind of quick but fun Mario ladder climb second stringer as an App for $2.99?

    Of course, just as a reckoning is coming for Nintendo, I think a similar bomb is going to fall on Apps and iTunes. The disc is in its last stage, but there are plenty of signs (ebook “borrowing” with a subscription plan on Amazon, very low flat rates for unlimited content, etc.) that paying for an single piece of “culture” isn’t going to last either.

  21. M-Bone Says:

    By some measures, Chuhai and other “liqueur” types are also included as “third beer”. Do you know if the stats that you are citing also include Chuhai? The third beer Japanese wiki piece, for example, includes Chuhai.

    Another possible explanation for the popularity of Crapposhu – it is often billed (rightly, I take it) as “diet beer”.

  22. @ortospace Says:

    Again on beer, it doesn’t change the point that you are making, but tangentially it should be pointed out that the price of beer is kept artificially high through the alcohol tax: for a 35cl can priced around 200 jpy, taxes are around 77 jpy, or more than 1/3 of the price. Considering also the 10 jpy due to the consumption tax, total taxes account for nearly half of the price.
    Basically, everytime you sip some there’s some bureaucrat smiling. The fact that consumers started (indirectly, and maybe even unwillingly, but still) challenging this policy makes the evolution of 3rd cat beers very interesting.

  23. Tim H. Says:

    I hope this series isn’t another wanton exaggeration of the significance of subcultures and how they’re taking Japan and the world by storm. I think we’ve all heard that yarn before.

    To suggest that Japan has no mainstream in its popular culture is absurd. Japan is one of the most conformist societies on the planet. And as long as they’re breathing, all those conformers, the great mass of the public, are buying cultural products in one form or another.

    If there is no ‘mainstream’ here in Japan, the word is meaningless.

  24. W. David MARX Says:

    I hope this series isn’t another wanton exaggeration of the significance of subcultures and how they’re taking Japan and the world by storm

    Nope!

  25. Mulboyne Says:

    Alcohol and CDs are two markets heavily influenced by regulation.

    Happoshu and 3rd sector beers were a response to the demand for lower prices which affected a number of sectors. Breweries could have easily lowered the price on beer, just as food and clothing companies did in their markets, but a higher proportion of sales would have gone on tax. It made more sense to develop a product which attracted a lower rate.

    In Britain, the growth of demand for hand-rolling tobacco is prompted by a similar tax incentive. There’s an element of counter-culture about its growth in popularity because papers are also used to roll a joint. However, it only kicked in as cigarette taxes headed ever higher. Kate Winslet smokes roll-ups: something you’d never have heard of a leading actress doing 20 years ago.

    As cigarette taxes rose in Japan, there were some mumblings about a rise in the popularity of kiseru. It hasn’t really happened but might do if the trade-off became attractive enough.

    CDs remain subject to resale price regulation which meant Japan never saw the kind of discounting supermarkets brought to the US and Europe. Instead, discounting was channelled through shops like Book-Off who went out of their way to make second hand goods look new.

    Incidentally, I suppose it’s not very controversial to point out that any discussion of discretionary spending patterns ultimately has to include the role of mobile phones. That’s a cost which few people had to bear up until the mid-90s but which is now essential for even the poorest net cafe refugee.

    As an aside, it’s interesting David’s article talks about inferior goods. There are other classifications which economists identify, notably experience goods, search goods and credence goods. Wikipedia will give you quick and dirty definitions.

    There’s a theory that products which would be classified as search goods in other countries – easily substituted and subject to price competition – often seemed to be experience goods in Japan – where price and quality are harder to determine in advance of any purchase.

    The argument runs that the process of deflation in Japan has several dimensions and one key driver is the way former experience goods have become search goods. It’s saying, in effect, that it’s not simply demand for lower prices which has affected markets but the change in status of a number of products, which may have other causes.

    The debate continues, partly because nobody has got around to doing a decent study so it’s still mostly conjecture. Sometimes it just seems to be a question of semantics but it’s not completely implausible. In particular, it’s noticeable that the other related category – credence goods – has been very resilient in Japan and whole industries based on them have grown. In other countries, at least some credence goods typically suffer collapses in a downturn.

    This is probably too arcane a tangent for this discussion, and I certainly wouldn’t want to represent myself as an expert witness on the subject. However, all the increases in product liability legislation in Japan, and the establishment of the Consumer Affairs Agency, are directly related to abuses in credence goods markets.

  26. Janne Says:

    Not just a slight justification. The point is that consumer preference is not driven solely by price. If it was, nobody would buy anything but those 5l plastic jars of white alcohol.

    The impetus of creating happoshu and 3rd category drinks has certainly been to get around the relatively high beer taxes. But the popularity of them is no longer connected simply to price. Many people do genuinely prefer them to “real” beer.

    It began as simply as a price savings, but it has created a new market segment as a result, one that is likely to thrive even if taxes are harmonized. As I understand, happoshu is no longer significantly cheaper than real beer, but still selling well.

    As for Tory’s, I am fairly sue the highball boom predated the reintroduction by years, and the push for the brand happened as a way to get in on the highball market.

    It’s dangerous to see everything through a single lens, and interpret things as if it was all about incomes and price levels. It’s never that simple.

  27. MattA Says:

    @M-Bone

    “when you look at the Gamespot Game of the Year from 2000-2010, six of them are Japanese games.”

    I think a more relevant metric would be the number of Japanese games on top-ten lists, which were once dominated by Japanese products and no longer are. See, for example, this one; only a single Japanese game made the top-ten list for the week ending Nov. 19:

    http://www.vgchartz.com/

  28. M-Bone Says:

    @Matt

    I was referring to the assumption that Japanese games have suffered in terms of quality – I think that it is telling that in the great “games as art” debate it is Japanese titles from the 2000s like Ookami or Shadow of the Colossus (and Resident Evil 4 for atmosphere) that keep coming up again and again.

    This week isn’t a great comparison, however, as it is the biggest month for US games this year, possibly for years, with Modern Warfare, Skyrim, Assassin’s Creed, and Saint’s Row – all AAA releases newly out.

    I think that we also tend to overestimate how dominant Japanese games were in the 1990s because the US ones were so crap – the lists still were jammed with Disney tie-ins, Madden, Mortal Kombat, Killer Instinct, NBA Jam and so on. We also saw a similar phenomenon of the vast majority of Japanese top sellers being Nintendo games.

    I think that we also need to acknowledge that Nintendo is in a lull right now – 3DS is gaining some momentum with the first appearance of good games and Wii is tapering off. Nintendo, we should note, was not only the big Japanese success story of the 2000s – it was a comeback story as GameCube and N64 really weren’t all that in terms of sales.

  29. M-Bone Says:

    Looking around a bit, it seems as though “third beer” does include Chuhai in all its infinite varieties (even Asahi Clear, which is imitation beer, seems to be defined as a “liqueur”). I think this changes the story considerably – beer is soundly selling more than Happoshu and it is only if softdrink style alcoholic beverages are included that “third beer” is looking to take over more of the market. This isn’t necessarily about price or prospects, some people just prefer to drink Chuhai.

  30. W. David MARX Says:

    The way I think about this is convenience store fridges: there are usually two-three sections for alcoholic beverages and “real beer” is taking up less and less of that real estate.

    The increase in happoshu and third-category beer — whether or not they are a full 50% yet — would not be dominant in the market if not for dropping incomes. You can also have “premium chuhai” and those aren’t part of the equation. People want to spend less on drinks —> Japanese beverage makers move to make cheaper products —> Those products see huge growth —> Companies make even more options for cheaper drinks and takes away R&D for premium drinks.

  31. W. David MARX Says:

    Sorry, Janne, I forgot to reply to your comment:

    The point is that consumer preference is not driven solely by price. If it was, nobody would buy anything but those 5l plastic jars of white alcohol.

    People want to increase or maintain their lifestyle standard. In the 1970s, that meant not drinking Japanese whiskey but Johnny Walker Black Label instead. In the 1980s, that meant drinking Blue Label instead of Black Label.

    When incomes decline slightly but steadily, people don’t start wearing burlap bags and drinking grain alcohol. They still want to drink “something like beer.” So they buy happoshu, and then when that’s too “expensive,” they go to third category. Some of them may even be fine with the flavor, but the point is that it’s clearly an inferior good whose existence is predicated upon consumers less willing or able to spend on their beer-like drinks. There’s no evidence that beverage conglomerates needed to even make these kinds of products in the boom times — everyone just drank beer. Incomes are not everything, but they set the background to the current consumer and production choices.

    Happoshu, by the way, is selling terribly right now, because it’s not cheap enough. In most cases, it’s being squeezed out of the fridges to make room for more third-category beers.

    And in fact, the highball boom started right around the Lehman Shock — 2008 and 2009. That’s when the Koyuki campaign started, and the marketing papers ran big trend stories on it. Highballs of course have been around for decades, but the “boom” started at that time.

  32. Mashu Says:

    A bit late with a comment, but as I’ve only read the first part as of tonight I’ll start here.

    While households assuredly will not resist an improvement in their standard of living, I find it unrealistic, especially in looking at Japan in many cases to approach consumers’ decision-making as a one-way uphill utility route where more/higher quality is always better without limit. It’s important to think about what people see or feel to be an average, acceptable (in a sense, “saturated”) standard of living when discussing the lifestyle standard they are trying to maintain (though it should be noted I think in a debt-OK society like the US, the constant upward climb approach can apply).

    My point is, at some point during Japan’s period of substantial sustained GDP growth and the rising incomes which lasted well beyond that, I think it is reasonable to assert that people reached and surpassed their ideal median lifestyle, and while there is a massive culture of saving money, there wasn’t really much in the way of equity investing or anything in your average household, so naturally a degree of that excess income went to luxury goods since there’s a limit to how much you can increase your 一番搾り consumption.

    There is no question that wages have fallen in Japan, but purchasing power has increased significantly over the past nearly 40 years. Yet still, consumption of top-tier products and luxury goods is steadily moving elsewhere. The luxury area is a natural decline as it really just an alternative to saving for many. As for preference for cheaper goods that are replaced frequently, perhaps this is discussed in following sections, but as Tim H’s comment above echoes, the Dentsu-fueled Japanese consumer market machine is a true force to be reckoned with. When we get newscasters and morning show hosts chattering on about a new “最近お流行りの〇〇” fad, people really do latch onto it in absurd numbers. As such, I believe that not so much a reduction in real income, but a consumer culture driven by advertising which has began to reinforce that it’s OK to look for good deals and aggressively seek low prices above all else. While it’s easy to get into a cause-effect discussion, I’m not convinced that it was a massive increase in demand for cheap goods that caused this, but to a degree the other way around.

    Looking forward to reading the other parts soon.

  33. Troy Says:

    I searched for “exchange rate” and did not find it on this page.

    When I was FOB in Japan the dollar was Y127, and in the 1990s it went briefly up to Y145 (yeay! since I had USD debts to pay).

    Now of course the Yen is ウルトラ strong. This, I think, is deflationary for Japan since imports should theoretically cost tons less now, and also it is wiping out Japanese industry since with the yuan so weak the Japanese can command Chinese labor for literally peanuts (well, not literally I guess, but the 元2400 month Honda’s workers are getting now is still only 3万 — theoretically what a Japanese laborer can make in a day given enough hours).

  34. W. David MARX Says:

    Even though the exchange rate is high for the yen, prices of imports for premium goods — at least from Europe and U.S. — are basically unchanged. Strikes me that retailers are using that to boost profits but not lowering the price of the good for consumers. This would hurt the “image” of the goods too much and no one knows how long this endaka will last.

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  37. Chuckles Says:

    No sarcasm and no boohoo.

    If you hollow out the standard diamond shaped First world class structure, what you get is roughly two abutting triangles. The hollowing out process isnt far gone in Japan, however, the exit of the middle class from cultural markets has meant that less affluent groups now form the base of a triangle of consumption for goods that are decidedly inferior. My point wasnt about how poor Japan is/was, but rather, that the consumption pattern, behavior of Otaku / Gyaru / Yankii, who have never made up the upper echelons of consumption for upscale goods approximates that of the 3rd world subaltern – meaning, that consumption takes place to fit in with a surrounding social structure, underlying social coercion communicated through the media, and the phenomenon of “leaping luxuries” first aptly described by Russell Belk. Of course, for the 3rd world societies Belk studied he used the term for different goods, but I think the pattern is the same.

    If Yankii, Otaku, Gyaru (YOG) adopt consumerism to resolve underlying social and psychological problems in the absence of high incomes, we see a structure that fits what Belk described almost perfectly, in his research on the psychological roots of 3rd world consumer culture – not to mention Adorno and Horkheimer and their point about the media coercion of the masses by consumer culture. In this case, while Japan had its regular middle class occupying the market positions that YOG now occupy, one could simply claim that that consumer culture was a variation on the West, with the added imperial and “otherness” factor. The difference here now, is that YOG are an “other” within a larger Japanese “other” and are subjected to added coercion which really cloaks any notion of Western, foreign influence on the pattern. I think that their position approaches that of the lower classes studied by Belk in Turkey, Central Asia and Africa, where the elites of third world countries form a transnational bloc whose very presence in fact and in media coerces lower classes into consumption to relieve psychological damage. As 3rd world countries became poorer and the not-so-rich bloc became larger, this pattern became definitive of 3rd world societies.
    In Japan, YOG are consuming not for enjoyment, but primarily for relief, as you say in latter parts of this series. This is not middle class, not current first world consumer culture and closer to 3rd world.
    Whereas you say that culture and its consumption becomes the raison d’etre for YOG, and I agree to a large extent, this differentiates them for 3rd world consumer culture where coercion forces consumption of culture that has no meaning – but only to the extent that creolization and indigenization of cultural goods does not occur. In the presence of these two factors, the pattern is almost the same.

    Please compare YOG with Le Sapeurs of Congo.

    http://online.wsj.com/article/SB10001424053111903927204576574553723025760.html

    Jonathan Friedman (Consumption and Identity) has an excellent essay “The Political Economy of Elegance: An African Cult of Beauty” on Les Sapeurs.

    The phrase 3rd world consumption was not meant to evoke images of poverty, but to anticipate your situation around marginal subcultures – in a larger economy with no central core or leading edge all pictures of fragmented cultural scenes, which are very common in the 3rd world, and to provocatively introduce a comparative approach – contra Japanese exceptionalism.

    Of course, I could also point out that when you layer First world economy / technology on non-Western substructure, Japan represents the highest possible kind of success for such a graft. It is inevitable, that as economic damage takes its toll, underlying behavioral imperatives force a return to a collectivist / tribal / traditional / 3rd world society mode of social being.

    My own view is that in the absence of the strong ethnic of individualism which characterizes the affluent west, consumption as participation, human sacrifice, psychological relief, sans individual ego enjoyment is almost inevitable.

  38. M-Bone Says:

    Possibly the most sophisticated followup to a five word comment in the history of the internet.

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