Market Overview

The domestic beverage market size (including cow milk and dairy drinks) rose to 5,160,000 million yen for FY2023, which was 104.5 percent of the previous fiscal year, based on the shipment value of manufacturers. Exhibiting growth for three consecutive years, the market recovered to FY2019-level (pre-pandemic level) of 5 trillion yen.
However, the market size expansion was largely due to product price revisions; the sales volume landed at almost the same level as in the preceding fiscal year. Consumer sentiment weakened as manufacturers repeatedly passed through the soaring costs of raw material and energy to consumers, rising prices of consumer products across the industry, including foods and beverages. Meanwhile, some factors, such as the reclassification of novel coronavirus to Category 5 disease under the Infectious Disease Act, the recovery of the flow of people, the increase in the number of inbound tourists (foreigners visiting Japan), and record-breaking summer heatwave, underpinned the demand. The size of the beverage market in FY2023 was the result of how these factors minimized the negative impact of price hikes on the demand volume, while price rises increased the market size by value.

Noteworthy Topics

Bottled Mineral Water Market Growing Stably

In view of the FY2023 beverage market by category, one of the categories that stood out was mineral water, showing marked growth both by value and by sales volume.
Sales was strong, especially domestically produced products, not only for national brand (NB) but also private brand (PB) bottled mineral water. Amid high prices, bottled mineral water was perceived as good deal; there was an "influx" of consumers buying bottled mineral water instead of other beverages. Rise in demand for water for daily use and for stockpiling, as well as increasing demand for thirst quenchers stemming from extremely hot summer, also contributed to the strong sales.

Future Outlook

Due to high prices, consumers are becoming thriftier and thus their willingness to purchase beverages are declining. Since the trend is expected to continue in FY2024, economical products including private brand drinks are attracting attention in the beverage market. As manufacturers continue to raise product prices in 2024, the FY2024 market is projected to follow the trajectory similar to the preceding fiscal year. Nonetheless, as business confidence is slightly deteriorating, the beverage market size in FY2024 is forecasted to edge up 2.1% from a year earlier to 5,270,000 million yen.

Research Outline