Why Japan Wants the Japanese to Drink More

According to official data reported by the Financial Times, the average per adult annual consumption of alcohol in the country fell from 100 liters per year in 1995 to 75 liters in the 2020 financial year. Like most other countries, the exchequer there depends on alcohol products. But the share dropped to 2% in the year of the pandemic, 2020, from 3% of tax revenue in 2011.

The fall is a major headache for Japan’s macroeconomic policymakers, as the country runs a chronic deficit on its budget and its total debt is more than twice the economy’s total GDP. And so, the government has come up with an unconventional response. Its ‘Viva’s sake!’ The competition invites Japanese aged 20 to 39 to propose business ideas to revive the wine industry – not the first such experiment aimed at increasing alcohol sales in the country and changing drinking habits.

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The population of the country started declining more than a decade ago. It dropped to 126.6 million the previous year, falling non-stop from a peak of 128 million in 2008. The age of the country also began a decade ago: more than a quarter of Japanese are over 65. Japan has chronically failed to reverse the declining number of births. According to official figures, only 840,000 children were born in the country in 2020 with a birth rate of 1.34 children per woman of childbearing age. As a result, the “new adult” group, the 20-year-olds in the total population, is down to just 0.96%. These demographic concerns are reflected in the “coming of age”, Seijin Shiki, at the festival in January. Each year celebrates everyone who turned 20 in the previous 12 months, the age of eligibility for the right to vote, smoke and drink, and officially become an adult.

Such demographics and related economic factors—the chronic deflation and economic stagnation that followed the property and stock market bubbles that burst in the 1980s, caused Japan to lose out to new rising stars on the global economic stage, all of whom were well-known Abenomics. The measure tried – has dramatically changed the Japanese people’s attitudes towards consumption and health, especially for youth.

For decades after the bubble burst, Japan saw anemic wage growth, declining corporate profits, low job security and a low propensity for consumption. The Japanese don’t drink, don’t get married, don’t buy cars, don’t take risks, all of which indicate a sense of insecurity. Young Japanese are sometimes referred to as the deflationary generation, their lifestyles and choices being unlike those of their parents, who lived in the bubble phase.

Demographic shift presents many other conflicts. Thousands of businesses that drove Japan’s post-war economic growth, and made it the world’s third-largest economy, are closing, simply because the owners have no one to take over the reins; No children, no credible candidates outside the family and no one to sell to the ‘national paucity of heirs’.

According to official statistics, the largest group of business owners in the country are 69-year-olds, and each year about 40,000 small businesses need a new heir. Not many people manage to find them. It’s such a dire situation that dating apps have emerged in Japan for matching owners with heirs to adopt potential sons and daughters.

Japan has in fact become the policy laboratory of the global economy to draw lessons on aging, dwindling population and shrinking labor force. A large and small population has an impact on productivity and long-term economic growth. Responses include automation, artificial intelligence, robotics, technologies to increase productivity per worker, and policies to bring more women in and join the labor force than traditionally seen. A larger proportion of retirees in the population than earners and taxpayers make it difficult to finance the social security framework, public spending on health care, long-term care and pensions.

Fiscal challenges and debt sustainability concerns increase dependence on taxes on consumption and increase social security contributions.

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