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Odorless Undies, Beer Sales Surge in Japan Summer

Consumer confidence in June rose
Cans of Kirin Holdings Co., right, are displayed for sale at a supermarket in Tokyo. Photographer: Kiyoshi Ota/Bloomberg

Japanese retailers are headed for hot summer sales of cheap beer and non-smell underwear, driven by above-average temperatures and consumers with fatter wallets, according to Deutsche Bank AG’s Takahiro Kazahaya.

Japan’s Meteorological Agency is forecasting the hottest summer in 100 years globally after a heat wave snaked into Tokyo last week via North America and Europe. Temperatures in the capital exceeded 95 degrees Fahrenheit (36 degrees Celsius), providing a boon for breweries including Kirin Holdings Co., garment makers and air conditioner manufacturers, Kazahaya said.

“Higher temperatures are like pennies from heaven for retailers,” the Tokyo-based analyst said. “Consumers’ appetites have improved.”

Japan’s weather agency says most of the nation has more than a 60 percent probability of hotter than average temperatures over the next month. When the temperature is 1 degree Celsius above average in the July-September period, consumer spending expands by 433.3 billion yen ($4.9 billion) and the gross domestic product by 345.6 billion yen, according to Dai-Ichi Life Research Institute.

A heat wave in July 2004, which saw Tokyo temperatures rise to a record 39.5 Celsius, drove monthly retail sales up 0.7 percent, according to the Trade Ministry.

To take advantage of seasonal sales, retailers are promoting a range of new products from cheaper beers to smell-absorbing underwear originally designed for astronauts. Air conditioner makers are ramping up production before the government ends subsidies on eco-friendly products this year.

Non-Alcoholic Beer

Consumer confidence in June rose for the sixth straight month to the highest level since September 2007. Summer bonuses increased about 0.8 percent this year, reversing a 17 percent decline in 2009, the Nikkei newspaper reported, citing a survey conducted by Nikkei Inc. and Nikkei Research Inc. The average summer bonus before taxes was 701,687 yen ($8,000), according to the survey.

Japan’s major brewers are churning out non-alcohol and no-malt beers to tap into demand for cheaper beverages. Kirin Holdings Co., the nation’s biggest beermaker, will double the annual sales target of its non-alcoholic “Yasumu Hi No Alc. 0.00%” drink after an initial annual target of 400,000 cases was achieved within about two months after its release in April.

No-Malt Beer

“New types of beers have been expanding the market,” said Naomi Takagi, an analyst at JPMorgan Chase & Co. “People who can’t drink alcohol such as drivers and pregnant women can have a taste of beer.”

No-malt beers, which are cheaper than regular brews, rose to more than 30 percent of total beer shipments for the first time in June, according to the Brewers Association of Japan and the Brewers Council of Happoshu Taxation. Asahi Breweries Ltd., Japan’s second-largest, said it plans to launch the first non-calorie beer in the world next month.

Clothing retailers will also benefit from higher temperatures, said Deutsche Bank’s Kazahaya. “Consumers are especially keen to buy casual wear including underwear” in hot weather, he said.

Goldwin Inc., the marketer of Speedo swimsuits in Japan, developed its MXP underwear for astronauts with the Japan Aerospace Exploration Agency. The shirt, which is made with eucalyptus fiber and nanotechnology, can neutralize sources of odors such as ammonia and acetic acid.

Uniqlo, Wacoal

Sales of the products are beating projections, said Hiroshi Katsuno, manager of Goldwin’s Maxifresh underwear group.

“Data from our experiments show that one shirt can absorb smell coming from four liters of sweat,” he said.

The Uniqlo chain, owned by Fast Retailing Co., has increased sales of sweat-absorbing, quick-drying underwear even as overall sales slowed in the three months through May. The underwear was developed with Toray Industries Inc., a Tokyo-based synthetic-fiber maker. Wacoal Holdings Corp. is marketing a new brassiere made of mesh material designed to keep the body cool and dry.

“Sales of summer underwear at Wacoal were sluggish because of cool weather until May,” said Nomura Holdings Inc. analyst Yoshimi Kamata, who covers apparel companies in Japan. “But it’s likely to take off, if the weather heats up.”

Travel agencies are also expecting a sales boost from the stronger yen. Japan’s currency has appreciated 7.6 percent against the dollar, from April 2 when it reached its lowest level this year. Against the euro, it has strengthened 16 percent from the year’s weakest level on January 11.

Overseas Travelers

At H.I.S. Co., Japan’s largest publicly traded travel agency, the number of customers who purchased travel products for July and August departures jumped 11 percent as of July 1 from a year earlier, said Manabu Shimizu, a company spokesman.

A government incentive to offer discounts on eco-friendly products is helping air conditioner makers. Daikin Industries Ltd., the world’s second-biggest supplier, raised annual production for the year ending March 2011 by 16 percent to about 3.3 million units from a year earlier, said spokeswoman Saki Hirata.

Consumers can get a subsidy of 36,000 yen on each household appliance if the product meets green-technology standards. The program for air conditioners is due to expire this year.

“There is talk of the government extending its stimulus measures, but we expect the effects of stimulus to wear off and consumption momentum to decline,” Chiwoong Lee, senior economist at Goldman Sachs Group Inc. in Tokyo, wrote in a report dated today. The hot weather boost to consumer spending is not sustainable, Lee said.

“The question now is whether retailers have the capability to ride the summer wind,” said Deutsche’s Hayakawa.

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