Coverage: Coca-Cola launches an alcoholic drink in Japan

Coca-Cola Co. is launching the first alcoholic product in company history, a lemon-flavored fizzy drink that will be available with 3 percent, 5 percent, and 7 percent alcohol, but only to consumers on the Japanese island of Kyushu.

Hallie Dietrick of Fortune had the story:

The drink, called Lemon-Do, joins a raft of competitors selling similar alcoholic sodas in the Japanese market, locally called Chu-Hi, which typically combine a grain-based alcohol with flavored carbonated water. The canned drinks offer a cheaper alternative to beer and more choice in flavor and alcohol content, ranging from less than 3% alcohol to 8%.

But this launch doesn’t mean Coca-Cola is going to offer alcoholic drinks more widely. The company hasn’t even made plans to launch the product throughout Japan, let alone offer booze to the rest of the world. In fact, the Japanese market is one of Coca-Cola’s most experimental. On average, the company tests 100 products each year on the country’s shelves, few of which ever leave its borders.

Apart from a brief flirtation with the wine market in the 1970s, Coca-Cola has never been in the intoxicating liquids business—that is, if you don’t count the cocaine it used to use in its early recipes.

An Agence-France Presse story reported that the spirit in the drink has not been disclosed:

He declined to reveal the exact spirit in the drink, as the recipe is a closely guarded secret. Coca-Cola product developers got the idea after visiting Japanese-style “izakaya” pubs, where they discovered that lemon-flavoured drinks are very popular, according to the firm’s website.

The popular “chuhai” drinks—which contain vodka or a distilled, grain-based spirit called “shochu”— come in a range of flavours such as grape, strawberry, kiwi and white peach. They range in strength from between three and nine percent and are particularly popular with young drinkers, especially women.

Coca-Cola is wading into an already competitive market, where major Japanese companies such as Suntory, Kirin and Asahi dominate the shelves. And the firm’s president has already dampened hopes of people hoping to get a tipple outside Japan, saying there are no plans to launch “Lemon-Do” outside of the country.

Leo Lewis of The Financial Times reported that Coke is seeing slowing sales in is core business:

The move into alcohol comes as Coca-Cola, like other large food groups, has faced shrinking sales in its core business: fizzy drinks. As a younger generation of consumers shun sugar, Coke has been investing in products in faster-growing segments, such as water and tea.

The plans have been revealed almost four months after a US-based analyst at Wells Fargo speculated in a report that Coke might shortly announce a move into alcoholic drinks.

James Quincey, Coke chief executive, did not rule out such a step at an investor event in November, but offered no timing or detail on ambitions to brew alcohol, according to media reports at the time.

In the late 1970s Coca-Cola embarked on a short experiment with wines, buying a number of California vineyards and a New York wine company. This culminated in, among other items, the sale of wine in cans on United Airlines flights.