Orion Beer celebrates its 60th anniversary, looks to represent Okinawan industry in the global market

Orion Beer celebrates its 60th anniversary, looks to represent Okinawan industry in the global market

May 17, 2017 Ryukyu Shimpo

Orion Breweries, Ltd (Urasoe, Okinawa; Yoshio Kadekaru, President), widely known as Okinawa’s hometown beer, reached the 60th anniversary of its founding on May 18. 12 years after the conclusion of the Battle of Okinawa, at a time when the industrial infrastructure destroyed in the war had not been fully rebuilt, Okinawa was separated from the Japanese mainland and under American rule, and the economy was largely dependent on imports, a beer maker with a single factory only in Okinawa was born. As the representative company of local manufacturing, Orion Breweries navigated the rough seas of competition and paved the way for exporting Okinawan goods and brands abroad for the global market. This article will take a look at the 60-year history of the “three stars.”

Troubles with market development, and human wave tactics at Sakurazaka

Orion Breweries Founder Sosei Gushiken

On May 18, 1957, Okinwaw Breweries, Ltd. was founded by Sosei Gushiken, known as one of the kings of Okinawan manufacturing. Gushiken also founded Gushiken Miso Shoyu Joint Corporation (now Aka Marusou), Ryukyu Shiryo (a livestock feed company), leading the revitalization of Okinawan manufacturing. However, plagued with the massive investment required by brewing and with the heat and water quality in Okinawa’s tropical climate, it was said that the company was “dead on arrival.”

Gushiken, looking for the highest-quality water, settled on building his factory in Nago. With help from Shigeharu Sakaguchi, who had worked as plan manager for Kirin Beer, and Takeharu Sawada, two authorities on beer brewing, serving as executive plant managers, Gushiken established himself as a top brewer in Okinawa.

To name the new beer, the company asked Okinawan residents for suggestions, and chose “Orion” from around 2,500 submissions. Two years after the founding of the company, on May 17th 1959, the bottled beer came to market across this island. The company then changed its name to Orion Breweries to match the beer and, “be universally effective worldwide.”

The steel can draft beer released in 1973 to compete with mainland brewers after the Okinawa Reversion

However, at the outset the sale of the beer faced difficulties. “The first year we sold 797 kiloliters, which in today’s numbers is around only three days’ worth of production. At the time, American beer was #1 and Yamato Beer #2. The Okinawan product was called, “island swill” and treated like a second-rate product,” said Kadekeru.

Import regulations on the mainstay imported beer was being ignored by the American civilian leadership. This of course created a quagmire dire enough for Gushiken to consider giving up, however his “never-say-die” spirit kept him going. While it seemed as if Orion Beer had its back against the wall, it was at this time that the “human wave tactic” was deployed with Naha’s Sakurazaka social district as the stage. The entirety of the company’s employees mobilized to the street’s cabarets and restaurants, and by going door-to-door with carts they developed their market by selling beer directly to stores during the day, and observing the pub-crawling customers and the goods being offered during the evening.

Employees lining up to see off the first shipment of Orion Beer. May 16, 1959

“Whoever controls Sakurazaka, controls Naha. Whoever controls Naha, controls Okinawa.” Just as Gushiken described, soon after this mass mobilization Orion saw a steep incline in support. In 1963, the 6th anniversary discount also paid off, and Orion accounted for 83% of beer consumed in Okinawa, selling 9,000 kiloliters and securing its popularization.

Diversification in the face of increased competition, and the continuing debate over the reduction of the liquor tax

“Hotel Orion Motobu Resort and Spa” which opened in 2014 right next to Ocean Expo Park

Okinawa was brought into the Japanese market with the 1972 reversion of Okinawa to Japan, and for Orion this was the point when competition from the major domestic brewers grew stiffer.

While there was discussions surrounding a merger or acquisition by major brewers, “The company decided on their own strategy to protect local industry” (From Orion Beer, 50 Years of Progress). Along with this, in order to prevent an economic shock occurring due to the reversion, special attention was given to sustaining local industry in the Act on Special Measures for Reversion. There was a measure which reduced the liquor tax for local beer by 60%, giving Orion a price advantage over the major brands.

The press conference announcing the details of the partnership between Orion and Ashai Breweries. August 21, 2002 Hotel Seibu Orion in Naha

There was also a large influx of tourists to Okinawa from EXPO Okinawa, and in May, 1974 “Hotel Orion” opened in Motobu, and in June, 1975 “Hotel Seibu Orion” (Currently Hotel Royal Orion) was opened in Nago as a joint investment with Seibu Group. Orion also got involved in agriculture and cultivation, diversifying the business beyond the beverage field.

While this was going on, there were efforts to extend the special measures related to the reversion beyond their five-year expiration, however there was a lot of doubt surrounding the continuation of the “shock alleviation” measures, and Orion needed to come up with a plan anticipating its repeal. In the mid-90’s they battled with the price wars in the domestic beer market due to the emergence of happoshu, a low-malt liquor, and in 2002 Orion was asked to strengthen their management base as a requirement to for the continuation of tax alleviation.

Some of the over 140,000 annual visitors from abroad who come to watch the brewing process at the Beer Park in Nago

In August of the same year, Meiki Kinjo, President of the company at the time, agreed to a comprehensive business partnership with Asahi Breweries. Asahi would acquire 10% of Orion’s stock, and in return “Orion Draft Beer” would be sold nationwide through Asahi’s sales network. Orion would produce Asahi beers such as “Super Dry” at their Nago factory, and sell the beer in Okinawa. Orion would be able to improve their brewing technique as well as the quality of the beer, and enjoy nationwide expansion, while Asahi would get logistical support and a reduction in their tax expenses, making the partnership a mutually beneficial “fifty-fifty” deal.

While the liquor tax alleviation measure was extended for the ninth time in the 2016 year-end tax revision, the period was shortened from five years to two, creating a major blowback. Orion continues to diversify and develop with things such as the opening of a 238-room hotel in Motobu that accommodates up to 900 people named the “Hotel Orion Motobu Resort and Spa.”

Shipping to 16 countries and regions

Orion Beer being bottled in the manufacturing line.

As a sign that Orion Beer’s recognition had spread beyond the borders of Japan, in April of last year it received the “Intellectual Property Achievement Awards” Minister of Economy, Trade, and Industry, and the “Excellent Exporting Business” Food Industry Affairs Bureau Chief Award from the Ministry of Agriculture, Forestry, and Fisheries, representing their exceptional efforts in exporting soon after in the same month.
Currently, Orion Beer is exported to 16 countries including the United States, Taiwan, South Korea, Hong Kong, Singapore, Australia, Russia, and Brazil. Exports are boosted by foreigners who visit Okinawa and become regular customers of the beer.

Domestically, the gap between Orion and the top for breweries: Asahi, Kirin, Suntory, and Sapporo remains large; based on the quantity of beer shipped Orion only accounts for about 1% of the total market share. However, according to the 2015 beer export report compiled by the Okinawa Customs House, of the total amount of beer exported from all of Japan (73,770 kiloliters, approx. 8.5 billion yen), Okinawa accounts for 3.4% of the total volume and 4.5% of the revenue, meaning Orion Beer’s brand recognition outpaces its scale.

Over 140,000 people visit Orion Beer Park in Nago each year to watch beer being made from beginning to end, and 70% of these visitors come from other prefectures in Japan or from abroad. Furthermore, around 40% of these visitors come from Taiwan. With 260 Family Mart convenience stores displaying goods in Taiwan, it is Orion’s biggest export destination. According to Orion President Yoshio Kadekaru, “Visitors safely and comfortably watch the brewing process, and then can try the finished product. The Beer Park has made a great contribution.”

(English translation by T&CT and Sam Grieb)

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