Photo/Illutration A Rokko Beer brewing facility in Kobe’s Kita Ward (Takashi Ichida)

A Kobe brewery known for producing Rokko Beer has been slapped with fines for mislabeling its cans of alcohol as beers when they were technically not beers at all, according to sources. 

I.N. International, a brewery in Kobe’s Kita Ward that began producing local beer in 1997, is considered a pioneer in Japan’s local brewery industry.

According to multiple insiders, the company started adding sugar to its canned beverages in 2020 to keep up with increased demand during the COVID-19 pandemic and extend its products' shelf life, since canned alcohols are often kept at room temperature on store shelves. 

However, the company continued to label these products as “beers” for the next three years.

To be legally considered a “beer” under Japan’s liquor laws, an alcohol cannot have sugar added as a sweetener. Only fruit, flavoring agents and similar materials can be used. Products that contain added sugar are classified as “imitation beer.”

Secondly, small brewers are eligible for a 15 percent reduction in the liquor tax when they deal in beer. This special tax break is not available for “imitation beer.”

However, I.N. International reported to the tax office that its imitation beer products were beers, and sold thousands of liters of imitation beer each month at the reduced tax rate designated for true beer only.

An investigation by the Osaka Regional Taxation Bureau revealed that I.N. International had received more than 4 million yen ($26,000) in tax breaks for beer during those three years, which the company was not entitled to because of the sugar added to its products.

The brewery should have filed a tax return for imitation beer, rather than its authentic counterpart, the investigation concluded.

I.N. International will likely have to pay the 4 million yen or more plus fines for under-reporting its taxes.

Manabu Nakajima, president of I.N. International, declined to recount detailed “brewing methods or tax matters” in response to an Asahi Shimbun inquiry.

“We strictly select ingredients and processes for production in accordance with the law,” he said. “We have stepped up efforts to eliminate any discrepancies in legal interpretation, following the advice of a tax accountant knowledgeable about liquor taxes.”

A 350-milliliter can of Rokko Beer carries a price tag of 400 yen after tax. The sales network has expanded into not only the greater Tokyo metropolitan area but also into the Tohoku and Kyushu regions.

Data from Teikoku Databank Ltd. shows the corporation’s sales were down to 50 million yen in the fiscal year ending in March 2021 from 90 million yen the previous fiscal year.

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