Japan's top retailers tap into 'near-beer' market

TOKYO, June 29 (Reuters) - Japan's two largest retailers, Seven & I Holdings (3382.T) and Aeon Co Ltd (8267.T), are launching their own beer-substitute brands in a bid to tickle drinkers' palates while saving them money.

Japanese retailers have been expanding in-house brands for everything from detergent to soft drinks in the face of the country's worst recession since World War II. But until now they have not made a full-fledged push into beer.

The move could intensify competition in Japan's mature beer market, which is dominated by Kirin Holdings Co (2503.T), Asahi Breweries (2502.T), Sapporo Holdings Ltd (2501.T) and unlisted Suntory Ltd.

Many Japanese brewers produce 'near-beer' drinks, which match traditional beers in terms of alcohol content but are made from ingredients such as bean protein and caramel, allowing them to avoid high taxation and therefore be sold at a cheaper price.

Aeon, which runs Jusco supermarkets and Maxvalu retail stores, said it would begin selling its version in July at 100 yen ($1.05) per 350-millitre can, or roughly 20 percent cheaper than similar offerings from major brewers.

The drink will be co-developed with Suntory and sold at 3,700 stores nationwide, Aeon said.

In a similar announcement on Monday, Seven & I said it would begin selling its own private label 'near beer' for 123 yen a can or 600 yen a six-pack from July at 12,000 retail outlets including its Seven-Eleven convenience store chain.

Seven & I's drink will also be co-developed with Suntory.

Prior to the announcement, shares of Aeon closed up 2 percent at 969 yen. Seven & I Holdings dropped 1.6 percent to 2,215 yen. The benchmark Nikkei average .N225 lost 1 percent.

(Reporting by Ritsuko Shimizu and Nathan Layne; editing by John Stonestreet)