Cheers! Coca-Cola Launches Its First Alcoholic Drink

Cheers! Coca-Cola Launches Its First Alcoholic Drink

The lemon-flavored alcoholic beverage is set to hit shelves in Japan

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Nae Osawa, 25, left, and her friend, Kang Yoo-jung, 30, enjoying Coca-Cola's first alcoholic drink, called Lemon-Do, at a sampling event in Fukuoka, Japan, on May 26. PHOTO: THE WALL STREET JOURNAL

A fizzy lemon-flavored alcoholic drink that goes on sale in Japan on Monday will mark Coca-Cola Co.’s KO 0.19% first fling in its 132-year history with the sale of alcohol.

At a sampling event here, hundreds of people lined up for a taste, including some who didn’t expect to find the American company experimenting with Japanese-style booze.

Hiroshi Tsukano, 59, a financial planner, thought one of Coca-Cola’s competitors was relaunching an old favorite. “I’m a bit surprised that this is a Coca-Cola brand,” he said. “It’s nice, but I would add a splash of grapefruit or more lemon to it.”

Canned drinks known as chuhai have long been popular in Japan. They are often made with a distilled grain-based alcohol called shochu and carbonated water flavored with fruit juice or other flavorings.

Coca-Cola, a big player in nonalcoholic drinks in Japan, is entering the fray with a lemon-flavored version of chuhai called Lemon-Do. It will be available with 3%, 5% and 7% alcohol, including a salty-lemon version and another that is flavored with honey and lemon. The drink doesn’t include any Coke.

The company enters a highly segmented and competitive market where others such as Suntory Holdings Ltd., Kirin Holdings Co. , and Asahi Group Holdings Ltd.dominate supermarket and convenience-store shelves. Coca-Cola is starting out on the southern island of Kyushu, and plans for the rest of Japan or other countries aren’t set yet.

“We’ve started to experiment because, in the end, we are trying to follow the consumer. And, in the case of Japan, this is a relatively well-developed segment of low alcohol,” said James Quincey, the president of Coca-Cola, at a shareholder meeting on April 26. He observed that the competition already makes both alcoholic and nonalcoholic beverages.

Although it owned a winery from 1977 to 1983, Coca-Cola has never directly sold an alcoholic drink in a history that dates to 1886.

Akari Utsunomiya, an analyst with Euromonitor International, said Coca-Cola has previously used Japan to test drinks for wider rollout, and the start on Kyushu, with a population of 13 million, could give it insights to apply in other countries.

Despite falling demand overall for alcoholic drinks in Japan owing to its shrinking population, canned booze has been growing in part because it is taxed less than beer and costs less. Most canned chuhai drinks retail for around ¥200 ($1.80) a can. Coca-Cola’s newest offerings will retail for ¥162 including tax.

Mr. Tsukano, the financial planner, said he buys beer and chuhai for himself and his wife once or twice a week, up to three cans at a time. He said he likes to chase two cans of beer with a can of chuhai. “First I am going to ask my wife if she likes this, then we will buy it,” he said.

The chuhai market is seen as a growth area because it appeals to both men and women and drinkers of all ages.

Coca-Cola is casting a wide net in trying to capture female drinkers with its lower alcohol offerings of 3% and 5% alongside the stiffer 7% version. Recently, chuhai drinks with high alcohol content have been growing quickly.

The company is running television advertisements featuring the dreamy actor Hiroshi Abe, who poses as a bartender carefully curating a lemon-flavored drink for a female customer at his bar.

It was a poster of Mr. Abe that attracted Nae Osawa to the tent where the sampled drinks were being handed out. “If this was served at a bar, I would drink it,” said Ms. Osawa, 25, who works for a cosmetics company in northern Japan and was in Fukuoka on a business trip. She sipped the salty-lemon version with 7% alcohol. “It goes down easy,” she said.

Keiko Urabe, 42, and her husband, Shinji, 42, said they like chuhai drinks at their local izakaya or pub paired with grilled meat and on occasion buy cans to drink at home.

Ms. Urabe said she prefers Coca-Cola’s version to her local pub’s. “The lemon is a bit more diluted at these places. This one is nicer.”