Shares in Japan's beer and wine companies were expected to struggle today after it became apparent that the Japanese government was considering increasing taxes on wine and low-malt happoshu.

Happoshu has been popular in Japan because it is relatively cheap due to its lower tax point compared to traditional beers, but the government is now mulling a proposal to slap an additional Y10-Y20 tax on the drink.

Meanwhile Japan's largest wine supplier, Mercian, opened lower and was expected to struggle today after reports the government wants to raise taxes on wine to the same level as those imposed on sake.

One trader said: "The higher tax should mean higher wine prices, which would likely hurt demand."

Meanwhile one analysts was quoted as saying he was very disappointed by talk of the tax increase. "Sales of wine have been on the decline since peaking in 1998 and were just starting to show signs of bottoming out early this year. A tax hike now would be like throwing cold water on any recovery."