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Opportunities in Japan’s food and beverage market

January 1, 2019
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Why this is important to Wisconsin businesses: By understanding current trends, Wisconsin companies can meet the needs of Japanese consumers.

The Japanese food and beverage industry is complex and evolving. The combined food retail and food service market is significant in size, with value approaching $600 billion. While the country’s older generation tends to maintain a traditional diet, younger consumers are beginning to favor Western cuisine and habits, leading to a change in the types and amounts of food consumed. However, Japan’s population is both contracting and aging, with a lower birth rate and longer life expectancy. This means demand for food and beverages could decrease in the future. Japanese consumer spending on food fell by 32.6% from 2012 to 2015, in line with the decrease in total consumer spending. This does not undermine the potential for U.S. companies in the Japanese market. Japan is highly dependent on imports for its food supply, and current trends in the food and beverage market—such as a more Westernized diet and the increasing popularity of health foods and rising incomes—pose opportunities for U.S. companies. The country’s food imports far exceed its exports—more than 10 times greater in 2014. Over the past few years, imports have risen and exports have fallen, with the top three imports being fish, meat and cereals. The country’s self-sufficiency in food was 39% in 2015, and the government has set a goal of rising this number to 45% by 2025.

In general, the Japanese consumer base is highly educated with significant disposable income. The main elements of the consumer mindset are: novelty seeking, high expectations, relative price sensitivity and an interest in foreign goods. Japanese consumers seek novelty and highly value new experiences and products; they have a preference for originality, new products, new functions and a large variety of food. Japanese consumers tend to have very high expectations for product quality and are willing to pay a premium price, provided that the products exceed their expectations. Product freshness and the origin of the product are very important. Japanese consumers are relatively price-conscious, an attribute that has become especially apparent in recent decades. There is larger demand for ready-made meals, processed and frozen foods, and reasonably priced private-label products. And Japanese consumers’ interest in foreign goods has been strengthened by increased exposure to global culture and media.

Over the past several years, the Japanese government has increased its focus on health. As a way reduce the burden on the country’s health system and decrease stress-related health issues, the Ministry of Health, Labor and Welfare introduced mandatory health checks in 2008. The government hopes to reduce the incidence of lifestyle diseases such as obesity and heart disease, and these health checks are meant to encourage healthier lifestyles. This focus on health has led to greater demand for food that is perceived to be healthy, such as products with low fat and sugar content, organic produce and nutritional supplements. Health-conscious consumers also tend to consume more fruits and vegetables, so demand for produce is likely to rise in the future.

Japanese consumers tend to buy groceries on a daily basis in local stores, and the large number of grocery stores in Japan—18,400 grocery stores and 54,400 convenience stores—is in response to this preference. Japan is shifting toward dual-income households with a busy lifestyle, and eating out is popular in Japan. Japan has a total of 620,000 restaurants and bars, and the Michelin Guide has given stars to 227 restaurants in the Tokyo area alone, making it the city with the most Michelin stars in the world.

With the younger generation taking an interest in Western food, products such as meat, dairy, salt, oil and fats are growing in popularity, and consumption of fish, seafood, and rice is falling. The continued trend of urbanization is also leading to demand for more variety in food and new experiences, and rising disposable income means that consumers are willing and able to pay for it. Japan’s marriage rate is decreasing, leading to a greater number of single-person households. Along with this, more women are entering the labor market, meaning there is less time for cooking and for eating together. These factors are creating more demand for ready-to-eat meals and home delivery. The aging population is also contributing to this, as many elderly consumers prefer the ease of prepared meals.

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