Agri-Food Trade Service

Consumer Trends - Beef and Pork in Japan

August 2010

International Markets Bureau
MARKET INDICATOR REPORT | AUGUST 2010

Global Analysis
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INSIDE THIS ISSUE

• Executive Summary
• Market Data
• Consumer Trends
• Retail Trends
• Canadian Performance
• Competition

EXECUTIVE SUMMARY

Japan imports approximately 60% of the agricultural and food products consumed domestically each year.

Japan's rate of self-sufficiency for food has dropped from 73% in 1965 to 40% in 2007, the lowest among the G8 countries. Domestic production can no longer meet demand. Japan's continued dependence on agri-food imports represents opportunities for competitive Canadian food exporters.

Japan's real Gross Domestic Product (GDP) growth of 2.1% in 2007 fell to only 0.5% in 2008, where it remained into 2009. Japan's GDP is expected to rise to 1.6% in 2010, which should ease inflation and positively stimulate the economy.

The Japanese recessionary mindset is influencing spending on food products, with the consumer being both price conscious and value conscious. Despite the majority of consumers indicating that price point was the deciding factor in their food purchases, few consumers appear to be willing to compromise on quality.

Japan's meat consumption has fallen slightly during 2008 and 2009. When it comes to fresh meat, Japanese consumers are selecting cheaper cuts. Cheaper processed meats, however, have not fared as well. Sales of canned/preserved meat and meat products declined between 2004 and 2009. Sales of frozen processed red meat also fell, as did sales of chilled processed meat, but to a lesser degree. To date, beef sales have not fully recovered from the BSE crisis of 2003. Pork has not recovered from the swine flu (H1N1) crisis of 2009. The Japanese beef mislabelling scandal (importing of United States beef re-labeled as domestic produced beef) in 2002, also negatively impacted meat sales in Japan. Nevertheless, Japan is still the ninth-largest market for fresh meat in the world and, in this respect, will remain important for the foreseeable future.

On a positive note, Japanese consumers are making an effort to ‘return to the kitchen'. Meal component providers need to use this window of opportunity to ensure that consumers continue to embrace this approach. In the short-term, this includes providing inspiring cooking ideas and continuing to demonstrate the value of a home-cooked meal.

DID YOU KNOW?

• In 2009, Canada's export of fresh or chilled beef to Japan increased by 22% over 2008 exports.
• Japanese consumers see Canada as having safe food and associate positive images with Canadian food.

MARKET DATA

Source: Packaged Food: Euromonitor from trade sources/national statistics

Source: Packaged Food: Euromonitor from trade sources/national statistics

Source: Packaged Food: Euromonitor from trade sources/national statistics

Source: USDA Agricultural Projections to 2019, February 2010 The projections were completed in November 2009.

Source: USDA Agricultural Projections to 2019, February 2010 The projections were completed in November 2009.

CONSUMER TRENDS

• Overall, Japanese consumers are still cautious when it comes to meat purchases.
• 39% of Japanese consumers indicated that saving money has become "more important" when grocery shopping.
• Japanese shoppers are being more frugal when it comes to food purchases, with brand loyalty down. As a result, products that meet quality expectations, but at a lesser price point, are experiencing success.
• A Japanese food and beverage consumer survey conducted by Datamonitor in 2008 indicated that price, taste or flavor, country of origin and health were the top four characteristics that influenced their purchase choices.
• Thirty-two percent of Japanese consumers, in the latter part of 2008 and into 2009, are choosing to buy cheaper cuts of meat than they purchased in 2007.
• While Japanese food and beverage consumers are beginning to buy into the health benefits associated with some products, such as organic foods, the current market share for organic is less than 0.5%.
• Overall, Japanese consumers see Canada as having safe food and associate positive images with Canadian branded food (i.e. pristine, natural, trusted, good tasting). In addition, they see Canada as adhering to strict food safety standards.
• A recent poll of Japanese consumers (IPSOS Reid, February 2010) showed that they have a positive perception of Canadian pork products and an interest in buying them. 
• According to the same survey, Japanese consumers were wary of purchasing Canadian beef products, in light of the discovery of BSE-infected cattle in the neighbouring United States (no reference was made to the BSE crisis in Canada).

Consumer Survey Results

NB: totals may not add up to 100% due to rounding
Source: Datamonitor Consumer Survey, April 2009

NB: totals may not add up to 100% due to rounding
Source: Datamonitor Consumer Survey, April 2009

• Over 59% of Japanese grocery shoppers indicated that lower prices have a "high" or "very high" influence over where they shop. Consumers are considering a variety of other market options, not just their usual grocery purchasing destination. Younger Japanese consumers, with low disposable income, are the top demographic choosing inexpensive foods. Food safety is the top concern for the Japanese housewife.
• Japanese singles, who grocery shop infrequently, shop at convenience stores, which offer extended hours of operation. Japanese housewives tend to shop at supermarkets because they provide one-stop shopping, as well as recipes and menu suggestions.
• Freshness is a top priority for the Japanese consumer. Foods that were snap-frozen immediately after harvest/catching were perceived to retain their freshness. Some consumers purchase fresh food in bulk, such as meat, when it is being offered at a low price.
• Japanese grocery shoppers generally check "country-of-origin" labeling.

RETAIL TRENDS

• Japanese supermarkets distribute 50% of packaged foods and meats, while warehouses and mass merchandisers account for 14% of distribution. Reuters reported in December 2008 that convenience stores and grocery shops have become popular, as consumers tighten their purse strings.
• Foreign supermarket giants like Costco, Carrefour and Tesco have recently entered the Japanese market and compete directly with Japanese counterparts such as AEON (Jusco), Japan's largest retail chain store operator and Asia's second-largest retailing group.
• Itochu is a growing player in the Japanese food retail and distribution market. It is a major food wholesaler and it also owns controlling interests in both the Familymart and, the am/pm convenience stores in Japan. Recent acquisitions in China in the wholesale sector have extended the company"s food and household goods distribution reach. Itochu now owns the second largest household goods wholesale business in China and has said it will use this investment to drive Japanese retailers and household brands into the market there.

Japan Pricing Survey - Shopping Influencers April 2009

Source: Datamonitor Consumer Survey, April 2009

CANADIAN PERFORMANCE

• Canada's agriculture exports to Japan equaled CAD $2.9 billion in 2009, of that total, meat and edible meat offal accounted for CAD $ 942.3 million or approximately 23% of exports.
• Canada is the fifth-largest supplier of frozen beef, fourth-largest supplier of fresh or chilled beef, and the second-largest supplier of fresh, chilled or frozen pork to Japan.
• In 2009, Canada's fresh or chilled beef sales to Japan increased 22% over the previous year.
• In 2009, Canada's fresh, chilled or frozen pork sales to Japan increased 14% over the previous year.

Source: Global Trade Atlas, April 2010 . 2009 numbers are actuals to December 2009

COMPETITION

• Foreign meat exporters are working to promote their products to Japanese consumers. The US Meat Export Federation (USMEF) is one of the most active; its promotions often focus on the promulgation of new cuts and cooking methods, in an effort to sell more middle meats.
• Meat and Livestock Australia is also very active on the promotional front. Among its latest campaigns was the 2009 Christmas Steak promotion, which commenced in November 2009. Posters, package stickers and steak recipes were distributed to participating retailers, and there were steak gift sets and grilling pans to be won.

Source: Global Trade Atlas, April 2010 . 2009 numbers are actuals to December 2009

Source: Global Trade Atlas, April 2010. 2009 numbers are actuals to December 2009

The Government of Canada has prepared this report based on primary and secondary sources of information. Although every effort has been made to ensure that the information is accurate, Agriculture and Agri-Food Canada assumes no liability for any actions taken based on the information contained herein.

Consumer Trends: Beef and Pork in Japan
© Her Majesty the Queen in Right of Canada, 2010
ISSN 1920-6615 Market Indicator Report
AAFC No. 11236E

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Her Majesty the Queen in Right of Canada.

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