Agri-Food Trade Service
Foodservice Profile: Japan
International Markets Bureau
MARKET ANALYSIS REPORT | JANUARY 2011
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INSIDE THIS ISSUE
- EXECUTIVE SUMMARY
- JAPANAN AGING GIANT
- CONSUMER PROFILE
- RESTAURANT SECTOR
- TOURISM SECTOR
- INSTITUTIONS SECTOR
- DISTRIBUTION STRUCTURE
- DISTRIBUTION PROFILE OF MAJOR COMPANIES
- OTHER MAJOR COMPANIES
- JAPANESE IMPORTS
- CANADIAN EXPORTS TO JAPAN
- MARKET ENTRY
- KEY CONTACTS
With a population of 128 million people and a gross domestic product (GDP) of US$5.1 trillion, Japan is one of the largest consumer markets in the world. As a result, the country has been, and continues to be one of the most important markets for Canadian agri-business, especially those interested in a major consumer foodservice market.
While it is true that Japan has a shrinking population and stagnant economic growth, the sheer size of the Japanese consumer foodservice market must also be noted. The estimated value of the consumer foodservice industry is a staggering US$300 billion, with the restaurant industry alone accounting for US$220 billion. Opportunities do exist even if the market is not poised for growth.
Japan offers some unique opportunities in the consumer foodservice industry, especially as the industry undergoes a restructuring. Major chained restaurants are playing an increasingly important role. Independent players and wholesalers are being cut out of the market, as major companies create vertical supply chains and purchase directly from producers, reducing the cost of dealing with middlemen, and creating opportunities for higher profits.
The tourism sector is also poised for growth, even as the overall foodservice industry is in decline. Japanese citizens enjoy traveling domestically and are generally affluent.
Finally, the institutions sector, typically a glum area of the market, is a shining opportunity for prospective exporters. The Japanese population is aging, and will rely more and more on government support in hospitals and other institutions, into the future.
JAPANAN AGING GIANT
Japan is a country off the coast of the Korean Peninsula, consisting of four major islands (Hokkaido, Honshu, Shikoku, and Kyushu) and numerous minor islands (Central Intelligence Agency, 2010). Tokyo, the capital city, is one of the largest cities in the world (Euromonitor, 2010). The national population is approximately 128,000,000 people, and is shrinking.
The Japanese agriculture sector is small but highly efficient. It still receives significant state support, however, Japanese agricultural production is shrinking, as is the number of farmers. National self-sufficiency in agriculture has fallen consistently since the 1960s, and will continue to decrease as the population of Japan ages. Many of those in agricultural industries are older and will soon be retiring.
Japan is the third-largest economy in the world, but has experienced anemic economic growth since the end of the 1980s. This is primarily due to poor investment choices and significant debt loads, which have stifled the ability of the government to stimulate the economy. While economic growth has been at a standstill for over two decades, Japan remains at the forefront of innovation in food products, and is the largest net importer of agri-food and seafood in the world. It is also the world's largest producer of fish and seafood.
Economic Facts About Japan
- Total GDP: US$ 5.1 trillion
- Per Capita GDP: US$ 42,581
- Median Income: US$49,677
- Share of Agriculture in GDP: 1.6%
- Debt to GDP Ratio: 192.1%
- Trade Balance: US$ -56.5 billion
Source: Euromonitor, 2010; Central Intelligence Agency, 2010; Global Trade Atlas, 2010
The 2008-2009 recession greatly affected Japan's exports and caused a significant decline in the GDP. Furthermore, the recession negatively affected government finances and drove the country further into debt. Japan has often been associated with high debt loads, although much of the fanfare about this is misleading. First, debt is primarily held by people in the domestic market. Second, significant amounts of public debt are actually owed between various public agencies, giving a figure that approaches 200% debt-to-GDP ratio. Once the debts owed between public agencies are accounted for, the actual public debt is closer to 90% debt-to-GDP ratio (Economist Intelligence Unit, 2010). This has allowed the Japanese Government to stay solvent and gives it some ability to stimulate the economy, despite the appearance of having completely crippled public finances.
Japan consists of four major islands (Honshu, Hokkaido, Kyushu, and Shikoku), the Okinawa archipelago, and a number of minor islands. These islands each have different and unique food cultures, all within an overarching Japanese palate. Dishes that are common across Japan include: Sukiyaki, Tempura, Sushi, Sashimi, Kaiseki Ryori, Yakitori, Tonkatsu, Shabu-shabu, Soba noodles and Udon noodles (Japan National Tourism Organization [JNTO], 2010).
Source: Euromonitor, 2010
Honshu is Japan's largest island in terms of geographic size, economy and population. Honshu is home to the Japanese capital of Tokyo. The island consists of six regions: Chubu Tokai, Chugoku, Hokuriku, Kansai, Kanto and Tohoku (JNTO, 2010).
Kanto is the most heavily populated region in Japan with 42.0 million people (Statistics Bureau, 2008). The region's GDP is US$1.7 trillion (Statistics Bureau, 2006). Tokyo, the capital of Japan, is the largest metropolitan area in the country and is found in the Kanto region. Popular foods include: Yuba, Namerou, Monja-yaki, and Fukagawa-meshi (JNTO, 2010).
Kansai is the second-most heavily populated region of Japan, with a population of 20.8 million (Statistics Bureau, 2008). The region's GDP is US$715.9 billion (Statistics Bureau, 2006). Osaka is the second-largest metropolis in Japan and the largest municipality in the Kansai region. Popular foods include: Funazushi, Yudofu, Koyadofu, and Takoyaki (JNTO, 2010).
Chubu-Tokai has a population of approximately 18.2 million people (Statistics Bureau, 2008). The GDP of the region is US$700.9 billion (Statistics Bureau, 2006). The region is home to Nagoya, which is Japan's third largest metropolis. Some popular local foods include: Houtou, Unagi, Misokatsu, and Misonikomi (JNTO, 2010).
Tohoku is the northern-most region on Honshu, and has a population of 9.4 million (Statistics Bureau, 2008). The region's GDP is US$292.0 billion (Statistics Bureau, 2006). The city of Sendai is the largest of the region. Popular foods include: Sasakamaboko, Wanko-soba, and Kiritanpo (JNTO, 2010).
Chugoku has a population of approximately 7.6 million (Statistics Bureau, 2008). The GDP of the region is US$262.6 billion (Statistics Bureau, 2006). The largest city in the region is Hiroshima. Some popular local foods include: Okonomiyaki, Oysters, Fugu, and Izumo Soba (JNTO, 2010).
Hokuriku has a population of approximately 5.5 million (Statistics Bureau, 2008). The GDP of the region is US$187.7 billion (Statistics Bureau, 2006). The largest city in the region is Niigata. Some popular local food and drinks include: Niigata sake, Hotaruika, and Jibu-ni (JNTO, 2010).
Hokkaido is Japan's northern-most island and has a population of 5.5 million people (Statistics Bureau, 2008). The GDP of Hokkaido is US$165.1 billion (Statistics Bureau, 2006). The largest city on the island of Hokkaido is Sapporo. The island houses significant agricultural production and is a major producer of beer. Popular foods include: Seafood, Ishikari-nabe, and Genghis Khan (JNTO, 2010).
Kyushu is Japan's southern-most major island, and has a population of 13.2 million people (Statistics Bureau, 2008). The GDP of Kyushu is US$386.7 billion (Statistics Bureau, 2006). Fukuoka is the largest city on the island and is located in the Fukuoka prefecture. Popular foods in Kyushu include: Mizutaki, Shochu, Sara-udon, and Hiyajiru (JNTO, 2010).
Shikoku is Japan's smallest of the four main islands in geographic terms, and has a population of 4.0 million people (Statistics Bureau, 2008). The GDP of Shikoku is US$120.0 billion, and Koci is its largest city (Statistics Bureau, 2006). Popular foods in Shikoku include: Bonito, Tai, and Sanuki-udon (JNTO, 2010).
The Okinawa archipelago is an island chain southwest of Kyushu, with a population of 1.4 million people (Statistics Bureau, 2008). The GDP of the island chain is $US32.2 billion (Statistics Bureau, 2006). The island chain is inhabited by people who are ethnically and culturally different than the inhabitants of the major Japanese islands. This is due to the long period of semi-autonomy this island chain had under Chinese rule, prior to Japanese annexation. No information is available from JNTO on the specialty foods in the region.
Detailed descriptions of the foods described in this section can be found at the following address: www.jnto.go.jp/eng/indepth/history/food/index.html
Japan has one of the most demanding consumer bases in the world with regards to product quality and innovation. However, Japan has a large, aging population which will weigh heavily on prospects for growth in the foodservice sector. As it currently stands, the jury is out on whether the Japanese market will grow or shrink, but some fundamental factors seem to indicate the latter.
As Japan's population continues to age, the population will shrink and, ultimately, this will lead to a higher share of income being directed toward meeting debt and social se-curity obligations, leaving less available for the purchase of luxury items.
The combination of a smaller population and less disposable income will likely lead to a smaller market for foodservice and thus contractions within the industry, especially as producers vie to control the ever-shrinking Japanese market through price reduction.
However, there are some positive influences that will affect the future of the foodservice industry. Planet Retail notes that household sizes are shrinking in Japan, and the single-person household is becoming more common. This will act as a positive shock to the industry, as single-person households are more likely to dine out than families (2010).
The aging population also brings demand for certain products, specifically in the realm of health and wellness products. Increased health and wellness product introductions are expected over the same timeline (2010-2014) that the population is forecast to shrink (Euromonitor, 2010). These products are expected to experience increased introductions, as Japanese people attempt to increase their longevity and improve their health through improved diets that offer the same quality of taste and innovation consumers have demanded in the past (2010). These products will offer higher prices, likely for lower volume, but will most likely not offset the overall decline in value that will probably occur in the Japanese food market.
Restaurants, takeaway foodservice, and drinking establishments, comprise approximately 77% of the consumer foodservice industry in Japan (USDA, 2009). The sector is characterized by high fragmentation and diversity (Euromonitor, 2010; Planet Retail, 2010). Chains are growing in importance, but the sector is currently dominated by the independent foodservice outlet. Diversity in the market manifests itself in the wide variety of restaurants available and the offerings that come with them. Japanese, Western, and Chinese food are all popular, and a trend toward more "internationalization" is picking up speed (Planet Retail, 2010).
While the restaurant sector is the largest in Japan for consumer foodservice, it declined in importance during the first decade of the new millennium, and is projected to decline well into the future (at least up until 2014).
This is the largest segment of the restaurant sector. In 2009, it accounted for just under half of total sector sales in value, and a quarter of the transaction volume. Full-service restaurants have experienced decreasing volume and value of sales since 2001.
Chained restaurants are growing in the sector as they begin to acquire better locations and more name recognition in the Japanese market. At the same time, the dominant, independent foodservice outlets are experiencing declining share in absolute numbers. However, it is widely expected that the growing strength of chained outlets will slow down over the period of 2009 to 2014.
The Nakashoku segment accounts for approximately 19% of sales in the consumer foodservice industry, and is characterized by the famous Bento Box (USDA, 2009).
This sector is essentially a take-away, ready-meal foodservice, where consumers buy pre-made meals and take them back to work or home. The Bento Box is the most prevalent product in the Nakashoku market and is an extremely popular lunch option. Other Nakashoku lunch options include purchases made from stand-alone, mobile kiosks (Euromonitor, 2010).
Like all the other sectors of the foodservice sector in Japan, the Nakashoku sector experienced a decline in the value and volume of sales. However, this sector does have the potential to remain relatively important in the overall Japanese foodservice market, due to shrinking household size and aging consumers. These households are less likely to cook for themselves, but also tend to have lower incomes, so will likely be looking for lower cost, convenient options in consumer foodservice.
The café and bar segment is the second-largest segment of the Japanese restaurant sector. Similar to the restaurant sector, this segment is shrinking in both value and volume terms, as well as in numbers of outlets. Furthermore, the segment is experiencing a shift away from independent outlets to chained, American-style outlets (such as Starbucks).
Over the period of 2009 to 2014, the segment is expected to decline further in value, volume and outlets.
Street Stalls and Kiosks
The kiosk and street stall segment is a small part of the Japanese restaurant sector. This segment has been declining in value and volume terms, similar to the rest of the Japanese restaurant market. This sector is dominated by independent outlets. This category excludes the Nakashoku segment.
Over the period of 2009 to 2014, the segment is expected, like the rest of the restaurant sector, to decline in value, volume and outlets.
The fast food sector is highly competitive and relies primarily on franchised restaurants. However, despite the competitive nature of the segment, fast food restaurants are increasing sales in a shrinking market. Furthermore, the number of transactions are increasing. This indicates that more Japanese are turning to the fast food segment for a convenient meal. Finally, the fast food sector is increasing the number of outlets, meaning the demand for fast food product supplies will be increasing as more retailers enter the market.
Overall, in a market of shrinking value, volume and outlets, the fast food sector offers opportunities to suppliers of agriculture and agri-food products.
Self-service cafeterias are suffering disproportionately in the new age of austerity in Japan. Japanese consumers view the self-service cafeteria segment as a low-end, value segment of the market. It is not associated with high quality, and can be considered a symbol of the institutions sector of the foodservice industry. However, it is not solely associated with that sector, and there are some self-service cafeterias that exist in non-institutional environments.
This sector is expected to perform poorly outside of the institutions sector, and thrive within the institutions sector, where the lack of alternative options will drive demand for self-service cafeterias.
The consumer foodservice market in Japan is in an overall state of decline, as a result of the perfect storm of bad conditions relating to the economics and demographics of the country. High debt loads, anemic economic growth and a shrinking population have conspired to reduce the market potential for Japan.
Full-service restaurants hold the majority of the foodservice industry by sub-sector, followed by cafés and bars. Both of these sectors saw declines in value of 8.9% and 11.6% respectively, over the review period of 2005 to 2009, and both are expected to shrink further by 2014.
The only sectors that experienced growth over the period of 2005 to 2009 were two of the smaller sectors: pizza foodservice and fast food. These convenience-oriented markets saw gains of 0.8% and 9.1%, respectively, and offer the best prospects for future growth as they are more appealing to Japanese youth than traditional cuisines.
|100% Home Delivery/Takeaway||29,076||28,621||28,080||27,325||25,263|
|Pizza Consumer Foodservice||1,657||1,647||1,615||1,657||1,670|
Source: Euromonitor, 2010
|100% Home Delivery/Takeaway||23,568||22,536||21,833||21,373||21,010|
|Pizza Consumer Foodservice||1,704||1,764||1,835||1,914||1,993|
Source: Euromonitor, 2010
The volume of market transactions also fell over the period of 2005 to 2009, which is indicative of a few trends in the Japanese economy. First, the Japanese economy was engaged in a significant economic slowdown until 2007, and a recovery over 2007-2008 was stymied by the global credit crisis in 2008-2009. This has helped accelerate a downward trend in market transactions, which would have been expected to continue under normal market circumstances, as Japan's population ages and shrinks.
|100% Home Delivery/Takeaway||2,806,782||2,794,108||2,762,876||2,638,636||2,477,021|
|Pizza Consumer Foodservice||60,152||59,802||57,731||58,961||60,273|
Source: Euromonitor, 2010
In the near term, from 2010 to 2014, Japan is expected to continue experiencing pains within the consumer foodservice sector. Japanese recovery from the recession in 2008-2009 will likely be slow, and the Economist Intelligence Unit expects real expenditure in the economy to return to 2007 levels by 2014 (2010). This slow recovery, combined with a decreasing population, will mean fewer volume transactions at a higher per unit value. In simpler terms, consumers will be spending more per meal than in the past, but there will be fewer meals bought from foodservice establishments.
|100% Home Delivery/Takeaway||2,365,424||2,286,517||2,223,776||2,169,632||2,124,920|
|Pizza Consumer Foodservice||64,620||70,867||76,732||82,517||88,518|
Source: Euromonitor, 2010
The number of Japanese consumer foodservice outlets fell from 2005 to 2009. The combination of poor economic conditions (specifically a deflationary environment), and a shrinking population led to fewer sales in both value and volume. This trend undoubtedly impacted the number of consumer foodservice outlets in the market, as cutthroat competition forced businesses out of the industry.
|100% Home Delivery/Takeaway||77,052||78,219||75,363||72,425||69,863|
|Pizza Consumer Foodservice||2,290||2,275||2,257||2,321||2,366|
Source: Euromonitor, 2010
The outlook for the Japanese consumer foodservice industry is also a negative one in terms of outlets. It is expected that the industry will have declined from 757,249 outlets in 2009, to 673,871 outlets by 2014 (Euromonitor, 2010). Again, the demographic and economic picture of Japan is not a bright one, and this will negatively impact all sectors of the Japanese economy, including foodservice.
|100% Home Delivery/Takeaway||67,734||65,916||64,342||62,955||61,507|
|Pizza Consumer Foodservice||2,429||2,512||2,598||2,678||2,744|
Source: Euromonitor, 2010
The hotel and lodging sector accounted for approximately US$10.8 billion in sales in 2009. The primary customer of the Japanese accommodation industry is the domestic consumer, either for business or leisure, accounting for a whopping 96.5% of the market (Datamonitor, 2009).
Overall, Japan accounts for approximately 10% of the world's supply of hotel rooms, and as a result, the size of the hotel sector is important to the consumer foodservice market (Planet Retail, 2010). This segment has over 65,000 different establishments, and over half of these are small businesses (traditional style inns called Ryokan) run by one to four people (Planet Retail, 2010; USDA, 2009). It should be noted that Ryokan generally serve traditional-style Japanese food instead of Western-style food (USDA, 2009). Chain hotels account for less than 10% of the market, and are domestically owned in most cases. International hotel chains have a very small presence in Japan.
Asia is the primary source of international tourism for the Japanese accommodations industry, (more specifically, Taiwan and South Korea). American and European tourists follow in second and third, respectively.
The United States Department of Agriculture (USDA) estimates that the tourism sector accounts for approximately 10% of all consumer foodservice sales in Japan (2009). The sector is volatile, but remains important especially as Japan is a popular tourist and business destination. The Japanese tourism sector experienced a significant downturn due to the 2008-2009 global recession, and although it is not expected to regain 2007's peak value in the near future, growth is expected between 2010 and 2014 as the sector slowly recovers.
Source: Euromonitor, 2010
Japan has an underdeveloped cruise ship industry, relative to other OECD countries. The industry is worth a paltry 1% of the entire tourism retail market, and lacks many of the options which have made cruises popular in the West, such as lower-end alternatives. The Japanese Government and the Japanese Association of Travel Agents began promoting the cruise ship industry in 2008. This is expected to yield increased awareness and opportunities in the future(Euromonitor, 2010).
The institutional foodservice sector accounts for approximately 11% of the Japanese consumer foodservice industry. It is a stagnant, and highly fragmented sector, and profit margins tend to be low (Datamonitor, 2009). However, it is expected to experience some growth as the population ages, primarily as people make the move into hospitals for treatments. This segment is gearing up to feed an increasingly large senior population (USDA, 2009).
Due to the current stagnation of the sector, the institutional consumer foodservice industry has become highly competitive and the only way to increase revenues is to either reduce costs or take market share away from competitors. Additionally, most foodservice outlets in this industry are either owned by a major organization, such as a corporation or government, or they are in contracts with them, giving them the support of these organizations. This allocates significant market power to the foodservice players at negotiation time.
Major industry players in this sector include: Compass Group PLC, Sodexho and SHiDAX (Datamonitor, 2009).
Japan has a highly complex distribution structure, which can involve both vertical and horizontal movements of goods (USDC, 2010).
Currently, the country operates on an importer and wholesaler model, where wholesalers will bring in goods from abroad, and resell them in the domestic market to foodservice and grocery retailers. Larger operators in the market have been trying to alter this model as much as they can. Switching to a system where goods are sold directly to the operators in the market is seen as ideal, as it would allow for streamlined business and lower costs. It is likely that this trend toward cutting out the wholesaler will continue into the future, especially for smaller firms which do not have the logistical capacity to handle their own import business. However, larger companies will likely seek to eliminate both wholesalers and importers altogether (USDC, 2010).
DISTRIBUTION PROFILES OF MAJOR COMPANIES
Unless otherwise noted, all of the information in this section was derived from Planet Retail, 2010.
AEON is a foodservice industry and grocery player that has begun restructuring its supply distribution operations. This fundamental change includes switching to a global distribution structure, which cuts out importers and independent distributors. Within Japan itself, the company has many distribution centres in order to move product to market. AEON has increased direct purchases from manufacturers and exporters (currently valued at US$0.99 billion) and intends to increase this amount five-fold, making the total amount US$4.95 billion in 2012. This is expected to account for 15% of total supplies purchased, and is intended to reduce costs by US$0.3 billion.
Colowide is a foodservice industry player that intends (as of 2010) to create a vertical supply chain, which would include distribution centres, and physical distribution of food products to their restaurants.
Doutor Nichires is a major business in Japan's coffee industry. It has a number of subsidiaries acquired from a merger with Nippon Restaurant Systems. These subsidiaries are involved in the acquisition and processing of food products, restaurant construction, and the acquisition of related non-food materials.
Dunkin' Brands operates Baskin Robbins Ice Cream. Supplies of ice cream are processed at the company factory and distributed by an affiliated third party.
McDonald's is the largest fast food corporation in the world and has a global supply chain which provides all of its foodservice industry needs. McDonald's in Japan tends to source as much of its product as possible from the Asia Pacific region, in order to reduce costs. The entire supply chain operates on the mantra of low price for quality products. The company operates 13 distribution centres and handles the logistical aspects of food distribution in the company.
MOS Food Services operates burger restaurants and puts strong emphasis on traceable ingredients. This is due to the company focus on natural and organic ingredients, and the positioning of the company as a healthy, fast food operator. The company focuses heavily on the sharing of data, in order to maximize efficiency through deliveries, and optimize inventory management. Optimized inventory management has helped the company reduce the frequency of oversupply or underdelivery of goods, as the database is shared with their suppliers. This same database contains information on the supplier, food content, and production history. The company is also aiming to use a joint distribution system for their food in collaboration with Duskin, with whom it has a partnership.
REX Holdings operates restaurants and neighbourhood stores. Most of the company's revenues are derived from food sales. The corporation sources its products for its various operations from different wholesalers. Its foodservice products are sourced through CostIs, Inc., a subsidiary of the company.
Royal Holdings is a restaurant industry player that is constantly changing its supply chain in order to maximize profits. This has led to a gradual verticalization of the supply chain. Currently, the company uses a central kitchen to supply some 120 items to their restaurants, and also owns processing facilities. They are actively engaged in purchasing directly from farmers, as this reduces costs, provides stability, and allows for food traceability.
Lawson is a convenience store chain in Japan. It is a member of the Mitsubishi family of companies.
Seven & I operates a variety of food-oriented businesses, including foodservice, grocery, and convenience stores (most notably 7-Eleven). The company acquires products through a variety of wholesalers and is trying to encourage those wholesalers to begin joint distribution to reduce costs. Seven & I does not purchase directly from farmers and manufacturers for its Japanese operations. Five companies supply food to Seven & I: SEJ, Ito-Yokado, York-Benimaru, York Mart, and SHELL GARDEN.
Skylark operates a host of different consumer foodservice outlets. The company has 12 merchandising centres that manage the ordering, processing and distribution of food to their restaurants. Fresh food is incredibly important to the company, which has tried to reduce frozen stocks. Skylark has done much to increase direct purchases from farmers and manufacturers. Most notably, the company has begun (as of 2009) acquiring beef directly from processors.
Starbucks is a coffee company. They primarily source their non-coffee food products from regional and domestic suppliers, in order to cater to domestic tastes. This means that opportunities in Japan are limited. However, Japan is a market open to many different types of food, and opportunities may exist to introduce Canadian pastries as a novel food item.
Subway is a sandwich company that sources its products through the Independent Purchasing Cooperative (IPC). The IPC handles the purchasing and packaging of products destined for Subway outlets.
Yoshinoya is an Asian food restaurant specializing in beef, specifically for gyudon. This "short plate" beef is currently sourced from the United States. Yoshinoya is a major purchaser of beef in Japan and, in 2000 (the most recent available estimate), the company accounted for approximately 10% of Japanese beef imports by tonnage. The company has a processing facility in the United States which cuts and packages the beef for distribution to Japan.
YUM! Brands is a major restaurant corporation known most notably for Kentucky Fried Chicken. YUM! primarily sources its food in the non-North American markets, through third party suppliers.
Zensho Group operates 32 subsidiaries in Japan and a variety of Asian, European, and North American style foodservice outlets. The company added approximately 700 outlets between 2008 and 2010. Zensho also operates some Duskin and MOS outlets in certain regions of Japan. Its most successful operation is its gyudon chain, Suyika, which accounts for 38% of the group's sales. The company has a national network of distributors and food processors to supply its ever-growing number of outlets. The company's logistical network is second to none, and has allowed them to remain competitive in a shrinking market. The company purchases directly from domestic and overseas farmers, rather than using a wholesaler.
OTHER MAJOR COMPANIES
At the time of publishing this report, Japanese distribution profiles for the following major companies are unavailable. Unless otherwise noted, all of the information in this section was derived from Planet Retail, 2010.
Burger King is a fast food industry operator. Burger King does not employ a universal supply structure outside of North America, and operations are subject to the recommendations and management of franchise operators within international markets.
Carlson is active in the restaurant, lodging and travel industries.
Darden is a seafood restaurant company, most notable for the seafood foodservice player, Red Lobster.
Denny's Corporation is responsible for the Denny's restaurant chain.
Domino's Pizza is a restaurant operator in Japan. Eight distributors and manufacturers in the Domino's supply chain (including four Canadian ones) operate outside of the United States and these are responsible for distributing products to a number of markets.
Duskin is a corporation whose primary source of revenue is not attributable to foodservice. However, they do house a significant foodservice segment contributing to business operations, specifically in the field of donuts and coffee shops. It also has an Asian fast food restaurant operation.
Hokka Hokka Tei is a fast food restaurant chain specializing in Asian food.
Honke Kamadoya is an Asian fast food restaurant chain.
Izumiya is both a retailer of grocery products, and a foodservice industry operator. The corporation operates in Japan and at the time of the writing of this report, are beginning operations in China.
Monteroza is a pub chain. The company controls all of its foodservice operations and does not franchise outlets, in order to provide consistent standards.
Japan's total agri-food imports in 2009 were valued at CAD$54.7 billion, which was a decrease from CAD$59.8 billion in 2008 (Global Trade Information Service [GTIS], 2010). Of this, Canada was the fourth-largest supplier of agri-food products to Japan, with a market share equivalent to 6.4% in 2009. Canada's chief competitors in the market are the United States (28.1%), China (10.8%), Australia (7.7%) and Thailand (6.0%).
Source: GTIS, 2010
The top five Japanese agri-food imports from the world were corn, cigarettes, frozen pork, soybeans and chicken meat. Agri-food imports were significantly impacted by the global economic contraction over the 2008-2009 period.
Canada is a significant producer and exporter of soybeans, and frozen pork, two large sectors that are expected to remain as such in the Japanese market.
|Corn (Maize), Other Than Seed Corn||3,810,638,576||3,133,748,371||2,923,478,682|
|Cigarettes Containing Tobacco||3,056,316,501||3,722,784,512||3,604,522,257|
|Pork, Nesoi, Frozen||4,737,981,128||4,116,865,082||2,577,132,747|
|Soybeans, Whether Or Not Broken||2,323,132,289||1,739,723,149||1,454,742,460|
|Prepared Or Preserved Chicken Meat Or Offal, Nesoi||997,572,996||1,304,844,283||1,292,239,186|
|Corn (Maize), Other Than Seed Corn||4,099,329,812||5,991,890,970||4,281,979,400|
|Cigarettes Containing Tobacco||3,183,119,695||3,403,434,374||3,965,221,444|
|Pork, Nesoi, Frozen||2,526,731,803||3,000,784,720||2,996,906,048|
|Soybeans, Whether Or Not Broken||1,778,755,538||2,494,162,070||1,987,208,295|
|Prepared Or Preserved Chicken Meat Or Offal, Nesoi||1,247,790,625||1,440,360,107||1,572,750,07|
Source: GTIS, 2010
Japanese seafood imports from the world were valued at CAD$14.7 billion in 2009, marking a slight decrease from CAD$15.0 billion in 2008 (GTIS, 2010). Canada was the eleventh-largest supplier of seafood products to Japan in 2009, holding a 2.9% share. The top five competitors in the country are China, the United States, Thailand, Chile, and Russia. Japanese seafood imports have been declining in value since 2000, when they were valued at CAD$22.8 billion (GTIS, 2010). While imports saw gains over the previous year in both 2004 and 2008, the overall trend has been a downward one, with imports declining in value in every other year since 2000. Inconsistent measurement units do not allow for volume comparisons.
Source: GTIS, 2010
Over the period of 2004 to 2007, Japanese imports of seafood declined significantly, as did domestic production. Domestic stocks of fish are declining and Japanese producers are having to travel further and incur higher costs to harvest fish, which has increased prices and decreased demand. This has been detrimental to both the domestic and foreign fishing industries.
|Shrimps And Prawns, Frozen||2,595,854,958||2,336,741,831||2,212,342,362|
|Fish Fillets, Frozen, Nesoi||0||0||0|
|Fish Meat, Frozen, Except Steaks And Fillets Nesoi||0||0||0|
|Fish, Bone-In, Frozen||738,406,865||754,323,314||655,695,759|
|Fish, Prepared Or Preserved,||1,218,611,353||988,136,606||923,738,888|
|Shrimps And Prawns, Frozen||1,851,515,848||1,905,547,362||1,962,786,738|
|Fish Fillets, Frozen, Nesoi||1,426,277,926||1,617,420,727||1,713,108,836|
|Fish Meat, Frozen, Except Steaks And Fillets Nesoi||752,901,035||1,124,889,371||762,700,877|
|Fish, Bone-In, Frozen||571,722,748||663,483,867||689,480,797|
|Fish, Prepared Or Preserved,||845,641,244||627,432,087||680,959,672|
Source: GTIS, 2010
CANADIAN EXPORTS TO JAPAN
Canada's top five exports to Japan in 2009 were canola, frozen pork, fresh pork, soy beans, and wheat. An interesting trend to note from the 2009 export year, is that most sectors experienced declining value, but several sectors in which Canada is a major exporter, did well. In fact, frozen pork, fresh pork and soy bean exports actually experienced an increase.
Japan is a market that has traditionally demanded high quality products. There may exist opportunities in the market for high quality Canadian pork and beef products. Frozen pork dropped significantly in terms of both value and volume in 2006, and continues to slowly decline, but fresh pork cuts are gradually picking up the slack. While beef imports are not in the top five, they have increased steadily since 2006, and will likely offer more opportunities in 2010 and into the future.
|Swine cuts, frozen||648.0||395.1||402.0||448.5||458.3|
|Swine cuts, fresh||293.2||288.8||288.3||334.4||340.9|
|Wheat nes and meslin||194.0||192.7||234.1||409.0||226.0|
|Swine cuts, frozen||180.6||125.5||125.9||132.5||138.1||Kg|
|Swine cuts, fresh||49.8||56.3||61.1||64.6||59.0||Kg|
|Wheat nes and meslin||1.0||1.0||0.9||1.0||0.8||Tonne|
Source: Statistics Canada, 2010
Canada's top seafood exports in 2009 were frozen shrimps and prawns, herring roe (preserved and frozen), frozen snow crabs, and sablefish. Four of Canada's top five seafood exports to Japan increased in value, as shown below, despite decreases in Canada's overall seafood exports to Japan. This indicates that while the Japanese fish and seafood market is shrinking in size, there do exist opportunities in select sectors, where Canadian producers are strong.
Canadian seafood exports are experiencing an overarching seafood market trend, that has seen declining volumes and values since 2000. This is unlikely to change, as per capita consumption of seafood in Japan is also on the decline (Food and Agriculture Organization, 2010).
|Shrimps and prawns, frozen, in shell||62153.8||57397.6||35852.3||32306.0||45928.9|
|Herring roe, preserved||64579.6||33311.9||31378.6||36909.2||42307.1|
|Herring roe, frozen||28369.1||20579.9||16157.0||18719.0||30325.1|
|Crabs, snow (Queen), frozen||52306.2||32147.1||47667.0||44215.9||29574.7|
|Shrimps and prawns, frozen, in shell||7274.7||7202.2||4911.8||5014.9||5216.5|
|Herring roe, preserved||4057.2||2563.7||1932.0||1719.7||1888.4|
|Herring roe, frozen||4456.1||3237.3||3031.5||2321.8||3254.4|
|Crabs, snow (Queen), frozen||5131.5||3921.7||4426.9||4290.9||3198.4|
Source: Statistics Canada, 2010
An important part of conducting business in any country is understanding their import and food safety regulations as well as their business culture. In addition to its unique business culture, Japan has stringent rules regarding the hygiene and cleanliness of food. Strict adherence to these rules can mean all the difference between a successful business relationship, and a failed one.
Agricultue and Agri-Food Canada has substantial resources in navigating the Japanese consumer foodservice market and exporters are encouraged to contact their local Agricultue and Agri-Food Canada Regional Office, as well as the Embassy of Canada in Japan.
More information on regulations can be obtained from:
Japan's consumer foodservice industry is an important market for Canadian exporters. Despite its aging consumer base and stagnant economic growth, it is still one of the largest food markets in the world. The country is consuming lower volumes and will continue to do so as the population shrinks, but consumer foodservice retailers will be looking for new, innovative, and lower-cost options, as they attempt to stave off the decline in retail sales value.
As the market shrinks, many independent companies are being replaced with chained outlets. The advantage of doing business with a chained outlet is that it can reduce overall costs and allow for large-scale exporting. Japan-based companies are looking to cut out major wholesalers and create their own supply chains. As more companies adopt this strategy, competitors who have not yet done so will also turn to this strategy for cost reduction purposes. Cutting out the wholesalers will allow for Canadian agri-business, as well as Japanese foodservice companies, to profit to a greater degree.
The tourism sector also offers opportunities as the Japanese are generally affluent and enjoy the experiences of domestic travel. New opportunities are expected to open in the cruise ship industry, where there have been significant developments in the last few years although this does remain a small, niche market. Government support and industry organization in recent years make it a potential area of notable growth in the near to medium term.
The institutions sector is another sector that may grow, even if the restaurant sector is shrinking. The aging population will create opportunities in state institutions that cater to the elderly, such as hospitals. While margins tend to be low in this sector and the Japanese government is likely to seek low-cost options to fulfill their needs, it still offers a place for Canadian exporters to do business.
The Embassy of Canada to Japan
The Embassy of Canada to Japan
7-3-38 Akasaka, Minato-ku
Tokyo, 107-8503, Japan
Tel: (011-81-3) 5412-6200
Fax: (011-81-3) 5412-6254
Canadian Government Trade Office, Sapporo
5F Nikko Bldg., North 4 West 4, Chuo-ku
Sapporo, Hokkaido, 060-0004, Japan
Canadian Government Trade Office, Kitakyushu
AIM Building, 8th Floor 3-8-1 Asano Kokurakita
Kitakyushu, 802-0001, Japan
Tel: (011-81-93) 533-4300
The Consulate of Canada, Nagoya
Nakato Marunouchi Building, 6F 3-17-6 Marunouchi, Naka-Ku
Nagoya, 460-0002, Japan
Tel: (011-81-52) 972-0450
Fax: (011-81-52) 972-0453
Japan External Trade Organization (JETRO)
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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.
Foodservice Profile: Japan
© Her Majesty the Queen in Right of Canada, 2011
ISSN 1920-6593 Market Analysis Report
AAFC No. 11292E
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