Health and functional foods to Japan
Trends and opportunities
The growing market can be attributed to a number of key population trends such as a rapidly ageing society, an increase in lifestyle related health issues and a strong interest in health and beauty.
Major contributors to recent growth in the market are products said to prevent disease, boost immunity or enhance skin beauty and those labelled with Food for Specified Health Use (FOSHU).
Examples of these products include:
- Cola drinks, introduced in 2012, which prevent absorption of fats, are manufactured domestically and labelled as FOSHU and/or ‘Tokuho Cola’, Tokuho coffee and tea are also available.
- Yoghurt products containing special lactic acid bacterium which improves immunity from influenza and/or improves intestinal regulation.
- Functional food products containing placenta which are believed to enhance skin beauty have increased in popularity.
Market share by key functional claims of products 2013
(Source: Fuji Keizai Group, H.B Foods Marketing Handbook 2014 Vol.3)
In Japan, Australia is seen as a trusted, secure and safe supplier of food and beverages because of its strict quarantine policy, advanced food safety and quality assessment system.
The marketing of overseas branded products in Japan requires a long term commitment due to regulatory requirements, awareness levels and understanding consumer preference in package designs and tablet size. Materials that are unique to Australia, with scientific evidence of health benefits and confirmed usable food ingredients, offer further opportunities in a competitive environment, including:
- Bovine cartilage powder
- Whey protein powder
- Freeze dried young barley grass or other fruit/vegetable powders
- Fish and shark liver oil (EPA)
- Herbs and spices derived from native plants that have proven health benefits
Japanese manufacturers are continually looking for ways to increase their production. Manufacturers require a stable supply of quality ingredients and often secure two to three trusted supply sources for key ingredients as backup. Ingredients manufactured with advanced technologies are of interest to Japanese manufacturers, as well as special technologies that maximise production efficiency.
Some Japanese manufacturers develop their product standards and specifications, but do not have production facilities instead outsourcing, particularly Asia. Manufacturing standards require GMP, HACCP and ISO certified facilities. Australia’s advanced food safety standards are a strong selling point, though cost of production is a challenge.
The health and functional foods sector is still very competitive in Japan. Despite Australia’s reputation as a safe and trusted supplier, the economic downturn and increased competition amongst supermarkets, grocery stores and pharmacies who sell food products has reduced the price of regular food and beverage. Continued discount of health and functional foods at pharmacies have reduced the value of sales and is becoming the key attraction for consumers entering the stores.
Japanese food and beverage manufacturers are struggling to secure profits. More Japanese manufacturers are entering into the health and functional food sector, which is considered to generate relatively more profit.
Marketing your products and services
Some Australian food and beverage companies have achieved success in the sector by developing an understanding of the market. Some key considerations and actions when exporting into the Japanese health and functional food market:
- Draw up a comprehensive export-marketing plan covering target segments, your strengths and weaknesses, external threats and opportunities.
- Find the right partner (importer or distributor) and establish the foundations for a long-term relationship.
- Ensure that you exercise the most stringent quality control on your product, especially in terms of product safety.
- Make sure that you can supply consistent quantities within agreed timeframes.
- Demonstrate a willingness to support promotional activities to market your product.
- Clearly address your product’s competitive advantages and scientific proof of health benefits. Although Japanese companies usually show interest in new ingredients, materials and ideas, they are unlikely to use them unless the product has a proven safety record and health benefits, plus a high potential to win consumer interest. Products satisfying all these things will have more chance of success. Examples of such products include those that contain glucosamine, chondroitin, collagen or a combination of both.
- Most Japanese companies prefer to have a direct business partner/ingredient supplier rather than dealing with a consolidator or agent to secure efficient communication and logistic arrangements. The Japan Food Sanitation Act sets tough specifications and standards for foods imported into Japan. Suppliers will need to regularly communicate on these specifications with their importers.
To be marketed as organic, the product must have Joint Accreditation System (JAS) certification. As of 15 November 2013, Australian Certified Organic (ACO) and The National Association for Sustainable Agriculture, Australia (NASAA) are the authorised certifiers of JAS under an equivalence arrangement with the Japan Ministry of Agriculture, Forestry and Fisheries (MAFF). This agreement is limited to plant and plant products excluding wine and other products. Livestock and dairy products need to be assessed separately by these certifiers outside of the equivalence arrangement.
A large percentage of health and functional food products are sold online, in catalogues and TV shopping channels. These are called correspondence retail businesses and represent approximately 24 per cent of total sales. The two major categories in 2013 consisted of ‘healthy diet/weight reducing’ foods containing enzymes and ‘beautiful skin’ products containing placenta. Door to door sales channels remains strong with senior citizens.
Tariffs, regulations and customs
Japanese importers are usually responsible for ensuring that imports comply with relevant regulations. However, Australian exporters need to be aware of any/all applicable regulations as legal responsibility could be incurred by the exporter through contracts. Regulations applicable to imported processed food include:
Depending on the product, any of the following may be required as part of customs procedures:
- certificates of origin for major ingredients used
- specification of colours, preservatives and additives
- a list of all ingredients used with the percentage breakdown
- product process information
- laboratory test results – types of tests vary according to nature of products
- factory production quality control records
- any chemical residue applied to crops
- other certificates.
Detailed information is required for complex and processed food.
Links and industry contacts
Government, business and trade resources
Ministry of Agriculture, Forestry and Fisheries of Japan
Ministry of Agriculture, Forestry and Fisheries of Japan (JAS organic law)
Ministry of Health, Labour and Welfare: Food Sanitation Law
Japan External Trade Organization
JETRO: Guidebook for Export to Japan 2011: Health Food and Dietary Supplements
JETRO: Specifications and Standards for Foods, Food Additives, etc. Under the Food Sanitation Act (Abstract) 2010
Department of Agriculture and Water Resources
Australian Certified Organic (ACO)
The National Association for Sustainable Agriculture, Australia (NASAA)
Please note: this list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only.
The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:
- develop international markets
- win productive foreign direct investment
- promote international education
- strengthen Australia's tourism industry
- seek consular and passport services.
Austrade provides information and advice that can help you reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.
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