(Last updated: 7 Nov 2011)

Trends and opportunities

The market

The processed food area covers a diverse area of products, ranging from vegetables through to complete, ready-to-eat meal solutions, canned preserved food, and the complex mixtures of ingredients that are utilised in the preparation of these products.

Japan has been hit by a number of food safety and false labelling scandals in both domestically produced and imported food products. Traceability and safety of food products draws more attention to consumers in Japan. There is an increasing awareness by Japanese buyers and consumers that Australia is a reliable and safe origin for processed foods.

As a result of ongoing macroeconomic conditions, a growing penchant for discounting amongst Japan’s leading retail chains has led to most product areas seeing unit price decline, which has exacerbated deflation. Sales of packaged foods are expected to show decline through to 2014, which will result in continuing deflation. With consumers becoming more cautious about spending, and a continued decline in domestic demand for packaged foods, Japanese manufacturers are likely to increase their focus on overseas markets for future growth.

Consumer demand for healthy food and beverage in Japan is increasing due to a rapid increase of the ageing population, as well as consumers’ health consciousness. All organic food sold after March 2001 must be produced in accordance with the new Japan Agricultural Standard (JAS), which was amended by Japan’s Ministry of Agriculture, Forestry and Fisheries.

Australia is currently supplying Japan with a wide range of processed food products such as:

• confectionary
• gourmet food
• honey
• macadamia nuts
• cheese 
• mixed ingredients for food production, which present unique attributes of the country

Australia is in a unique position to capitalise on this market by taking advantage of Australia’s ‘clean, green, and safe’ image with Japanese consumers. However, many Japanese importers feel that Australian products are expensive therefore hard to sell into mass market.

Opportunities

Japanese manufacturers, processors, restaurant chains, supermarkets, and convenience store chains are all interested in safe, price-competitive and value-added products from overseas.

The best opportunities for Australian processed foods suppliers include:

• Processed products based on crops, meat, dairy, grains in which Australia is internationally competitive
• Offer unique attributes and selling points of products
• Nicely designed packaged gourmet food products
• Shelf life to be over 12 months and kept in ambient temperature
• Products that appeal to health-conscious Japanese buyers, and use of natural ingredients with the least amount of additives and preservatives
• Product that has traceability and is antibiotic-free
• Products especially tailored to Japanese buyers’ specifications

Competitive environment

Australia takes advantage of being a large supply country of raw materials for food products to Japan. There are a large number of domestically produced processed food products in Japan whose ingredients are from Australia such as dairy products, wheat, crops and fruits.

With the strong influence of the Western lifestyle, consumers have more access to purchase imported food products that are current sold through various channels such as department stores, speciality food stores, supermarkets and the Internet.

Australian confectionaries such as Tim Tams and macadamia nut chocolate, and gourmet products such as honey and cheese crackers have established the mid- to high-end market presence in Japan.

Tariffs, regulations and customs

Japanese importers are usually responsible for ensuring that imports comply with relevant regulations. However, you need to be aware of any regulations as legal responsibility could be incurred through a contract. Regulations applicable to imported processed food include:

• Food Sanitation Law
• Japan Agricultural Standard
• Product labelling regulations
• Product liability law
• Organic standards
• Other regulations may also apply in special cases

Depending on the product, any of the following may be required as part of the customs procedure:

• Certificates of origin of major ingredients used
• Specification of colours, preservatives and additives
• A list of all ingredient used with percentage breakdown for customs
• Product process information
• Laboratory test results – types of test vary according to nature of products
• Factory production quality control record
• Chemical residue applied to crops used as ingredients
• Other certificates such as AQIS document
• Tariffs on processed food vary according to products, ingredients, and the degree of processing
• Tariff quotas apply to some products

The more complex processed foods with many ingredients and process of production may require detailed information.

Marketing your products and services

Market entry

The economic difficulties faced by Japan since the 1990s have forced Japan’s processed food industry to review their traditional operational methods and to seek a new competitive advantage, including overseas supply. Recent trends have seen firms bow to the pressures of the high cost of local production and are now seeking sub-contractors or relocation of production offshore.

A number of Australian food and beverage companies have achieved success in Japan by understanding the market, supplying required product information for obtaining an import approval by Japanese government authorities, having products that are unique and competitive, and working with good partners.

Australia’s geographical location is beneficial for conducting business in Japan. Australian companies may take advantage of counter-seasonal production, similar time zones and frequent flights direct to major Japanese business centres such as Tokyo and Osaka.

This is an extremely competitive sector so it is advisable to do the following:

• Draw up a comprehensive export-marketing plan covering target segment, your own strengths and weaknesses, external threats and opportunities.
• Find the right partner (importer or distributor) and establish the foundations for a long-term relationship with them.
• Ensure that you exercise the most stringent quality control on your product, especially in terms of product safety.
• Ensure that you can supply to the market in consistent quantities at promised time frame.
• Willingness to support promotional activities to make market awareness of your product.

Potential buyers of your products include:

• Existing importers or distributors for the product
• Japanese food manufacturers who further process your products to produce finished products in Japan
• Japanese food service industry for pre-cooked meals and sauces
• Supermarkets as suppliers of their own private labels

Japanese purchasers appreciate approaches that are well researched and have an understanding of the situation and competition in Japan, as well as an appreciation for the competitive nature of the market. Australia has a very good image in the minds of consumers as a ‘clean and green’ country, and as such, can benefit from strategic marketing underpinned with this belief.

The Japanese processed food market is very sophisticated – catering for increasingly quality and price conscious consumers. The population is also ageing and becoming more health-conscious, which is leading to increased potential for products stressing health benefits and demonstrable lower chemical and or organic status.

Suppliers like to be informed of the origins of their business partner in order to assess production capability. This is especially true for products with traceability and organic products. It is advised that you prepare detailed information sheets about company owners and top-level staff to prove consistency and continuity of stable management and quality control practices.

It is important that any contracts and business documents are fully understood by both sides as it is sometimes challenging for those unfamiliar with the environment to communicate effectively with Japanese companies.

It may be worthwhile exploring the possibility of marketing your products via the Internet but it is largely dependent on the products. In doing so, it is of paramount importance that English and Japanese services are provided (for both B2B and B2C). There are a number of different ways to set up an exporting online system, but Japanese consumers may find it difficult to trust a company they are not familiar with.

Distribution channels

The traditional distribution channels for processed food are multi-layered and relatively complex with personal, historical and financial relations playing their part in the decision making process.

However, these distribution channels are becoming more simplified as the larger trading companies are bypassed by suppliers. Each product in the food and beverage industry has its own specialised wholesaler. You will need to investigate the market, competition, regulations, and available channels to determine the best route to distribute your products.

Links and industry contacts

Government, business and trade resources for Japan

Ministry of Agriculture, Forestry and Fisheries of Japan – www.maff.go.jp/eindex.html
Ministry of Agriculture, Forestry and Fisheries of Japan (JAS organic law) – www.maff.go.jp/e/jas/index.html
Ministry of Health, Labour and Welfare: Food Sanitation Law – www.mhlw.go.jp/english/topics/importedfoods/index.html

Media

Japanscan Food Industry Bulletin – www.japanscan.com

Australian resources

Japan External Trade Organization – www.jetro.go.jp/australia

Contact details

The Australian Trade Commission – Austrade – is the Australian Government’s trade and investment development agency.

Through Austrade’s network of offices in over 50 countries, we assist Australian companies to succeed in international business, attract productive foreign direct investment into Australia and promote Australia's education sector internationally.

For more information on how Austrade can assist you, contact us on:

Australia ph: 13 28 78 | Email: info@austrade.gov.au

A list of Austrade offices (in alphabetical order of country) is also available.

Sources

• Austrade industry specialists
• Euromonitor International
• Japan newspapers and industry publications
• Japan External Trade Organization
• Ministry of Agriculture, Forestry and Fisheries of Japan
• Ministry of Health, Labour and Welfare