Agri-Food Consumer Profile
Japan

May 2011

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Executive Summary

  • The global downturn curbed demand for Japanese exports, causing a negative growth rate of -5.2% in 2009.
  • Japan's population is ageing faster than any other nation. It is projected that those aged 65 and over will account for approximately 25% of the total population by 2020.
  • Staple foods in Japan are dominated by three main product groups: dairy, rice/noodles and bread. Together, these products accounted for 81% of value sales in 2010.
  • The Japanese government introduced compulsory ‘metabolic syndrome' health check system for citizens over 40 in 2008, increasing Japanese health consciousness and demand for health and wellness products.
  • The largest consumer expenditure categories in Japan continue to be food and beverages, housing, and leisure and recreation.
  • A total of 60% of Japan's economy is based on domestic consumer spending.
  • As the majority of Japan's population is urbanized, supermarkets are catering to increasing demands for variety across product categories.
  • Japan is the world's largest net agri-food/seafood importer, with imports totalling $67.9 billion in 2009.
  • Canada is Japan's fourth largest agricultural import source, and ranks as its 15th largest agri-food export market.
  • Following the recent tsunami and earthquake that have affected the region, Japan has experienced significant losses to agricultural equipment and amenities, which have caused decreases in the amounts of agri-foods produced.
  • As a result, a significant increase in demand of agri-food and fish products is expected to occur.

Overview

Japan is a market of almost 127 million people that produces enough output to be ranked as the world's 3rd largest economy. It also holds positions as the world's 6th biggest importer, 2nd largest foreign exchange reserves holder and largest creditor nation.

Japan has a very small agricultural sector that is highly subsidized and protected. Despite its size, Japan's agricultural sector has some of the highest crop yields in the world. Japan is usually self-sufficient in rice, but still imports about 60% of its food on a caloric basis. However, because of the natural disasters of 2011 that took place in Japan, the country is expected to import a higher quantity of agri-food products including rice, vegetables and seafood.


Economic Snapshot

  • Japan has a relatively high GDP/capita of US$34,200.
  • Services account for the largest contribution to GDP, contributing approximately 76%, while industry accounts for 23% of GDP and agriculture accounts for close to 1%.
  • The global downturn curbed demand for Japanese exports, causing a negative growth rate of -5.2% in 2009. Growth has since rebounded, coming in at 1.9% in 2010.
  • Unfortunately, growth is expected to decrease again in 2011 to 1.4% because of the recent earthquake and tsunami. Due to the natural disasters, it is not clear how negatively exports will be affected, but they will undoubtedly struggle.
  • The recent struggles have caused significant deflation, and inflation is not expected to reappear until quite some time in the future.
  • In 2010, Japan's employment rate was at 5.2%. It is expected to decrease to 5.0% by the end of 2011.
  • Japan has a large government debt that exceeds 200% of GDP.

Demographics

Demographics (2010)
Total Population 127 million
Population Growth -0.3%
Age Structure 0-14 years: 13.1%
15-64 years: 64%
65 years up: 22.9%
Median Age 44.8 years
Life Expectancy 82.3 years
Urban Population 67% of total population
Urban Population Growth 0.2% annually
  • Japan's population of 127 million people makes it the tenth largest in the world. Japan's urban population is also growing at 0.2% annually.
  • However, low fertility rates and increasing health costs are likely to cause negative population growth in upcoming years.
  • Japan has the fifth highest life expectancy in the world, at 82.3 years.
  • Japan's population is ageing faster than any other nation in the world. It is projected that those aged 65 and over will account for 25% of the total population by 2020.
  • With a workforce estimated at over 65 million, Japan's labour force is the ninth largest in the world. Close to 70% of the total labour force is employed in the services sector, 26% in industry and 4% in agriculture.
Most Populous Cities in Japan (2010)
Rank City Population
1 Tokyo 12.8 million
2 Yokohama 3.7 million
3 Osaka 2.6 million
4 Nagoya 2.2 million
5 Sapporo 1.8 million
6 Kyoto 1.5 million
7 Kobe 1.5 million
8 Kawasaki 1.4 million
9 Fukuoka 1.4 million
10 Saitama 1.2 million
  • There are few ethnic groups in Japan, as close to 99% of people are ethnic Japanese. There are pockets of Korean and Chinese minorities in the country.
  • Japan is home to several mega cities, with over 10 cities containing more than 1 million people. A list of these is provided on the right.
  • Due to the recent natural disasters and the radiation contamination that occurred in the Fukushima nuclear plant, severe damage was caused to several cities in the Northeast provinces of Touhoku and Kanto on the Pacific coast. This included the cities of Tokyo, Chiba, Ibaraki, Fukushima, Saitma and Iwate. Economic losses are expected to total US$235 billion (4% of GDP).
  • Also, the damage caused to Japan's fishing industry has limited their capacity to supply fish products, and as a result, Japan will become highly dependent on seafood imports.

Consumer Profile

General

  • Not only are Japanese consumers affluent, sophisticated and highly demanding, they are also becoming savvier, healthier, and more concerned about the food they eat, sparking new trends in health and wellness products.
  • Staple foods in Japan are dominated by three main product groups: dairy, rice/noodles and bread. Together, these products accounted for 81% of value sales in 2010.
  • Traditionally, Japanese households have three meals during the day, breakfast, lunch and dinner. Usually, at least one of these meals is eaten outside of the home.
  • Breakfast usually includes a bowl each of rice and miso soup, and a side dish such as grilled fish, seaweed, or an omelette.
  • Busier lifestyles and high incomes have resulted in demand for convenience products.
  • Due to the increasing popularity of convenience foods, such as breakfast bars and cereals for breakfast consumption, North America is in the midst of a hand-food trend while eating on-the-go. In Japan, however, this may cause some problems as eating on-the-go while in a public setting carries a social stigma.
  • Lunch is typically prepared at home, and is usually made up of bento boxes, which are portioned lunch boxes made up of rice and various vegetables and meats, rice balls, or sushi rolls.
  • Despite preference for Japanese food products, traditional foods and methods of preparation are giving way to new and increasingly diverse products, tastes and preparations. Spending on fish and seafood has decreased, while consumption of sugar and confectionary products has grown.
  • The traditional preference for seafood and fish is meeting competition from Western influence on preferences for red meat and dairy products.

Health and Wellness

  • The Japanese government introduced compulsory ‘metabolic syndrome' health check system for citizens over 40 in 2008, increasing Japanese health consciousness and demand for health and wellness products.
  • As a result, health oriented foods such as low-salt and low-fat content varieties have increased in popularity along with organic food and health promoting drinks.
  • As Japanese consumers are relatively affluent, organic foods are popular, with spending in this sector expected to continue. Japan is Asia's largest organic food market in terms of revenue.
  • Not only are organic foods considered healthy, they also cater to the Japanese consumers' demand for ‘safe' food.
  • Sales of organic packaged food grew by 2.1% in current value in 2009.
  • Organic and consumer foodstuff orders rose 12.6% in 2009, and are expected to continue increasing.
  • Foods related to losing weight were also popular, with sales increasing 82% from 2005 to 2009. Sales of cholesterol related foods grew slightly as well, by 1% between 2005 and 2007.
  • Health-oriented green and black teas have also seen growth, with the recession actually encouraging sales of naturally healthy tea. Fortified/functional tea showed strong growth of 6.5% in 2009.
  • Demand for fortified/functional tea drinks was stimulated by the introduction of the ‘metabolic syndrome' health check system in Japan.
  • The economic downturn saw sales of fortified/functional beverages decline by 2.1% in 2009. Major categories saw declining sales, such as fortified/functional bottled water, energy drinks, and sports drinks, which each declined by 4.9%, 3.1% and 5.7% respectively in the same year.
  • Despite overall negative growth in 2009, fortified/functional coffee saw a 257% market growth." 
  • Sales of naturally healthy beverages also fell in 2009, by 3.3% in current value terms. This is likely because of the global downturn.

Fast Food

  • In 2009, current value growth of fast food was 1%, with chicken being the most dynamic sub-sector, demonstrating 5% current value growth.
  • Fast food outlets increased by 1% in 2009, reaching a total of 65,121 outlets.
  • Major fast food chains operate in both urban and rural areas. Chains accounted for 97% of value sales in 2009 and 95% of outlets.
  • As most consumers prefer to eat their meals sitting down, eat-in sales registered a steady 83% value share of fast food sales from 2005-2009.
  • 7-Eleven Japan convenience store fast food chains held a 40.2% share of value sales in 2009.
  • There are several 24-hour convenience stores in Japan that represent tough competition to the fast food industry, as 80% of consumers in Japan are no more than a five minute walk from these stores.

Alcohol

  • Spending on alcoholic beverages in Japan is expected to decrease along with the population.
  • Alcoholic drink volume sales declined in 2010, mostly due to changing demographics and a poor economy.
  • Despite decreases in the industry, imported wines from Europe, Australasia and the Americas have seen particularly high growth rates resulting from the changing tastes of Japanese consumers.

Spending Habits

  • The largest consumer expenditure categories in Japan continue to be food and beverages, housing, leisure and recreation.
  • As Japan is currently recovering from a recession, consumer expenditure on semi-durable goods has fallen dramatically. Consumers are less willing to spend on furniture, clothing and other expensive goods.
  • A total of 60% of Japan's economy is based on domestic consumer spending.
  • The trend toward health products will spur continued spending on health goods and medical services, as the Japanese population ages and becomes more health conscious.
  • The nation's large population over 60 years of age holds three fifths of the total household savings in Japan.

Retail and Distribution

  • As the majority of Japan's population is urbanized, supermarkets are catering to increasing demands for variety across products.
  • Supermarkets posted a current value decline of 4% in 2009, but were still viewed as a better option than street markets. The decline in 2009 is likely a result of the downturn.
  • Hypermarkets were worse off than supermarkets in 2009, with a current value decline of 18%, and sales dropping significantly due to store closures.
  • Supermarkets and hypermarkets represent the main distribution channel for the health and wellness food and beverages industry, representing more than 60% of all value sales in 2009.
  • Online food and drink retailing has nearly doubled since 2004, reaching a value of $7.59 billion* in 2009. This represents a growth of 14% from 2008, and is expected to reach $11.2 billion* by 2014 as more consumers stay home and use the internet. *Based on Bank of Canada exchange rates, June 3, 2011.

Import Situation

  • In 2010, Japan's total trade equalled $1.5 trillion. Total agricultural trade in 2010 was $58.1 billion, representing 3.9% of total trade.
  • Japan is the world's largest net agri-food/seafood importer, with imports totalling $67.9 billion in 2009.
  • As a major agricultural net importer, Japan imported a total of $54.7 billion of agricultural products in 2010, leaving the country with a negative trade balance of $51.3 billion.
  • In terms of fish and seafood imports, Japan imported $14.8 billion worth of fish and seafood in 2010. It is now the second largest fish and seafood importer, after the United States.
  • In 2010, Japan's major agricultural import markets were the United States, China, Australia, Canada and Thailand. These five major markets account for close to 60% of Japan's total agricultural imports.
  • Japanese consumers are likely to demand more products from the global market rather than those produced locally, due to the radiation contamination and the natural disasters that took place in 2011.

Canadian Position

  • Japan is Canada's second largest agricultural export market. Japan imported close to $3 billion worth of agricultural goods from Canada in 2010.
  • Canada is Japan's fourth largest agricultural import source, and ranks as its 15th largest agri-food export market.
  • Japan is Canada's primary overseas market for agri-food and seafood products.
  • Top agricultural products exported from Canada to Japan in 2010 included rape/colza seeds, accounting for 32.8% of total exports, frozen swine cuts (14.8%), pork (9.7%), wheat (7.9%) and soya beans (7.9%).
  • Perceptions of Canada in Japan are positive, but awareness of Canadian products is low compared to competitors. Canada faces competition from the United States, Australia, China, Southeast Asia and the European Union.
  • Canadian exporters of health and wellness products will find a particularly lucrative market in Japan, as the trend continues to be popular.
  • Demand for rice, vegetables and fish products is expected to increase substantially as a result of the natural disasters that have affected the region.

Opportunities for Canadian Exporters

Opportunities Canadian Advantage
Japanese demand for safe and high quality food products. Canada has systems in place to ensure high quality and high safety standards. Perceptions of Canadian products are positive.
Japan is relying more on imports for consumer ready food products. Canada is already a significant exporter of consumer goods to Japan, and food processing is the 2nd largest manufacturing industry in Canada, while beverage processes produce a variety of products.
Japanese consumers are demanding a greater variety of innovative and functional foods, and the Japanese health and wellness market is well established and will likely continue to grow. Canada is a leading world supplier of functional foods and nutritional goods.
A shift towards Western consumption patterns has caused increased consumption of pork and beef in Japan. Canada is a significant exporter of pork and beef to Japan and Canadian food is generally perceived as safe.
Following the recent earthquake and tsunami in the region, Japan has become highly dependent on the global market for seafood products. Canada is a major exporter of fish products to Japan; therefore, there may be a significant increase in the demand for seafood from Canada.
Over 24,000 ha of farm land in the region has been damaged due to floods and pollution caused from the high concentrations of saltwater after the tsunami. Canadian exporters can meet the need for fish and vegetable products which will most likely be in high demand.

Key Resources