Required Report - public distribution

**Date:** 2/24/2005

**GAIN Report Number:** JA5503

JA5503

**Japan**

**HRI Food Service Sector**

**Report**

**2005**

**Approved by:**

![](media/image1.wmf)Mark Dries, Director

Agricultural Trade Office

**Prepared by:**

Kevin Sage-EL, Deputy Director, Alex Otsuka, Food Service Marketing
Specialist and Market Makers, Inc.

**Report Highlights:**

This is an updated guide to Japan\'s nearly \$245 billion HRI Food
Service market. The HRI industry is continuing to make adjustments since
the decline of the bubble economy and nearly a decade of recession.
Today, this thriving industry increasingly offers international cuisines
throughout the market place. Consequently, competition is intense and
the sophisticated Japanese consumer generally demands high quality food
products in their meals. U.S. suppliers are well positioned to compete
in many product categories provided they are willing to adjust to
changing market demands.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Tokyo ATO \[JA2\]

\[JA\]

Table of Contents

[**SECTION I. MARKET SUMMARY 3**](#section-i.-market-summary)

[SECTION II. ROAD MAP FOR MARKET ENTRY
7](#section-ii.-road-map-for-market-entry)

[A. ENTRY STRATEGY 7](#a.-entry-strategy)

[Market Access 7](#market-access)

[Comparative Advantage of the Products
9](#comparative-advantage-of-the-products)

[Receptivity of the Distribution Trade
9](#receptivity-of-the-distribution-trade)

[Ability or Willingness to Meet Market Requirements
10](#ability-or-willingness-to-meet-market-requirements)

[B. MARKET STRUCTURE 10](#b.-market-structure)

[C. SUB-SECTOR PROFILES 15](#c.-sub-sector-profiles)

[Restaurant Sector 15](#restaurant-sector)

[Other Restaurant Types 18](#other-restaurant-types)

[Hotel Food Service Sector 22](#hotel-food-service-sector)

[Institutional Food Service 23](#institutional-food-service)

[SECTION III. COMPETITION 25](#section-iii.-competition)

[Red Meat 25](#red-meat)

[Fish and Seafood 25](#fish-and-seafood)

[Dairy Products 25](#dairy-products)

[Processed Fruits & Vegetables 25](#processed-fruits-vegetables)

[Poultry 26](#poultry)

[Fruit & Vegetable Juice 26](#fruit-vegetable-juice)

[Fresh Fruit 26](#fresh-fruit)

[Fresh Vegetables 26](#fresh-vegetables)

[Wine and Beer 26](#wine-and-beer)

[Snack Foods 27](#snack-foods)

[Breakfast Cereals and Pancake Mix
27](#breakfast-cereals-and-pancake-mix)

[SECTION IV. BEST PRODUCTS PROSPECTS
29](#section-iv.-best-products-prospects)

[A. Products Present in the Market Which Have Good Sales Potential
29](#a.-products-present-in-the-market-which-have-good-sales-potential)

[B. Hospitals 30](#b.-hospitals)

[C. Drinking Establishments 31](#c.-drinking-establishments)

[D. Coffee Shops 31](#d.-coffee-shops)

[E. Bars, Night Clubs and Beer Halls
31](#e.-bars-night-clubs-and-beer-halls)

[F. Prepared Food at Retail Stores
33](#f.-prepared-food-at-retail-stores)

[SECTION V. POST CONTACT AND FURTHER INFORMATION
34](#section-v.-post-contact-and-further-information)

# SECTION I. MARKET SUMMARY

The Japanese Hotel, Restaurant, Institutional (HRI) Food Service Sector
was valued at ¥30.3 trillion in 2003, down slightly from 2002 at ¥30.7
trillion. However, due to a weak dollar in 2003, the equivalents are
\$261.6 billion in 2003 and \$244.7 billion in 2002, at the respective
exchange rates of \$1=115.7 and 1\$ = ¥125.6. After growing steadily
during most the 1990's, the total value of the HRI food service sector
in Japan has declined since 1998 when it peaked at Yen ¥32.9 trillion.

![](media/image2.wmf)

The principal reasons for the decline in the value of the food service
sector are attributed to the following:

1.  Reduced spending by individuals on dining out due to unfavorable
    macro-economic trends, including higher unemployment, reduced
    disposable income, and economic uncertainty.

2.  Decreased corporate spending on business entertainment, banquets and
    receptions.

-   Statistics used in this report are primarily expressed in yen, since
    year-to-year fluctuations in the exchange rate distort the reading
    of trends. However, a dollar figure will be provided for the latest
    year's figures. Exchange rates by year are: 1998 - ¥131.4/\$; 1999 -
    ¥114.0/\$; 2000 - ¥107.4/\$; 2001 - ¥121.0/\$; 2002 - ¥125.6/\$;
    2003 - ¥115.7/\$; 2004 - ¥108.19/\$.

Some additional trends occurring within the food service industry
reflect the emergence of certain structural trends. For example, during
the decline in sales for the food service sector from 1997 to 2003, the
top 100 Japanese food service companies have been showing an average 1.9
percent year-on-year rise. The total revenue for the top 100 now account
for about 18 percent of the total share of sales in the HRI market.
Also, from 1992 to 1998, the number of food service companies decreased
by 386,000 but at the same time, the number of outlets increased by 4.1
percent from 2.572 million to 2.677 million shops. These trends are
recurring each year and may eventually result in a market with fewer
individual outlets in favor of an increased amount of large chains.

The Japanese food service industry as broadly defined has six major
segments. Among the five traditional food service establishments, the
largest sector is Restaurants (41% valued at \$107.2 billion), followed
by Hotels (10.8% valued at \$28.1 billion), Institutional Food Service
(12.3% valued at \$32.1 billion), Drinking Establishments (18% valued at
\$46.7 billion) and Transportation Related (0.8% valued at \$2.1
billion).

A sixth, separate category that has grown in importance in Japan is
"Prepared Foods Sold at Retail Stores"[^1] such as convenience stores,
supermarkets, and department stores. These foods are ready-to eat, HMR
type products (obento lunch boxes eaten at the office are one example)
and are classified by the Japan Food Service Association within the Food
Service Sector. The value of the "Prepared Food Sold at Retail stores"
sector in 2003 was \$45.4 billion, accounting for 17.4% of the total
Japanese food service industry.

![](media/image3.wmf)

The value of each of the traditional food service sectors declined
during the past five years; the sole exception is the *nakashoku* or
"Prepared Foods Sold at Retail Stores" category which has increased each
year.

+--------------------------+----+---+---+---+---+---+---+--------+
| JAPAN FOOD SERVICE       |    |   |   |   |   |   |   |        |
| MARKET BY SECTOR BY YEAR |    |   |   |   |   |   |   |        |
+--------------------------+----+---+---+---+---+---+---+--------+
| Sector                   | 19 | 1 | 2 | 2 | 2 | 2 |   | \%     |
|                          | 98 | 9 | 0 | 0 | 0 | 0 |   | Ch     |
|                          |    | 9 | 0 | 0 | 0 | 0 |   | g.1998 |
|                          |    | 9 | 0 | 1 | 2 | 3 |   |        |
|                          |    |   |   |   |   |   |   | to     |
|                          |    |   |   |   |   |   |   | 2002   |
+--------------------------+----+---+---+---+---+---+---+--------+
|                          | (¥ | ( | ( | ( | ( | ( | ( |        |
|                          | Tr | ¥ | ¥ | ¥ | ¥ | ¥ | \ |        |
|                          | il | T | T | T | T | T | $ |        |
|                          | ). | r | r | r | r | r | B |        |
|                          |    | i | i | i | i | i | i |        |
|                          |    | l | l | l | l | l | l |        |
|                          |    | . | . | . | . | . | . |        |
|                          |    | ) | ) | ) | ) | ) | ) |        |
+--------------------------+----+---+---+---+---+---+---+--------+
| Restaurants              | 13 | 1 | 1 | 1 | 1 | 1 | 1 | -6.77% |
|                          | .3 | 2 | 2 | 2 | 2 | 2 | 0 |        |
|                          |    | . | . | . | . | . | 7 |        |
|                          |    | 8 | 9 | 4 | 5 | 4 | . |        |
|                          |    |   |   |   |   |   | 2 |        |
+--------------------------+----+---+---+---+---+---+---+--------+
| Hotels                   | 4  | 4 | 4 | 3 | 3 | 3 | 2 | -      |
|                          | .4 | . |   | . | . | . | 8 | 25.00% |
|                          |    | 2 |   | 7 | 6 | 3 | . |        |
|                          |    |   |   |   |   |   | 1 |        |
+--------------------------+----+---+---+---+---+---+---+--------+
| Institutional            | 3  | 3 | 3 | 3 | 3 | 3 | 3 | -5.13% |
|                          | .9 | . | . | . | . | . | 2 |        |
|                          |    | 9 | 8 | 8 | 8 | 7 | . |        |
|                          |    |   |   |   |   |   | 1 |        |
+--------------------------+----+---+---+---+---+---+---+--------+
| Drinking Establishments  | 6  | 6 | 6 | 5 | 5 | 5 | 4 | -      |
|                          | .6 | . |   | . | . | . | 6 | 18.18% |
|                          |    | 1 |   | 7 | 4 | 4 | . |        |
|                          |    |   |   |   |   |   | 7 |        |
+--------------------------+----+---+---+---+---+---+---+--------+
| Transportation           | 0  | 0 | 0 | 0 | 0 | 0 | 2 | -      |
|                          | .3 | . | . | . | . | . | . | 33.33% |
|                          |    | 3 | 3 | 3 | 3 | 2 | 1 |        |
+--------------------------+----+---+---+---+---+---+---+--------+
| Prepared Foods Sold at   | 4  | 4 | 5 | 5 | 5 | 5 | 4 | 20.45% |
| Retail Stores            | .4 | . |   | . | . | . | 5 |        |
|                          |    | 9 |   | 1 | 1 | 3 | . |        |
|                          |    |   |   |   |   |   | 4 |        |
+--------------------------+----+---+---+---+---+---+---+--------+
| Total                    | 32 | 3 | 3 | 3 | 3 | 3 | 2 | -7.90% |
|                          | .9 | 2 | 2 | 1 | 0 | 0 | 6 |        |
|                          |    | . |   |   | . | . | 1 |        |
|                          |    | 2 |   |   | 7 | 3 | . |        |
|                          |    |   |   |   |   |   | 6 |        |
+--------------------------+----+---+---+---+---+---+---+--------+
| Source: Food Service     |    |   |   |   |   |   |   |        |
| Industry Research Center |    |   |   |   |   |   |   |        |
+--------------------------+----+---+---+---+---+---+---+--------+

The key factors affecting the food service industry over the past five
years can be summarized as follows:

-   A deflationary environment highlighted by record unemployment
    levels, that has caused most individuals to tighten their budget for
    dining out and that forced food service operators to reduce both
    menu prices and costs;

-   A conscious effort by many corporations to reduce discretionary
    spending on business meals and receptions which has been a
    traditional source of income for high-end restaurants, after-hour
    drinking establishments and banquet facilities at hotels;

-   The damaging impact of Severe Acute Respiratory Syndrome (SARS) on
    Japan's hotel and tourism trade in the summer of 2003, even though
    the disease was never found in Japan.

-   Consumer concerns for food safety, particularly in response to Avian
    Influenza (AI) and Bovine Spongiform Encephalopathy (BSE), both of
    which have led to sales declines for many operations serving beef,
    poultry and egg products.

-   A trend by consumers to pursue new tastes and new styles of food
    when eating out.

The Japanese food service sector has traditionally been very receptive
to the use of imported food products. This is due partly to the fact
that:

1.  Imported food products are often less expensive than domestically
    produced Japanese equivalents;

2.  The food service sector often pioneers new food concepts from
    abroad, which makes it more receptive to importing the items used in
    the menu.

While it is impossible to say exactly what percentage of imported food
vs. domestic inputs are used for the food service sector as a whole, it
is estimated that well over half of all food service menu items involve
imported foodstuffs in one form or another. Imported items such as
frozen vegetables, frozen potatoes, beef, shrimp, salmon, pork, wine and
the like are heavily used by the food service sector.

The United States, China, Australia, Canada, and Thailand are major
agricultural exporters to Japan. The total value of U.S. exported
agricultural food products to Japan in 2003 was \$11.4 billion or 34% of
all Japan agricultural food imports.

Most industry experts believe the Japanese food service sector will
return to growth when the economy improves and disposable consumer
income increases. Within the food service sector, it is expected that
certain segments will continue to do better than others, in particular,
the 'Delicatessen and bento lunch box', category, offering consumer
convenience as well as new concepts such as ethnic foods which attract
customers with their unique new tastes.

Complicating the above outlook is the ban on U.S. beef imports by Japan
since December 2003. This ban continues at the time of this report and
will likely delay expected rebounds in the food industry as a whole and
particularly in the food service industry. A Japan think tank, the UFJ
Institute, did a survey in August 2004 on the impact of the ongoing
import ban. Its findings showed that losses associated with the ban for
the entire food industry amounted to ¥273 billion (\$2.5 billion). The
impact on the food service industry is calculated to be ¥128.8 billion
(\$1.2 billion). Generally, the high costs of substitutions for imported
American beef, including imports from Australia are not passed on to
consumers. Consequently, most of the burden is internalized within the
industry.

A brief summary of Advantages and Challenges for U.S. food exporters
targeting the Japanese food service sector appears below:

  -----------------------------------------------------------------------
  **Advantages**                      **Challenges**
  ----------------------------------- -----------------------------------
  The success of U.S. fast food and   Many consumers view American food
  restaurants chain concepts help     culture as less attractive than
  introduce American style food       European or Japanese counterparts.
  inputs into the general diet.       

  U.S. food producers have a positive Most imported food products are
  image for safety compared to many   viewed by some consumers as less
  Asian competitors, especially among safe than domestically produced
  the trade.                          Japanese food products.

  The U.S. has a reputation and       The quality and reliability of
  history as reliable supplier of     Asian exporting countries has been
  food (both availability and         growing as the distribution
  delivery).                          infrastructure and quality
                                      assurance (QA) procedures have
                                      improved.

  The U.S. has a wide variety of food Japanese buyers are sourcing from
  products, including fresh & further all over the world rather than from
  processed.                          only a few countries.

  High Japanese farming costs and a   The perception of U.S. price
  weak dollar make imported food      competitiveness and quality has
  products attractive.                declined vis-à-vis other exporting
                                      countries.

  U.S. is a source of advanced food   Japanese government policies
  processing technology.              relating to food safety are
                                      increasingly disrupting smooth flow
                                      of trade for items such as beef
                                      (BSE) and poultry & egg (Avian
                                      Influenza).
  -----------------------------------------------------------------------

# SECTION II. ROAD MAP FOR MARKET ENTRY

## A. ENTRY STRATEGY

There are no magic formulas for new-to-market exporters to enter the
Japanese food service market. Strategies will vary depending on the type
of food product being introduced and the current competitive
environment. However, there are some basic procedures that new-to-market
exporters are recommended to follow when considering the Japanese food
service market for the first time.

### Market Access

> One of the fundamental first steps is to determine the market access
> for your product. In particular this means:

1.  Determine if your product category can currently be imported into
    Japan. Due to food safety concerns the Japanese government has
    become increasingly strict in allowing food products into Japan. For
    example, poultry products have faced multiple bans due to avian
    influenza outbreaks. Sources of information include freight
    forwarders, traders, and the U.S. Embassy Agricultural Affairs
    Office.

2.  Determine the import classification and tariff rate for your
    product. Some product categories such as those containing dairy
    product, are still highly protected by the Japanese government and
    face either prohibitively high tariff or quota barriers. It is
    important to know in advance if this is the case to prevent time and
    energy being dedicated to products that will not ultimately be price
    competitive. Again freight forwarders and traders can be helpful in
    determining into what category your product falls.

3.  Determine whether your product meets Japanese regulations for food
    ingredients. If the product contains prohibited ingredients it will
    have to be reformulated before it can be imported into Japan. In
    some cases this may be difficult for U.S. exporters due to volume
    constraints or because the ingredient is a key element of the
    formulation. By ascertaining this in advance U.S. exporters can save
    themselves much frustration later if it is difficult to reformulate.
    Sources for this information include:

USDA/FAS GAIN Report, Number JA4063 "Japan Food and Agricultural Import
Regulations and Standards
2004"(<http://www.fas.usda.gov/gainfiles/200408/146107089.doc>). Freight
forwarders can also be helpful in determining ingredient acceptability.

A.  [Competitive Analysis]{.underline}

> Once it is established that the product can be physically exported
> into Japan it is important to establish whether the product will be
> accepted from a competitive standpoint. This entails doing at least a
> preliminary analysis of the market to determine:

-   What is the size of the opportunity for the type of product?

-   Who are the key customer targets for the products?

-   What is the current pricing of similar types of products?

-   Can the product be cost effectively introduced?

-   What are the key points of differentiation for the product compared
    to others?

-   In what form and what kind of packaging is the competitor's products
    sold? Will customers expect the same?

> To do this analysis it is helpful to take some combination of the
> following steps:

1.  Visit Japan to research in person the customers your type of product
    is sold to and see how the product is menued.

2.  Utilize resources such as U.S. Foreign Agricultural Service, state
    agricultural offices, JETRO, State Regional Trade Groups (SRTGs[^2])
    and the local U.S. Agricultural Trade Office (ATO) to obtain
    information about the market relevant to your product.

3.  Talk with freight forwarders and Japanese importers that handle your
    category of products.

4.  If possible, meet with potential customers to determine the kinds of
    needs they have and their current sources for your products.

### Comparative Advantage of the Products

> To succeed in entering the Japanese market, it will be important to
> define the comparative advantage of your products versus the
> competition. Potential customers in Japan will have to perceive merit
> in using your products. The most common merits are:

1.  Offering price savings that will encourage the customer to give your
    product a trial.

2.  Offering a product or form of product that is new to the Japanese
    market. Every year there are new items that become popular in Japan
    that did not exist before. Recent examples include tortillas for
    wrap sandwiches, bagels, flavored coffees, gourmet style soft
    cookies and scones, to name a few.

3.  Offering a more convenient form of the product that makes it easier
    for food service operators to use. This may include a new technology
    for packaging that makes the product easier to prepare or a new form
    of the product that offers advantages in terms of labor cost,
    preparation time or efficiency.

4.  Offering a high quality product. Food service operators are always
    interested in products that offer better quality in one form or
    another. For example, it may be that your product has a demonstrably
    better track record than competitors on safety issues. These points
    of difference are worth promoting.

## 

### Receptivity of the Distribution Trade

> It is important for new-to-market exporters to understand how the
> distribution system works and to identify potential partners or
> distributors. Such partners or distributors can offer invaluable
> advice on issues related to the product, its positioning, packaging,
> labeling, and custom clearance procedures. There are numerous ways to
> identify these partners. Some suggestions include:

1.  Ask the ATO and co-operator groups for a list of importers for your
    category of products.

2.  Attend trade shows such as Foodex to meet potential partners and
    obtain leads.

3.  If visiting Japan, discuss potential importers and distributors with
    freight forwarders, and if meeting any customers, enquire as to
    their preferred distribution channel. Many times customers will have
    their own preferred channels which they use for imported products.

> It is important to obtain a reliable on-site partner or importer if
> you expect to do long term business in Japan and you do not plan to
> have your own in-country office. Some things to look for include:

1.  Does the partner/importer represent other imported products?

2.  Do they have a favorable reputation in the marketplace?

3.  Do they have the capability of communicating daily with you in
    English?

4.  Do they have an understanding of import procedures for your type of
    food product?

### Ability or Willingness to Meet Market Requirements

> To be successful, it is very important for the new-to-market exporter
> to be willing to make changes to the product if necessary to meet
> market expectations in terms of service, quality, and price. Some
> basic suggestions include:

1.  Make sure you are willing to re-formulate the product if necessary
    to meet relevant Japanese Food Sanitation Laws and Regulations.

2.  Be willing to adjust the product or packaging to meet Japanese taste
    profiles and market expectations. For example, many Japanese
    operators prefer smaller package sizes due to lack of space to store
    items.

3.  Provide samples on a timely basis, but only upon request of a
    client/importer.

4.  Ensure that all documentation necessary to clear customs/quarantine
    procedures is provided in proper form.

5.  Reply to requests for information in a timely manner, within at
    least 48 hours, preferably less.

6.  Work closely with your partner or importer to prepare sales
    materials in Japanese.

7.  Be patient. Most Japanese food service operators will start with
    only a small order in order to test the potential supplier. This is
    especially true for new-to-market suppliers where the risk of
    something going wrong initially (clearing customs, wrong
    documentation, wrong labeling, etc.) is the highest.

8.  Japanese food service operators are looking for suppliers who can
    provide consistent high quality product without defects or foreign
    materials, and who are reliable partners in terms of both delivery
    and safety issues. To help cement relations, it is strongly
    recommended to have face-to-face meetings at least once per year
    with your customers.

## B. MARKET STRUCTURE

Despite a rapidly consolidating distribution channel, most imported food
products still pass through trading companies. The large general trading
companies such as Mitsubishi, Mitsui, and Itochu, have divisions
specializing in a wide variety of imported food products while small
importers tend to specialize in a limited line of items. Trading
companies function as legal importers of the products and serve a
variety of functions including clearing customs, handling documentation
and product testing at point of import, warehousing the product, and
financing the inventory. In the past, trading companies would normally
sell the product to first line wholesalers who in turn would sell to
secondary wholesalers and even to third line distributors before the
product finally reached the food service operator.

This pattern has changed significantly in the past decade, particularly
for chain food service customers who have substantial buying power. In
order to reduce food costs, most large food service operators directly
take possession of the product or thru designated distribution centers
rather than use wholesalers (some food service operators import product
directly but the majority still use trading companies). The deflationary
environment of the past several years, which has intensified price
competition among food service chains, has accelerated the trend to
eliminate middlemen.

In order to survive in an increasingly competitive marketplace,
wholesalers are being forced to consolidate. Smaller wholesalers are
either disappearing or being bought by larger ones. In order to add
value, most large wholesalers own their own distribution trucks.
Wholesalers now focus on carrying broad product lines that can
efficiently service small food service operators or small chains with
one-stop service. Some wholesalers are now also beginning to import
products directly to reduce costs further.

A diagram of the flow of product from the U.S. exporter follows:

######### 

######### **HRI Sector Trends**

A discussion of some of the key trends in the HRI industry that U.S.
exporters should be aware of follows:

A.  Price Competition:

> The deflationary environment of the 1990's, coupled with record high
> post-war unemployment levels, caused many food service chains to lower
> menu prices in an effort to attract customers. McDonald's Japan, for
> example, introduced value meal sets and half price hamburgers,
> reducing the price of a hamburger to 1970's levels. In order to
> compete many other fast food and family restaurants took similar
> approaches. Hotels, which traditionally have significant banqueting
> business from corporate functions and weddings, saw their sales
> decline as entertainment budgets were reduced. To compete, they also
> introduced lower cost menus. The impact on food manufacturers has been
> severe pressure on price margins as food service operators have sought
> to cushion menu price declines with lower food costs and price
> declines from suppliers. For U.S. exporters this represents an
> opportunity for those that offer attractive value in addition to cost
> savings from higher value products.

B.  New Tastes From Abroad:

> The variety of menus available in Japan continues to expand. Partly
> due to the large number of Japanese traveling abroad every year, foods
> from countries such as Southeast Asia, Europe, Australia and the
> Americas are becoming increasingly popular. Japanese consumers are
> increasingly interested in trying new tastes and experiencing new
> kinds of foods. Examples of this include Monsoon Café, a causal dining
> restaurant chain featuring South East Asian dishes, and Starbucks
> Coffee, which successfully launched many new styles and flavors of
> coffees as well as side menus such as scones.
>
> The interest in new food concepts opens the door to food exporters to
> introduce new concepts.

C.  Theme Park Restaurants:

> A recent trend has been the increasing popularity of theme park
> restaurants. This includes restaurants at major new parks, which have
> opened in the past few years, including Disney Sea, and Universal
> Studio Japan, as well as at other locations such as Tokyo Dome.
>
> These theme restaurants often focus on foods from abroad and offer
> opportunities for U.S. exporters to test their products. Disney
> Resorts and Universal Studio Japan draw an estimated 30-40 million
> visitors a year. Food buyers there are always looking for original and
> unique new products associated with the U.S. (for example, smoked
> turkey drumsticks and caramel popcorn are two popular items at
> Disneyland).

D.  Updating of Traditional Japanese Menus:

> In order to compete with new tastes from abroad, Japanese food service
> operators are striving to introduce new ideas and formats using
> traditional Japanese foods in new formats, flavors or combinations.
> Examples include new bite-sized gyoza in a variety of non-traditional
> flavors, and sushi bars featuring revolving self-serve counter
> formats.

E.  Healthy Foods:

> Japanese consumers are increasingly interested in foods that are
> perceived as healthy. This trend takes a variety of forms. For
> example, fast food chains are introducing salad menus. Family
> restaurant chains are including nutritional information on the menu,
> such as calories per serving.
>
> Some restaurants are featuring organic products as a point of
> difference. In addition, the slow food movement has slowly gained
> awareness in Japan.
>
> U.S. exporters that have products that fit into the "healthy" category
> will have opportunities as this sector grows.

F.  Buffet Style:

> As part of the effort to add value and reduce costs, many food
> operators have introduced buffet style or limited set menu options to
> their menus, especially for lunchtime service. This is a relatively
> new phenomenon in Japan. This can be seen at many hotels as well as
> more traditional restaurants.

G.  HMR Prepared Foods:

> As previously discussed, the area of sharpest growth in the food
> industry has been ready-to-eat products that can be purchased at
> retail shops. For example, many consumers purchase take-out lunches at
> convenience stores or similar retail shops that can be eaten quickly
> at the office or elsewhere. Vendors of these foods have steadily
> increased the freshness, quality, and variety of the foods they offer,
> providing a more attractive menu selection to consumers. U.S.
> exporters that provide the kinds of products that would fit
> lunchbox-type or HMR items should consider approaching the assemblers
> of these types of foods.

H.  Further Processed Foods:

> Food service operators are increasingly relying on further processed
> foods rather than raw components. The reasons for this include: 1)
> help ensure consistency of menus throughout the operators' outlets, 2)
> speed up the time it takes to prepare and serve the food, 3) increase
> food safety since less handling and cross contamination opportunities
> exist and 4) improve overall costs since less labor is necessary for
> food preparation. Since the U.S. is a leader in the development of
> further processed foods, the trend toward further processed foods
> represents an opportunity for U.S. exporters.

I.  Food Safety:

> The importance and awareness of food safety has risen sharply in
> consumers' minds over the past five years due to a series of high
> visibility food scares and scandals. Deaths from E. coli O-157
> outbreaks, sickness from dairy products by Snow Brand, the BSE mad cow
> occurrences in Japan and North America, and world wide outbreaks of
> avian influenza have sensitized consumers to the issues of food
> safety. As a result, food service operators have become much more
> stringent in demanding strict procedures and systems for food safety
> from their suppliers. This includes detailed documentation from
> suppliers regarding QA systems and procedures at the production site,
> documentation relating to all ingredients used by the supplier
> including country of origin, and certification that the products
> adhere to Japanese regulatory requirements. Information relating to
> allergens is also required. Many chain operators will not consider
> buying from a new supplier until all the documentation is provided and
> an on-site inspection of the production facilities is conducted to
> verify the standards of the supplier.
>
> In addition, food service operators have become much more demanding
> regarding quick and accurate responses to any product quality
> complaints to ensure steps are taken to prevent re-occurrences.
> Suppliers who do not measure up to the expectations of the food
> service operator for food safety are often replaced. The experience of
> the FAS Offices in Japan, is that having a quick response procedure in
> place to address food safety or product quality complaints can result
> in minimized disruption to trade.

J.  GMO:

    Food service operators in Japan normally require GMO free food
    products from suppliers. Japanese consumers have not accepted GMO
    products as a whole though they are legal in Japan. A labeling law
    governs the identification of GMO ingredients on consumer packaging
    (See GAIN report JA2010 and the Japan Ministry of Agriculture's
    website:
    <http://www.maff.go.jp/soshiki/syokuhin/hinshitu/organic/eng_yuki_gmo.pdf>
    ).

## C. SUB-SECTOR PROFILES

A detailed discussion of the various sub-sectors of the HRI food service
industry follows.

### Restaurant Sector

The restaurant sector is the largest of the HRI food service segments.
Restaurant sales in 2003 were ¥12.4 trillion equivalent to \$107.2
billion. This represents 41% of total food service industry sales. The
restaurant sector includes a wide variety of types of operators, ranging
from American-style fast food chains to more traditional family owned
single outlet restaurants.

The restaurant sector is divided four major sub-segments. A chart
diagramming this segmentation follows:

![](media/image4.wmf)

###### General Restaurants

> General restaurants are categorized by the Ministry of Economy, Trade
> & Industry into five categories: non-specialized restaurants, Japanese
> restaurants, Western Restaurants, Chinese Restaurants, and Meat/Other
> Asian.
>
> The largest numbers of outlets are non-specialized restaurants,
> followed by Chinese, Japanese, and Western.

+-----------------------+---------------+---------------+---------------+
| NUMBER OF RESTAURANT  |               |               |               |
| OUTLETS BY TYPE OF    |               |               |               |
| GENERAL RESTAURANT    |               |               |               |
+-----------------------+---------------+---------------+---------------+
|                       | \# of Outlets |               |               |
+-----------------------+---------------+---------------+---------------+
| Type of Restaurants   | 2001 \*       | 1999          | 1996          |
+-----------------------+---------------+---------------+---------------+
| Non-Specialized       | 80,511        | 82,034        | 87,129        |
+-----------------------+---------------+---------------+---------------+
| Chinese               | 62,990        | 61,727        | 61,817        |
+-----------------------+---------------+---------------+---------------+
| Japanese              | 42,176        | 39,039        | 38,662        |
+-----------------------+---------------+---------------+---------------+
| Western               | 30,422        | 31,523        | 29,871        |
+-----------------------+---------------+---------------+---------------+
| Meat/Other Asian      | 28,143        | 24,326        | 22,850        |
+-----------------------+---------------+---------------+---------------+
| Total                 | 244,242       | 238,649       | 240,329       |
+-----------------------+---------------+---------------+---------------+
| Source: Ministry of   |               |               |               |
| Economy, Trade &      |               |               |               |
| Industry              |               |               |               |
|                       |               |               |               |
| \* The latest year    |               |               |               |
| for which census data |               |               |               |
| has been published.   |               |               |               |
+-----------------------+---------------+---------------+---------------+

> The category with the greatest opportunity for most U.S. food
> exporters is Western restaurants. Western restaurants are composed of
> family restaurants which serve many Western dishes as well as
> restaurants specializing in country-specific cuisine such as French,
> Italian, and Mexican. As a result the menu relies heavily on imported
> food products to provide authenticity as well as taste. Large family
> restaurants chains such as Skylark, Royal Host, Denny's, Coco's, Tony
> Roma's and Sizzler's are major users of imported U.S. foods including
> such items as frozen potatoes, frozen vegetables and beef.
>
> In recent years, new American-style concepts have opened in Japan,
> such as TGIF and Outback Steakhouse and Bubba Gump Shrimp Co. These
> companies use imported foods on their menu extensively.
>
> French restaurants have traditionally been popular in Japan and more
> recently Italian restaurants have also surged in popularity. Mexican
> restaurants, which are still few in number, are slowly growing in
> popularity and provide opportunities for U.S. exporters for items such
> as tortillas, frozen guacamole, and related Tex-Mex foods. Food
> service chains that come to Japan from the U.S. are perfect targets
> for U.S. exporters who also sell those food product concepts in the
> U.S.

###### Sushi Restaurants:

> Japan is famous for sushi, which now is increasingly becoming popular
> around the world. Sushi relies heavily on seafood and rice as the core
> menu. Japan is the world's largest importer of seafood products and a
> substantial portion of fish exports end up in sushi form. This
> includes tuna, scallops, sea urchin, salmon eggs, yellow fin, salmon,
> crab and shrimp. Most seafood imports pass through wholesale markets
> such as Tsukiji Fish Market in Tokyo before being delivered to sushi
> shops and makers throughout Japan. The U.S. is a major exporter of
> salmon, salmon eggs, and sea urchin used by sushi operators.
>
> The value of the sushi food service segment was estimated at ¥1.33
> trillion in 2003, equal to \$11.5 billion. In 2001, the most recent
> census year, a total of 39,539 sushi restaurants were reported, a
> slight decline from the prior census.

###### Noodle Shops: 

> Noodles, served either hot in steaming water, or cold on a dish, are
> one of the most popular foods eaten outside of the home in Japan.
>
> In 2003, the value of the soba/udon food service segment was estimated
> at ¥1.1 trillion or \$9.5 billion. There were estimated 35,106
> soba/udon shops in 2001, many of them single proprietorship shops.
>
> Noodles consumed outside of the home are frequently ranked as the most
> popular lunch item by consumers because they are both quick to serve
> and eat, and quite inexpensive. A typical soba set will cost only
> ¥500 - ¥700. However, more recent intensified price competition has
> resulted in more inexpensive soba set meals at ¥390. It is common for
> the Japanese 'business man' to down a bowl of noodles within minutes
> during lunch.
>
> Noodles are usually produced in Japan using imported wheat flour.
>
> Opportunities for U.S. exporters are principally the ingredients used
> as toppings for noodles. This includes items such as pork slices, and
> cut corn.
>
> Since many noodle shops are individual outlets rather than large
> chains, U.S. exporters' strategy for selling toppings must rely on
> major food service wholesalers who supply the shops.

### Other Restaurant Types

> The Food Service Research Center categorizes a number of special food
> service concepts into its "All Other" category. These include:

-   Hamburger Chains

-   Fried Chicken Restaurants

-   Pizza Shops

-   Donuts and Ice Cream Shops

-   Okonomiyaki

> A brief description of those that are of particular interest to the
> U.S. exporter follows:

1.  Hamburger Chains:

> The number one food service operator in Japan is McDonald Japan, which
> opened in 1972 and now has 3,773 units nationwide. The hamburger fast
> food concept has been one of the most visible and successful segments
> over the past 30 years. A list of the top five hamburger chains
> includes:

  ------------------------------------------------------ --------------------
                                                         [\#
                                                         Units]{.underline}

  McDonald's Japan                                       3,773

  Mos Foods                                              1,476

  Lotteria                                               637

  Freshness Burger                                       178

  First Kitchen                                          123
  ------------------------------------------------------ --------------------

> By providing reasonably priced, fast and clean service, the hamburger
> chain concept has captured a significant share of the youth and family
> dining out budget.
>
> Because the hamburger chain menu uses concepts originating in the
> U.S., they are ideal targets for U.S. exporters. For example,
> McDonald's Japan has long imported many of its food items from the
> U.S. including frozen potatoes, pork patties, hot dogs, and bagels.
> Hamburger chain sales declined in 2002 and 2003 as a result of BSE
> concerns in Japan but are slowly returning to previous levels.

2.  Pizza Restaurants

> The pizza industry has been a bright spot of growth in Japan over the
> past decade. Fuelled by the launch of Domino's Pizza in the late
> 1980's, pizza delivery chains have successfully carved out a niche in
> the food service market in Japan with their promise of rapid delivery.
> A partial list of some of the top pizza chains includes:

  ------------------------------------------------------ --------------------
                                                         [\#
                                                         Units]{.underline}

  Pizza La                                               589

  Pizza Hut                                              329

  Strawberry Cones                                       190

  Domino's                                               165

  Pizza California                                       144

  Pizza Station                                          37

  Shakey's                                               26
  ------------------------------------------------------ --------------------

> Pizza restaurants offer a wide variety of choices, many tailored
> specifically to Japan. In addition to traditional toppings such as
> pepperoni and sausage, pizzas in Japan feature toppings such as
> eggplant, asparagus, tuna, garlic, potatoes, pineapple and chicken. In
> addition to sourcing toppings from abroad, pizza chains also source
> crusts either in dough form or finished crust from abroad.

3.  Fried Chicken Restaurants

> KFC Japan dominates the fried chicken restaurant market with over
> 1,100 units nationwide. However, due to KFC Japan's policy of
> promoting domestic Japanese chicken, the opportunities for U.S.
> exporters are limited to non-chicken menu items such as fried
> potatoes.

A list of the top 50 restaurant chains in Japan follows:

+---+-------------+------+--------------------------+--------+--------+
| T |             |      |                          |        |        |
| O |             |      |                          |        |        |
| P |             |      |                          |        |        |
| 5 |             |      |                          |        |        |
| 0 |             |      |                          |        |        |
| R |             |      |                          |        |        |
| E |             |      |                          |        |        |
| S |             |      |                          |        |        |
| T |             |      |                          |        |        |
| A |             |      |                          |        |        |
| U |             |      |                          |        |        |
| R |             |      |                          |        |        |
| A |             |      |                          |        |        |
| N |             |      |                          |        |        |
| T |             |      |                          |        |        |
| C |             |      |                          |        |        |
| O |             |      |                          |        |        |
| M |             |      |                          |        |        |
| P |             |      |                          |        |        |
| A |             |      |                          |        |        |
| N |             |      |                          |        |        |
| Y |             |      |                          |        |        |
| P |             |      |                          |        |        |
| R |             |      |                          |        |        |
| O |             |      |                          |        |        |
| F |             |      |                          |        |        |
| I |             |      |                          |        |        |
| L |             |      |                          |        |        |
| E |             |      |                          |        |        |
+===+=============+======+==========================+========+========+
| * | **Company   | **S  | **Outlet Name,**         | **Loca | **Pri  |
| * | Name**      | ales |                          | tion** | ncipal |
| R |             | (\$  | **Type & \# of Outlets** |        | Purc   |
| a |             | Mil  |                          |        | hasing |
| n |             | .)** |                          |        | Ag     |
| k |             |      |                          |        | ents** |
| * |             |      |                          |        |        |
| * |             |      |                          |        |        |
+---+-------------+------+--------------------------+--------+--------+
| 1 | McDonald's  | 3    | McDonald's, Fast Foods   | Nati   | Direct |
| \ | Japan       | ,342 |                          | onwide | Import |
| . |             |      | 3,773                    |        |        |
+---+-------------+------+--------------------------+--------+--------+
| 2 | Skylark     | 2    | Skylark, Family Style    | Nati   | Imp    |
| \ |             | ,428 |                          | onwide | orters |
| . |             |      | Gusto, Family Style      |        |        |
|   |             |      |                          |        | Direct |
|   |             |      | 2,450                    |        |        |
+---+-------------+------+--------------------------+--------+--------+
| 3 | Duskin      | 1    | Mr. Donuts, Donuts       | Nati   | Direct |
| \ |             | ,124 |                          | onwide |        |
| . |             |      | 1,319                    |        | Imp    |
|   |             |      |                          |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| 4 | Kentucky    | 1    | KFC, Fast Food, 1,188    | Nati   | Imp    |
| \ | Fried       | ,101 |                          | onwide | orters |
| . | Chicken     |      | Pizza Hut, Pizza, 306    |        |        |
|   | Japan       |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 5 | Royal       | 1    | Royal Host, Family Style | Nati   | Imp    |
| \ |             | ,054 |                          | onwide | orters |
| . |             |      | 501                      |        |        |
+---+-------------+------+--------------------------+--------+--------+
| 6 | Mos Food    | 929  | Mos Burger, Fast Food    | Nati   | Imp    |
| \ | Service     |      |                          | onwide | orters |
| . |             |      | 1,476                    |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 7 | Yoshinoya   | 867  | Yoshinoya, Beef Bowl     | Nati   | Imp    |
| \ | D&C         |      |                          | onwide | orters |
| . |             |      | 992                      |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 8 | Reins       | 840  | Gyukaku, Korean BBQ      | Nati   | Imp    |
| \ | In          |      |                          | onwide | orters |
| . | ternational |      | Doma Doma, Pub/Izakaya   |        |        |
|   |             |      |                          |        | Direct |
|   |             |      | 1,188                    |        |        |
+---+-------------+------+--------------------------+--------+--------+
| 9 | Denny's     | 827  | Denny's, Family Style    | Nati   | Imp    |
| \ | Japan       |      |                          | onwide | orters |
| . |             |      | 578                      |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Saizeriya   | 563  | Saizeriya, Italian       | Nati   | Imp    |
| 0 |             |      |                          | onwide | orters |
| \ |             |      | 673                      |        |        |
| . |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Matuya      | 480  | Matsuya, Japanese Fast   | Nati   | Imp    |
| 1 | Foods       |      | Food                     | onwide | orters |
| \ |             |      |                          |        |        |
| . |             |      | 604                      |        | Whole  |
|   |             |      |                          |        | salers |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Jonathan's  | 469  | Jonathan's, Family       | Nati   | Imp    |
| 2 | & Co.       |      | Style/Coffee             | onwide | orters |
| \ |             |      |                          |        |        |
| . |             |      | 363                      |        | Direct |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Whole  |
|   |             |      |                          |        | salers |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Ohsho Food  | 469  | Ohsho, Chinese Family    | Nati   | Imp    |
| 3 | Service     |      | Style                    | onwide | orters |
| \ |             |      |                          |        |        |
| . |             |      | 457                      |        | Whole  |
|   |             |      |                          |        | salers |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Ichibanya   | 449  | Curry House CoCo         | Nati   | Imp    |
| 4 |             |      |                          | onwide | orters |
| \ |             |      | Curry Fast Food          |        |        |
| . |             |      |                          |        | Direct |
|   |             |      | 874                      |        |        |
|   |             |      |                          |        | Whole  |
|   |             |      |                          |        | salers |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Aleph       | 435  | Bikkuri Donkey,          | Nati   | Imp    |
| 5 |             |      | Hamburger Steak          | onwide | orters |
| \ |             |      |                          |        |        |
| . |             |      | 275                      |        | Whole  |
|   |             |      |                          |        | salers |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Kappa       | 424  | Kappa Sushi, Sushi Fast  | Nati   | Imp    |
| 6 | Create      |      | Food                     | onwide | orters |
| \ |             |      |                          |        |        |
| . |             |      | 206                      |        | Whole  |
|   |             |      |                          |        | salers |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Joyful      | 423  | Joyful, Family Style     | Nati   | Imp    |
| 7 |             |      |                          | onwide | orters |
| \ |             |      | 508                      |        |        |
| . |             |      |                          |        | Whole  |
|   |             |      |                          |        | salers |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Japan       | 398  | Transportation Food      | Nati   | Whole  |
| 8 | Restaurant  |      | Service                  | onwide | salers |
| \ | Enterprise  |      |                          |        |        |
| . |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Zensho      | 389  | Sukiya, Beef Bowl        | Nati   | Imp    |
| 9 |             |      |                          | onwide | orters |
| \ |             |      | Wendy's, Fast Food       |        |        |
| . |             |      |                          |        | Direct |
|   |             |      | 490                      |        |        |
|   |             |      |                          |        | Whole  |
|   |             |      |                          |        | salers |
+---+-------------+------+--------------------------+--------+--------+
| 2 | Saint Marc  | 372  | Saint Marc, Family       | Nati   | Whole  |
| 0 |             |      | Style/Coffee             | onwide | salers |
| \ |             |      |                          |        |        |
| . |             |      | 295                      |        | Imp    |
|   |             |      |                          |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| 2 | CoCo's      | 362  | CoCo's, Family Style     | Nati   | Imp    |
| 1 | Japan       |      |                          | onwide | orters |
| \ |             |      | 350                      |        |        |
| . |             |      |                          |        | Whole  |
|   |             |      |                          |        | salers |
+---+-------------+------+--------------------------+--------+--------+
| 2 | Kisoji      | 354  | Kisoji, Shabu-Shabu Meat | Nati   | Imp    |
| 2 |             |      |                          | onwide | orters |
| \ |             |      | 174                      |        |        |
| . |             |      |                          |        | Direct |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Whole  |
|   |             |      |                          |        | salers |
+---+-------------+------+--------------------------+--------+--------+
| 2 | Dynac       | 312  | Zenmaru, Sanvalley,      | Nati   | Imp    |
| 3 |             |      |                          | onwide | orters |
| \ |             |      | Japanese Family Style    |        |        |
| . |             |      |                          |        | Direct |
|   |             |      | 241                      |        |        |
|   |             |      |                          |        | Whole  |
|   |             |      |                          |        | salers |
+---+-------------+------+--------------------------+--------+--------+
| 2 | Gourmet     | 311  | Kineya/Sojibo, Noodle    | Nati   | Whole  |
| 4 | Kineya      |      |                          | onwide | salers |
| \ |             |      | 599                      |        |        |
| . |             |      |                          |        | Imp    |
|   |             |      |                          |        | orters |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 2 | Sunday Sun  | 304  | Sunday Sun, Family Style | Nati   | Whole  |
| 5 |             |      |                          | onwide | salers |
| \ |             |      | 358                      |        |        |
| . |             |      |                          |        | Imp    |
|   |             |      |                          |        | orters |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 2 | Atom        | 300  | Tokubei/Atom, Japanese   | Nati   | Imp    |
| 6 |             |      | Family Style,291         | onwide | orters |
| \ |             |      |                          |        |        |
| . |             |      |                          |        | Whole  |
|   |             |      |                          |        | salers |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 2 | Sato        | 281  | Sato, Japanese Family    | Nati   | Imp    |
| 7 | Restaurant  |      | Style                    | onwide | orters |
| \ | Systems     |      |                          |        |        |
| . |             |      | 250                      |        | Whole  |
|   |             |      |                          |        | salers |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 2 | Tasco       | 274  | Takadaya, etc., Japanese | Nati   | Imp    |
| 8 | System      |      | Family Style, 353        | onwide | orters |
| \ |             |      |                          |        |        |
| . |             |      |                          |        | Whole  |
|   |             |      |                          |        | salers |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 2 | Tonden      | 268  | Tonden, Japanese Family  | Nati   | Imp    |
| 9 |             |      | Style                    | onwide | orters |
| \ |             |      |                          |        |        |
| . |             |      | 124                      |        | Whole  |
|   |             |      |                          |        | salers |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 3 | Ringer Hut  | 267  | Ringer Hut, Noodle       | Nati   | Imp    |
| 0 |             |      | Family Style             | onwide | orters |
| \ |             |      |                          |        |        |
| . |             |      | 1,115                    |        | Whole  |
|   |             |      |                          |        | salers |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 3 | Akindo      | 166  | Akindo/Sushiro, Sushi    | Kansai | Imp    |
| 1 | Sushiro     |      |                          |        | orters |
| \ |             |      | 113                      |        |        |
| . |             |      |                          |        | Whole  |
|   |             |      |                          |        | salers |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 3 | Prime Link  | 250  | Gyukaku, Susho shop      | Nati   | Imp    |
| 2 |             |      |                          | onwide | orters |
| \ |             |      | 468                      |        |        |
| . |             |      |                          |        | Whole  |
|   |             |      |                          |        | salers |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 3 | Anrakutei   | 248  | Anrakutei, Korean BBQ    | Nati   | Imp    |
| 3 |             |      |                          | onwide | orters |
| \ |             |      | 285                      |        |        |
| . |             |      |                          |        | Whole  |
|   |             |      |                          |        | salers |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 3 | Edoichi     | 242  | Sutamina Taro, Global    | Kanto  | Imp    |
| 4 |             |      | Viking                   |        | orters |
| \ |             |      |                          |        |        |
| . |             |      | Multi Concept            |        | Whole  |
|   |             |      |                          |        | salers |
|   |             |      | 154                      |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 3 | Shuho       | 235  | Ramen Tonta, Ramen       | Nati   | Whole  |
| 5 |             |      |                          | onwide | salers |
| \ |             |      | 433                      |        |        |
| . |             |      |                          |        | Imp    |
|   |             |      |                          |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| 3 | Ramala      | 233  | Tofuro, Nihonbashi-tei,  | Kanto  | Whole  |
| 6 |             |      |                          |        | salers |
| \ |             |      | Multi Concept            |        |        |
| . |             |      |                          |        | Imp    |
|   |             |      | 117                      |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| 3 | Sagami      | 220  | Sagami, Japanese Family  | Nati   | Whole  |
| 7 | Chain       |      | Style                    | onwide | salers |
| \ |             |      |                          |        |        |
| . |             |      | 195                      |        | Imp    |
|   |             |      |                          |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| 3 | Green House | 209  | Saboten, Tonkatsu        | Nati   | Whole  |
| 8 | Foods       |      | Restaurant               | onwide | salers |
| \ |             |      |                          |        |        |
| . |             |      | 462                      |        | Imp    |
|   |             |      |                          |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| 3 | Nihon       | 199  | Yomenya Goemon, Multi    | Nati   | Whole  |
| 9 | Restaurant  |      | Concepts                 | onwide | salers |
| \ | System      |      |                          |        |        |
| . |             |      | 249                      |        | Imp    |
|   |             |      |                          |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| 4 | Gennki      | 197  | Gennki Sushi, Sushi Fast | Nati   | Whole  |
| 0 | Sushi       |      | Food                     | onwide | salers |
| \ |             |      |                          |        |        |
| . |             |      | 195                      |        | Imp    |
|   |             |      |                          |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| 4 | Hanaya      | 191  | Hanaya Yohei, Japanese   | Kanto  | Whole  |
| 1 | Yohei       |      | Family Style             |        | salers |
| \ |             |      |                          |        |        |
| . |             |      | 139                      |        | Imp    |
|   |             |      |                          |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| 4 | Nakau       | 189  | Nakau, Beef Bowl Fast    | Nati   | Whole  |
| 2 |             |      | Food                     | onwide | salers |
| \ |             |      |                          |        |        |
| . |             |      | 290                      |        | Imp    |
|   |             |      |                          |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| 4 | WDI         | 186  | Capricciosa, Italian     | Nati   | Imp    |
| 3 |             |      | Family Style             | onwide | orters |
| \ |             |      |                          |        |        |
| . |             |      | Toni Roma's, Steak House |        | Whole  |
|   |             |      |                          |        | salers |
|   |             |      | Hard Rock Café           |        |        |
|   |             |      |                          |        | Direct |
|   |             |      | 171                      |        |        |
+---+-------------+------+--------------------------+--------+--------+
| 4 | Yakinikuya  | 183  | Yakinikuya Sakai, Korean | Nati   | Imp    |
| 4 | Sakai       |      | Barbeque                 | onwide | orters |
| \ |             |      |                          |        |        |
| . |             |      | 203                      |        | Whole  |
|   |             |      |                          |        | salers |
+---+-------------+------+--------------------------+--------+--------+
| 4 | Kura        | 179  | Muten Kura Sushi, Sushi  | Kansai | Imp    |
| 5 | Corporation |      | Fast Food                |        | orters |
| \ |             |      |                          |        |        |
| . |             |      | 83                       |        | Whole  |
|   |             |      |                          |        | salers |
+---+-------------+------+--------------------------+--------+--------+
| 4 | Kora        | 179  | Kora Honten, Crab        | Nati   | Imp    |
| 6 |             |      | Restaurant               | onwide | orters |
| \ |             |      |                          |        |        |
| . |             |      | Kamado, Pub/Izakaya      |        | Whole  |
|   |             |      |                          |        | salers |
|   |             |      | Karubi Iccho, Korean     |        |        |
|   |             |      | Barbeque                 |        |        |
|   |             |      |                          |        |        |
|   |             |      | 106                      |        |        |
+---+-------------+------+--------------------------+--------+--------+
| 4 | Miya        | 176  | Miya, Steak House        | E      | Imp    |
| 7 |             |      |                          | astern | orters |
| \ |             |      | 167                      | Japan  |        |
| . |             |      |                          |        | Whole  |
|   |             |      |                          |        | salers |
+---+-------------+------+--------------------------+--------+--------+
| 4 | Daiwa       | 175  | Esquire Club, Night Club | Nati   | Imp    |
| 8 | Jitsugyo    |      |                          | onwide | orters |
| \ |             |      | Yaruki Chaya,            |        |        |
| . |             |      | Pub/Izakaya              |        | Whole  |
|   |             |      |                          |        | salers |
|   |             |      | 186                      |        |        |
+---+-------------+------+--------------------------+--------+--------+
| 4 | Umeno Hana  | 173  | Umeno Hana, etc.,        | Nati   | Imp    |
| 9 |             |      | Japanese Restaurant      | onwide | orters |
| \ |             |      |                          |        |        |
| . |             |      | 229                      |        | Whole  |
|   |             |      |                          |        | salers |
+---+-------------+------+--------------------------+--------+--------+
| 5 | Korakuen    | 171  | Aizuppo, Korakuen, etc., | Nati   | Imp    |
| 0 |             |      | Ramen Noodle Shop        | onwide | orters |
| \ |             |      |                          |        |        |
| . |             |      | 197                      |        | Whole  |
|   |             |      |                          |        | salers |
+---+-------------+------+--------------------------+--------+--------+
| S |             |      |                          |        |        |
| o |             |      |                          |        |        |
| u |             |      |                          |        |        |
| r |             |      |                          |        |        |
| c |             |      |                          |        |        |
| e |             |      |                          |        |        |
| : |             |      |                          |        |        |
| N |             |      |                          |        |        |
| i |             |      |                          |        |        |
| k |             |      |                          |        |        |
| k |             |      |                          |        |        |
| e |             |      |                          |        |        |
| i |             |      |                          |        |        |
| N |             |      |                          |        |        |
| e |             |      |                          |        |        |
| w |             |      |                          |        |        |
| s |             |      |                          |        |        |
| p |             |      |                          |        |        |
| a |             |      |                          |        |        |
| p |             |      |                          |        |        |
| e |             |      |                          |        |        |
| r |             |      |                          |        |        |
| R |             |      |                          |        |        |
| e |             |      |                          |        |        |
| s |             |      |                          |        |        |
| e |             |      |                          |        |        |
| a |             |      |                          |        |        |
| r |             |      |                          |        |        |
| c |             |      |                          |        |        |
| h |             |      |                          |        |        |
+---+-------------+------+--------------------------+--------+--------+

### Hotel Food Service Sector

The Hotel/Inn sector had food sales worth ¥3.26 trillion in 2003,
equivalent to \$28.1 billion. This represents 10.8% of the total food
service industry sales.

The Hotel food business has declined the past eight years because of a
poor economy, which caused a reduction in guest traffic as well as a
reduction in banquet and reception business.

Hotels in Japan have traditionally been a popular venue for corporate
receptions and seminars as well as for wedding receptions. The economic
squeeze has caused reductions in spending for both corporate and
individual functions.

First class hotels have a large variety of on-site restaurants to choose
from including Western, Chinese and Japanese restaurants.

Hotels are major users of almost all kinds of foods, particularly
imported products. Because they have large professional chef staffs,
hotels tend to create many dishes from scratch rather than relying on
prepared or further processed foods.

Decision making on what kinds of items to put on the menu is usually
made by the executive chefs of each hotel. Because they cater to
international travelers, many major hotels regularly feature promotions
of different country's cuisines. For the same reason, they are more
receptive to imported food.

Most hotels rely on wholesalers to supply their food products, often
ordering only a few days in advance of delivery.

Japan also has many small *ryokan* or traditional Japanese style inns,
which primarily serve holiday travelers. The menu tends to be limited
and feature traditional Japanese dishes. *Ryokans* are a less inviting
target for U.S. exporters due to their focus on traditional Japanese
foods. A list of the top 15 hotel chains in Japan appears below:

+---+------------------+-----------+-----------+-----------+-----------+
| R | Company Name     | Sales (\$ | \# of     | Location  | Principal |
| a |                  | Mil.)     | Hotels    |           | P         |
| n |                  |           |           |           | urchasing |
| k |                  |           |           |           | Agents    |
+===+==================+===========+===========+===========+===========+
| 1 | Prince Hotels    | 467       | 83        | N         | Wh        |
| \ |                  |           |           | ationwide | olesalers |
| . |                  |           |           |           |           |
+---+------------------+-----------+-----------+-----------+-----------+
| 2 | Imperial Hotel   | 271       | 3         | Tokyo,    | Wh        |
| \ |                  |           |           | Osaka     | olesalers |
| . |                  |           |           |           |           |
+---+------------------+-----------+-----------+-----------+-----------+
| 3 | New Otani hotels | 243       | 29        | N         | Wh        |
| \ |                  |           |           | ationwide | olesalers |
| . |                  |           |           |           |           |
+---+------------------+-----------+-----------+-----------+-----------+
| 4 | Fujita Kanko     | 201       | 49        | N         | Wh        |
| \ |                  |           |           | ationwide | olesalers |
| . |                  |           |           |           |           |
+---+------------------+-----------+-----------+-----------+-----------+
| 5 | Keio Plaza       | 151       | 49        | Tokyo,    | Wh        |
| \ |                  |           |           | Sapporo   | olesalers |
| . |                  |           |           |           |           |
+---+------------------+-----------+-----------+-----------+-----------+
| 6 | Daiichi Hankyu   | 150       | 44        | N         | Wh        |
| \ | Hotels           |           |           | ationwide | olesalers |
| . |                  |           |           |           |           |
+---+------------------+-----------+-----------+-----------+-----------+
| 7 | Resort Trust     | 140       | 34        | N         | Wh        |
| \ |                  |           |           | ationwide | olesalers |
| . |                  |           |           |           |           |
+---+------------------+-----------+-----------+-----------+-----------+
| 8 | Mitsui Kanko     | 126       | 18        | N         | Wh        |
| \ |                  |           |           | ationwide | olesalers |
| . |                  |           |           |           |           |
+---+------------------+-----------+-----------+-----------+-----------+
| 9 | Royal Hotel      | 123       | 14        | N         | Wh        |
| \ |                  |           |           | ationwide | olesalers |
| . | (Rihga Royal)    |           |           |           |           |
+---+------------------+-----------+-----------+-----------+-----------+
| 1 | Washington Hotel | 123       | 35        | N         | Wh        |
| 0 |                  |           |           | ationwide | olesalers |
| \ |                  |           |           |           |           |
| . |                  |           |           |           |           |
+---+------------------+-----------+-----------+-----------+-----------+
| 1 | Hotel Keikyu     | 106       | 8         |           | Wh        |
| 1 |                  |           |           |           | olesalers |
| \ |                  |           |           |           |           |
| . |                  |           |           |           |           |
+---+------------------+-----------+-----------+-----------+-----------+
| 1 | Kokusai Kanko    | 85        | 1         | Nagoya    | Wh        |
| 2 | and the          |           |           |           | olesalers |
| \ |                  |           |           |           |           |
| . | Hotel Nagoya     |           |           |           |           |
|   | Castle           |           |           |           |           |
+---+------------------+-----------+-----------+-----------+-----------+
| 1 | Palace Hotel     | 77        | 2         | Tokyo     | Wh        |
| 3 |                  |           |           |           | olesalers |
| \ |                  |           |           |           |           |
| . |                  |           |           |           |           |
+---+------------------+-----------+-----------+-----------+-----------+
| 1 | Jyuraku          | 71        | 6         | Kanto     | Wh        |
| 4 |                  |           |           |           | olesalers |
| \ |                  |           |           |           |           |
| . |                  |           |           |           |           |
+---+------------------+-----------+-----------+-----------+-----------+
| 1 | ANA Hotels       | 69        | 32        | N         | Wh        |
| 5 |                  |           |           | ationwide | olesalers |
| \ |                  |           |           |           |           |
| . |                  |           |           |           |           |
+---+------------------+-----------+-----------+-----------+-----------+
| S |                  |           |           |           |           |
| o |                  |           |           |           |           |
| u |                  |           |           |           |           |
| r |                  |           |           |           |           |
| c |                  |           |           |           |           |
| e |                  |           |           |           |           |
| : |                  |           |           |           |           |
| N |                  |           |           |           |           |
| i |                  |           |           |           |           |
| k |                  |           |           |           |           |
| k |                  |           |           |           |           |
| e |                  |           |           |           |           |
| i |                  |           |           |           |           |
| N |                  |           |           |           |           |
| e |                  |           |           |           |           |
| w |                  |           |           |           |           |
| s |                  |           |           |           |           |
| p |                  |           |           |           |           |
| a |                  |           |           |           |           |
| p |                  |           |           |           |           |
| e |                  |           |           |           |           |
| r |                  |           |           |           |           |
| R |                  |           |           |           |           |
| e |                  |           |           |           |           |
| s |                  |           |           |           |           |
| e |                  |           |           |           |           |
| a |                  |           |           |           |           |
| r |                  |           |           |           |           |
| c |                  |           |           |           |           |
| h |                  |           |           |           |           |
+---+------------------+-----------+-----------+-----------+-----------+

### Institutional Food Service

The institutional food service sector had sales worth ¥3.7 trillion in
2003, equivalent to \$32.1 Billion. This represented 12.3% of the total
food service industry sales.

After peaking in 1998, institutional food service sales have declined
slightly, though less than for the food service industry as a whole.

The institutional food service sector is comprised of four segments;
business/office cafeterias, school lunch programs, hospitals, and
welfare facilities. This might be one segment to see growth as Japan's
aging demographic intensifies. Many food service companies are gearing
up to service what is called the "silver" market.

Sales by segment in 2003 were as follows:

  --------------------------- -------------- -------------- --------------
  INSTITUTIONAL FOOD SERVICE                                
  SALES                                                     

                              2002 Sales                    

                              ¥ Billion      \$ Billion     \% Share

  Business/Office Cafeterias  1,994          17.2           53.7

  School Lunch                473            4.1            12.7

  Hospitals                   1,005          8.7            27.1

  Welfare Facilities          241            2.1            6.5

  Total:                      3,713          32.1           100.0

  Source: Food Service                                      
  Industry Research Center                                  
  --------------------------- -------------- -------------- --------------

> Business/Office Cafeterias
>
> The largest segment of the institutional food service market is
> business/office cafeterias, with \$17.2 billion in sales in 2003.
>
> Business cafeterias are found primarily in companies with 50 or more
> employees. They usually serve simple menus and are designed to provide
> inexpensive food to employees.
>
> Most business cafeterias are run by contract feeders. Due to the
> emphasis on providing low prices, contract feeders focus on food
> materials that are inexpensive. Opportunities exist for products such
> as frozen and canned vegetables, frozen potatoes, ketchups,
> condiments, and meat.
>
> A list of the top 15 institutional contract feeders in Japan appears
> below:

  ----------------------------------------------------------------------------------
  Rank        Company Name                   Sales (\$   Location      Principal
                                             Mil.)                     Purchasing
                                                                       Agents
  ----------- ------------------------------ ----------- ------------- -------------
  1\.         Shidax                         1,218       Nationwide    Wholesalers

  2\.         Nisshin Healthcare Food        1,201       Nationwide    Wholesalers
              Service                                                  

  3\.         Seiyo Food Systems             570         Nationwide    Wholesalers

  4\.         AIM Service                    553         Nationwide    Wholesalers

  5\.         Green House                    475         Nationwide    Wholesalers

  6\.         Uokuni Sohonsha                415         Nationwide    Wholesalers

  7\.         Fuji Sangyo                    387         Nationwide    Wholesalers

  8\.         Mefeos                         333         Nationwide    Wholesalers

  9\.         Nikkoku Trust                  277         Nationwide    Wholesalers

  10\.        Uokuni                         162         Kansai        Wholesalers

  11\.        Ichifuji Food Service          158         Nationwide    Wholesalers

  12\.        Nihon General                  147         Chubu         Wholesalers

  13\.        Lepast                         142         Tokyo         Wholesalers

  14\.        NEC Ryebeck                    115         Tokyo         Wholesalers

  15\.        Harvest                        97          Kanto         Wholesalers

  Source:                                                              
  Nikkei                                                               
  Newspaper                                                            
  Research &                                                           
  MMI                                                                  
  Research                                                             
  ----------------------------------------------------------------------------------

# SECTION III. COMPETITION

The United States is the largest supplier of agricultural products to
Japan with a market share of 34.4%. Total U.S. agricultural exports to
Japan were \$11.4 billion in 2003.

Other major suppliers of agricultural products to Japan in 2003 were, in
order of size; China (11.8%), Australia (8.2%), Canada (6.4%) and
Thailand (5.8%).

A brief discussion of the key competitive situation for major consumer
oriented food categories follows: The source of the information is the
Japan import statistics provided by Customs.

### Red Meat

Red meat (beef and pork) has been the largest category of food products
exported to Japan. The total value of U.S. red meat exports in 2003 was
\$2.8 billion. The U.S. had the largest share of red meat imports at 40%
in 2003. Other major exporting countries are Australia (beef) and
Denmark (pork).

The food service sector is a major customer for U.S. red meats,
particularly beef bowl chains, yakiniku barbeque chains, family
restaurants, and steak restaurants. This is due to the attractive price
and quality of U.S. red meat. Imported red meat is less expensive than
domestic Japanese production and imported red meats accounts for over
half of all red meat consumption in Japan. The discovery of a case of
BSE in the U.S. in December 2003 led to a ban on U.S. beef products
which is still under negotiation at the time of this report. During the
ban, exports of U.S. pork products have increased to partially cover
beef shortages.

### Fish and Seafood

The U.S. is the second largest supplier of edible fish and seafood
products after China. The value of edible U.S. seafood exports to Japan
in 2003 was \$1.3 billion, representing a 10% market share. The U.S. is
a major exporter of roe and urchin eggs (\$459 million in 2003), surimi
fish paste (\$184 million), salmon (\$112 million) and crab (\$88
million).

The food service market, especially the sushi restaurant segment, is a
major customer of U.S. fish products.

### Dairy Products

The U.S. exported \$90 million worth of dairy products in 2003, after
Australia (\$280 million) and New Zealand (\$201 million). Dairy
products are still a protected industry in Japan and cheese is the major
dairy import.

### Processed Fruits & Vegetables

The U.S. is the second largest exporter of processed fruits and
vegetables to Japan with a 20% share. The value of 2003 exports from the
U.S. was \$537 million, second only to China (\$1.2 billion and 44%
share). The U.S. has traditionally been a major supplier of frozen
vegetables (potatoes, corns, beans, peas and broccoli) to Japan. The
food service sector is a major customer for these products, particularly
fast food restaurants, family restaurants and Western restaurants, which
value the year-round availability, ease of preparation and inexpensive
cost of frozen imports.

### Poultry

The U.S. is the fourth largest supplier of poultry to Japan with a 7%
share. U.S. exports to Japan were valued at \$110 million in 2003, after
Thailand (\$634 million), China (\$545 million) and Brazil (\$265
million).

U.S. market share of poultry exports to Japan has declined the past 3
years due to outbreaks of Avian Influenza in the U.S. that has led to
periodic bans of U.S. poultry.

The main target for processed chicken from the U.S. has been the food
service sector, in particular fast food chains.

### Fruit & Vegetable Juice

The U.S. is the leading exporter of fruit & vegetable juice to Japan,
exporting \$152 million in 2003, with a share of 34%. Brazil is the
second largest exporter with a share of 22%. The U.S. is a major
exporter of orange, grapefruit, and apple juice to Japan. Food service
operators are major customers of U.S. juices, particularly hotels,
family restaurants, and fast food chains.

### Fresh Fruit

The U.S. is a major exporter of fresh fruits to Japan, exporting \$490
million in 2003, with a market share of 34%. While the primary market
for most U.S. fresh fruit is the retail sector, fresh fruits can also be
found in the hotel segment of the food service industry, and are used in
cut-up form as toppings on dessert tartes at cake shops and fancy
restaurants.

### Fresh Vegetables

The U.S. is the second largest supplier of fresh vegetables to Japan
after China. U.S. exports of fresh vegetables were \$148 million in
2003, with a market share of 16%. Broccoli and asparagus are two of the
major fresh vegetables exported from the U.S. Due to the seasonality of
fresh vegetables, food service operators tend to rely more on frozen
vegetables than fresh.

### Wine and Beer

The U.S. is the third largest exporter of wine and beer to Japan with a
7% share, behind France (56% share) and Italy (13% share).

The food service market is a major market for wine and beer. Western
style wines are found at most hotels, Western restaurants, and
increasingly at traditional Japanese restaurants as well. Wine is also
carried at most bar and night clubs. Domestic Japanese production of
wine is still limited.

In contrast to wine, most beer consumed in Japan is produced by the
large Japanese breweries such as Kirin, Asahi and Sapporo. Beer is
carried at most restaurants which target adults, as well as beer halls,
pubs, nightclubs and bars. In recent years, pubs specializing in beers
from around the world have opened in the major cities in Japan, offering
imported beers an avenue of sales opportunity.

### Snack Foods

The U.S. is the leading supplier of snack foods to Japan, exporting
\$108 million in 2003. U.S. market share among exports was 16%.

Due to ingredient/additive issues, many typical U.S. snack foods are
difficult to export to Japan without reformulation.

### Breakfast Cereals and Pancake Mix

The market for breakfast cereals and pancake mix is rather small in
Japan. U.S. exports to Japan totaled \$23 million in 2003 with a share
of 28%. The major food service customer for U.S. breakfast cereals and
pancake mix is the hotel sector.

+-----------+-----------------+-------------------+-------------------+
| **Product | **Major         | **Strengths of    | **Advantages and  |
| C         | Supply**        | Key Supply        | Disadvantages**   |
| ategory** |                 | Countries**       |                   |
|           | **Source**      |                   | **Local           |
|           |                 |                   | Suppliers**       |
+===========+=================+===================+===================+
| Red Meat  | 1.  US. - 40%   | US is a cost      | The high cost of  |
| (fresh/   |                 | efficient         | feed and raising  |
| chille    | 2.  Denmark     | supplier of both  | cattle and swine  |
| d/frozen) |     -17%        | beef and pork to  | makes local       |
|           |                 | Japan.            | production very   |
| Net       | 3.  Australia - |                   | expensive.        |
| Imports:  |     16%         | Australia is a    |                   |
|           |                 | cost efficient    | Local production  |
| \$6.6     |                 | beef producer.    | has the advantage |
| Billion   |                 |                   | of freshness and  |
|           |                 | Denmark is a      | stringent         |
|           |                 | major supplier of | production        |
|           |                 | quality, low cost | trace-ability     |
|           |                 | pork.             | requirements      |
|           |                 |                   | generally         |
|           |                 |                   | supported by      |
|           |                 |                   | consumers.        |
+-----------+-----------------+-------------------+-------------------+
| Fish &    | 1.  China - 18% | China is the      | Japanese          |
| Seafood   |                 | leading low cost  | companies fish    |
|           | 2.  U.S. -10%   | supplier of       | worldwide for     |
| Net       |                 | seafood.          | marine resources. |
| Imports:  | 3.  Russia - 8% |                   |                   |
|           |                 | Russia is the     |                   |
| \$12.5    |                 | major source      |                   |
| Billion   |                 | crab.             |                   |
|           |                 |                   |                   |
|           |                 | The U.S. is the   |                   |
|           |                 | leader in surimi, |                   |
|           |                 | roe and urchin    |                   |
|           |                 | exports.          |                   |
+-----------+-----------------+-------------------+-------------------+
| Processed | 1.  China - 44% | China is a low    | High costs make   |
| Fruit &   |                 | cost supplier of  | local production  |
| V         | 2.  U.S. - 20%  | many vegetables   | less competitive  |
| egetables |                 | popular in Japan. | for further       |
|           | 3.  Thailand -  |                   | processing.       |
| Net       |     6%          | The U.S. is a     |                   |
| Imports:  |                 | major supplier of |                   |
|           |                 | frozen potatoes,  |                   |
| \$2.7     |                 | corn, peas, and   |                   |
| Billion   |                 | mixed vegetables  |                   |
+-----------+-----------------+-------------------+-------------------+

+-----------+-----------------+-------------------+-------------------+
| Poultry   | 1.  Thailand -  | Thailand and      | The high cost of  |
|           |     38%         | China both are    | local poultry     |
| Net       |                 | low cost          | production makes  |
| Imports:  | 2.  China -33%  | producers of      | it less           |
|           |                 | further processed | attractive to     |
| \$1.7     | 3.  Brazil -    | chicken.          | food service      |
| Billion   |     16%         |                   | operators. Most   |
|           |                 | Brazil is the low | domestic          |
|           |                 | cost source for   | production goes   |
|           |                 | raw commodity     | to the retail     |
|           |                 | chicken.          | market where      |
|           |                 |                   | freshness is      |
|           |                 |                   | valued.           |
+-----------+-----------------+-------------------+-------------------+
| Fruit &   | 1.  U.S. -- 34% | The U.S. is the   | Domestic Japanese |
| Vegetable |                 | leading supplier  | juice is more     |
| Juice     | 2.  Brazil --   | of price          | expensive than    |
|           |     22%         | competitive, high | imports           |
| Net       |                 | quality apple,    |                   |
| Imports:  |                 | grapefruit,       |                   |
|           |                 | tomato & orange   |                   |
| \$450     |                 | juice.            |                   |
| Million   |                 |                   |                   |
|           |                 | Brazil is the low |                   |
|           |                 | cost supplier of  |                   |
|           |                 | orange juice.     |                   |
+-----------+-----------------+-------------------+-------------------+
| Fresh     | 1.  Philippines | The U.S. is the   | The consumer      |
| Fruit     |     -- 34%      | leading supplier  | desire for        |
|           |                 | of quality, price | freshness         |
| Net       | 2.  U.S. -- 34% | competitive       | benefits Japanese |
| Imports:  |                 | grapefruits and   | production of     |
|           |                 | oranges.          | mikan,            |
| \$1.4     |                 |                   | strawberries,     |
| Billion   |                 | The Philippines   | peaches, grapes,  |
|           |                 | is a major        | and apples.       |
|           |                 | supplier of       |                   |
|           |                 | bananas, mangos   | Customers rely on |
|           |                 | and pineapples.   | imports in        |
|           |                 |                   | off-season        |
|           |                 |                   | periods.          |
+-----------+-----------------+-------------------+-------------------+
| Fresh     | 1.  China --    | China is the      | Though Japanese   |
| V         |     42%         | leading supplier  | vegetables are    |
| egetables |                 | of fresh          | expensive         |
|           | 2.  U.S. -- 17% | vegetables to     | consumers         |
| Net       |                 | Japan due to both | perceive them as  |
| Imports:  |                 | competitive price | both safer and    |
|           |                 | and proximity.    | fresher, and are  |
| \$873     |                 |                   | willing to pay a  |
| Million   |                 | Issues of         | premium for them. |
|           |                 | chemical residues |                   |
|           |                 | have recently     |                   |
|           |                 | slowed imports    |                   |
|           |                 | from China.       |                   |
+-----------+-----------------+-------------------+-------------------+
| Wine and  | 1.  France --   | France is the     | Japan has little  |
| Beer      |     56%         | leading exporter  | tradition as a    |
|           |                 | of wines to       | wine maker,       |
| Net       | 2.  Italy 13%   | Japan, followed   | though this is    |
| Imports:  |                 | by Italy. French  | slowly changing.  |
|           | 3.  U.S. -- 7%  | and Italian wines |                   |
| \$1.0     |                 | have a quality    | Most wines are    |
| Billion   |                 | image and         | imported.         |
|           |                 | imported in both  |                   |
|           |                 | bottled and bulk  |                   |
|           |                 | form.             |                   |
+-----------+-----------------+-------------------+-------------------+
| Snack     | 1.  U.S. -- 16% | The U.S. is the   |                   |
| Foods     |                 | leading supplier  |                   |
|           | 2.  China --    | of Western-style  |                   |
| Net       |     14%         | snack foods       |                   |
| Imports:  |                 | (cookies,         |                   |
|           | 3.  Australia   | candies,          |                   |
| \$668     |     -- 9%       | pretzels, chips). |                   |
| Million   |                 |                   |                   |
|           |                 | China provides    |                   |
|           |                 | some              |                   |
|           |                 | Japanese-style    |                   |
|           |                 | snack items at a  |                   |
|           |                 | competitive       |                   |
|           |                 | price.            |                   |
+-----------+-----------------+-------------------+-------------------+
| Breakfast | 1.  U.S. -- 28% | U.S. is a major   | The market for    |
| Cereals & |                 | producing country | breakfast cereals |
| Pancake   | 2.  Australia   | for breakfast     | and pancake mix   |
| Mix       |     -- 11%      | cereals & Pancake | for food service  |
|           |                 | mix.              | operators is      |
| Net       |                 |                   | relatively small  |
| Imports:  |                 |                   | in Japan.         |
|           |                 |                   |                   |
| \$81      |                 |                   |                   |
| Million   |                 |                   |                   |
+-----------+-----------------+-------------------+-------------------+

# SECTION IV. BEST PRODUCTS PROSPECTS

## A. Products Present in the Market Which Have Good Sales Potential

> Despite the fact that the Japanese Foodservice sector has not been
> growing the past several years, it is still a very large market for
> many U.S. food products and will continue to be so in the future. As
> the Japanese economy improves, it is expected that the food service
> sector will also return to a growth mode.
>
> It is important for U.S. exporters to continue to make efforts to
> cultivate the Japanese food service sector for those items that have
> established a significant presence over time in the market in order to
> maintain the sales volume and increase it where possible.
>
> ***[Pork:]{.underline}*** The market for pork has expanded the past
> three years due to the occurrence of BSE in beef in Japan, and more
> recently the ban on U.S. beef products due to the discovery of a case
> of BSE in the U.S. Pork has been added to the menu by many food
> service operators to offset decline in beef sales. Key targets for
> pork items include: family restaurants, hotels, fast food chain,
> tonkatsu (fried pork) shops, yakiniku barbeque shops, Western
> restaurants, noodle shops, contract feeders, and pizza chains
> (toppings).
>
> ***[Beef:]{.underline}*** Despite the current ban on U.S. beef exports
> to Japan, it is expected that the market will open up again in the
> near future. Japan is the largest market outside the U.S. for American
> beef and the food service sector is the largest customer for U.S. beef
> within Japan. Key targets are: family restaurants, steak houses, beef
> bowl chains, hotels, yakiniku barbeque shops, Western restaurants, and
> contract feeders.
>
> ***[Roe and Sea-Urchin:]{.underline}*** Japan is a major market for
> U.S. roe and sea-urchin and should continue to be in the future. Key
> targets are: sushi shops and sushi takeout shops.
>
> ***[Frozen Vegetables (Potatoes, Corn, Mixed
> Vegetables):]{.underline}*** The Japanese food service sector is a
> major customer for frozen vegetables such as potatoes, corn and mixed
> vegetables. Despite increased competition from New Zealand and China
> it should remain a strong market for the future. Key targets are: fast
> food chains, family restaurants, hotels, contract feeders, and Western
> restaurants.
>
> ***[Wine:]{.underline}*** The wine market continues to grow,
> particularly the lower price segment. The demand for western wine
> should increase as traditional Japanese restaurants place it on the
> menu. Key targets are: hotels, Western restaurants, bars and
> nightclubs, and for the future, Japanese restaurants.

-   **[School Lunch Programs]{.underline}**

> The school lunch sector was valued at ¥473 billion in 2003, equivalent
> to \$4.1 billion. The school lunch program in Japan is rather
> difficult to penetrate for most foreign companies since it is overseen
> by a combination of national and local government bodies, with many
> layers of decision marking. Menus are normally designed at the local
> level, and products are purchased through wholesalers who supply the
> schools regularly. The school lunch program is primarily targeted at
> elementary and junior high school age children.

## B. Hospitals

> Hospital feeding was estimated to total ¥1 trillion in 2003, equal to
> \$8.7 billion. The hospital feeding market has been flat over the past
> five years. Hospitals increasingly rely on outside contractors to
> provide the feeding programs though some have in-house systems. The
> health care system in Japan is based on a national health insurance
> program and coverage extends to feeding as well.
>
> Most large hospitals have nutritionists on staff who help develop
> menus to meet the different requirements of each patient. Because many
> different kinds of meals are served daily depending on the patients
> needs, contractors are forced to provide custom order production in
> small lots.
>
> Meals typically feature traditional Japanese food with which most
> patients are familiar and comfortable. The custom order nature of the
> orders as well as the traditional Japanese food taste makes it
> difficult for exporters to penetrate this segment. On the other hand,
> U.S. exporters with experience in supplying foods to hospitals in the
> U.S. may discover some opportunities for specialized products in
> Japan.

## C. Drinking Establishments

The drinking establishment sector in Japan had sales worth ¥5.4 trillion
in 2003, equivalent to \$46.7 billion. Drinking establishments account
for 18% of the total food service market in Japan.

Drinking establishments are divided into four major categories in
Japan: 1) coffee and tea shops, 2) beer halls and Japanese pubs, 3)
bars, cabarets and night clubs, and 4) ryotei (upscale Japanese
drinking/entertainment establishments).

  ---------------------------- -------------- -------------- --------------
  DRINKING ESTABLISHMENTS BY                                 
  TYPE FOR 2002                                              

  Type of Establishment        2003                          

                               ¥ Trillion     \$ Billion     \% Share

  Coffee/Tea Shops             1.14           9.9            21.1

  Beer Halls/Pubs              1.12           9.8            20.9

  Bars, Cabarets, Night Clubs  2.75           23.8           51.1

  Ryotei                       .038           3.2            6.9

  Total                        5.04           46.7           100.0

  Source: Japan Food Service                                 
  Industry Research Center                                   
  ---------------------------- -------------- -------------- --------------

Sales of all four segments have decreased since 1998, declining 18% in
total between 1998 and 2002.

The main reason for the decline in drinking establishment sales,
particularly bars, beer pubs and nightclubs, is the reduction in expense
account spending for corporate entertainment. Many drinking
establishments have had to reduce prices to maintain customers, while
others have gone out of business entirely.

## D. Coffee Shops

> Despite the successful introduction of Starbucks Coffee, sales of the
> coffee shop industry have declined during the past decade, decreasing
> 17% between 1998 and 2003. Coffee shops were once primarily frequented
> as meeting places with limited menu selections. Starbucks has
> revolutionized the coffee shop industry with its take-out coffees,
> exotic flavors and comfortable atmosphere, which many chain
> competitors are now imitating. As a result of competition from chain
> coffee shops such as Starbucks and Doutor, many small single-owner
> coffee shops have gone out of business. The number of coffee shops
> decreased from 126,260 in 1991 to 89,933 in 2001 according to the most
> recent government census data.
>
> The launch of Starbucks has created new opportunities for U.S.
> exporters for the coffee shop segment, particularly for items such as
> scones, wrap sandwiches, and gourmet cookies.

## E. Bars, Night Clubs and Beer Halls

> Between 1998 and 2003, sales at bars, nightclubs and beer halls
> declined 19%. The number of establishments declined from 372,299 in
> 1996 to 346,034 in 2001 according to government census data.
>
> Bars, night clubs, and beer pubs make natural targets for U.S.
> alcoholic beverage manufacturers. Because many of the establishments
> are single proprietorships, it is difficult to directly sell to this
> market. Most sales are through distributors.

+---+-------------+------+--------------------------+--------+--------+
| T |             |      |                          |        |        |
| O |             |      |                          |        |        |
| P |             |      |                          |        |        |
| 1 |             |      |                          |        |        |
| 5 |             |      |                          |        |        |
| D |             |      |                          |        |        |
| R |             |      |                          |        |        |
| I |             |      |                          |        |        |
| N |             |      |                          |        |        |
| K |             |      |                          |        |        |
| I |             |      |                          |        |        |
| N |             |      |                          |        |        |
| G |             |      |                          |        |        |
| E |             |      |                          |        |        |
| S |             |      |                          |        |        |
| T |             |      |                          |        |        |
| A |             |      |                          |        |        |
| B |             |      |                          |        |        |
| L |             |      |                          |        |        |
| I |             |      |                          |        |        |
| S |             |      |                          |        |        |
| H |             |      |                          |        |        |
| M |             |      |                          |        |        |
| E |             |      |                          |        |        |
| N |             |      |                          |        |        |
| T |             |      |                          |        |        |
| S |             |      |                          |        |        |
+===+=============+======+==========================+========+========+
| * | **Company   | **S  | **Outlet Name,**         | **Loca | **Pri  |
| * | Name**      | ales |                          | tion** | ncipal |
| R |             | (\$  | **Type & \# of Outlets** |        | Purc   |
| a |             | Mil  |                          |        | hasing |
| n |             | .)** |                          |        | Ag     |
| k |             |      |                          |        | ents** |
| * |             |      |                          |        |        |
| * |             |      |                          |        |        |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Monte Roza  | 1    | Hirokiya, Uotami, Wara   | Nati   | Direct |
| \ |             | ,145 | Wara,                    | onwide |        |
| . |             |      |                          |        | Whole  |
|   |             |      | Pub/Izakaya              |        | salers |
|   |             |      |                          |        |        |
|   |             |      | 1,106                    |        | Imp    |
|   |             |      |                          |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| 2 | Doutor      | 749  | Doutor, Colorado,        | Nati   | Direct |
| \ | Coffee      |      | Excelsior,               | onwide |        |
| . |             |      |                          |        | Imp    |
|   |             |      | Coffee Shop              |        | orters |
|   |             |      |                          |        |        |
|   |             |      | 1,294                    |        |        |
+---+-------------+------+--------------------------+--------+--------+
| 3 | Daisho      | 634  | Shoya, Yaruki Chaya,     | Nati   | Imp    |
| \ |             |      |                          | onwide | orters |
| . |             |      | Beer Halls, Tavern       |        |        |
|   |             |      |                          |        | Direct |
|   |             |      | 705                      |        |        |
|   |             |      |                          |        | Whole  |
|   |             |      |                          |        | salers |
+---+-------------+------+--------------------------+--------+--------+
| 4 | Yoro no     | 540  | Yoro no Taki             | Nati   | Imp    |
| \ | Taki        |      |                          | onwide | orters |
| . |             |      | Beer Halls, Tavern       |        |        |
|   |             |      |                          |        | Direct |
|   |             |      | 1,355                    |        |        |
|   |             |      |                          |        | Whole  |
|   |             |      |                          |        | salers |
+---+-------------+------+--------------------------+--------+--------+
| 5 | Starbucks   | 510  | Starbucks Coffee         | Nati   | Im     |
| \ | Coffee      |      |                          | onwide | porter |
| . | Japan       |      | Coffee Shop              |        |        |
|   |             |      |                          |        | Direct |
|   |             |      | 514                      |        |        |
+---+-------------+------+--------------------------+--------+--------+
| 6 | Watami      | 455  | Watami, Pub/Izakaya      | Nati   | Imp    |
| \ | Foods       |      |                          | onwide | orters |
| . | Service     |      | 370                      |        |        |
|   |             |      |                          |        | Whole  |
|   |             |      |                          |        | salers |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 7 | Colowide    | 438  | Amataro, Pub/Izakaya     | Nati   | Whole  |
| \ |             |      |                          | onwide | salers |
| . |             |      | Sangendo, Pub/Izakaya    |        |        |
|   |             |      |                          |        | Imp    |
|   |             |      | 337                      |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| 8 | Murasaki    | 415  | Murasaki, Pub/Izakaya    | Nati   | Whole  |
| \ | Honsha      |      |                          | onwide | salers |
| . |             |      | 478                      |        |        |
|   |             |      |                          |        | Imp    |
|   |             |      |                          |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| 9 | Tsubohachi  | 363  | Tsubohachi, Pub/Izakaya  | Nati   | Whole  |
| \ |             |      |                          | onwide | salers |
| . |             |      | 506                      |        |        |
|   |             |      |                          |        | Imp    |
|   |             |      |                          |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Marche      | 313  | Suikoden, Hkkenden,      | Nati   | Whole  |
| 0 |             |      | Ishinden, Pub/Izakaya    | onwide | salers |
| \ |             |      |                          |        |        |
| . |             |      | 789                      |        | Imp    |
|   |             |      |                          |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Sapporo     | 218  | Sapporo Lion, Beer Hall  | Nati   | Whole  |
| 1 | Lion        |      |                          | onwide | salers |
| \ |             |      | 210                      |        |        |
| . |             |      |                          |        | Imp    |
|   |             |      |                          |        | orters |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Ten Allied  | 184  | Tengu, Pub/Izakaya       | Nati   | Whole  |
| 2 |             |      |                          | onwide | salers |
| \ |             |      | 155                      |        |        |
| . |             |      |                          |        | Imp    |
|   |             |      |                          |        | orters |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Chimney     | 168  | Chimney, Pub/Izakaya     | Nati   | Whole  |
| 3 |             |      |                          | onwide | salers |
| \ |             |      | 235                      |        |        |
| . |             |      |                          |        | Imp    |
|   |             |      |                          |        | orters |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Kohikan     | 127  | Kohikan, Coffee Shop     | Nati   | Whole  |
| 4 |             |      |                          | onwide | salers |
| \ |             |      | 411                      |        |        |
| . |             |      |                          |        | Imp    |
|   |             |      |                          |        | orters |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Di     |
|   |             |      |                          |        | rector |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Sanko       | 126  | Toho Kenbunroku, Tukino  | Tokyo, | Whole  |
| 5 | Marketing   |      | Shizuku, Pub/Izakaya     | Osaka  | salers |
| \ | Foods       |      |                          |        | Imp    |
| . |             |      | 54                       |        | orters |
|   |             |      |                          |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| S |             |      |                          |        |        |
| o |             |      |                          |        |        |
| u |             |      |                          |        |        |
| r |             |      |                          |        |        |
| c |             |      |                          |        |        |
| e |             |      |                          |        |        |
| : |             |      |                          |        |        |
| N |             |      |                          |        |        |
| i |             |      |                          |        |        |
| k |             |      |                          |        |        |
| k |             |      |                          |        |        |
| e |             |      |                          |        |        |
| i |             |      |                          |        |        |
| N |             |      |                          |        |        |
| e |             |      |                          |        |        |
| w |             |      |                          |        |        |
| s |             |      |                          |        |        |
| p |             |      |                          |        |        |
| a |             |      |                          |        |        |
| p |             |      |                          |        |        |
| e |             |      |                          |        |        |
| r |             |      |                          |        |        |
| R |             |      |                          |        |        |
| e |             |      |                          |        |        |
| s |             |      |                          |        |        |
| e |             |      |                          |        |        |
| a |             |      |                          |        |        |
| r |             |      |                          |        |        |
| c |             |      |                          |        |        |
| h |             |      |                          |        |        |
+---+-------------+------+--------------------------+--------+--------+

## F. Prepared Food at Retail Stores

The only segment of the food service industry to show growth during the
past six years has been in the increased offerings to consumers for deli
and/or bento-lunch box meals, also collectively known as *nakashoku*.
This segment has grown from ¥4.40 trillion in 1998 to ¥5.26 trillion in
2003, equivalent to \$45.4 billion. Sales of this segment have grown for
several reasons.

1.  Consumers are relying more and more on convenient, ready-to-eat
    prepared foods rather than make from scratch.

2.  HMR type foods sold at retail stores such as convenience stores or
    sushi take-out shops are both less expensive and faster alternatives
    than restaurant or fast food chains.

3.  Prepared food manufacturers have improved both the quality and
    variety of the products, enhancing their appeal. Prepared foods sold
    at retail stores now include pasta dishes, salads, noodles, sushi,
    sandwiches and even fried chicken.

*Nakashoku* meals are sold through a variety of channels, primarily
convenience stores, bento lunchbox takeout shops, department stores food
sections, and supermarkets. Increasingly much of the production is
performed at central off-site facilities, and distributed in finished
form to retailers for sale within a 24-hour period. U.S. exporters
interested in exploring this business should first study the types of
items being sold and seek an introduction to some of the key food
processors assembling these products. A list of the top 5 lunchbox
retail shops in Japan follows.

+---+-------------+------+--------------------------+--------+--------+
| T |             |      |                          |        |        |
| O |             |      |                          |        |        |
| P |             |      |                          |        |        |
| 5 |             |      |                          |        |        |
| T |             |      |                          |        |        |
| A |             |      |                          |        |        |
| K |             |      |                          |        |        |
| E |             |      |                          |        |        |
| O |             |      |                          |        |        |
| U |             |      |                          |        |        |
| T |             |      |                          |        |        |
| L |             |      |                          |        |        |
| U |             |      |                          |        |        |
| N |             |      |                          |        |        |
| C |             |      |                          |        |        |
| H |             |      |                          |        |        |
| B |             |      |                          |        |        |
| O |             |      |                          |        |        |
| X |             |      |                          |        |        |
| S |             |      |                          |        |        |
| H |             |      |                          |        |        |
| O |             |      |                          |        |        |
| P |             |      |                          |        |        |
| S |             |      |                          |        |        |
+===+=============+======+==========================+========+========+
| * | **Company   | **S  | **Outlet Name,**         | **Loca | **Pri  |
| * | Name**      | ales |                          | tion** | ncipal |
| R |             | (\$  | **Type & \# of Outlets** |        | Purc   |
| a |             | Mil  |                          |        | hasing |
| n |             | .)** |                          |        | Ag     |
| k |             |      |                          |        | ents** |
| * |             |      |                          |        |        |
| * |             |      |                          |        |        |
+---+-------------+------+--------------------------+--------+--------+
| 1 | Hokka Hokka | 1    | Hokka Hokka Tei, Takeout | Nati   | Direct |
| \ | Tei         | ,706 | Bento                    | onwide |        |
| . | Sohonten    |      |                          |        | Whole  |
|   |             |      | 3,519                    |        | salers |
+---+-------------+------+--------------------------+--------+--------+
| 2 | Honke       | 1    | Honke Kamadoya, Takeout  | Nati   | Direct |
| \ | Kamadoya    | ,046 | Bento                    | onwide |        |
| . |             |      |                          |        | Imp    |
|   |             |      | 2,570                    |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| 3 | Kozosushi   | 507  | Kozosushi, Sushi Takeout | Nati   | Imp    |
| \ | Honbu       |      |                          | onwide | orters |
| . |             |      | 1,348                    |        |        |
|   |             |      |                          |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 4 | Origin      | 349  | Origin Bento/Toshu,      | Nati   | Imp    |
| \ | Toshu       |      | Takeout Bento            | onwide | orters |
| . |             |      |                          |        |        |
|   |             |      | 548                      |        | Direct |
+---+-------------+------+--------------------------+--------+--------+
| 5 | Rock Field  | 336  | RF1, Kobe Croquette,     | Nati   | Direct |
| \ |             |      | Yugo,                    | onwide |        |
| . |             |      |                          |        | Imp    |
|   |             |      | 272                      |        | orters |
+---+-------------+------+--------------------------+--------+--------+
| S |             |      |                          |        |        |
| o |             |      |                          |        |        |
| u |             |      |                          |        |        |
| r |             |      |                          |        |        |
| c |             |      |                          |        |        |
| e |             |      |                          |        |        |
| : |             |      |                          |        |        |
| N |             |      |                          |        |        |
| i |             |      |                          |        |        |
| k |             |      |                          |        |        |
| k |             |      |                          |        |        |
| e |             |      |                          |        |        |
| i |             |      |                          |        |        |
| N |             |      |                          |        |        |
| e |             |      |                          |        |        |
| w |             |      |                          |        |        |
| s |             |      |                          |        |        |
| p |             |      |                          |        |        |
| a |             |      |                          |        |        |
| p |             |      |                          |        |        |
| e |             |      |                          |        |        |
| r |             |      |                          |        |        |
| R |             |      |                          |        |        |
| e |             |      |                          |        |        |
| s |             |      |                          |        |        |
| e |             |      |                          |        |        |
| a |             |      |                          |        |        |
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+---+-------------+------+--------------------------+--------+--------+

# SECTION V. POST CONTACT AND FURTHER INFORMATION 

In Japan, the Foreign Agricultural Service has two Agricultural Trade
Offices located in Japan.

*In Tokyo:*

ATO Tokyo

Toshin Tameike Bldg. 8F

1-1-14 Akasaka Minato-ku, Tokyo 107-0052

Tel: 81 (3\*) 3505-6050

Fax: 81 (3\*) 3582-6429

*In Osaka-Kobe:*

ATO Osaka

American Consulate General

11-5, Nishitenma 2-chome

Kita-ku, Osaka 530-8543

Tel: 81 (6\*) 6315-5904

Fax: 81 (6\*) 6315-5906

\**Please add a zero before this number if dialing from within Japan.*

The following homepages and reports can provide useful information to
interested exporters.

*Agricultural Trade Office's homepages*

[http://www.atojapan.org](http://www.atojapan.org/) (ATO Tokyo, English)

[http://www.greatamericanfood.imfo](http://www.greatamericanfood.imfo/)
(ATO Osaka, Japanese)

*Reports from Japan's ATO's, in addition to those from the Agricultural
Affairs Office in Japan can be found using the links provided or by
searching from the FAS Japan Reports website at:*

<http://www.fas.usda.gov/scriptsw/attacherep/default.asp>

**\***Please visit the Foreign Agricultural Service's website at
<http://www.fas.usda.gov/> and then continue on to the above Reports
Website for the available updated versions of the following reports:

> *Japan Exporters Guide*
>
> This is comprehensive document from the ATO's in Japan containing
> information useful to exporters and U.S. suppliers, considering the
> Japan market for the first time.

<http://www.fas.usda.gov/gainfiles/200502/146118914.pdf>

*Food Processing Sector Study*

A detailed look at Japan\'s food processing sector by ATO Osaka,
identifying key trends and leading Japanese manufacturers.

<http://www.fas.usda.gov/gainfiles/200301/145785214.pdf>

*Retail Food Sector Report*

> This is a comprehensive report by the ATO's in Japan on the Japanese
> retail food market detailing the structure, size and areas of growth
> of this sector, its key industry players and prospects for various
> U.S. products.

<http://www.fas.usda.gov/gainfiles/200008/30677668.pdf>

*Food and Agricultural Import Regulations and Standards (FAIRS) Report*

> The FAIRS report is a comprehensive guide produced by the Agricultural
> Affairs Office (AAO) of the U.S. Embassy on Japan\'s food and beverage
> regulations, standards and requirements for importation.

<http://www.fas.usda.gov/gainfiles/200308/145985782.pdf>

*Procedures for Importing Foods and Related Products into Japan under
the Food Sanitation Law*

JETRO report summarizing specific technical import procedures for food
products.

<http://www.jetro.go.jp/en/market/regulations/pdf/agri2004mar-e.pdf>

*Red Meat Export Requirements for Japan*

USDA Food Safety and Inspection Service (FSIS) summary of red meat
export requirements for Japan.

<http://www.fsis.usda.gov/OFO/export/japan.htm>

*The National Organic Program - Export Arrangement with Japan*

> USDA / Agricultural Marketing Service useful information on National
> Organic Program and Export arrangement with Japan. Product & Market
> Briefs

<http://www.ams.usda.gov/nop/NOP/TradeIssues/Japan.html>

*Japan Wine Market Annual Report from ATO Tokyo*

<http://www.fas.usda.gov/gainfiles/200212/145784927.pdf>

*Pet Food Market Research on the Japanese Market from ATO Osaka*

<http://www.fas.usda.gov/gainfiles/200304/145885127.pdf>

*Japan External Trade Organization (JETRO) Reports*

<http://www.jetro.go.jp/ec/e/market/index.html>

> *Food Business Line from ATO Tokyo*

Periodic press translations of timely news articles covering Japan's
food market

<http://www.fas.usda.gov/scriptsw/attacherep/default.asp>

# 

[^1]: For what is normally referred to in most resource publications
    used for creating this report as "Prepared Foods Sold at Retail
    Stores," is locally known as '*nakashoku'.* From this point it will
    also be referred to as "Delicatessen Foods and/or Bento (lunch box
    products).

[^2]: See [FASonline](http://www.fas.usda.gov/default.htm) or
    <http://www.fas.usda.gov/agexport/psinfo.html> for more about SRTGs.