Voluntary Report - public distribution

**Date:** 9/29/2003

**GAIN Report Number:** JA3525

JA3525

**Japan**

**Market Development Reports**

**Food Business Line**

######## Periodic Press Translations from ATO Tokyo

**2003**

**Approved by:**

![](media/image1.wmf)Kevin Sage-EL, Deputy Director

#### ATO Tokyo

**Prepared by:**

Akiko Matsuyoshi, Marketing Clerk

**Report Highlights:**

From America's largest overseas food and agricultural export market as
translated from Japan's mass media and food industry news. This issue
includes: In the midst of flat sales in Japan's food market, lead by
*Seven Eleven Japan*, convenience store chains offer some good news; new
large-scale Japanese supermarket openings are trying to get the jump on
the impending arrivals of global retail giants; In addition to reducing
the use of additives and preservatives, efforts also continue in Japan's
food industry to offer consumers new products tailored to special needs
and; *Sapporo Breweries* to contract out to Japanese farmers for 100% of
its malt and hops requirements.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Tokyo ATO \[JA2\]

\[JA\]

**Food Business Line**

> *Periodic Press Translations from ATO Tokyo Vol III, Issue 36 July
> 15-August 15, 2003*![](media/image2.png){width="0.7423611111111111in"
> height="0.6381944444444444in"}

###### Retail/Wholesale

-   It was announced that *Ryoshoku Food Service*, a subsidiary of
    *Ryoshoku,* a major wholesaler, and *Yukiwa*, a wholesale subsidiary
    of food manufacturer *Nichirei*, would be merged as of October 1. As
    a result, the new company, *RY Food Service* is expected to be the
    largest in its category among chilled and frozen food wholesalers.
    (b 7/24)

-   According to the Japan Economic Newspaper's annual convenience store
    survey, total sales of *Seven-Eleven Japan* was 2.21 trillion yen in
    2002, a 4.7% increase compared to 2001. This was some 500 billion
    yen above the fiscal year 2002 sales of the supermarket operator
    *AEON*. *Seven-Eleven* also increased its lead over second-ranked
    *Lawson* compared to last year. *Seven-Eleven's* total number of
    stores at the end of fiscal 2002 was 9,743, up 6.9% compared
    to 2001. (b 7/24)

-   According to the Japan Economic Newspaper's annual convenience store
    survey, total sales of 57 convenience stores increased by 3.2% in
    2002 compared to 2001 on a total-store basis. Although sales were
    sluggish on a same-store basis, the convenience store operators
    managed to maintain growth by opening new outlets. This allowed them
    to expand in an otherwise struggling retail sector. (a 7/24)

-   In an aim to reduce labor cost and increase efficiency, *AEON* plans
    to introduce Japan's first self-checkout registers as early as
    August. (a 7/24)

-   Supermarket operators such as *Daiei*, *Ito-Yokado*, and *AEON*
    suffered a decline in same-store sales in July due to unseasonably
    cold weather. Sales at food supermarkets also declined. For example,
    total sales of *Life Corporation* in July declined by 4.8% on a
    same-store basis, compared to the same month last year. (a 8/7)

-   According to the *Japan Department Store Association*, total sales
    of its member companies in June declined by 2.1% compared to the
    same month last year. It was the 15^th^ consecutive monthly decline
    compared to previous year's sales. In addition, total sales of
    member companies from January thru June 2003 declined by 2.8%
    compared to the same period last year. (Shokuryo Jyokai 8/7)

-   According to a survey of Japanese wholesalers completed by the Japan
    Economic Newspaper, total sales and pretax profits increased by 1.1%
    and 12.6% respectively in 2002 compared to 2001. As for food
    wholesalers, their sales increased by 1.9% compared to the previous
    year. (a 8/7)

-   400 new supermarkets are expected to open in the second half of this
    fiscal year with at least 1,000 sq. meters of floor space, up about
    40% from last year. This will be the highest increase since the June
    2000 implementation of the Large-Scale Retail Store Law. Better
    performing companies like *AEON* and *Ito-Yokado* are particularly
    aggressive about launching new, large-scale outlets and expanding
    their business before *Wal-Mart* and other foreign rivals can fully
    develop new operations in Japan. (a 8/13)

####### Food Service

-   *Colowide*, an operator of pub dining style restaurant chains, plans
    to open a Japanese-style restaurant featuring Kabuki in Tokyo,
    supervised under the famous Kabuki star, Kankuro Nakamura. (a 7/24)

-   In a move that acknowledges the trend to offer consumers higher
    quality in Japan's fast food service establishments, *Mos Food
    Service* announced that they would start selling high-value burgers
    at the unit price of 580 - 640 yen, served on a ceramic plate. (a
    7/24)

-   *Foodx Globe*, an operator of *Tully's Coffee* plans to open a
    second green tea specialty store in Tokyo on August 12. In addition
    to various drinks using green tea, light meals such as *sozai*
    (deli) side dishes and *onigiri* rice balls will be offered. (b 8/5)

-   According to the *Japan Food Service Association*, total sales of
    its member companies during the period of January through June 2002
    declined by 0.3% on an all-store basis compared to the same period
    in 2001. It was a 6.6% decline on a same-store basis. (Shokuryo
    Jyokai 8/7)

-   On August 8, *McDonald's Japan* announced a pretax loss of 537
    million yen in the first half of the fiscal year ending on June 30,
    compared to the year-earlier profit of 2.46 billion yen. The red ink
    was attributed to weak sales of hamburgers. (b 8/12)

-   The appetite for hamburgers appears to be waning among Japanese
    consumers. Japan Economic Newspaper estimated that the market size
    for hamburgers shrank by 6.4% to 604 billion yen in 2002, compared
    to 2001. This is the second consecutive year of decline in the
    market. (b 8/12)

####### Food Processing/New Products/Market Trends

-   There is continuing evidence that the Japan food industry is
    tailoring new food offerings according to current trends in consumer
    demands. Convenience stores are starting to introduce smaller
    packages of various *sozai* (deli) side dishes and relishes in
    response to targeted consumer needs. After the liberalization of the
    liquor sales in September, more consumers are expected to buy
    smaller portion-size packages of HMR products that are purchased
    especially to be consumed with alcoholic beverages (*in Japan, this
    type of meal or appetizer is referred to as 'o-tsumami'*). Also
    *Family Mart* introduced smaller deli packages that are prepared
    with a 15% reduction in salt, targeting the elder generation.
    *Seven-Eleven* is also selling deli packages that contain less
    artificial flavors and colorings. (a 7/16)

-   The non-alcoholic beer market is expanding. Sales of non-alcoholic
    beer in June skyrocketed to six times the amount sold in the same
    month last year. (b 8/2)

-   *House Foods Corporation* introduced a new retort-packaged food line
    called "Yasashii Shokutaku" (thoughtful dinner table), targeting the
    elder generation for ages ranging from 50 to 64. (f 8/4)

-   By 2006, *Sapporo Breweries* plans to procure all of their malt and
    hops from Japanese contract farmers. *Sapporo* will require contract
    farmers to submit reports on how their crops are grown and, indicate
    the type and amount of agricultural chemicals and fertilizers used.
    Switching to contract farming as the sole input source will cost up
    to 100 million yen a year. However, the company hopes that consumers
    will appreciate the company's investment on safety and result in
    more sales of its regular and low-malt beers. *Sapporo* will be the
    first large-scale brewer in the world to depend solely on contract
    farmers for the supply of its major beer ingredients. (a 8/5)

-   Total imports of frozen vegetables declined by 10.8% from January
    through June 2003, compared to the same period last year. It is
    mainly due to the detection of agricultural pesticide residue in
    Chinese vegetables and declining customers at food service outlets.
    Imports from China declined by 9.7%, but its import market share
    went up 0.5%, still keeping the No. 1 position closely followed by
    the U.S. share of 36%. (f 8/7)

####### Food Safety/Consumer Awareness

-   According to the Japan Economic Newspaper's annual convenience store
    survey, 86.1% of the responding companies indicated plans or a
    strong interest in reducing additives in their food products.
    Companies that already discontinue use of preservatives and
    artificial colorings increased to 31.4%, while another 42.9% plan to
    do likewise. While only 20% already use some sort of traceability
    system, another 48.6% plan to do so in the future.

(b 7/24)

####### ATO/Cooperator/Competitor Activities/Trade Shows

-   The President of the *Raisin Administrative Committee* visited Japan
    and held a press conference on July 1 in Tokyo, to reemphasize the
    importance of the Japanese market for U.S. raisins. (f 7/21)

-   The *Raisin Administrative Committee* held an award ceremony for
    finalists in its raisin snack menu contest on June 28 in Tokyo.
    Afterwards, the Committee is planning a special event for the
    finalist by taking them on a prizewinner's mission to Fresno,
    California. (f 7/24)

*ATO Comments*: The ATO attended a dried egg white seminar held by the
*U.S. Poultry and Egg Export Council* on July 18 in Tokyo. Approximately
120 people attended, consisting of bakery technicians (95%) and
manufacturers/wholesalers/importers/media (5%). Technical analysis for
the use of dried egg white was given, followed by the menu introductions
and tasting of snacks and confectionery products using dried egg white.

** Sources **

\(a\) The Japan Economic Newspaper (b) The Nikkei Marketing Journal

\(c\) The Japan Food Journal (d) The Beverage & Food News Commentary

\(e\) The Japan Food News (f) The Food Industry News

DISCLAIMER - *Food Business Line* is derived from major Japanese news
wires, mass distribution press, and food industry newspapers and
magazines. Inclusion of an item in *Food Business Line* does not imply
agreement by USDA or U.S. Embassy/Tokyo; nor does USDA or U.S.
Embassy/Tokyo attest to the accuracy or completeness of the translation
of the news item. ATO Tokyo cannot further translate or send source
materials to users.