Required Report - Public distribution

**Date:** 11/14/2008

**GAIN Report Number:** JA8713

JA8713

**Japan**

**Retail Food Sector**

**Annual Report**

**2008**

**Approved by:**

![](media/image1.wmf)Michael Conlon, Director, ATO Japan

AmConGen

**Prepared by:**

Masahiro Matsumoto, ATO Osaka, John Mark Looney

**Report Highlights:**

Food and beverage retail sales increased by one percent to \$370.5
billion in 2007 because of the sharp increase in economic activity in
the 4^th^ quarter of 2007 and the rise in food prices. Although the
total number of retail food outlets has also been decreasing,
convenience stores and conventional supermarkets have continued to
increase steadily over the years. Consumers' concern about food safety
has been increasing due to the recent food safety scandals.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Osaka ATO \[JA3\]

\[JA\]

**Japanese Retail Food Sector Report in 2008**

![](media/image2.png){width="4.177083333333333in" height="4.875in"}

**U. S. Agricultural Trade Office**

**JAPAN**

Table of Contents

[I. Japanese Retail Market Summary
4](#i.-japanese-retail-market-summary)

[1. Trends in the Retail Food Sales 4](#trends-in-the-retail-food-sales)

[2. The Number of Retail Establishments is Declining
5](#the-number-of-retail-establishments-is-declining)

[3. Food & Beverage Sales Around Japan
7](#food-beverage-sales-around-japan)

[4. The Popularity of Home Meal Replacements (HMR) Increases
7](#the-popularity-of-home-meal-replacements-hmr-increases)

[5. Healthy Foods Offer Expanded Opportunities
8](#healthy-foods-offer-expanded-opportunities)

[6. Usage of Private Brands Expands 9](#usage-of-private-brands-expands)

[II. Trends in the Retail Industry
10](#ii.-trends-in-the-retail-industry)

[1. Large-scale Supermarkets and Conventional Supermarkets
10](#large-scale-supermarkets-and-conventional-supermarkets)

[2. Convenience Stores 11](#convenience-stores)

[3. Department Stores 12](#department-stores)

[III. Road Map for Market Entry 14](#iii.-road-map-for-market-entry)

[1. Food Distribution System in Japan
14](#food-distribution-system-in-japan)

[A. Distribution Structure for National and Conventional Supermarkets
14](#__RefHeading___Toc214432645)

[B. Distribution Structure for Department Stores
15](#__RefHeading___Toc214432646)

[C. Distribution Structure for Convenience Stores
15](#__RefHeading___Toc214432647)

[D. Co-ops and voluntary chains 15](#__RefHeading___Toc214432648)

[E. Most traditional stores 16](#__RefHeading___Toc214432649)

[F. Specialty stores 16](#__RefHeading___Toc214432650)

[G. Online Sales - 16](#__RefHeading___Toc214432651)

[2. International Competition of Food Exports to Japan
16](#international-competition-of-food-exports-to-japan)

[IV. Consumer Purchasing Behavior 19](#iv.-consumer-purchasing-behavior)

[1. Demographic Trends 19](#demographic-trends)

[2. Strong Interests in Healthy Foods
20](#strong-interests-in-healthy-foods)

[3. Safety Issues 21](#safety-issues)

[4. Imported Food Products 21](#imported-food-products)

[VI. Best Product Prospects 25](#vi.-best-product-prospects)

[VII. Post Contact and Further Information
28](#vii.-post-contact-and-further-information)

# I. Japanese Retail Market Summary

Total retail sales in Japan (food and beverages, general merchandises
and fabrics, apparel and accessories) amounted to \$614.6 billion in
2007, with total food and beverage retail sales accounting for \$370.6
billion of that figure. Total retail sales have been flat in recent
years due low domestic consumption caused by negative population growth,
an aging population and a sluggish economy. Annual gross profits of
Seven & I and Aeon, Japan's largest and second largest retail group
respectively, declined in 2007.

Even though Japan's overall retail trade has been generally flat over
the last several years, sales in the retail food and beverage sector
increased by around \$3 billion in 2007 because of a sharp rise in food
prices. For example, the Japanese government has increased the price it
charges to flour mills for wheat by 40% over the last year. Prices of
many basic food products in Japan including noodles, bread, egg, cooking
oil, milk and milk products, soy sauce, meat, fish, etc. have also
significantly increased. Butter is in short supply and many municipal
governments are increasing school lunch fees to accommodate high food
prices.

  ------------- ----------- --------------- -------------------- --------------- ---------
  **Figure 1.                                                                    
  Total Retail                                                                   
  Sales                                                                          
  (million                                                                       
  US\$)**                                                                        

  ** **         **Total**   **Food &        **General            **Fabrics,      
                            Beverage**      Merchandise**        Apparel, &      
                                                                 Accessories**   

  2005          620,136     369,136         150,000              101,000         

  2006          614,700     367,700         148,000              99,000          

  2007          614,582     370,582         147,000              97,000          
  ------------- ----------- --------------- -------------------- --------------- ---------

Source: METI

## 1. Trends in the Retail Food Sales

Overall retail food sales in Japan are typified by:

-   The value of retail food sales increased slightly nationwide in 2007

-   Decreasing number of food and beverage retail outlets

-   Strong concern about food safety - Anshin (reassurance) and Anzen
    (safety)

-   Increasing food prices

-   Continuous growth in "home meal replacements" (HMR)

-   Strong interests in "healthy foods"

-   Expanding usage of private brands

-   Diversification of store concepts

-   Increasing consolidation in the food industry

-   Growth in imported food

The value of overall retail food sales increased slightly in 2007 to
\$370.6 billion. Amidst this backdrop, there has been an industry
restructuring in nearly every key segment, with all types of food
retailers scrambling to find new ways of satisfying consumer needs.

  ---------- ----------- ---------------- -------------- --------------- -----------------
  **Figure                                                               
  2. Total                                                               
  Food                                                                   
  Retail                                                                 
  (Million                                                               
  US\$)**                                                                

  ** **      **Total**   **Large-scale    **Department   **Convenience   **Specialty/One
                         Supermarket &    Stores**       Stores**        Category/Mom &
                         Conventional                                    Pop
                         Supermarkets**                                  Stores/Others**

  2005       369,136     67,578           20,099         66,905          214,554

  2006       367,700     67,922           19,975         67,191          212,612

  2007       370,582     69,965           19,734         68,087          212,796
  ---------- ----------- ---------------- -------------- --------------- -----------------

Source: METI

*A large-scale supermarket is defined as a store that sells clothing,
food and living-related products. A conventional supermarket is defined
as a store in which over 70% of the products sold is food. A specialty
store is defined as a store specializing in foreign foods, discount
foods, natural/healthy foods, etc, that tend to be smaller in size. One
category store is defined as a store in which over 90% of the products
are one type of food, such as meat and fish. A Mom and Pop store is
defined as a grocery store that is small and a family-run operation.*

**Figure 3: Percentage of the Sales of Each Retail Format in 2007**

Source: METI

## 2. The Number of Retail Establishments is Declining

One of the effects of industry restructuring is that the number of
stores selling food and beverages, with the exception of convenience
stores and conventional supermarkets, has continued to decrease steadily
over the last several years. Supermarkets and convenience stores
continue to be the primary distribution channel for food in Japan.
Large-scale supermarkets appear to have lost some ground to regional
supermarkets. The clear losers in the long-term are "traditional food
stores," "one-category," and "Mom and Pop stores" that are declining in
importance.

**Figure 4: Decreasing Number of Retail Establishments**

  ----------------- ------------------ ----------------- -----------------
  **Type of         **2004**           **2007**          **Growth Rate (%)
  Stores**                                               '04/'07**

  **Total**         **1,238,049**      **1,136,755**     **- 8**

  Department Stores 308                272               \- 2

  Large Scale       1,675              1,583             \- 5
  Supermarket                                            

  Specialty/One     36,220             34,954            \- 3
  Category & Pop                                         
  Stores/Others                                          

  Convenience       42,738             43,318            0.1
  Stores                                                 

  Drug Stores       13,095             12,671            \- 3

  Conventional      56,221             57,511            0.2
  Supermarket                                            

  Other Specialized 1,085,122          984,600           \- 9
  Stores                                                 

  Other Supermarket 2,680              1,846             \- 31
  ----------------- ------------------ ----------------- -----------------

Source: METI

Source: METI

## 3. Food & Beverage Sales Around Japan

Five out of eight prefectures showed positive sales growth from 2002 to
2006 (see Figure 6). Japanese real economic growth rate increased 1.6%
in 2007, including a 3.5% annualized rate in the 4^th^ quarter.
Investments and exports to Asia and Europe were responsible for this
spike in growth. In fact, Japan's economy had been recovering in recent
years, having recorded 6 years of continuous growth from 2002. However,
sales in Osaka, Japan's second largest markets, declined. The economy of
Osaka has been generally weaker than in other parts of Japan. It is
important to keep in mind that even in an environment of stagnant sales
geographic markets in Japan are quite sizeable -- often exceeding that
of entire countries. For example, Kyushu alone possesses a GDP that
exceeds that of South Korea, Australia and the Netherlands.

Figure 6: Prefectural Population and Sales Trend (2006)

+------------+---------------+------------+----------------+---------+
| **Pr       | *             | **Overall  | **Food         | **Sales |
| efecture** | *Population** | Food Sales | Purchasing per | Growth  |
|            |               | (million   | household (US  | Rate    |
|            |               | US\$)**    | \$)**          | \'02\   |
|            |               |            |                | ~\'06** |
+------------+---------------+------------+----------------+---------+
| Hokkaido   | 5,600,705     | 15,500     | 7,266          | 0.8%    |
+------------+---------------+------------+----------------+---------+
| Miyagi     | 2,340,485     | 6,000      | 8,162          | 0%      |
|            |               |            |                |         |
| \*(Tohoku) |               |            |                |         |
+------------+---------------+------------+----------------+---------+
| Tokyo      | 12,361,736    | 44,200     | 9,371          | 8%      |
|            |               |            |                |         |
| \*(Kanto)  |               |            |                |         |
+------------+---------------+------------+----------------+---------+
| Aichi      | 7,145,614     | 17,700     | 8,157          | 4.0%    |
|            |               |            |                |         |
| \*(Chubu)  |               |            |                |         |
+------------+---------------+------------+----------------+---------+
| Osaka      | 8,665,105     | 24,700     | 7,983          | \- 5.0% |
|            |               |            |                |         |
| \*(Kinki)  |               |            |                |         |
+------------+---------------+------------+----------------+---------+
| Hiroshima  | 2,867,423     | 7,800      | 8,105          | \- 1.0% |
|            |               |            |                |         |
| \          |               |            |                |         |
| *(Chugoku) |               |            |                |         |
+------------+---------------+------------+----------------+---------+
| Ehime      | 1,479,775     | 3,900      | 7,717          | 3.0%    |
|            |               |            |                |         |
| \          |               |            |                |         |
| *(Shikoku) |               |            |                |         |
+------------+---------------+------------+----------------+---------+
| Fukuoka    | 5,030,311     | 13,900     | 8,001          | 8.1%    |
|            |               |            |                |         |
| \*(Kyushu) |               |            |                |         |
+------------+---------------+------------+----------------+---------+
| Others     | 81,562,317    | 234,000    | \~\~           | \~\~    |
+------------+---------------+------------+----------------+---------+
| Total      | 127,053,471   | 367,700    | 8,103\*\*      | 1%      |
+------------+---------------+------------+----------------+---------+
| \*\*       |               |            |                |         |
| Denotes    |               |            |                |         |
| average of |               |            |                |         |
| all        |               |            |                |         |
| p          |               |            |                |         |
| refectures |               |            |                |         |
+------------+---------------+------------+----------------+---------+

Source: Food Supermarket Yearbook

\* See Japanese map of front page to locate the regions.

## 4. The Popularity of Home Meal Replacements (HMR) Increases

The HMR market (ready-to-cook, ready-to-heat and ready-to-eat meals)
continues to represent the fastest growth opportunity in the Japanese
food sector. Driven by such macro trends as an increasing number of
single households, the aging population of Japan and an increasing
number of working women, etc, consumer demand for HMR products is so
strong that all retail food outlets are adding to or expanding their
offerings in this area.

The expanding retail presence of "delicatessen" in supermarkets of all
sizes -- as well as in department stores and convenience stores --
attests to the popularity of the HMR market. HMR sales are also
increasing at a brisk rate in the fast food industry.

## 5. Healthy Foods Offer Expanded Opportunities

Driven by the aging population of Japan and by concerns regarding food
safety, consumer interest in healthy and organic foods has been
increasing. While interest is strongest among those aged 50 and above,
expanding interest can also be seen in the younger age groups.

The healthy food category (or functional foods) has been growing
steadily since the mid 1990's. In Japan, functional food can be divided
into "Foods for Specific Health Use," or FOSHU, and health-enhanced
food. Among the numerous attributes that serve to distinguish one from
the other, the most important is that FOSHU products require government
approval, while health-enhanced food products do not. What motivates
companies to pursue the FOSHU designation, rather than avoid the
often-lengthy approval process, is that they can affix the FOSHU seal on
the product in question should it meet the Minster of Health Labor and
Welfare (MHLW) criteria. The fastest growing healthy food category is
the nutritional reinforcement beverage segment.

<table>
<colgroup>
<col style="width: 18%" />
<col style="width: 7%" />
<col style="width: 8%" />
<col style="width: 7%" />
<col style="width: 8%" />
<col style="width: 7%" />
<col style="width: 8%" />
<col style="width: 7%" />
<col style="width: 8%" />
<col style="width: 6%" />
<col style="width: 1%" />
<col style="width: 1%" />
<col style="width: 2%" />
<col style="width: 2%" />
<col style="width: 2%" />
<col style="width: 0%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="10"><p><strong>Figure 7. The Healthy Food Market Has the
Potential to Grow Further</strong></p>
<p><strong>(million Dollar)</strong></p></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td><strong> </strong></td>
<td colspan="2"><strong>2003</strong></td>
<td colspan="2"><strong>2004</strong></td>
<td colspan="2"><strong>2005</strong></td>
<td colspan="2"><strong>2006</strong></td>
<td colspan="6"><strong>2007</strong></td>
<td></td>
</tr>
<tr class="odd">
<td>Supplement</td>
<td>3,954</td>
<td>31.9%</td>
<td>4,228</td>
<td>31.7%</td>
<td>4,469</td>
<td>33.0%</td>
<td>4,493</td>
<td>31.9%</td>
<td colspan="2">4,574</td>
<td colspan="4">32.1%</td>
<td></td>
</tr>
<tr class="even">
<td>Diet Food and Beverage</td>
<td>490</td>
<td>4.0%</td>
<td>521</td>
<td>3.9%</td>
<td>550</td>
<td>4.1%</td>
<td>599</td>
<td>4.0%</td>
<td colspan="2">632</td>
<td colspan="4">4.4%</td>
<td></td>
</tr>
<tr class="odd">
<td>Balanced Nutritional Food and Beverage</td>
<td>333</td>
<td>2.7%</td>
<td>330</td>
<td>2.5%</td>
<td>318</td>
<td>2.4%</td>
<td>332</td>
<td>2.7%</td>
<td colspan="2">403</td>
<td colspan="4">2.8%</td>
<td></td>
</tr>
<tr class="even">
<td>Nutritional Reinforcement Food</td>
<td>223</td>
<td>1.8%</td>
<td>217</td>
<td>1.6%</td>
<td>246</td>
<td>1.8%</td>
<td>264</td>
<td>1.8%</td>
<td colspan="2">288</td>
<td colspan="4">2.0%</td>
<td></td>
</tr>
<tr class="odd">
<td>Nutritional Reinforcement Beverage</td>
<td>4,425</td>
<td>35.7%</td>
<td>4,845</td>
<td>36.3%</td>
<td>4,858</td>
<td>35.9%</td>
<td>4,768</td>
<td>35.7%</td>
<td colspan="2">4,775</td>
<td colspan="4">33.5%</td>
<td></td>
</tr>
<tr class="even">
<td>Food for Specified Health Uses (FOSHU)</td>
<td>1,409</td>
<td>11.4%</td>
<td>1,548</td>
<td>11.6%</td>
<td>1,620</td>
<td>12.0%</td>
<td>1,703</td>
<td>11.4%</td>
<td colspan="2">1,770</td>
<td colspan="4">12.4%</td>
<td></td>
</tr>
<tr class="odd">
<td>FOSHU (Beverage)</td>
<td>1,564</td>
<td>12.6%</td>
<td>1,654</td>
<td>12.4%</td>
<td>1,466</td>
<td>10.8%</td>
<td>1,646</td>
<td>12.6%</td>
<td colspan="2">1,795</td>
<td colspan="4">12.6%</td>
<td></td>
</tr>
<tr class="even">
<td>Total</td>
<td>12,398</td>
<td>100.0%</td>
<td>13,343</td>
<td>100.0%</td>
<td>13,527</td>
<td>100.0%</td>
<td>13,805</td>
<td>100.0%</td>
<td colspan="2">14,237</td>
<td colspan="4">100.0%</td>
<td></td>
</tr>
</tbody>
</table>

Source: Agriculture, forest and fishery finance corp.

Source: Agriculture, Forest and Fishery Finance Corp.

## 6. Usage of Private Brands Expands

The majority of major food retailers now feature their own private
brands -- a concept that reflects the voice of the customer in keeping
with supermarkets' expanding role as the "custodians of safety and lower
price." In the wake of recent food scandals (i.e., Chinese dumpling,
false labeling, etc.), consumers' concern about food safety has
increased, and trust for food handlers has deteriorated. Food retailers
have accordingly positioned themselves as the gatekeepers of food
safety, and have begun to focus more on quality control (i.e., country
of origin, level of pesticides used, presence of genetically modified
ingredients, shelf life, etc). The price of raw materials have risen
drastically; therefore consumers are tempted to buy lower priced
products to save money.

The general concept of private brands is to offer the same quality of
product but with a price significantly lower than national brands. Thus,
the sales of private brand products have been rapidly increasing. At
present, about 70% of the supermarkets handle private brands and 60
percent are planning to increase private brands offerings. The addition
and expansion of private brand offerings is part of this overall
positioning as the gatekeepers of food safety and price. The widening of
this trend can be seen in the expansion of private brand product
offerings for products such as processed foods to perishable products
including fresh produce and meat.

# II. Trends in the Retail Industry

## 1. Large-scale Supermarkets and Conventional Supermarkets

Large-scale supermarkets and conventional supermarkets accounted for 19%
of the retail food market (US\$70 billion) in 2007. Seven & I and Aeon
have been expanding the total business by acquisitions. Seven & I
recently acquired Millennium Retailing, which is the holding company of
Sogo and Seibu Department Store. Aeon acquired Daiei and Maruetsu, two
large supermarket chains, in 2007. International retailer, Carrefour
Japan, was also acquired by Aeon. The world largest retailer, Wal-Mart,
which acquired the majority share of Seiyu, has been struggling in the
Japanese market. Moreover, many medium- and large-scale supermarkets
have suffered bankruptcy in recent years. The big two retail group, Aeon
and Seven & I, have started to request a reduction in the prices from
national brand manufacturers, leveraging their huge buying power.

Price competition has become more intense and is a major feature of the
supermarket business in Japan. Supermarkets are seeking to reduce costs
and improve their infrastructures through the introduction of management
systems and the improvement of procurement processes as well as through
the closure of unprofitable stores in their efforts to improve
efficiency. The companies which have succeeded to reduce management cost
and to prevent losses have regained their profit. In general, gross
profit rate of the chain stores decreased in 2007. Aeon and Seven & I
have started to introduce electronic money payment which enables them to
collect purchasing information.

**Company profiles**

The following tables summarize key details regarding the top 20
supermarkets by total sales in Japan.

**Figure 9. Top 20 Supermarkets by Total** Sales in 2007

+----+-------+---------+--------+---------+------+-----------+-------+
| ** | **Co  | **Total | **Food | **Ratio | **Nu | *         | **G   |
| Ra | mpany | Sales   | Sales  | of Food | mber | *Location | rowth |
| nk | Na    | (US\$   | (US\$  | Sales** | of   | of HQ &   | R     |
| ** | mes** | mil     | millio |         | O    | Stores**  | ate** |
|    |       | lion)** | n)\*** | **(%)** | utle |           |       |
|    |       |         |        |         | ts** |           | *     |
|    |       |         |        |         |      |           | *'06- |
|    |       |         |        |         |      |           | '07** |
|    |       |         |        |         |      |           |       |
|    |       |         |        |         |      |           | **    |
|    |       |         |        |         |      |           | (%)** |
+----+-------+---------+--------+---------+------+-----------+-------+
| 1  | Aeon  | 43,820  | 24,364 | 55.6    | 569  | Chiba     | 22.5  |
|    |       |         |        |         |      |           |       |
|    |       |         |        |         |      | N         |       |
|    |       |         |        |         |      | ationwide |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 2  | Ito-Y | 12,630  | 5,709  | 45.2    | 179  | Tokyo     | \-    |
|    | okado |         |        |         |      |           | 1.5   |
|    |       |         |        |         |      | N         |       |
|    |       |         |        |         |      | ationwide |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 3  | Uny   | 10,310  | 5,990  | 58.1    | 229  | Aichi     | \-    |
|    |       |         |        |         |      |           | 1.0   |
|    |       |         |        |         |      | Chubu     |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 4  | Daiei | 10,140  | 6,449  | 63.6    | 207  | Tokyo     | \-    |
|    |       |         |        |         |      |           | 6.8   |
|    |       |         |        |         |      | N         |       |
|    |       |         |        |         |      | ationwide |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 5  | Seiyu | 8,370   | Not    | \-      | 392  | Tokyo     | \-    |
|    |       |         | dis    |         |      |           | 0.9   |
|    |       |         | closed |         |      | N         |       |
|    |       |         |        |         |      | ationwide |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 6  | Izumi | 3,990   | 2,242  | 56.2    | 72   | Hiroshima | 5.3   |
|    |       |         |        |         |      | Western   |       |
|    |       |         |        |         |      | Japan     |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 7  | Life  | 3,730   | 2,950  | 79.1    | 201  | Osaka     | 5.0   |
|    |       |         |        |         |      |           |       |
|    |       |         |        |         |      | N         |       |
|    |       |         |        |         |      | ationwide |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 8  | He    | 3,570   | 2,199  | 61.6    | 104  | Shiga     | 2.0   |
|    | iwado |         |        |         |      |           |       |
|    |       |         |        |         |      | Kinki &   |       |
|    |       |         |        |         |      | Chugoku   |       |
+----+-------+---------+--------+---------+------+-----------+-------+

+----+-------+---------+--------+---------+------+-----------+-------+
| 9  | Iz    | 3,230   | 1,835  | 56.8    | 87   | Osaka     | 0.6   |
|    | umiya |         |        |         |      |           |       |
|    |       |         |        |         |      | Kinki     |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 10 | Mar   | 3,050   | 2,800  | 91.8    | 239  | Tokyo     | 2.6   |
|    | uetsu |         |        |         |      |           |       |
|    |       |         |        |         |      | Kanto     |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 11 | York  | 3,000   | 2,121  | 70.7    | 154  | Fukushima | 5.2   |
|    | Ben   |         |        |         |      |           |       |
|    | imaru |         |        |         |      | Tohoku    |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 12 | Fuji  | 2,920   | 1,679  | 57.5    | 91   | Ehime     | \-    |
|    |       |         |        |         |      |           | 1.7   |
|    |       |         |        |         |      | Shikou    |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 13 | B     | 2,890   | 1,502  | 52      | 120  | Gifu      | 10.0  |
|    | arrow |         |        |         |      |           |       |
|    |       |         |        |         |      | Chubu     |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 14 | Tokyu | 2,820   | 1,968  | 69.8    | 96   | Tokyo     | 1.2   |
|    | Store |         |        |         |      |           |       |
|    |       |         |        |         |      | Kanto     |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 15 | \     | 2,440   | 2,196  | \*\* 90 | 150  | Hyogo     | 5.7   |
|    | *Coop |         |        |         |      |           |       |
|    | Kobe  |         |        |         |      | Hyogo     |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 16 | Okuwa | 2,290   | 1,807  | 78.5    | 138  | Wakayama  | 2.9   |
|    |       |         |        |         |      |           |       |
|    |       |         |        |         |      | Kinki     |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 17 | Aeon  | 2,180   | 822    | 37.7    | 48   | Fukuoka   | 14.3  |
|    | K     |         |        |         |      |           |       |
|    | yushu |         |        |         |      | Kyushu    |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 18 | \     | 2,160   | 1,944  | \*\* 90 | 94   | Hokkaido  | 7.4   |
|    | *Coop |         |        |         |      |           |       |
|    | Sa    |         |        |         |      | Hokkaido  |       |
|    | pporo |         |        |         |      |           |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 19 | In    | 2,070   | 1,730  | 83.6    | 126  | Tokyo     | 3.2   |
|    | ageya |         |        |         |      |           |       |
|    |       |         |        |         |      | Kanto     |       |
+----+-------+---------+--------+---------+------+-----------+-------+
| 20 | K     | 1,660   | 1,560  | 94      | 105  | Ibaragi   | 7.4   |
|    | asumi |         |        |         |      |           |       |
|    |       |         |        |         |      | Kanto     |       |
+----+-------+---------+--------+---------+------+-----------+-------+

Source: Nikkei MJ and Nihon Shokuryo Shinbun

\* Used share of food sales in 2006 due to no disclosure in 2007.

\*\* ATO's assumptions

## 2. Convenience Stores

Convenience stores occupy 18% of the retail market, with sales of US\$68
billion in 2007 (see Figure 2 and 3). Sales increased only by 1.3
percent in 2007, which follows a 1.0 percent increase in 2006. The
slower growth is a reflection of a reduction in the number of store
openings. In addition, closure of many unprofitable stores has
accelerated. The rapid growth experienced by convenience stores has
ended, and many companies have been forced into structural reform.
Because locations to open new stores have been limited, convenience
stores have been reviewing the existing stores. The sales of the
existing stores (exclude new stores) decreased from the previous year,
except those of Family-Mart.

Nowadays, companies' growth can no longer rely on new store openings as
they had in the past. The price competition from both supermarkets and
take-out shops has forced convenience stores to reduce their prices. In
addition, there are an increasing number of supermarkets that are
extending their hours of operation -- and these, too, compete with
convenience stores. In short, convenience stores now experience
competition from a variety of other types of outlets, because they have
been so successful that other distribution outlets have begun to imitate
them, with similar product offerings, longer hours, etc.

In order to survive and expand, convenience store operators are
employing new strategies -- such as offering new services or private
brands. In particular, alliances with other businesses are growing.
Lawson has opened "Fresh Lawson," a new experimental store concept that
sells perishable products. Lawson also acquired a 33% stake of the
convenience store "99 Plus," which also sells perishable products. Most
convenience stores in Japan have plans to increase their assortment of
perishable products.

Convenience stores are also trying to expand their customer bases to
include not only the younger generations but, the older generations as
well. Most of the convenience stores have already begun targeting the
elderly by promoting safe and healthy food products in addition to
offering services such as post office boxes, ATMs (Automated Teller
Machines), and various payment systems (i.e., consumers can pay utility
bills at their local convenience store)[.]{dir="rtl"}

**Company Profiles**

The following table (Figure 10) summarizes key details regarding the top
10 convenience stores in Japan.

\-

  ------------- ----------------- ------------ ----------- -------------- --------------
  **Figure 10.                                                            
  Top 10                                                                  
  Convenience                                                             
  Stores in                                                               
  2007**                                                                  

  **Rank**      **Company Name**  **Total      **No. of    **Location**   **Growth Rate
                                  Sales (US\$  Outlets**                  \'06\~\'07**
                                  million)**                              

  1             Seven-Eleven      21,830       12,034      Nationwide     1.6%

  2             Lawson            12,000       8,587       Nationwide     2.1%

  3             Family Mart       10,170       7,187       Nationwide     5.2%

  4             Circle K/Sunkus   8,300        6,139       Nationwide     -1.5%

  5             Mini-Stop         2,590        1,895       Kanto, Chubu   5.6%

  6             Daily Yamazaki    1,820        1,622       Nationwide     -5.1%

  7             AM/PM             1,740        1,169       Nationwide     -5.4%

  8             Seiko Mart        1,290        1,031       Hokkaido,      0.4%

  9             99+ (Shop 99)     1,210        837         Nationwide     -0.8%

  10            3-F               1,000        722         Kanto          1.2%
  ------------- ----------------- ------------ ----------- -------------- --------------

Source: Nikkei MJ

## 3. Department Stores

Department store sales accounted for only 5% of the total retail food
market with sales of US\$19 billion in 2007. Significant restructuring
among major department stores has been increasing. For example, the
major department store Sogo filed for chapter eleven bankruptcy and
merged with Seibu Department Store, which is now Millennium Retailing
Co. The second largest department store, Isetan, merged with the third
largest department store Mitsukoshi. The Kansai region's large
department store Hankyu merged with its strongest competitor, Hanshin
Department Store. They now operate under a name, H2O Retailing. Daimaru
Department Store merged with Matsuzakaya and established J Front
Retailing.

Food sales at department stores have continuously declined for the past
several years with a dramatic decrease in sales from 2000 to 2002
related to store closures.

It is important to note the "*depachika*" phenomenon when discussing the
retail food sector of a department store. *Depachika* means the basement
floor of the department store where fresh food halls are traditionally
located. *Depachika* was quiet and did ordinary retail food business.
The major change with D*epachika* is an increasing number of shops that
deal with high-quality HMR. In fact, this was responsible for spurring
the high-quality HMR market in Japan. In addition, the main tenants are
branches of famous restaurants. The *Depachika* phenomenon turned the
basement floor from nothing special into an attractive place and a means
of bringing customers to department stores. Similar to the supermarket
and convenience store segments, the environment of the department stores
is highly competitive, with restructuring and merger and acquisition
activity occurring in many companies. Some have modified their business
structures, or opened new departments to improve sales. On the positive
side, department stores, which have been an underexploited channel, have
become willing to consider new ideas, which might offer opportunities
for U.S. exporters.

**Company Profiles**

Figure 11 summarizes key details regarding the top 10 department stores
in Japan.

**Figure 11. Top 10 Department Stores in 2007**

+------+--------------+----------+--------------+---------+----------+
| **Ra | **Company    | **Total  | **Food Sales | *       | **Number |
| nk** | Name**       | Sales    | (US\$        | *Growth | of       |
|      |              | (US\$    | million)**   | Rate    | O        |
|      |              | mi       |              | (       | utlets** |
|      |              | llion)** |              | Food)** |          |
|      |              |          |              |         |          |
|      |              |          |              | **'06   |          |
|      |              |          |              | \~'07** |          |
+------+--------------+----------+--------------+---------+----------+
| 1    | Takashimaya  | 9,479    | 1,856        | 2.7%    | 20       |
+------+--------------+----------+--------------+---------+----------+
| 2    | Isetan       | 7,143    | 748          | 0.3%    | 10       |
+------+--------------+----------+--------------+---------+----------+
| 3    | Mitsukoshi   | 7,036    | 1,695        | \- 3.8% | 18       |
+------+--------------+----------+--------------+---------+----------+
| 4    | Sogo         | 4,564    | No           | \-      | 12       |
|      |              |          | disclosing   |         |          |
+------+--------------+----------+--------------+---------+----------+
| 5    | Marui        | 4,532    | No           | \-      | 17       |
|      |              |          | disclosing   |         |          |
+------+--------------+----------+--------------+---------+----------+
| 6    | Daimaru      | 4,382    | 962          | 2.0%    | 24       |
+------+--------------+----------+--------------+---------+----------+
| 7    | Seibu        | 4,255    | No           | \-      | 16       |
|      |              |          | disclosing   |         |          |
+------+--------------+----------+--------------+---------+----------+
| 8    | Tokyu        | 2,735    | No           | \-      | 12       |
|      |              |          | disclosing   |         |          |
+------+--------------+----------+--------------+---------+----------+
| 9    | Kintetsu     | 2,731    | 783          | 0%      | 9        |
+------+--------------+----------+--------------+---------+----------+
| 10   | Hankyu       | 2,676    | 695          | 0.9%    | 11       |
+------+--------------+----------+--------------+---------+----------+

Source: Nikkei MJ, Nihon Shokuryo Shinbun

# III. Road Map for Market Entry

## 1. Food Distribution System in Japan

When considering market entry in Japan's relatively developed food
market, it is important to keep the following points in mind:

-   **Overall,** traditional entry points via importers are beginning to
    make way for other more diverse avenues. For example, even within
    one food retail organization (i.e., large-scale supermarket,
    regional supermarket chain, convenience store chain, etc.), there
    may be several routes for procurement -- including importers,
    wholesalers, etc.

-   **Large-scale supermarkets** still rely primarily on importers and
    wholesalers. Most are engaged to some degree in developing and
    maintaining private labels, which they tend to outsource to food
    processors.

-   **Conventional supermarkets** tend to depend more on wholesalers.
    They usually procure from a number of regional/local and national
    wholesalers who buy imported food products from trading houses and
    importers. Wholesalers and big trading houses are generally
    interested in handling high volume products, not niche-oriented
    products.

[]{#__RefHeading___Toc214432645 .anchor}**A. Distribution Structure for
National and Conventional Supermarkets** - Giant nationwide supermarket
chains including Aeon and Seven & I mainly purchase their foods through
three channels: (1) direct from the importers; (2) direct from the
manufacturers and processors; and (3) wholesalers and distributors.
Conventional supermarkets purchase through similar distribution
channels, although they mainly purchase from wholesalers, whereas the
major national chains rely more on direct routes.

**Figure: 13**

[]{#__RefHeading___Toc214432646 .anchor}**B. Distribution Structure for
Department Stores** - Food items at department stores are procured
almost entirely through wholesalers and tenant merchants. Imported
products reaching department store "tenant merchant" shelves is
dependent upon the wholesaler purchasing these products from importers
or trading companies. Tenant merchant companies mainly purchase the
ingredients for their products from wholesalers and then manufacture the
products to be sold.

**Figure 14:**

\*ADO - All Nippon Department Stores Development Organization

[]{#__RefHeading___Toc214432647 .anchor}**C. Distribution Structure for
Convenience Stores** - Convenience store chains utilize trading
companies and wholesalers, depending on the type of product. Due to
limited space, convenience stores can only handle a few brands per
category. Product performance is reviewed continuously, and slow moving
products are replaced quickly, ensuring the highest turnover possible.
Their management systems present the most significant challenges for
imported packaged processed foods, since they require that U.S.
exporters: 1) modify product taste/specifications to fit the tastes of
Japanese consumers; 2) shorten delivery time to ensure freshness; and 3)
update and introduce new products frequently.

[]{#__RefHeading___Toc214432648 .anchor}**D. Co-ops and voluntary
chains** use a variety of sources, including importers, wholesalers and
direct importing. Serving voluntary chains, there are several major
joint procurement organizations: CGC Japan, Nichiryu, All Japan
Supermarket Association (AJS) and Consumer Cooperatives (Co-ops). Their
major role is to develop private brand products with Japanese food
processors and overseas sources to sell to member retailers. Some of
these organizations directly import non-branded food products that are
"volume" oriented in nature.

[]{#__RefHeading___Toc214432649 .anchor}**E. Most traditional stores**
(i.e., Mom & Pop and one category stores) depend on wholesalers.
Penetration of imported foods into these shops and stores is relatively
low.

[]{#__RefHeading___Toc214432650 .anchor}**F. Specialty stores** (i.e.,
foreign foods, discount foods, etc.) also primarily depend on
wholesalers. Selected coffee shop chains, discount stores and natural
food specialty stores with chain operations may be worth development for
U.S. food exporters.

[]{#__RefHeading___Toc214432651 .anchor}**G. Online Sales -** Finally,
online sales including TV, mail order offers yet another possible
channel that U.S. exporters can consider for retail food distribution.
Majority of the sales are still non foods, but food and beverage sales
are increasingly being purchased online.

## 2. International Competition of Food Exports to Japan

Overall, the United States has maintained its position as the largest
exporter of food products to the Japanese market, representing 24.6% of
all imported value in 2007. The next highest share is held by China
(15.5% of all imported value), and all other countries are far less (see
figures 16).

Although food products from China pose a real threat to U.S. exports
because of their lower prices -- especially those produced in China by
Japanese-owned and contracted companies -- the spate of food scandals
occurring over the past few years has caused consumers to demand higher
levels of food safety. Specifically, in 2007 and 2008 there were a
number of imported foods from China (i.e., frozen dumpling, milk
products, eels, etc.) that were found to contain prohibited chemicals
and false labeling. This led to a significant decrease in food imports
from China in 2008.

Because of the uneven nature of Chinese food safety, U.S. exporters have
an opportunity to build on America's existing image of providing "safe"
and "high quality" food products.

**Figure 15: Major Food Exporters to Japan**

  ---------- ------------ ----------- --------- ------------- ----------- --------
  **Rank**   **2001**                           **2003**                  

             ** **        **Value**   **%**     ** **         **Value**   **%**

  1          U.S.A.       11,407      26.5%     U.S.A.        11,587      26.3%

  2          China        6,069       14.1%     China         6,251       14.2%

  3          Australia    3,001       7.0%      Australia     2,999       6.8%

  4          Canada       2,582       6.0%      Canada        2,615       5.9%

  5          Thailand     2,359       5.5%      Thailand      2,450       5.6%

  6          Korea        1,491       3.5%      Korea         1,312       3.0%

  7          Denmark      1,181       2.8%      Denmark       1,308       3.0%

  8          France       1,098       2.6%      France        1,298       2.9%

  9          Russia       1,058       2.5%      Russia        1,055       2.4%

  10         Taiwan       856         2.0%      Taiwan        1,049       2.4%

             World Total  43,006      100%      World Total   44,076      100%
  ---------- ------------ ----------- --------- ------------- ----------- --------

(Figure continued on next page)

Figure 15: Major Food Exporters to Japan (cont.)

  ---------- -------------- ----------- -------- -------------- ----------- --------
  **Rank**   **2005**                            **2007**                   

             ** **          **Value**   **%**    ** **          **Value**   **%**

  1          U.S.A.         11,117      22.1%    U.S.A.         12,656      24.6%

  2          China          8,148       16.2%    China          7,978       15.5%

  3          Australia      4,629       9.2%     Australia      4,040       7.8%

  4          Canada         3,073       6.1%     Canada         3,148       6.1%

  5          Thailand       2,521       5.0%     Thailand       2,634       5.1%

  6          France         1,466       2.9%     France         1,731       3.4%

  7          Brazil         1,495       3.0%     Brazil         1,404       2.7%

  8          Chile          1,384       2.7%     Chile          1,378       2.7%

  9          Korea          1,351       2.7%     Korea          1,150       2.2%

  10         New Zealand    1,124       2.2%     New Zealand    1,061       2.1%

             World Total    50,384      100%     World Total    51,520      100%
  ---------- -------------- ----------- -------- -------------- ----------- --------

Source: JETRO

## 

**3. Summary of Key Advantages and Current Position of the U.S. Food
Products in the Japanese Market** **(Figure 17):**

+-------------+----------------------------+--------------------------+
| **Key       | **Advantages**             | **Current Position**     |
| Words**     |                            |                          |
+-------------+----------------------------+--------------------------+
| Food Safety | U.S. agriculture can       | Chinese dumpling (gyoza) |
|             | successfully differentiate | and milk products        |
|             | itself from Japan and      | accelerated Japanese     |
|             | third countries on food    | consumers' strong        |
|             | safety issues by HACCP,    | concern with imported    |
|             | GAP, ISO, etc.             | foods.                   |
|             |                            |                          |
|             |                            | Differences in           |
|             |                            | regulations between the  |
|             |                            | United States and Japan  |
|             |                            | on MRLs (maximum residue |
|             |                            | levels) and Food         |
|             |                            | Sanitation Law, etc.     |
|             |                            | make import of           |
|             |                            | agricultural products    |
|             |                            | risky.                   |
+-------------+----------------------------+--------------------------+
| Health      | The organic and natural    | U.S. certified organic   |
| Co          | food industry in the U.S.  | foods are not            |
| nsciousness | is advanced in terms of    | automatically sold as    |
|             | certification, HACCP,      | organic foods in Japan.  |
|             | number of stores, etc.     | Prices of natural and    |
|             | There are many kinds of    | organic foods are higher |
|             | organic and natural foods  | than conventional foods. |
|             | in the United States.      |                          |
+-------------+----------------------------+--------------------------+
| Stable      | The U.S. is the largest    | Japan's food self        |
| Supply      | exporter of food products  | sufficiency rate is only |
|             | to Japan. As a largest     | 39% and it has been      |
|             | supplier of food products  | declining due to aging   |
|             | in the world, the U.S. has | population and the       |
|             | a great opportunity to     | declining farm           |
|             | expand exports to Japan.   | population.              |
+-------------+----------------------------+--------------------------+
| Price and   | U.S. food products are     | In general, Japanese     |
| Quality     | competitive in prices and  | products are high        |
|             | high in quality. In        | quality but they are     |
|             | addition, there are many   | expensive. However,      |
|             | kinds of products.         | Japanese consumers trust |
|             |                            | Japanese products and    |
|             |                            | have concerns about the  |
|             |                            | quality of imported      |
|             |                            | products.                |
+-------------+----------------------------+--------------------------+
| Cultural    | Japanese consumers are     | Most of the U.S. food    |
| Influences  | strongly influenced by     | products in the Japanese |
|             | U.S. food culture such as  | market are already       |
|             | McDonald, KFC, Starbucks,  | common.                  |
|             | Coca-Cola, etc.            |                          |
+-------------+----------------------------+--------------------------+

# IV. Consumer Purchasing Behavior

## 1. Demographic Trends

**Elderly Population Is Growing Rapidly**

As has been widely reported, Japan has the fastest growing elderly
population (over 65) in the world, expected to reach 25% of the total
population by the year 2015. This demographic tidal wave is creating
significant new opportunities for sales of health-oriented food
products. Figure 18 illustrates the growth trend of the aged in
comparison to the decline of those in younger age brackets.

Food consumption by the elderly has been increasing due to the fact that
Japan's population is rapidly aging. This trend is not just a result of
the increasing number of elderly; this group's consumption patterns are
also very active. One possible reason for this is the older generation's
greater "spare time" (either because their children are independent or
they are retired). They also have high disposable incomes because they
are finished paying off most of their debts. According to the Ministry
of Public Management, Home Affairs, Posts and Telecommunications
Statistics Bureau, the average savings for households of those aged over
60 is US\$171,000 -- the highest of all household incomes by age group.

Figure 18: Forecast for Elderly Population

  ---------- -------------- ----------------- ----------------- ---------------
  **Year**   **Population                                       
             (1,000                                             
             People)**                                          

             **Total**      **Age 0-14 Yrs.** **Age 15-64 Yrs** **65 and Over**

  2005       127,768        17,585            84,422            25,761

  2010       127,176        16,479            81,285            29,412

  2015       125,430        14,841            76,807            33,781

  2020       122,735        13,201            73,635            35,899

  2025       119,270        11,956            70,960            36,354

  2030       115,224        11,150            67,404            36,670

  2035       110,679        10,512            62,919            37,249

  2040       105,695        9,833             57,335            38,527

  2045       100,443        9,036             53,000            38,407

  2050       95,152         8,214             49,297            37,641
  ---------- -------------- ----------------- ----------------- ---------------

Source: Ministry of Public Management, Home Affairs,

Posts and Telecommunications, Statistics Bureau

## 2. Strong Interests in Healthy Foods

Purchases of healthy food products is particularly strong among
consumers over 50 years old. Those companies with health-oriented
products should clearly consider the importance of the aging demographic
segment in Japan.

Japanese consumers of all ages have expressed an interest in "organic"
foods (see figure 20). However, purchases of organic products does not
appear to follow the high level of interest. The main reason is that
organic food is expensive compared to regular food. Moreover, consumers
do not fully understand the positive effects of "organic products."
However due to continuous food safety scandals, consumers' interest has
been increasing. If there are more supermarkets selling natural and
organic foods throughout Japan like the United States, the consumption
might drastically increase.

Source: Agriculture, forest and fishery finance corp.

## 3. Safety Issues

Due to continuous food safety scandals, consumers' concern about food
safety has been increasing. The followings are some of the food safety
scandals that occurred in 2007:

a\. False labeling of the country of origin -

Chinese eels were sold as domestic eels.

b\. False variety of chicken -

Cheaper normal chicken was sold at higher price as famous Hinai chicken.

c\. False labeling of shelf life and reuse of outdated products -

Famous Akafukumochi (rice cake with bean paste) and Shiroi Koibito
(chocolate) sold

after the expiration date and reused raw materials.

d\. False labeling of beef -

> A well known traditional high class Japanese restaurant sold cheaper
> and lower class beef as Matsuzaka Beef that is well known as highest
> class domestic beef. This restaurant also reused left over food.

e\. 10 people reported food poisoning by imported Chinese dumpling
(gyoza) and subsequently 450 people throughout Japan reported feeling
ill.

## 4. Imported Food Products

Most Japanese consumers actively choose "Kokusan," or domestic products,
due to anxiety over the imported food products. They have a perception
that imported food products are inexpensive but unsafe, especially
Chinese food products. Previously there were many consumers who claimed
that they could not determine whether a product was domestic or
imported. However, labeling of the country of origin at the retail
stores has been enforced by law; and now all products must label the
country of origin, with some exceptions for processed foods.

It is important to note that "good taste" and "high quality" are not
major reasons for purchasing imported products (see figure 21). The
position of U.S. food products are also in the zone of inexpensive and
not so safe (see figure 22).

![](media/image3.wmf){width="5.996527777777778in" height="4.0875in"}

Source: Agriculture, Forest and fishery Finance Corporation

![](media/image4.wmf){width="6.499305555555556in"
height="5.601388888888889in"}

Source: Agriculture, Forest and Fishery Finance Corporation

Source: JETRO

# VI. Best Product Prospects

The following table lists products that can be considered "best" import
prospects. Some products were selected based on high volume,
demonstrated growth, and U.S. competitiveness. However, other products
were selected based a growing demographics (e.g. aging population) or a
growing trend (healthy food) or because they represent a unique concept
that offers significant potential.

Best Import Prospects

+------+-------+-----+------+------+--------+-----------+-----------+
| *    | **HS  | **2 | **   | **   | **     | **Key     | **Market  |
| *Pro | C     | 007 | 2007 | 5-Yr | Import | Co        | Attra     |
| duct | ode** | Mar | W    | Avg. | Tariff | nstraints | ctiveness |
| Ca   |       | ket | orld | An   | Rate** | to Market | for       |
| tego |       | S   | Imp  | nual |        | Deve      | U.S.A.**  |
| ry** |       | ize | orts | Im   |        | lopment** |           |
|      |       | (1, | (    | port |        |           |           |
|      |       | 000 | 1000 | Grow |        |           |           |
|      |       | MT  | M    | th** |        |           |           |
|      |       | )** | T)** |      |        |           |           |
+------+-------+-----+------+------+--------+-----------+-----------+
| Pork | 0203  | 1   | 755  | -3%  | JPY36  | C         | In 2008,  |
|      |       | 627 |      |      | 1\~482 | urrently, | pork      |
|      |       |     |      |      | per kg | market    | imports   |
|      |       |     |      |      |        | growth of | from      |
|      |       |     |      |      |        | U.S. beef | Jan-Jul   |
|      |       |     |      |      |        | is not    | have      |
|      |       |     |      |      |        | expected  | increased |
|      |       |     |      |      |        | to effect | by 22%    |
|      |       |     |      |      |        | co        | from      |
|      |       |     |      |      |        | nsumption | 2007.     |
|      |       |     |      |      |        | of pork,  | This is   |
|      |       |     |      |      |        | but if    | mainly    |
|      |       |     |      |      |        | Japan     | due to    |
|      |       |     |      |      |        | were to   | increased |
|      |       |     |      |      |        | end age   | p         |
|      |       |     |      |      |        | res       | roduction |
|      |       |     |      |      |        | trictions | and feed  |
|      |       |     |      |      |        | on beef,  | cost of   |
|      |       |     |      |      |        | pork      | domestic  |
|      |       |     |      |      |        | co        | producers |
|      |       |     |      |      |        | nsumption |           |
|      |       |     |      |      |        | would     |           |
|      |       |     |      |      |        | fall.     |           |
+------+-------+-----+------+------+--------+-----------+-----------+
| S    | 19    | 327 | 106  | 47%  | 6      | Snack     | Suppliers |
| nack | 05.90 |     |      |      | %\~34% | food      | that can  |
| Food | 2     |     |      |      |        | companies | offer     |
| (e   | 106.9 |     |      |      |        | have had  | custom    |
| xcl. | 0.924 |     |      |      |        | products  | packaging |
| n    |       |     |      |      |        | pulled    | and       |
| uts) |       |     |      |      |        | from      | fl        |
|      |       |     |      |      |        | shelves   | exibility |
|      |       |     |      |      |        | due to    | on        |
|      |       |     |      |      |        | Chinese   | in        |
|      |       |     |      |      |        | tainted   | gredients |
|      |       |     |      |      |        | milk      | and       |
|      |       |     |      |      |        | scandal.  | p         |
|      |       |     |      |      |        | This      | roduction |
|      |       |     |      |      |        | could     | process   |
|      |       |     |      |      |        | affect    | will have |
|      |       |     |      |      |        | U.S.      | greater   |
|      |       |     |      |      |        | suppliers | success   |
|      |       |     |      |      |        | who use   | over      |
|      |       |     |      |      |        | milk      | others.   |
|      |       |     |      |      |        | products  | Products  |
|      |       |     |      |      |        | from      | c         |
|      |       |     |      |      |        | China as  | ontaining |
|      |       |     |      |      |        | ing       | healthy,  |
|      |       |     |      |      |        | redients. | f         |
|      |       |     |      |      |        |           | unctional |
|      |       |     |      |      |        |           | in        |
|      |       |     |      |      |        |           | gredients |
|      |       |     |      |      |        |           | have      |
|      |       |     |      |      |        |           | stronger  |
|      |       |     |      |      |        |           | consumer  |
|      |       |     |      |      |        |           | appeal.   |
+------+-------+-----+------+------+--------+-----------+-----------+
| Fr   | 0710  | 871 | 773  | 11%  | 6%\    | Recent    | The       |
| ozen | 2004  |     |      |      | ~23.8% | pesticide | market    |
| Ve   |       |     |      |      |        | cont      | for       |
| geta |       |     |      |      |        | amination | imported  |
| bles |       |     |      |      |        | in        | frozen    |
|      |       |     |      |      |        | Chinese   | v         |
|      |       |     |      |      |        | food      | egetables |
|      |       |     |      |      |        | products  | has       |
|      |       |     |      |      |        | may deter | q         |
|      |       |     |      |      |        | consumers | uadrupled |
|      |       |     |      |      |        | from      | over the  |
|      |       |     |      |      |        | p         | last 20   |
|      |       |     |      |      |        | urchasing | years. As |
|      |       |     |      |      |        | frozen    | Japanese  |
|      |       |     |      |      |        | food      | consumers |
|      |       |     |      |      |        | Products. | become    |
|      |       |     |      |      |        | Also,     | more      |
|      |       |     |      |      |        | Japanese  | familiar  |
|      |       |     |      |      |        | frozen    | with      |
|      |       |     |      |      |        | food      | frozen    |
|      |       |     |      |      |        | companies | foods,    |
|      |       |     |      |      |        | are       | demand    |
|      |       |     |      |      |        | becoming  | will      |
|      |       |     |      |      |        | more      | increase. |
|      |       |     |      |      |        | active    | Also, the |
|      |       |     |      |      |        | overseas  | U.S. is   |
|      |       |     |      |      |        | to bring  | the       |
|      |       |     |      |      |        | frozen    | largest   |
|      |       |     |      |      |        | products  | supplier  |
|      |       |     |      |      |        | into      | of frozen |
|      |       |     |      |      |        | Japan.    | potato    |
|      |       |     |      |      |        |           | products. |
+------+-------+-----+------+------+--------+-----------+-----------+
| Pea  | 1202  |     | 36   | -4   | JPY61  | China     | China,    |
| nuts |       |     |      | .74% | 7\~726 | will      | which     |
|      |       |     |      |      | per kg | resume    | supplies  |
|      |       |     |      |      | and/or | exporting | 74% of    |
|      |       |     |      |      | 10%    | soon,     | Japan's   |
|      |       |     |      |      |        | after     | peanut    |
|      |       |     |      |      |        | quality   | market,   |
|      |       |     |      |      |        | issue is  | has       |
|      |       |     |      |      |        | resolved. | stopped   |
|      |       |     |      |      |        | Peanuts   | exporting |
|      |       |     |      |      |        | from      | peanuts   |
|      |       |     |      |      |        | China are | to Japan  |
|      |       |     |      |      |        | in        | due to    |
|      |       |     |      |      |        | expensive | quality   |
|      |       |     |      |      |        | compared  | issues.   |
|      |       |     |      |      |        | to        | This      |
|      |       |     |      |      |        | peanuts   | leaves    |
|      |       |     |      |      |        | from the  | the       |
|      |       |     |      |      |        | United    | industry  |
|      |       |     |      |      |        | States.   | with a    |
|      |       |     |      |      |        |           | severe    |
|      |       |     |      |      |        | MRL and   | shortage  |
|      |       |     |      |      |        | aflatoxin | of        |
|      |       |     |      |      |        | are       | peanuts.  |
|      |       |     |      |      |        | barriers  |           |
|      |       |     |      |      |        | for U.S.  |           |
|      |       |     |      |      |        | shellers  |           |
|      |       |     |      |      |        | to meet   |           |
|      |       |     |      |      |        | Japanese  |           |
|      |       |     |      |      |        | re        |           |
|      |       |     |      |      |        | gulations |           |
+------+-------+-----+------+------+--------+-----------+-----------+
| High | 2009  | 9   | 32   | 31%  | JPY    | Strong    | World     |
| Qua  |       | 01, | 1673 |      | 23\~27 | co        | imports   |
| lity |       | 673 | KL   |      | per kg | mpetition | are       |
| Nat  |       | KL  |      |      | or     | from      | i         |
| ural |       |     |      |      | 5.4%\  | China and | ncreasing |
| F    |       |     |      |      | ~29.8% | Brazil,   | in Japan  |
| ruit |       |     |      |      |        | with some | as        |
| J    |       |     |      |      |        | lesser-   | consumers |
| uice |       |     |      |      |        | producing | become    |
|      |       |     |      |      |        | countries | more      |
|      |       |     |      |      |        | gaining   | health    |
|      |       |     |      |      |        | market    | c         |
|      |       |     |      |      |        | share as  | onscious. |
|      |       |     |      |      |        | well.     | Imports   |
|      |       |     |      |      |        |           | from the  |
|      |       |     |      |      |        |           | U.S.      |
|      |       |     |      |      |        |           | increased |
|      |       |     |      |      |        |           | by 22% in |
|      |       |     |      |      |        |           | 2007, and |
|      |       |     |      |      |        |           | are       |
|      |       |     |      |      |        |           | expected  |
|      |       |     |      |      |        |           | to        |
|      |       |     |      |      |        |           | increase  |
|      |       |     |      |      |        |           | in 2008.  |
|      |       |     |      |      |        |           | Orange    |
|      |       |     |      |      |        |           | and       |
|      |       |     |      |      |        |           | g         |
|      |       |     |      |      |        |           | rapefruit |
|      |       |     |      |      |        |           | juice     |
|      |       |     |      |      |        |           | have the  |
|      |       |     |      |      |        |           | largest   |
|      |       |     |      |      |        |           | share.    |
+------+-------+-----+------+------+--------+-----------+-----------+
| Ber  | 08    | 6.2 | 4.7  | 38%  | 6%     | The U.S.  | Varieties |
| ries | 10.20 |     |      |      | \~9.6% | market    | falling   |
|      | 08    |     |      |      |        | share of  | under HS  |
|      | 10.40 |     |      |      |        | imports   | code      |
|      | 08    |     |      |      |        | has       | 0810.20   |
|      | 11.20 |     |      |      |        | decreased | have seen |
|      |       |     |      |      |        | from 40%  | a steady  |
|      |       |     |      |      |        | to 32% in | increase  |
|      |       |     |      |      |        | the last  | over the  |
|      |       |     |      |      |        | 5 years,  | last 5    |
|      |       |     |      |      |        | and world | years.    |
|      |       |     |      |      |        | imports   | I         |
|      |       |     |      |      |        | are       | ncreasing |
|      |       |     |      |      |        | expected  | co        |
|      |       |     |      |      |        | to be low | mpetition |
|      |       |     |      |      |        | in 2008.  | from      |
|      |       |     |      |      |        | Pr        | Mexico is |
|      |       |     |      |      |        | omotional | still     |
|      |       |     |      |      |        | effort is | minor.    |
|      |       |     |      |      |        | needed.   |           |
+------+-------+-----+------+------+--------+-----------+-----------+
| Tree | 0801  | 79  | 65.6 | -24% | Fre    | The U.S.  | I         |
| Nuts | 0802  |     |      |      | e\~12% | does      | ncreasing |
|      |       |     |      |      |        | produce   | consumer  |
|      |       |     |      |      |        | si        | awareness |
|      |       |     |      |      |        | gnificant | and       |
|      |       |     |      |      |        | imports   | health    |
|      |       |     |      |      |        | to Japan  | benefits  |
|      |       |     |      |      |        | of        | of nuts   |
|      |       |     |      |      |        | products  | has       |
|      |       |     |      |      |        | in HS     | increased |
|      |       |     |      |      |        | 0801.     | co        |
|      |       |     |      |      |        | While     | nsumption |
|      |       |     |      |      |        | co        | recently. |
|      |       |     |      |      |        | mpetition | Producers |
|      |       |     |      |      |        | is not    | should    |
|      |       |     |      |      |        | i         | continue  |
|      |       |     |      |      |        | ncreasing | promotion |
|      |       |     |      |      |        | their     | in baking |
|      |       |     |      |      |        | market    | and       |
|      |       |     |      |      |        | share,    | conf      |
|      |       |     |      |      |        | U.S.      | ectionary |
|      |       |     |      |      |        | producers | sectors,  |
|      |       |     |      |      |        | should    | as well   |
|      |       |     |      |      |        | keep      | as        |
|      |       |     |      |      |        | safety    | exploring |
|      |       |     |      |      |        | issues a  | new       |
|      |       |     |      |      |        | top       | sectors.  |
|      |       |     |      |      |        | priority  |           |
|      |       |     |      |      |        | to ensure |           |
|      |       |     |      |      |        | U.S.      |           |
|      |       |     |      |      |        | imports   |           |
|      |       |     |      |      |        | remain    |           |
|      |       |     |      |      |        | high.     |           |
+------+-------+-----+------+------+--------+-----------+-----------+
| Wine | 2204  | 2   | 174  | 0    | 15% or | Japanese  | Total     |
|      |       | 39, | .441 | .25% | JPY125 | wine      | imports   |
|      |       | 796 | KL   |      | per    | market is | have      |
|      |       | KL  |      |      | liter, | very      | remained  |
|      |       |     |      |      | whi    | com       | stable,   |
|      |       |     |      |      | chever | petitive, | c         |
|      |       |     |      |      | is the | with      | onfirming |
|      |       |     |      |      | less,  | France    | that the  |
|      |       |     |      |      | s      | and Italy | Japanese  |
|      |       |     |      |      | ubject | leading   | wine      |
|      |       |     |      |      | to a   | exports   | market    |
|      |       |     |      |      | m      | resp      | has       |
|      |       |     |      |      | inimum | ectively, | r         |
|      |       |     |      |      | c      | and The   | ecovered. |
|      |       |     |      |      | ustoms | U.S.      | The value |
|      |       |     |      |      | duty   | following | of U.S.   |
|      |       |     |      |      | of     | with      | imports   |
|      |       |     |      |      | JPY67  | 14.6% of  | has       |
|      |       |     |      |      | per    | the       | increased |
|      |       |     |      |      | liter. | import    | due to    |
|      |       |     |      |      |        | market in | marketing |
|      |       |     |      |      |        | 2007.     | programs, |
|      |       |     |      |      |        | While the | the       |
|      |       |     |      |      |        | U.S. has  | strong    |
|      |       |     |      |      |        | excelled  | yen, and  |
|      |       |     |      |      |        | in the    | i         |
|      |       |     |      |      |        | lower end | ncreasing |
|      |       |     |      |      |        | of the    | sales of  |
|      |       |     |      |      |        | market,   | more      |
|      |       |     |      |      |        | the       | m         |
|      |       |     |      |      |        | de        | oderately |
|      |       |     |      |      |        | velopment | priced    |
|      |       |     |      |      |        | of        | New World |
|      |       |     |      |      |        | mid-range | and       |
|      |       |     |      |      |        | products  | C         |
|      |       |     |      |      |        | will be a | alifornia |
|      |       |     |      |      |        | challenge | wines.    |
|      |       |     |      |      |        | for the   |           |
|      |       |     |      |      |        | United    |           |
|      |       |     |      |      |        | States.   |           |
+------+-------+-----+------+------+--------+-----------+-----------+
| Pet  | 2309  | 773 | 407  | -8%  | Free\~ | Con       | While the |
| Food |       |     |      |      | PY59.5 | taminated | number of |
|      |       |     |      |      | per    | pet food  | pets in   |
|      |       |     |      |      | kg,    | from      | Japan is  |
|      |       |     |      |      | plus   | China has | in        |
|      |       |     |      |      | JPY6   | led the   | creasing, |
|      |       |     |      |      | for    | Japanese  | pet size  |
|      |       |     |      |      | every  | g         | is        |
|      |       |     |      |      | 1%     | overnment | de        |
|      |       |     |      |      | exc    | to create | creasing, |
|      |       |     |      |      | eeding | re        | resulting |
|      |       |     |      |      | 10% by | gulations | in less   |
|      |       |     |      |      | weight | for per   | con       |
|      |       |     |      |      | of     | food      | sumption. |
|      |       |     |      |      | l      | applying  | U.S.      |
|      |       |     |      |      | actose | to        | producers |
|      |       |     |      |      | cont   | manuf     | should    |
|      |       |     |      |      | ained. | acturing, | co        |
|      |       |     |      |      |        | import    | ncentrate |
|      |       |     |      |      |        | and       | on        |
|      |       |     |      |      |        | dist      | hig       |
|      |       |     |      |      |        | ribution. | h-quality |
|      |       |     |      |      |        | Producers | products  |
|      |       |     |      |      |        | should be | for       |
|      |       |     |      |      |        | sure      | smaller   |
|      |       |     |      |      |        | their     | animals.  |
|      |       |     |      |      |        | products  |           |
|      |       |     |      |      |        | comply.   |           |
+------+-------+-----+------+------+--------+-----------+-----------+
| Ca   | 1905  | 608 | 112  | 51%  | 9%\~   | Rising    | The       |
| kes, |       |     |      |      | 29.8%% | price of  | average   |
| Waff |       |     |      |      |        | inputs    | price for |
| les, |       |     |      |      |        | has       | U.S.      |
| Pies |       |     |      |      |        | decreased | products  |
|      |       |     |      |      |        | total     | remains   |
|      |       |     |      |      |        | world     | co        |
|      |       |     |      |      |        | imports   | mpetitive |
|      |       |     |      |      |        | into      | with      |
|      |       |     |      |      |        | Japan.    | China,    |
|      |       |     |      |      |        | China has | possible  |
|      |       |     |      |      |        | increased | allowing  |
|      |       |     |      |      |        | market    | the U.S.  |
|      |       |     |      |      |        | share     | to        |
|      |       |     |      |      |        | while the | acquire   |
|      |       |     |      |      |        | U.S. has  | market    |
|      |       |     |      |      |        | decreased | share in  |
|      |       |     |      |      |        | over the  | the wake  |
|      |       |     |      |      |        | last 5    | of        |
|      |       |     |      |      |        | years.    | Chinese   |
|      |       |     |      |      |        |           | tainted   |
|      |       |     |      |      |        |           | food      |
|      |       |     |      |      |        |           | scandals. |
+------+-------+-----+------+------+--------+-----------+-----------+
| Sa   | 03    | 387 | 152  | -17% | 3.5%   | Farm      | There is  |
| lmon | 02.12 |     |      |      |        | raised    | an        |
|      | 03    |     |      |      |        | frozen    | increase  |
|      | 03.11 |     |      |      |        | Salmon    | in the    |
|      | 03    |     |      |      |        | from      | demand    |
|      | 03.19 |     |      |      |        | Norway    | for US    |
|      | 03    |     |      |      |        | and Chile | "natural" |
|      | 03.22 |     |      |      |        | continues | and       |
|      |       |     |      |      |        | to        | "wild"    |
|      |       |     |      |      |        | dominate  | salmon as |
|      |       |     |      |      |        | the       | opposed   |
|      |       |     |      |      |        | market    | to the    |
|      |       |     |      |      |        | along     | farm      |
|      |       |     |      |      |        | with an   | raised    |
|      |       |     |      |      |        | increase  | salmon.   |
|      |       |     |      |      |        | in fresh  | Seasonal  |
|      |       |     |      |      |        | salmon    | promotion |
|      |       |     |      |      |        | exports   | remains a |
|      |       |     |      |      |        | from      | plus.     |
|      |       |     |      |      |        | Canada.   |           |
|      |       |     |      |      |        | Prices    |           |
|      |       |     |      |      |        | have      |           |
|      |       |     |      |      |        | risen due |           |
|      |       |     |      |      |        | to the    |           |
|      |       |     |      |      |        | increase  |           |
|      |       |     |      |      |        | in global |           |
|      |       |     |      |      |        | oil       |           |
|      |       |     |      |      |        | prices.   |           |
|      |       |     |      |      |        | Reduction |           |
|      |       |     |      |      |        | in        |           |
|      |       |     |      |      |        | Japanese  |           |
|      |       |     |      |      |        | fish      |           |
|      |       |     |      |      |        | purchases |           |
|      |       |     |      |      |        | due to a  |           |
|      |       |     |      |      |        | shift     |           |
|      |       |     |      |      |        | towards   |           |
|      |       |     |      |      |        | increased |           |
|      |       |     |      |      |        | meat      |           |
|      |       |     |      |      |        | con       |           |
|      |       |     |      |      |        | sumption. |           |
+------+-------+-----+------+------+--------+-----------+-----------+
| N    | 22    | 74, | 72   | 107% | 9.6%\  | Co        | Market is |
| on-a | 02.90 | 862 | ,675 |      | ~13.4% | mpetition | co        |
| lcoh | 22    | KL  | KL   |      |        | from the  | ntinually |
| olic | 09.00 |     |      |      |        | major     | growing   |
| B    |       |     |      |      |        | Japanese  | with a    |
| ever |       |     |      |      |        | domestic  | strong    |
| ages |       |     |      |      |        | brands    | demand    |
|      |       |     |      |      |        | and the   | for       |
|      |       |     |      |      |        | growing   | health    |
|      |       |     |      |      |        | variety   | conscious |
|      |       |     |      |      |        | of other  | and diet  |
|      |       |     |      |      |        | imported  | drinks.   |
|      |       |     |      |      |        | non-      | The       |
|      |       |     |      |      |        | alcoholic | higher    |
|      |       |     |      |      |        | b         | cost of   |
|      |       |     |      |      |        | everages. | beer and  |
|      |       |     |      |      |        |           | other     |
|      |       |     |      |      |        |           | alcoholic |
|      |       |     |      |      |        |           | beverages |
|      |       |     |      |      |        |           | will      |
|      |       |     |      |      |        |           | result in |
|      |       |     |      |      |        |           | the       |
|      |       |     |      |      |        |           | continued |
|      |       |     |      |      |        |           | a         |
|      |       |     |      |      |        |           | ttraction |
|      |       |     |      |      |        |           | of these  |
|      |       |     |      |      |        |           | al        |
|      |       |     |      |      |        |           | ternative |
|      |       |     |      |      |        |           | products. |
+------+-------+-----+------+------+--------+-----------+-----------+
| Fu   | \--   | JPY | \--  | \--  | See    | Japan has | Market    |
| ncti |       | 1.2 |      |      | sp     | important | growing   |
| onal |       | tr  |      |      | ecific | food      | very      |
| F    |       | ill |      |      | p      | standard  | rapidly;  |
| oods |       | ion |      |      | roduct | req       | grown 61% |
|      |       |     |      |      | ca     | uirements | in the    |
|      |       |     |      |      | tegory | that must | past 6    |
|      |       |     |      |      |        | be met.   | years.    |
|      |       |     |      |      |        | For the   | The aging |
|      |       |     |      |      |        | Japanese  | p         |
|      |       |     |      |      |        | to        | opulation |
|      |       |     |      |      |        | recognize | is        |
|      |       |     |      |      |        | any new   | growing   |
|      |       |     |      |      |        | b         | segment   |
|      |       |     |      |      |        | eneficial | of        |
|      |       |     |      |      |        | aspects   | interest, |
|      |       |     |      |      |        | of food,  | as well   |
|      |       |     |      |      |        | s         | as        |
|      |       |     |      |      |        | cientific | products  |
|      |       |     |      |      |        | evidence, | targeting |
|      |       |     |      |      |        | education | specific  |
|      |       |     |      |      |        | and       | health    |
|      |       |     |      |      |        | promotion | co        |
|      |       |     |      |      |        | is        | nditions. |
|      |       |     |      |      |        | n         |           |
|      |       |     |      |      |        | ecessary. |           |
+------+-------+-----+------+------+--------+-----------+-----------+
| Food | 2     | \-- | 369  | 36%  | 9%\    | Health    | Key       |
| Pre  | 106.9 |     |      |      | ~29.8% | issues    | market    |
| para |       |     |      |      | +JPY1, | are a     | drivers   |
| tion |       |     |      |      | 159per | major     | such as   |
| Prod |       |     |      |      | kg     | concern   | declining |
| ucts |       |     |      |      |        | in Japan. | home      |
|      |       |     |      |      |        | Japanese  | cooking   |
|      |       |     |      |      |        | consumers | and       |
|      |       |     |      |      |        | consider  | greater   |
|      |       |     |      |      |        | Japanese  | demand    |
|      |       |     |      |      |        | products  | for       |
|      |       |     |      |      |        | to be     | co        |
|      |       |     |      |      |        | safer     | nvenience |
|      |       |     |      |      |        | than      | and       |
|      |       |     |      |      |        | over-seas | rea       |
|      |       |     |      |      |        | products, | dy-to-eat |
|      |       |     |      |      |        | so        | foods     |
|      |       |     |      |      |        | producers | indicate  |
|      |       |     |      |      |        | should    | that      |
|      |       |     |      |      |        | make sure | demand    |
|      |       |     |      |      |        | their     | for       |
|      |       |     |      |      |        | products  | processed |
|      |       |     |      |      |        | comply    | food      |
|      |       |     |      |      |        | with      | products  |
|      |       |     |      |      |        | Japanese  | should    |
|      |       |     |      |      |        | re        | continue  |
|      |       |     |      |      |        | gulations | to grow   |
|      |       |     |      |      |        | and be    | for the   |
|      |       |     |      |      |        | willing   | fo        |
|      |       |     |      |      |        | to tailor | reseeable |
|      |       |     |      |      |        | their     | future.   |
|      |       |     |      |      |        | product   |           |
|      |       |     |      |      |        | to the    |           |
|      |       |     |      |      |        | Japanese  |           |
|      |       |     |      |      |        | market.   |           |
+------+-------+-----+------+------+--------+-----------+-----------+
| C    | 2203  | 3,4 | 31   | -11% | Free   | Japanese  | Rede      |
| raft |       | 91, | ,830 |      |        | g         | velopment |
| Beer |       | 118 | KL   |      |        | overnment | projects  |
|      |       | KL  |      |      |        | imposes   | create    |
|      |       |     |      |      |        | higher    | new pubs  |
|      |       |     |      |      |        | tax on    | and       |
|      |       |     |      |      |        | beer      | re        |
|      |       |     |      |      |        | compared  | staurants |
|      |       |     |      |      |        | with      | i         |
|      |       |     |      |      |        | other     | ncreasing |
|      |       |     |      |      |        | liquors.  | op        |
|      |       |     |      |      |        |           | portunity |
|      |       |     |      |      |        | Five      | and       |
|      |       |     |      |      |        | major     | market    |
|      |       |     |      |      |        | domestic  | places    |
|      |       |     |      |      |        | brewers   | for craft |
|      |       |     |      |      |        | control   | beer.     |
|      |       |     |      |      |        | 98.4% of  |           |
|      |       |     |      |      |        | the beer  | Holidays  |
|      |       |     |      |      |        | market    | and       |
|      |       |     |      |      |        |           | special   |
|      |       |     |      |      |        |           | occasions |
|      |       |     |      |      |        |           | offer     |
|      |       |     |      |      |        |           | good      |
|      |       |     |      |      |        |           | times to  |
|      |       |     |      |      |        |           | market    |
|      |       |     |      |      |        |           | high      |
|      |       |     |      |      |        |           | quality   |
|      |       |     |      |      |        |           | products. |
+------+-------+-----+------+------+--------+-----------+-----------+

Sources: ATOs; Ministry of Agriculture, Forestry and Fisheries; Ministry
of Economy, Trade and Industry; Ministry of Finance; Japan Frozen Food
Association; Chocolate and Cocoa Association of Japan; Pet Food
Manufacturers Association; Zenkoku Seiryou Inryou Kogyokai; Fuji Keizai;
Brewers Association of Japan. Note: The 2007 market size is an estimate
made by ATO.

# 

# VII. Post Contact and Further Information

If you have any questions or comments regarding this reports or need
assistance exporting to Japan, please contact the U.S. Agricultural
Trade Offices in Tokyo or Osaka at the following addresses:

# 

+-----------------------------------+-----------------------------------+
| **Tokyo**                         | **Osaka**                         |
+-----------------------------------+-----------------------------------+
| U.S. Agricultural Trade Office    | U.S. Agricultural Trade Office    |
|                                   |                                   |
| U.S. Embassy, Tokyo               | U.S. Consulate General,           |
|                                   | Osaka-Kobe                        |
| 1-10-5 Akasaka, Minato-ku         |                                   |
|                                   | 2-11-5, Nishi-tenma, Kita-ku,     |
| Tokyo 107-8420                    |                                   |
|                                   | Osaka 530-8543                    |
| Tel: 81-3-3505-6050               |                                   |
|                                   | Tel: 81-6-6315-5904               |
| Fax: 81-3-3582-6429               |                                   |
|                                   | Fax: 81-6-6315-5906               |
| E-mail: atotokyo@fas.usda.gov     |                                   |
|                                   | E-mail: atoosaka@fas.usda.gov     |
+-----------------------------------+-----------------------------------+

For further information, please access the U.S. Agricultural Trade
Office, Japan web site at:

<http://www.usdajapan.org/>

# 

#