THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENTPOLICY

Required Report - public distribution
Date: 4/13/2018
GAIN Report Number: JA8503

Japan
FOOD PROCESSING SECTOR
Food Processing Report
Approved By:
Morgan Perkins, ATO Director
Prepared By:
Sumio Thomas Aoki, Senior Marketing Specialist
Kenta Kubokawa, Marketing Specialist
Report Highlights:
The Japanese food processing industry is one of the worlds’ most advanced and sophisticated, withyearly output valued at over $200 billion. Much of Japan’s food processing industry relies on imported
ingredients, and the United States is the number one supplier. In addition to the scale of this industry,technological advances combine with changing demographics and consumer preferences to create
constant product churn and opportunities for new exporters.

Post:
Tokyo ATOSECTION I: Market Summary
A. Overall Market Summary
The Japanese food processing industry is one of the worlds’ most advanced and sophisticated. Japan’s
food manufacturers produce a wide variety of products, from traditional Japanese foods to health foods
for infants and the elderly. Japanese food producers focus mainly on the domestic market, balancing theneed to maintain market share with traditional product lines while developing creative products to attract
consumers, who are always on the lookout for new and innovative foods. As a result, Japanese food
manufacturing is characterized by high rates of product turnover.
Sales Value of the Japanese Food Processing Industry 2015-2017

Source: Shurui
Shokuhin Tokei
Geppo(酒類食品統計
月報8月号,
August 2017
pp20)

The Japanese food processing industry manufactured $216.1 billion worth of food and beverage
products in 2016. Sales are estimated to have increased to $218 billion in 2017.
The largest food processing companies developed from traditional breweries that expanded theirportfolios to include foods, distilled spirits, beverages, etc... Several other market leaders emerged fromthe dairy industry. Processed food products that are increasing in popularity include yogurt, meat, soups,
and ramen. Popular beverage items include tea, vegetable juice, distilled spirits, and energy drinks.
Frozen foods consumption has recently grown as well, due to their convenience and improvement inproduct quality. As more people seek single-size portions or do not have time to cook every meal,
convenience and packaging are critical factor in product development.
Market entry takes time in Japan, especially for ingredient suppliers. Manufactures are frequently
searching for specific ingredients but can be unwilling to disclose new product development plans, andmay be reluctant to candidly discuss product sourcing needs. The challenge for U.S. ingredientsuppliers, therefore, is to build a relationship with potential manufacturer partners so that when new
product needs arise, you will have a pre-existing relationship. In order to capitalize on thoseopportunities it is important have product and representation in-country. Therefore, building a
relationship with a local importer is a critical early step.
Note: Because of the fluctuating exchange rate much of the data in this report is in Japanese Yen. The

following table of average annual exchange rate is provided for the readers’ reference:
Yearly Average Exchange rate, Yen/USD
YearlyaverageJPY
per USD

2014

2015

2016

106.85122.05109.84

Source: http://murc-kawasesouba.jp/fx/year_average.php
B. Domestic Companies
The Japanese food processing industry is dominated by 15 major companies of which Kirin Holdings
Co., Ltd is the largest (See Company Profiles). Total production of processed foods, excluding beverage
and alcohol, has risen continuously except for a short-term slump from 2008 to 2011. Ready-to-eat
meals, processed grain products, and livestock products have been the main drivers of that growth.
Growth in production of ready-to-eat meals in particular has been strong, increasing 54.1% from 2010 to2017 per the Ministry of Agriculture, Forestry and Fisheries.

Company Profiles, Source: Shurui Shokuhin Tokei Geppo (酒類食品統計月報9月号, September 2017)

Ranking

1

2

3

4

5

Company(Main products)

Kirin Holdings(Beverage,
alcohol)Asahi Group
Holdings(Beverage,
alcohol)
Suntory Ltd.
(Beverage,
alcohol)Meiji Holdings
Co., Ltd.
(Dairy, beverage,
Confectionery)
Nippon Ham
Foods Ltd.
(Meats)Phone & Website

03-5541-5321
http://www.kirinholdings.co.jp/english/
03-5608-51112
http://www.asahigroup-holdings.com/en/
03-5579-1000
https://www.suntory.com/softdrink/index.html
03-3273-4001
http://www.meiji.com/global/
06-7525-3026
https://www.nipponham.co.jp/eng/

6

Ajinomoto Co.,Inc.
(food and aminoacids)

03 -5250 -8111
https://www.ajinomoto.com/en/?scid=av_ot_pc_cojphead_global

C. Key Market Drivers
Key market drivers for the food processing sector include: Continued diversification of the Japanese diet.
 As the number of women entering the workforce continues to increase-- and marriage andfertility rates continue to decline-- it is increasingly common that Japanese consumers purchaseprepared foods instead of cooking at home.
 A declining and aging population.
 Weak economic environment, causing processors to seek out lower-cost food inputs andinternational processing options to maintain competitive prices. (However, a weak Japanese yen
has recently caused a slowdown in import growth).
 Heightened consumer and retailer food safety concerns.
 Increasing interest in health and functional foods with an emphasis on the needs of the growing
senior population.
D. Key Advantages & Challenges for U.S. Food Products
Japanese consumers are familiar
with ingredients from the U.S.,
recognize their high quality, andhave confidence in the safety of
U.S. products. In addition, the U.S.
is one of few producers able tosupply Japanese food processors
with the volumes and quality of
inputs that they require.
SECTION II: Check list for market entry
Market Structure & Entry
A. Market Structure
The Japanese market structure and distribution system is different from the U.S. The following
illustration is a basic flowchart showing how imported products tend to enter and move throughthe traditional Japanese distribution system:
Ingredient products will most likely be handled by a:

1. General trading company

2. First-line wholesaler
3. Second-line wholesaler
4. Food processor

Trading companies play the following
services:
1. Import processing
2. Financing
3. Customs clearance
4. Warehousing
5. Preparation of order and shipping
documentation
Large food processors and retailers are
increasingly purchasing sizeable quantities
of product directly from trading companies.

Retailers & HRI

Large Food
Processors
U.S. Exporter

Japanese Importer- Large trading company- Specialty importerPrimary
Wholesaler

SecondaryDistributor

Food Ingredient Distribution Flow Chart

Small Food
Processor

B. Market Entry
It can be difficult to enter the Japanese market. Regulations on ingredients and additives are very
strict, and exporters must ensure that their products are permitted in Japan. For additional
information, please see below (Section C. 1.). As part of the product clearance and approval
process, it is also common that local processors and the Japanese government request a great dealof specific information regarding product handling and composition. In addition, Japanesemanufacturers have a reputation for demanding very high standards of product quality andconsistency; while also having a reputation for working collaboratively with suppliers to develop
long term supply relationships.
Despite the work involved, the Japanese market has enormous potential.
Strategies for entering the Japanese market will vary depending on product characteristics,
competition, and the market environment. However, buyers in the food and beverage industry
often prefer to find new products at large trade shows, or specially-targeted trade showcases,
where they can look at many products at once. Therefore, the best way to learn about the market
while getting the chance to talk to potential business partners is to participate in one of Japan’s
many trade shows.
The largest food related trade show in Japan is FOODEX Japan, which takes place every March.
Depending on your target market, other smaller trade shows can also be useful

C. Entrance Strategy:
Before You Start:a. Ensure your company has the production capacity to commit to the market.
b. Ensure your company has the financial and non-financial (staff, time, etc.) resources toactively support your exported product(s).
c. Evaluate whether your company has the ability to tailor your product’s packaging andingredients to meet foreign import regulations, food safety standards, and culturalpreferences.
d. Evaluate whether your company has the necessary knowledge to ship overseas, such as
being able to identify and select international freight forwarders, manage climate
controls, and navigate export payment mechanisms, such as letters of credit.
1. Determine whether your product is permissible by Japanese food regulations.
a. Read the Exporter Guide and the Food and Agricultural Export Regulations Report,
published by our office and available at:
http://gain.fas.usda.gov/Lists/Advanced%20Search/AllItems.aspx and selecting “Japan”
and “Exporter Assistance”
b. For plant or animal health information, contact your local APHIS office at:
http://www.aphis.usda.gov/animal_health/area_offices/c. If the product contains meat or meat products, please refer to the Food Safety Inspection
Service Export Library: http://www.fsis.usda.gov/wps/portal/fsis/topics/internationalaffairs/exporting-products
d. Review Japanese food regulations to determine if your product(s) complies with (orneeds to be altered to comply with) local laws regarding additives, residue levels, andprocessing procedures. Also understand regulations in terms of weight, size, and labeling.
JETRO’s Handbook for Agricultural and Fishery Products Import Regulations is a
helpful tool: http://www.jetro.go.jp/en/reports/regulations/pdf/agri2009e.pdf
2. Perform Some Basic Market Research:a. Determine the specific area of the market your product is targeting:
http://www.fas.usda.gov/topics/getting-started
b. Determine whether there is demand for your product by searching online websites,
speaking with other companies that have experience in Japan, visiting the market to
conduct market tours, or attending a trade show in Japan.
c. Determine whether your product is price competitive versus Japanese and otherproducers, keeping in mind transportation and modification costs. Determine thecomparative advantage of your products. Potential customers need to be convinced of themerit of using your products: Such as price savings, higher quality, higher value or moreconvenient packaging. Most packaging or labeling will have to be changed for theJapanese market, as American packaging is usually too large.
You should also contact your industry organization or local State Regional Trade Group,
which works closely with USDA to help food and agricultural companies advance theirexporting goals: To learn more about these groups, and which ones may be working in Japanon your behalf, please see:
http://www.usdajapan.org/tradeservice/cooperators-industry-partner-groups/
3. Develop an Export Action Plan:
Once you have collected the general market, products, and regulatory information, begin theprocess of creating an export action plan. This will be instrumental in helping distributors
and buyers see your vision. Keep in mind that many portions of this plan will change after
personal interaction with the market or as more information is gathered. This action planshould include: Your story
 Product
 Objective
 Market Marketing plan Schedule Evaluation
 Literature in Japanese Goals and benchmarks, short/long-term
 Product modifications, if applicable Product packaging and handling Financial resources to be committed
 Non-financial resources to be committed
 Additional financing Potential importers and buyers

4. Get to Know the Market Personally:
Visit Japan to explore opportunities first-hand or find a representative. Be sure your partner
has a good reputation and track record. This face-to-face interaction is very important inJapan, where personal relationships are highly valued.
D. Finding a Buyer
Trade shows: the best tools for market research as well as for finding potential distributors. A listof USDA endorsed trade shows can be found at: http://www.fas.usda.gov/topics/trade-showsa. The recommended trade shows in Japan for the food processing sector are:
-FOODEX JAPAN http://www3.jma.or.jp/foodex/en/-Supermarket Trade Show http://www.smts.jp/en/-International Food Ingredients and Additives Exhibition (IFIA) Japan:
http://www.ifiajapan.com-Health Ingredients Japan: http://www.hijapan.info/eng/b. Contact one of the State Regional Groups and ask if they have any upcoming activities

involving your target market such as trade missions or showcases.
Section III Competition
U.S. Involvement in the Industry
The U.S. is Japan’s number one agricultural trading partner, and the U.S. is known as a reliable exporterthat provides safe and high quality foods.
Major Food Exporters to Japan in 2017,
Source: Global Trade Atlas: All commodities
Partner Country
World
United States
China
Australia
ThailandCanadaBrazilFranceIndonesia
New ZealandPhilippines

United States Dollars (Billions)
2015

2016

50.1
12.6
6.4
3.7
3.7
3.3
2.7
1.4
1.1
1.3
1.0

2017

48.9
11.7
6.2
3.7
3.6
3.3
2.7
1.5
1.1
1.3
1.0

51.9
12.7
6.2
4.0
3.9
3.5
2.5
1.6
1.5
1.4
1.0

% Share% Change2015
100.002016
100.002017 2017/2016
100.00
6.23

25.11

24.03

24.51

8.34

12.88

12.74

11.93

- 0.49

7.42

7.64

7.78

8.22

7.35

7.42

7.56

8.22

6.64

6.66

6.73

7.33

5.46

5.53

4.76

- 8.51

2.87

3.03

3.08

8.15

2.21

2.27

2.87

34.10

2.57

2.70

2.71

6.72

2.06

2.13

1.94

- 3.41

Japan Import Statistics from United States 2017,
Source: Global Trade Atlas, Japan Import Statistics, All AG Simplified. (Figures Rounded)

Description

United States Dollars (millions)% Share% Change

20162017 2017/2016

2015

2016

2017

2015

Cereals

3,817

3,228

3,500

27.97 25.31 25.23

8.42

Meat And Edible Meat Offal
Oil Seeds Etc.; Misc Grain, Seed, Fruit, Plant
Etc

2,599

2,857

3,214

19.05

23.16

12.49

1,798

1,598

1,716

13.18 12.53 12.37

7.39

Fish, Crustaceans & Aquatic Invertebrates
Edible Fruit & Nuts; Citrus Fruit Or Melon
Peel
Prep Vegetables, Fruit, Nuts Or Other Plant
Parts
Edible Preparations Of Meat, Fish,
Crustaceans Etc
Food Industry Residues & Waste; Prep Animal
Feed

1,258

1,190

1,405

9.22

9.33

10.13

18.07

992

905

874

7.27

7.09

6.3

-3.44

596

576

626

4.36

4.51

4.51

8.82

465

427

480

3.41

3.35

3.46

12.52

500

446

471

3.66

3.49

3.39

5.63

Beverages, Spirits And Vinegar

430

414

427

3.15

3.24

3.08

3.23

Miscellaneous Edible Preparations
Dairy Prods; Birds Eggs; Honey; Ed Animal Pr
Nesoi

285

314

329

2.09

2.46

2.37

4.93

254

195

236

1.86

1.53

1.7

21.36

Edible Vegetables & Certain Roots & Tubers
Prep Cereal, Flour, Starch Or Milk; Bakers
Wares

216

243

226

1.58

1.9

1.63

-6.88

143

105

108

1.05

0.82

0.78

2.8

Sugars And Sugar Confectionary

82

68

71

0.6

0.54

0.51

4.25

Cocoa And Cocoa Preparations

58

55

59

0.42

0.43

0.42

7.16

Animal Or Vegetable Fats, Oils Etc. & Waxes
Milling Products; Malt; Starch; Inulin; Wht
Gluten

56

57

48

0.41

0.45

0.35

-15.19

49

40

46

0.36

0.31

0.33

15.83

Coffee, Tea, Mate & Spices

49

39

37

0.36

0.31

0.27

-6.6

22.4

Sec
tion
IV
Bes
t
pro
duc
ts
pro
spe
cts
A.
Co
nsu
mer

Trends
1. Health &Beauty
Products that offer health and beauty or anti-aging benefits have always been popular in the Japanesemarket. A recent study showed that over 70% of Japanese feel the need to live a healthy lifestyle, andover 90% of women have experience dieting. A healthy diet is an extremely valued concept. The official
definition of functional foods (FOSHU) and drinks in Japan is “food which is expected to have a
specified effect on health due to the relevant constituents or food from which allergens have been
removed” such as dietary fiber, oligosaccharides, non-calorie sweeteners, calcium, iron, mineralabsorption promoters, beta-carotene, chitosan, specified soy protein, collagen, polyphenols, lutein (e.g.
blueberry smoothies) lactic acid bacteria cultures (e.g. yogurt or chocolate), soy isoflavones, andgerminated brown rice (GABA) have been included.

Research has shown that over 80% of Japanese women are aware of the term “anti-aging.” Japanese
green tea (maccha) has a well known reputation for containing ingredients to make skin beautiful.
Maccha products contain the entire leaf, ground to powder. Through mass media and SNS, macchabased beverages and foods have enjoyed continued gains in popularity.
Another example of such products is a popular gummy candy that has added collagen to improve skinhealth. Food manufacturers arealways looking for the next antiaging breakthrough ingredients,
so exporters of ingredients with
documented anti-aging properties
are well positioned ot takeadvantage of that demand. It isespecially helpful if exporters canoffer something that is not yet
widely available.
The major distribution line forthese functional food products isthrough supermarkets andconvenience stores.
2. “Gohoubi Shouhi”
There is a concept of enjoying
small luxuries that is popular inJapan. This is called “Gohoubi
Shouhi” (Reward Consumption).
“Gohoubi Shouhi” refers to
rewarding yourself by purchasing
pricier versions of everyday products. For example, approximately 38% of Japanese women spend extra
money on dessert and confectionary products. To take advantage, many convenience stores havelaunched up-scale and premium versions of products in their confectionary lines.
“Puchi Zeitaku” (Miniluxury), “Otonano” (Adult or Upgraded) are other keywords that refer to thisconcept. Many products such as limited-time special flavor products and craft beers are sold at slightly
higher prices than normal products for the Gohoubi Shouhi market.
3. Increasing Participation of Women in the Labor Force and Growth of Convenience Foods

Japanese women have always had a great deal of responsibility for daily purchases for both themselves
and their families. More women are entering the Japanese work force today, according to a survey by
Ministry of Health, Labor and Welfare. (http://www.mhlw.go.jp/bunya/koyoukintou/joseijitsujo/16.html) Along with this development, there has been an increase in demand for conveniencefoods and easy-to-prepare meals. The best example is the rapid expansion of convenience (konbini) store
chains offering a large variety of prepared meals, traditional bento lunch boxes, onigiri (rice balls), pasta
dishes, sandwiches, salads, baked goods, and desserts. Ingredients such as low-cost processed vegetables
for bento lunches or ingredients in snack foods such as croquettes, fried potatoes, and meat patties, are inhigh demand. Furthermore, many confectionery companies have launched products that target working
women. For example, in convenience stores in Japan you can find a variety of mini-sized candy, snacks,and chocolates that target working women who want a sweet snack with their coffee or lunch.
Other demographic changes influencing food consumption include later marriages and increases in thenumber of elderly people living alone. Single people are increasingly targeted with easy-to-prepare
single-portion meals. Packed sauces, meals in-a-box, instant meals, high quality frozen meals and otherconvenient options are growing in popularity and appear poised to continue to grow.
B. Producer Trends
Producer trends can be evaluated at the large trade shows in Japan. One of the largest food trade showsin Japan is called FOODEX (see D. Finding a Buyer, SECTION III). In 2017 FOODEX hosted over
80,000 visitors and 3,282 exhibitors; with 1,979 from overseas (see table below): Source: FoodEX
Japan 2017
The Most Sought After Items According to Buyers Were:
A wide variety of exhibitors including:(http://www.jma.or.jp/foodex/index.
# of
% of
Ranking
Product Type
Ranking
Product Type
Companies
Companies
html)
1

Alcoholic Beverages

405

1

Snacks / Desserts

14.2%

2

Confectionaries, Sweets& Confectionary
Ingredients

356

2

Vegetables / Fruits

10.1%

323

3

Coffee / Tea / Drink
ingredients

9.9%

292

4

Alcoholic beverages

8.4%

256

5

Livestock /Processed meats

8.1%

253

6

Bread / Noodles / Pasta

8.0%

248

7

Seasoning / Spices /Raw Materials /Ingredients

7.6%

3
4
5
6

7

Organic / Functional
Food & Drinks
Fresh Foods(Processed Foods)
Frozen Foods
Dried Foods& Legumes (Beans)
Canned Products,
Bottled Products &Agricultural
Preserved Foods

Marine products /Processed productsSoft drinks / Water
Functional foods /Health foods
GrainsDairy / Egg products
Environmentallyconscious foods /Organic foods

8

Beverages

183

8

9

170

9

161

10

11
12

Coffee & Tea
Seasonings &Condiments
Cooking Oils & Fats
Rice, Noodles & Flour

153
134

11
12

13

Sauces & Dressings

132

13

67

14

Other / Food-related
products / Information

2.6%

60

15

Sugar / Spreads

1.0%

10

14
15

Special-Occasion,
Certified &Professional-Use Foods
Dairy Products & Eggs

7.1%
5.7%
5.7%
4.5%
3.9%
2.8%

C. Industry Developments
Manufacturers need to constantly
introduce new products, tastes,
packaging and ideas. Japanesemanufacturers are always ready tochange taste, texture, packaging or
product names to catch consumers’
attention. The year 2016 saw anincrease in sales of soft drinks,
juices, and water. However, salesof other categories showed either
slight increases or remained flatcompared to the previous year.
Thus, many companies launched
new brands as well as upscaleversions of their original products

in order to stimulate consumption.
SECTION V: Key Contacts
ATO Tokyo, U.S. Embassy 1-10-5, Akasaka, Minato-ku, Tokyo 107-8420 Tel: 81-3-3224-5115 Fax:
81-3-3582-6429 E-mail address: atotokyo@fas.usda.gov
ATO Osaka American Consulate General 2-11-5, Nishi Tenma, Kita-ku, Osaka City, Osaka 530-8543
Tel: 81-6-6315-5904 Fax: 81-6-6315-5906E-mail address: atoosaka@fas.usda.gov