Japan Food and Drink Report Q2 2008

Publication Date	May 2008
Publisher	Business Monitor
Product Type	Report
Pages	72
ISBN Number	1749-2785
Product Code	BMI00988

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£425.00
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Summary

Japan is one of the most challenging food and drink, as well as retail, markets for foreign companies.

While food and beverage consumption is high, buoyed by consumers with extremely strong purchasing power, interest in innovative products and responsiveness to marketing, the sector is mature and saturated, offering little in terms of long-term growth potential. In BMI's Food and Drink Business Environment Ratings, Japan is placed joint fourth (alongside Thailand) in the table ranking 14 key markets in the Asia Pacific region. The country seen as offering fewer opportunities than the other mature markets, such as Australia and South Korea, while its substantial economic clout clearly provides room for companies already operating in the country, albeit in the shorter term.

Overall, Japanese food and drink market can be viewed as a double-edged sword: on the one hand, its large and wealthy population is extremely receptive to innovation, but - on the other - companies investing in the country must accept steady and unspectacular annual growth. More recently, the situation has been further complicated by rising commodity prices, which have eventually been passed onto consumers by both food and drink producers, and - more reluctantly - by retailers, which had previously attempted to absorb the rising costs themselves. The net result should be higher value, but lower volume sales, which will tend to cancel each other out in the short term, until some companies succeed in offering alternative retail formats and food and beverage products.

In terms of individual segments, alcoholic beverages have been recording a slide over the past few years.

In response to the toughening of the operating environment, major brewers are attempting to boost their involvement in other segments, as well as regions. To this end, in December 2007, Kirin and Suntory breweries unveiled new products in their domestic happoshu (carbohydrate-free versions of the quasi-beer drink) portfolios, with Asahi already marketing s a carbohydrate-free beverage Style Free happoshu brand. Sapporo followed suit with the launch a new low-carbohydrate beer at the end of February 2008.

Around the same time, Asahi and compatriot trading house Marubeni Corp formed a wine-making joint venture in China, in partnership with Chinese brewer DaFuHao Beer Co, targeting a fledgling, yet enormously high-growth market.

In the meantime, according to the figures jointly released by the country's five major brewers Japanese beer shipments fell in 2007 - for the third year running, reaching the lowest levels since 1992, when the brewers started collating such data. However, the recent fuel price rises resulted in the higher cost of beer, leading to the January 2008 11.9% increase in the sales of beer and beer-like drink. This development will further push consumers towards alternative beverages, which have already gained popularity due to increased health-consciousness, although some brewers are aiming to protect themselves from soaring commodity prices. For example, Kirin is partnering Australian Lion Nathan to purchase raw materials, having successfully trialled the scheme in the course of 2007.

Content

Executive Summary .........5 Business Environment ....6 Regional Food & Drink Business Environment Ratings ............. 6 Table: Asia Pacific Food & Drink Ratings Q208 ............... 9 Japans Food and Drink Business Environment Rating......... 9 Table: Japans Global Food & Drink Business Environment Ratings Peer Group ............................................................................................. 10 SWOT Analysis ......................................................................... 11 Mass Grocery Retail ............................................................ 11 Japan Mass Grocery Retail SWOT ...................................... 11 Food and Drink ................................................................... 12 Japan Food And Drink SWOT ............................................. 12 Macroeconomic Outlook........................................................... 13 Table: Japan - Macroeconomic Forecasts........................... 16 Retail................................17 Industry Forecast Scenario....................................................... 17 Table: Japan Mass Grocery Retail Indicators - Sales Value by Format (US$bn) - Historical Data & Forecasts ............................................... 18 Table: Grocery Retail Sales by Format - Historical Data & Forecasts............................................................................................................... 19 Industry Developments.............................................................. 19 Market Overview ...................................................................... 22 Table: Structure Of Japans Mass Grocery Retail Market By Estimated Number Of Outlets .............................................................................. 24 Table: Structure Of Japans Mass Grocery Retail Market, Sales By Format (US$bn) ........................................................................................ 24 Table: Average Annual Sales Per Outlet By Format (US$mn) ............................................................................................................................ 24 Food And Drink ..............25 Regional Overview: Confectionery in the Asia Pacific region .. 25 Table: Leading Global Chocolate Manufacturers ............... 25 Table: Leading Confectionery Companies in the Asia Pacific Region................................................................................................................. 28 Industry Forecast Scenario....................................................... 30 Food .................................................................................... 30 Table: Confectionery Category Sales - Historical Data & Forecasts .................................................................................................................. 31 Table: Food Consumption, Category Sales & Trade Indicators - Historical Data & Forecasts.......................................................................... 32 Drink.................................................................................... 32 Table: Japan Beverage Sub-Sectors Volume/Value Sales - Historical Data & Forecasts................................................................................. 34 Industry Developments.............................................................. 34 Food .................................................................................... 34 Drink.................................................................................... 37 Market Overview ...................................................................... 40 Agriculture........................................................................... 40 Table: Japan Agricultural Production by Sub-sector ('000 tonnes) ..................................................................................................................... 41 Table: Japan Organic Agricultural Data............................. 41 Table: Japan Processed Dairy Production ('000 tonnes, unless stated) .............................................................................................................. 41 Food .................................................................................... 42 Drink.................................................................................... 42 Tobacco...........................44 Industry Forecast Scenario....................................................... 44 Table: Cigarette Value/Volume Sales - Historical Data & Forecasts.................................................................................................................. 45 Industry Developments.............................................................. 45 Market Overview ...................................................................... 46 Competitive Landscape.47 Key Players............................................................................... 47 Mass Grocery Retail ............................................................ 47 Table: Key Players in Japan's Mass Grocery Retail Sector - 2007...................................................................................................................... 47 Food and Drink ................................................................... 48 Table: Key Players in Japan's Food & Drink Sector - 2007 48 Regional Company Case Studies............................................... 49 Food: Unilever In The Asia Pacific Region ......................... 49 Table: Per Capita Food Consumption in Selected Asia Pacific Markets (US$)................................................................................................... 53 Drink: San Miguel Corporation In The Asia Pacific Region 54 Table: San Miguel Corporation In The Asia Pacific Region 55 Table: San Miguel Corporation Revenue And Earnings Growth By Operating Division, Q107 (%) ................................................................... 55 Table: San Miguel Corporation Sales By Market (US$mn) .............................................................................................................................. 57 Table: San Miguel Corporation Key Historical Data ....... 58 Company Analysis..................................................................... 59 Mass Grocery Retail ............................................................ 59 Seven & I Holdings.............................................................. 59 Lawson Inc........................................................................... 60 AEON................................................................................... 61 Seiyu .................................................................................... 62 Food .................................................................................... 63 Ajinomoto ............................................................................ 63 Drink.................................................................................... 64 Kirin .................................................................................... 64 Asahi Breweries Ltd............................................................. 65 Food & Drink Ratings Appendix ...................................................................................................................66 Introduction: Revised Methodology .......................................... 66 Ratings Overview...................................................................... 66 Ratings System..................................................................... 66 Indicators............................................................................. 66 Table: Limits of Potential Returns ....................................... 67 Table: Risks to Realisation of Potential Returns.................. 68 Weighting............................................................................. 68 Table: Weighting ................................................................. 69 BMI Forecast Modelling.70 How We Generate Our Industry Forecasts ............................... 70 Retail Industry ..................................................................... 70 Sources ................................................................................ 71

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Product features / use

Scope	Expert Insight/Opinion
Level	General Industry Strategies
Data	Detailed Market Forecasts
Profiles	Profiles of Key Companies
Features	Contains SWOT Analysis
Extra Info	Consumer Trends Highlighted