GIA Survey shows Food Manufacturers in Japan Are Keen to Tap on Health Food Trends Over Next 2-3 Years

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Global Intelligence Alliance Group (GIA), a global leader in customized Market Intelligence and Strategic Analysis services and solutions, has released survey findings that show that Japanese food manufacturers plan on tapping on consumer health trends in Japan, rating organic, sugar-free or low sugar, as well as low-carbohydrate foods as important.

Global Intelligence Alliance Group (GIA), a global leader in customized Market Intelligence and Strategic Analysis services and solutions, has released survey findings that show that Japanese food manufacturers plan on tapping on consumer health trends in Japan, rating organic, sugar-free or low sugar, as well as low-carbohydrate foods as important.

For the rankings table, please refer to http://www.globalintelligence.com/news/news/latest/gia-survey-shows-food-manufacturers-in-japan-are-k

"The domestic organic food industry in Japan is still underdeveloped. This is partly because of the high level of pesticide traditionally needed for the average fruit or vegetable farm in Japan, compared with North America or most of Western Europe, in order to fight off insect infestations caused by a relatively hot and humid climate," explained Ms. Kim Khoo, GIA's practice head for Manufacturing & Industrial Goods in Asia Pacific. "The term, organic, also has low public recognition in Japan due to cultural differences from other mature consumer markets."

The Japanese Trade Commission estimates that organic foods make up less than 0.5 % of the market. GIA considers this to translate into under-tapped market potential and provided a review of the key market drivers.

For the key market drivers table, please refer to
http://www.globalintelligence.com/news/news/latest/gia-survey-shows-food-manufacturers-in-japan-are-k

1. Recent food scandals in Japan
There were two major food scandals in Japan in 2008. One involved pesticide-tainted Chinese dumplings, which caused food poisoning in at least 10 consumers. The other involved contaminated rice, intended for industrial uses such as the manufacture of glue, which was sold to thousands of consumers, including schoolchildren and nursing home patients. This second scandal even resulted in the resignation of Japan's agriculture minister.

Different border regulations along global supply chains make the tracking of ingredients challenging. Consumer are increasingly aware of unethical practices through the mass media, and are paying attention to food safety, ingredient quality and labeling. Consumer concern from food scandals is perhaps the most important driver of both legislation and consumer sentiment towards organic food.

2. New food labeling laws
New food labeling laws which were toughened due to the food scandals and rash of food labeling misrepresentations by Japanese food manufacturers, is expected to streamline and expand coverage of existing laws is expected to draw more consumer attention to 'what goes into their manufactured or processed food'.

3. Law enactment on organic farming
Strengthening the wider supply chain, beginning with agricultural producers, will inadvertently drive the growth of the organic food industry in Japan. Recent official changes, namely the Law on Promotion of Organic Agriculture and guidelines from Ministry of Agriculture, Forestry and Fisheries (MAFF) focuses on promoting local organic products, with quantitative targets. They set out to:

1. Help farmers switch to organic farming
2. Facilitate the production, distribution, and sale of organic farm products
3. Improve consumer access to organic farm products
4. Connect organic farmers, consumers, and other stakeholders

Market potential
Food manufacturers can gain from tapping into a large aging population with relatively high-income levels. Japan is expected to see a dramatic rise in the ratio of elderly dependents (age 65 and over) as a share of the adult population. The sharp decline in fertility in Japan is also expected to generate a more rapid aging of Japan's population than in any other major industrial countries.

"Sales in organic food in the European Union and the United Kingdom have witnessed severe declines recently. The challenge for organic food manufacturers in Japan will be exacerbated by other market restraints unique to the country, such as limited space to grow food domestically, the consumer obsession with the look of a product, and the significant price difference between conventional and organic foods. The import market share is likely to be a significant portion of the market growth. International organic food manufacturers hoping to enter the Japan may want to start by studying the sales and distribution channels, customer value drivers, market partners and competitors, so they can be competitively positioned as the economy next picks up", said Khoo.

For further information, visit http://www.globalintelligence.com or send email to info(at)globalintelligence.com.

About Global Intelligence Alliance
Global Intelligence Alliance (GIA, http://www.globalintelligence.com) provides clients with a single source for customized Market Intelligence services: market monitoring, business research and analysis projects, the Intelligence Plaza™ software, consulting and training. Through its full-range service offering, GIA helps customers set up and conduct Market Intelligence activities that serve both strategic and operational decision-making. The GIA network consists of GIA Group companies and independent Member and Research Partner organizations that operate in more than 100 countries. GIA Group was founded in 1995 and is owned by management and private investors. Venture capital funding to support international expansion was obtained in April 2007 from CapMan (http://www.capman.com).

About the Survey
Participants in the survey included 40 major Japanese food manufacturers, including producers of confectionary, dairy, bakery products and cooking sauces. The survey involved one-on-one interviews in late 2008.

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Heidi Lembidakis

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