The Journal The Authority on Global Business in Japan

FOOD | NATURE

NOVEMBER 2014

Healthy Habits, Healthy Growth

Organic products are slowly gaining ground in Japan


The idea that “we are what we eat” is increasingly finding resonance with Japanese consumers. Companies sharing the philosophy that organic produce offers the best options for human health are rising to that challenge.

“The global market is growing because it has a direct impact on environmental protection and cleanup, supports biodiversity, and helps people reduce the amount of chemicals they ingest every day,” according to Donald Nordeng, who heads Daabon Organic Japan Co., Ltd.

There is a growing understanding that our world and everything in it follow the laws of physics, he added, meaning that things will not stay the same after change is introduced into a system.
“Change happens,” maintained Nordeng, whose Colombia-based company is this year marking a centenary of producing organic crops.

Food1aDaabon Organic has seen growth of between 6 percent and 8 percent in sales of foodstuffs in Japan in recent years, and the expansion has been even more dramatic in the cosmetics and personal care markets. Certified organic since 1992 and in Japan since 2000, the company employs nearly 2,000 people in Colombia and six in Japan, and is the largest supplier of organic bananas and palm oil in the world.

Daabon has a policy of owning the farms from which it sources its products, as well as the processing facilities and import offices. This means customers are purchasing directly from farmers.

Organic certification was first introduced in California in 1973, and the European Union followed suit in 1992.

Today, organic certification covers a vast array, from produce, meats and dairy products, to processed food and personal care items such as shampoo and cosmetics. Bedding, towels, and clothing can also qualify, with companies such as Nike and adidas incorporating organic fiber into their products.

In total, organic food accounts for around 4 percent of the global market, with 2 percent of cosmetics and personal care products certified organic and 0.5 percent of textiles.
Consumers in Japan are very similar to those who buy organic products in other countries.

“Many are new parents who start to think about the chemicals in their food as they most likely started to think about health when they conceived,” Nordeng said. “Many mothers breastfeed, so whatever mommy eats goes into junior’s mouth; nothing makes people think about what they eat more than that.”

Building bridges
John Bayles, joint founder of the Alishan Organic Center and Tengu Natural Foods mail order service, agrees that women are the prime drivers of the market, although health-conscious elder consumers are also an “important part of the organic customer base.”

“Each place understands the concept of organic differently,” Bayles told the ACCJ Journal. “Japan understands organic more from a personal health and safety standpoint,” he added.

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Based in the city of Hidaka, in Saitama Prefecture, Bayles is originally from Connecticut, and set up the company in 1986 with his wife, Fay Chen. Alishan is named after her hometown in Taiwan, which is also the location of Jade Mountain, the highest peak in eastern Asia. Today, the company employs 45 people, most of whom are involved in sourcing, importing, repacking, and onward distribution.

“We are a bridge between organic producers and Japanese consumers—and we care deeply about both,” said Bayles. “I have a knack for logistics. No matter where the farm and fork, it is a complex supply chain.

“Food is not just fuel,” he emphasized. “It has a huge impact on human health and happiness. To help a person acquire food that is satisfying, fun, and profitable—what could be better?”

Obstacles in the garden
There have been hurdles in the growth of the organic sector in Japan, according to Nordeng at Daabon, such as bureaucrats’ insistence on categorizing locally grown, non-certified produce as “specially grown” or “additive-free.”

“These kinds of unsubstantiated, vague categories are what Japanese retailers prefer, as they can charge more. This kind of product remains uncontrolled by regulation, while organic is controlled,” he said.

Bayles explained that his company is happy to import products that lack the Japanese Agricultural Standard (JAS) seal of organic approval, but are still deemed organic, such as apricots from Pakistan and sweet corn from Thailand. These products meet EU and US standards, so Alishan covers the organic claim with a sticker stating “Certified in country of origin.”

On the positive side, both Bayles and Nordeng believe that the recent agreement between Japan and the United States to accept equivalency on standards is changing the field and, Nordeng holds, will serve “as a new runway for JAS products to touch down from the US and to take off from Japan.”

Pairing science and nature
The Japan arm of Amway is also active in the organic products market, with the Nutrilite division of the US giant operating farms in North and South America that have met the standards of the International Federation of Organic Agricultural Movements.

For example, in the foothills of the Cascade mountain range in Washington state, the 62-acre Trout Lake Farm is the largest organic herb farm in North America.

While Amway points out that Nutrilite often chooses organically grown ingredients first, it is not always possible—or even desirable—to use only certified organic ingredients.

“The pairing of the best of science with the best of nature means organically grown ingredients may be combined with synthetic ingredients to deliver the highest quality products, based on standards for efficacy, palatability and bioavailability,” believes Andreas Faahs, chief marketing officer and vice president of Amway Japan G.K.

Faahs added that, while there is a broad understanding among Japanese of what organic means, organic principles are still not being put into practice at Japanese shops. Although many supermarkets may have an organic section, there are few organic stores here.

“While a business model has not been fully established, the desire for greater food safety has increased in Japan in recent years,” he explained, citing the 2013 scandal in which some hotels were found to have deliberately mislabeled products’ place of origin, raw materials, and use-by date.
“This could have spurred the steady development of the organic market,” he added.

Like others in the sector, Faahs believes organics have a bright future in Japan.

“Taking into consideration that Japan’s population is one-third the size of the population of the US, we believe there is great potential,” he said. “If Japan’s high level of literacy leads to the spread of food education, understanding of organics will increase, and people will likely come to better understand the superiority of companies which handle products that use organically grown raw materials.”