The Journal The Authority on Global Business in Japan

During self-introductions at the most recent Food and Agriculture Committee meeting, attendees shared their industry stories and why they love the food business. For most of us, the combination of an incredibly dynamic and demanding consumer with ever-changing international agricultural trade issues make Japan a challenging market, no matter where in the food chain one may reside.

This year, the United States will export to Japan roughly $11.5 billion in food products and agricultural commodities, which is a vital market not only for the traditional Midwestern breadbasket states, but for the entire country. According to the US Department of Agriculture’s Foreign Agriculture Service, Japan is:

  • the top market for beef, pork, and corn;
  • second for wheat, rice, and vegetables;
  • third for fruit and soybeans;
  • fourth for wine;
  • and fifth for dairy and nuts.

Perhaps the biggest feature of the Japan food industry is its stellar reputation throughout the rest of Asia for products of only the highest quality. If your product can pass Japan’s stringent import inspection process—with its focus on food safety and labeling—and then go on to be accepted by consumers, that means a lot in other markets.

A plethora of trade organizations in Tokyo help advance the competitiveness of US exports. These bodies include the non-governmental U.S. Meat Export Federation, the USA Poultry and Egg Export Council, and various state-sponsored efforts. Even sorghum has people on the ground. These groups work tirelessly to navigate both import regulations and the ever-changing consumer.

PURCHASE PATTERNS
Smaller households and an aging society have pushed forward innovation and market opportunities for a dizzying variety of prepared foods. And the country’s hyper-competitive convenience store landscape—with more than 50,000 stores—has driven innovative packaging. On an average day, 65 percent of people residing in Tokyo and Osaka ate a prepared meal from a restaurant or convenience store.

Japanese households spend more of their disposable income on food compared with the United States— 15 and 7 percent, respectively—and the purchasing patterns are remarkably different. Japanese grocery shoppers can be incredibly price-conscious, often going from store to store to save a few yen. And most shoppers have a wallet stuffed with reward programs for virtually every shop in the neighborhood—even if the rewards are only token at best. This high level of price elasticity for daily staples could spell trouble for any country disadvantaged in the import process, as consumers are quick to switch to save money.

In an interesting contrast, seemingly little care is given to price on gift giving occasions, entertaining, or buying beautiful treats in a department store basement. Indeed, consumers seem to have a budget switch. When it is on, they do anything to save money. When it is off, price is no object.

COMMITTEE GOALS
There is a lot to be done to ensure US competitiveness in this vital and dynamic market. The ACCJ is working hard through its Food and Agriculture Committee to engage new leadership in Washington DC, as well at the Embassy of the United States, Tokyo. We hope to be a valuable source of knowledge and resources to help US businesses remain competitive in Japan.

As chair, my goal is for the committee to be a touchstone for the wide variety of topics and issues that affect trade and industry by driving engagement with members and making connections when questions arise.

In September, we hosted a reception where members shared what they love most (food samples!) while mingling with colleagues old and new. During the year to come, please look out for more events from this committee, and feel free to join us as we work to increase opportunities for US and member businesses in this sector. There is a lot of work to do, and your input is welcome.

Paul Kraft is chair of the ACCJ Food and Agriculture Committee, and commercial director of Nespresso Professional
This year, the United States will export to Japan roughly $11.5 billion in food products and agricultural commodities.