Health and wellness series – Naturally healthy products in Japan

January 2019

Executive summary

Japan has one of the largest elderly populations in the world, and Japanese consumers are interested in consuming healthy and nutritional products in order to achieve healthier lifestyles.

According to Euromonitor International, retail sales of health and wellness products in Japan increased to US$50.7 billion in 2017.

Naturally healthy (NH) is one of the categories of health and wellness. Euromonitor's definition includes food and beverages that naturally contain a substance that improves health and well-being beyond the product's pure calorific value.

NH products recorded the highest retail value in 2017 among the health and wellness products categories, with US$26.2 billion in sales, representing 51.7% share of the total sales of health and wellness products in 2017.

Among NH products, the retail value of NH packaged food accounted for 10.8% (US$2.8 billion), while NH beverages accounted for 89.2% (US$23.4 billion) in 2017.

Supermarkets continued to dominate the naturally healthy distribution landscape in 2017, with a 60.0% share in NH packaged food and 31.7% share in NH beverages.

General health and wellness trends in Japan

Evolving health attitudes reshape demand

The Japanese health and wellness market is being reshaped by significant shifts in consumer demand. Increasing concerns about the health issues associated with sugar consumption among consumers and institutions, as well as concerns about the health impact of additives in food and beverages, along with a related trend towards natural products, are having an increasing impact on purchasing patterns. There were some new decaf ready-to-drink (RTD) coffee products in the market in 2017. Moreover, the introduction of new certification relating to functional claims has broadened the scope of health and wellness innovation and marketing.

Natural trend has wide-ranging influence

The natural trend remains a key influence on the development of health and wellness packaged food and beverages. The naturally healthy segment (CAGR: 1.9% from 2013 to 2017) grew strongly in packaged food in 2017 (CAGR: 5.9% from 2013 to 2017), while it has also expanded in beverages (CAGR: 1.5% from 2013 to 2017). The strong growth of Kagome's long-established tomato juice was driven by its repositioning as a functional product with an FFC (Food with Functional Claims) label for its naturally occurring lycopene, which can enhance HDL ("good cholesterol") rates. Meanwhile, mugicha tea (Japanese roasted barley tea and its minerals are effective for heart strokes) grew strongly as it benefited from its naturally caffeine-free character in the midst of consumer efforts to reduce caffeine intake – a key influence on innovation in other areas of beverages.

The overall health and wellness market is expected to see growth over 2018-2022 (CAGR: 3.2%), driven by the general increase in consumer health-consciousness in Japan. "Free from" (CAGR:4.4%) and "naturally healthy" (CAGR: 3.5%) are expected to be the most dynamic areas over the forecast period, reflecting increasing consumer concerns about certain ingredients and additives and a growing emphasis on natural products. Meanwhile, the expansion of the fortified/functional segment (CAGR: 3.2%) is likely to be driven by a diversification of the product range, as a growing number of manufacturers and brands take advantage of the Food with Functional Claims certification introduced, either through innovation or the repositioning of existing products. Consumer awareness of organic products (CAGR: 0.9%, 2013-2017; 1.8% [forecast], 2018-2022) and their particular benefits remain a considerable obstacle to development, especially given the high prices.

Market data

Historical health and wellness market retail sales by category in US$ millions, 2013-2017
Category 2013 2014 2015 2016 2017 CAGR* % 2013-2017 Share % 2017
Health and wellness 47,166.1 47,288.2 48,268.3 49,638.1 50,688.7 1.8 100.0
HW beverages 31,685.9 31,312.2 31,484.9 32,033.2 32,638.4 0.7 64.4
HW packaged food 15,480.3 15,976.0 16,783.4 17,604.9 18,050.3 3.9 35.6

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Forecast health and wellness market retail sales by category in US$ millions, 2018-2022
Category 2018 2019 2020 2021 2022 CAGR* % 2018-2022 Share % 2022
Health and wellness 52,134.0 53,830.6 55,704.6 57,450.0 59,199.3 3.2 100.0
HW beverages 33,527.7 34,589.0 35,782.8 36,919.0 38,076.3 3.2 64.3
HW packaged food 18,606.4 19,241.6 19,921.8 20,531.0 21,123.0 3.2 35.7

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Naturally healthy products accounted for 51.7% of all health and wellness products in 2017, achieving retail sales of US$26.2 billion with a CAGR of 1.9% from 2013 to 2017. They will continue to represent 52.5% of the total health and wellness market in 2022, reaching US$31.1 billion with a forecast CAGR of 3.5% from 2018 to 2022.

Historical health and wellness market retail sales by type in US$ millions, 2013-2017
Category 2013 2014 2015 2016 2017 CAGR* % 2013-2017 Share % 2017
Health and wellness 47,166.1 47,288.2 48,268.3 49,638.1 50,688.7 1.8 100.0
Naturally healthy (NH) 24,306.9 24,406.9 24,920.7 25,524.5 26,199.4 1.9 51.7
Fortified/functional (FF) 16,747.6 16,788.9 17,184.8 17,960.1 18,199.7 2.1 35.9
Better for you (BFY) 4,911.2 4,834.2 4,848.6 4,810.3 4,908.9 0.0 9.7
Free from 623.6 675.7 725.7 750.2 783.3 5.9 1.5
Organic 576.8 582.6 588.5 592.9 597.4 0.9 1.2

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Forecast health and wellness market retail sales by type in US$ millions, 2018-2022
Category 2018 2019 2020 2021 2022 CAGR* % 2018-2022 Share % 2022
Health and wellness 52,134.0 53,830.6 55,704.6 57,450.0 59,199.3 3.2 100.0
Naturally healthy (NH) 27,085.7 28,103.5 29,173.8 30,143.0 31,072.8 3.5 52.4
Fortified/functional (FF) 18,614.0 19,157.4 19,801.3 20,436.3 21,113.1 3.2 35.7
Better for you (BFY) 5,006.7 5,090.0 5,195.2 5,288.0 5,384.2 1.8 9.1
Free from 821.3 861.8 903.5 941.2 977.4 4.4 1.7
Organic 606.4 617.9 630.8 641.4 651.8 1.8 1.1

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Naturally healthy

Many Japanese consumers are now interested in consuming naturally healthy products as part of their drive to live healthier lifestyles. Consequently, they have been avoiding health and wellness products that are considered to be artificial or exceptionally processed and not perceived as natural, authentic and chemical-free. The removal or substitution of ingredients that are naturally present is therefore seen as unnatural and incompatible with the core values of a healthy lifestyle (Euromonitor International, 2018).

Among naturally healthy products, the retail value of NH packaged food accounted for 10.8%, while NH beverages accounted for 89.2% in 2017.

Consumers of all ages in Japan tend to embrace healthier eating habits, which is reflected in demand for NH high-fibre food in ordinary life. The compound annual growth rate of NH high-fibre food was 8.8% from 2013 to 2017, reaching retail sales of US$301.6 million in 2017. NH high-fibre breakfast cereals recorded a high CAGR of 15.2% from 2013 to 2017.

Nuts in particular have been developed with diverse packaging and pack sizes to be positioned as daily snacks providing a source of protein for consumers ranging in age from children to seniors. As a result, honey and nuts, seeds and trail mixes recorded a positive value growth rate. In particular, NH honey recorded the highest CAGR of 17.0% from 2013 to 2017, reaching retail sales of US$526.9 million in 2017. Media attention also drives demand for honey.

Naturally healthy packaged food

Honey maintained double-digit dynamism in 2017, as it benefited from a focus on its prebiotic qualities in the media, particularly on television. The capacity of oligosaccharides in honey to boost the effectiveness of probiotics also enabled the category to grow in tandem with the probiotic boom in yogourt. Media attention, primarily television programs, also raised consumer awareness of the health benefits of manuka honey, including boosting immunity and alleviating sore throats. Building on its established healthy image, honey is set to remain by far the most dynamic category of naturally healthy packaged food in 2018-2022 (CAGR: 7.7%), followed by NH olive oil (CAGR: 5.2%), NH cereal bars (CAGR: 5.0%) and NH high‑fibre food (CAGR: 4.3%). All the subcategories of NH packaged food saw positive CAGRs in the previous five years (2013-2017) and are expected to see the same growth in the coming five years (2018-2022).

Like the situation with honey, a strong media focus on the health benefits of consumption played a key role in the strong expansion of NH olive oil. Japanese customers' interest in Italian cuisine, which is also partly founded on the healthy image of the Mediterranean diet, bolstered olive oil, which is an important ingredient in Italian food. Olive oil's growth in 2017 was boosted by rising unit prices as a result of increased import costs. However, the fact that demand remained strong underlines the impact of rising awareness of olive oil's health benefits and the way it has become established in Japanese consumers' culinary practice, including increasingly being used in Japanese as well as Italian cuisine. Demand is expected to remain strong (Euromonitor International, 2018).

Increasing interest in high-fibre bread, spurred by the availability of an increasingly wide range of products, is set to be a key driver of growth in naturally healthy high-fibre packaged food over the forecast period. This trend began to gain momentum in 2013-2017, with players such as convenience store chain Lawson Inc. frequently introducing products containing bran (hard outer layers of cereal grain). Meanwhile Yamazaki launched products such as 12 Koku Bread, which contains 12 different types of grain, including rye, barley, spelt, sesame, millet, quinoa and pumpkin seeds, to appeal to health-conscious consumers keen to consume naturally sourced fibres (Euromonitor International, 2018).

Historical naturally healthy packaged food – market retail sales in US$ millions, 2013-2017
Category 2013 2014 2015 2016 2017 CAGR* % 2013-2017
Naturally healthy (NH) 24,306.9 24,406.9 24,920.7 25,524.5 26,199.4 1.9
Naturally healthy packaged food 2,244.5 2,366.8 2,518.0 2,684.9 2,820.6 5.9
NH rice 880.1 908.5 929.5 950.0 968.9 2.4
NH honey 281.3 290.8 359.9 462.5 526.9 17.0
NH nuts, seeds and trail mixes 370.6 386.4 404.0 418.2 429.1 3.7
NH olive oil 287.1 313.6 336.4 345.9 370.0 6.5
NH fruit snacks 208.5 210.0 214.0 218.1 221.9 1.6
NH high-fibre food 215.0 255.5 272.3 288.1 301.6 8.8
NH high-fibre bread 128.8 147.6 158.3 167.2 175.0 8.0
NH high-fibre breakfast cereals 47.4 67.9 73.1 79.0 83.5 15.2
NH high-fibre sweet biscuits 24.4 25.3 26.2 27.1 28.3 3.8
NH high-fibre pasta 14.5 14.6 14.7 14.8 14.9 0.7
NH cereal bars 1.9 1.9 1.9 2.0 2.1 2.5

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Forecast naturally healthy packaged food – retail sales in US$ millions, 2018-2022
Category 2018 2019 2020 2021 2022 CAGR* % 2018-2022
Naturally healthy (NH) 27,085.7 28,103.5 29,173.8 30,143.0 31,072.8 3.5
Naturally healthy packaged food 2,957.1 3,100.1 3,244.8 3,372.5 3,492.2 4.2
NH rice 994.5 1,023.6 1,054.6 1,081.5 1,107.2 2.7
NH honey 584.5 640.9 695.2 743.4 787.5 7.7
NH nuts, seeds and trail mixes 440.4 453.3 466.7 478.1 488.6 2.6
NH olive oil 391.6 414.5 437.9 459.3 479.9 5.2
NH fruit snacks 227.2 233.4 240.1 245.8 251.2 2.5
NH high-fibre food 316.6 332.2 347.9 361.8 375.0 4.3
NH high-fibre bread 183.9 193.3 202.9 211.7 220.1 4.6
NH high-fibre breakfast cereals 88.1 92.6 97.0 100.8 104.1 4.3
NH high-fibre sweet biscuits 29.6 30.9 32.3 33.5 34.7 4.1
NH high-fibre pasta 15.1 15.3 15.6 15.9 16.1 1.6
NH cereal bars 2.3 2.4 2.5 2.6 2.8 5.0

Source: Euromonitor International, 2017

*CAGR: Compound Annual Growth Rate

Company shares

Nisshin Oillio Group Ltd. led the market share in NH packaged food (5.6%, thanks to the strong sales of its olive oil brand, Bosco), followed by Kyoritsu Foods Co Inc. (4.6%), Kato Bros Honey Co Ltd. (2.8%) and Kellogg Co. (2.7%) in 2017. Kellogg Co. had the highest compound annual growth rate of 12.3% from 2013 to 2017 among the top ten companies.

Top ten companies in NH packaged food and their retail market share (% breakdown), 2013-2017
Company 2013 2014 2015 2016 2017 CAGR* % 2013-2017
Nisshin Oillio Group Ltd. 5.8 5.8 5.9 5.8 5.6 −0.9
Kyoritsu Foods Co. Inc. 4.2 4.2 4.5 4.6 4.6 2.3
Kato Bros Honey Co. Ltd. 2.5 2.4 2.6 2.7 2.8 2.9
Kellogg Co. 1.7 2.4 2.4 2.6 2.7 12.3
Toyo Nuts Co. Ltd. 2.6 2.5 2.5 2.4 2.4 −2.0
Ajinomoto Co. Inc. 2.2 2.1 2.1 2.1 2.0 −2.4
Nippon Hachimitsu Co. Ltd. 1.7 1.6 1.7 1.8 1.9 2.8
Denroku Co. Ltd. 1.5 1.5 1.4 1.3 1.3 −3.5
Bright Food (Group) Co. Ltd. 1.2 1.2 1.1 1.1 −2.9
Deoleo SA 1.2 1.2 1.1 1.1 1.1 −2.2

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Brand shares

The top brand, Bosco (5.6% share, produced by Nisshin Oillio Group Ltd), benefits from a strong distribution network and spans across most store-based channels in which olive oil is sold. Bosco also offers a wide range of products and packaging types, including unique plastic bottles with a bag inside to prevent the olive oil from oxidizing, as well as regular glass and plastic bottles. Kellogg's Bran Flakes recorded the highest compound annual growth rate of 25.7% from 2013 to 2017, although its brand share was 1.5% and it ranked sixth among the top ten companies.

Top ten companies in NH packaged food and their retail market share (% breakdown), 2013-2017
Brand Company 2013 2014 2015 2016 2017 CAGR* % 2013-2017
Bosco Nisshin Oillio Group Ltd. 5.8 5.8 5.9 5.8 5.6 −0.9
Kyoritsu Kyoritsu Foods Co. Inc. 4.2 4.2 4.5 4.6 4.6 2.3
Sakura-jirushi Kato Bros Honey Co. Ltd. 2.5 2.4 2.6 2.7 2.8 2.9
Ajinomoto Ajinomoto Co. Inc. 2.2 2.1 2.1 2.1 2.0 −2.4
Renge-jirushi Nippon Hachimitsu Co. Ltd. 1.7 1.6 1.7 1.8 1.9 2.8
Toyo Nuts Toyo Nuts Co. Ltd. 1.8 1.8 1.8 1.7 1.8 0.0
Kellogg's Bran Flakes Kellogg Co. 0.6 1.3 1.4 1.5 1.5 25.7
Denroku Denroku Co Ltd. 1.5 1.5 1.4 1.3 1.3 −3.5
Kellogg's All Bran Kellogg Co. 1.1 1.1 1.1 1.1 1.1 0.0
Filippo Berio Bright Food (Group) Co. Ltd. 1.2 1.2 1.1 1.1 −2.9

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Distribution channels

Supermarkets continued to dominate the naturally healthy distribution landscape in 2017, with a 60.0% share in NH packaged food, and a compound annual growth rate of 0.6%. Convenience stores played an important role too, with a 14.6% share in 2017 and a CAGR of 0.7% from 2013 to 2017.

Distribution of NH packaged food by format: % value, 2013-2017
Channel 2013 2014 2015 2016 2017 CAGR* % 2013-2017
Store-based retailing 90.1 90.1 90.1 90.1 90.2 0.0
Grocery retailers 85.0 85.2 85.2 85.3 85.3 0.1
Modern grocery retailers 72.7 73.5 73.9 74.3 74.6 0.6
Convenience stores 14.2 14.3 14.4 14.5 14.6 0.7
Supermarkets 58.5 59.3 59.5 59.8 60.0 0.6
Traditional grocery retailers 12.3 11.6 11.3 11.0 10.7 −3.4
Food/drink/tobacco specialists 1.9 1.9 1.9 1.9 1.9 0.0
Independent small grocers 2.0 2.0 2.0 1.9 1.9 −1.3
Other grocery retailers 8.4 7.7 7.4 7.2 6.9 −4.8
Non-grocery specialists 5.1 4.9 4.9 4.8 4.8 −1.5
Non-store retailing 9.9 9.9 9.9 9.9 9.8 −0.3
Vending 0.5 0.5 0.5 0.5 0.4 −5.4
Home shopping 3.0 3.0 3.0 3.1 3.2 1.6
Internet retailing 1.4 1.4 1.5 1.5 1.5 1.7
Direct selling 5.1 5.0 4.9 4.8 4.7 −2.0
Total 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Naturally healthy beverages

The retail sales of NH beverages (US$23.4 billion) accounted for 89.2% of total NH product sales (US$26.2 billion) in 2017. NH beverages recorded an annual growth rate of 1.5% from 2013 to 2017, and they are expected to have a CAGR of 3.4% from 2018 to 2022, driven mainly by NH soft drinks (in particular NH RTD tea, NH bottled water and NH fruit/vegetable juice).

Within NH beverages, retail sales of soft drinks had a 89.5% share, while NH hot drinks had a 10.5% share in 2017. NH RTD tea (US$10.9 billion), NH bottled water (US$4.2 billion) and NH fruit/vegetable juice (US$4.8 billion) led sales in NH soft drinks, accounting for 90.6% share of the total retail sales of NH soft drinks in 2017. The compound annual growth rate of NH RTD tea was 3.6% from 2013 to 2017 and is expected to be 4.8% from 2018 to 2022. The compound annual growth rate of NH bottled water is 1.8% from 2013 to 2017 and is forecast to be 1.5% from 2018 to 2022. The compound annual growth rate of NH fruit/vegetable juice is −0.8% from 2013 to 2017, but is expected to increase to 3.5% from 2018 to 2022.

Even though the compound annual growth rate of NH hot drinks decreased to −2.7% from 2013 to 2017, its subcategory (NH fruit/herbal tea) recorded a CAGR of 3.4%. This fruit/herbal tea trend is forecast to continue to prevail in the future with the highest CAGR of 8.8% from 2018 to 2022 in all NH beverages, reaching US$39.2 million in 2022. Despite the negative growth of NH green tea (−3.0% CAGR in 2013-2017), the retail sales of this sub-category (US$2.2 billion) accounted for 88.6% of the NH hot drinks market (US$2.4 billion) in 2017.

Innovation and brand repositioning focused on Foods for Specified Health Uses (FOSHU, Japan only) and Foods with Functional Claims (FFC) certifications, which are expected to play a key role in the development of these categories from 2018 to 2022, as manufacturers take inspiration from the success of brands such as Kagome Tomato Juice (Euromonitor International, 2018).

Historical naturally healthy beverages – retail sales in US$ millions, 2013-2017
Category 2013 2014 2015 2016 2017 CAGR* % 2013-2017
Naturally healthy (NH) 24,306.9 24,406.9 24,920.7 25,524.5 26,199.4 1.9
Naturally healthy beverages 22,062.4 22,040.2 22,402.7 22,839.7 23,378.8 1.5
NH hot drinks 2,730.6 2,665.8 2,563.0 2,505.2 2,449.7 −2.7
NH tea 2,724.9 2,660.0 2,557.1 2,494.8 2,439.3 −2.7
NH fruit/herbal tea 22.5 22.4 22.4 23.7 25.7 3.4
NH green tea 2,455.1 2,391.5 2,290.7 2,228.3 2,171.6 −3.0
NH other tea 247.3 246.1 244.1 242.8 241.9 −0.6
NH other hot drinks 5.7 5.8 5.9 10.4 10.5 16.5
NH soft drinks 19,331.8 19,374.4 19,839.7 20,334.5 20,929.0 2.0
NH Asian speciality drinks 1,060.2 1,041.4 1,060.5 1,053.2 1,077.8 0.4
NH bottled water 3,868.7 3,954.3 4,072.5 4,142.1 4,159.3 1.8
NH natural mineral water 3,338.1 3,434.1 3,509.2 3,545.7 3,588.0 1.8
NH carbonated natural mineral bottled water 34.9 33.7 34.0 31.6 30.0 −3.7
NH still natural mineral bottled water 3,303.1 3,400.4 3,475.2 3,514.0 3,558.0 1.9
NH spring water 530.6 520.3 563.3 596.4 571.3 1.9
NH still spring bottled water 530.6 520.3 563.3 596.4 571.3 1.9
NH fruit/vegetable juice 4,925.6 4,835.4 4,570.8 4,666.6 4,778.4 −0.8
NH 100% juice 4,662.2 4,571.7 4,334.9 4,487.8 4,605.3 −0.3
NH superfruit juice 263.4 263.7 235.9 178.8 173.1 −10.0
NH superfruit 100% juice 26.5 31.5 30.5 29.7 28.5 1.8
NH superfruit juice (up to 24% juice) 206.2 180.7 159.7 106.8 101.4 −16.3
NH superfruit nectars (25%-99% juice) 30.7 51.5 45.8 42.4 43.2 8.9
NH non-cola carbonates 0.6 0.6 0.6 0.6 0.6 0.0
NH RTD[1] tea 9,476.7 9,542.6 10,135.2 10,472.0 10,912.8 3.6
NH RTD green tea 5,021.7 5,202.1 5,529.8 5,885.9 6,110.9 5.0
Other NH RTD tea 4,455.0 4,340.5 4,605.4 4,586.1 4,801.9 1.9

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

[1]: RTD = Ready-to-drink

Forecast naturally healthy beverages – retail sales in US$ millions, 2018-2022
Category 2018 2019 2020 2021 2022 CAGR* % 2018-2022
Naturally healthy (NH) 27,085.7 28,103.5 29,173.8 30,143.0 31,072.8 3.5
Naturally healthy beverages 24,128.6 25,003.4 25,929.0 26,770.5 27,580.6 3.4
NH hot drinks 2,418.3 2,400.2 2,391.3 2,378.0 2,366.7 −0.5
NH tea 2,407.7 2,389.3 2,380.2 2,366.6 2,355.2 −0.5
NH fruit/herbal tea 28.0 30.6 33.4 36.2 39.2 8.8
NH green tea 2,136.7 2,113.6 2,098.6 2,080.0 2,063.2 −0.9
NH other tea 242.9 245.1 248.2 250.5 252.8 1.0
NH other hot drinks 10.7 10.9 11.2 11.4 11.6 2.0
NH soft drinks 21,710.2 22,603.2 23,537.7 24,392.5 25,213.9 3.8
NH Asian speciality drinks 1,110.3 1,144.6 1,182.2 1,215.0 1,244.5 2.9
NH bottled water 4,203.3 4,266.8 4,340.0 4,398.9 4,454.8 1.5
NH natural mineral water 3,648.4 3,721.6 3,801.7 3,867.3 3,928.4 1.9
NH carbonated natural mineral bottled water 29.1 28.6 28.3 27.9 27.7 −1.2
NH still natural mineral bottled water 3,619.3 3,693.0 3,773.4 3,839.4 3,900.7 1.9
NH spring water 555.0 545.2 538.3 531.6 526.4 −1.3
NH still spring bottled water 555.0 545.2 538.3 531.6 526.4 −1.3
NH fruit/vegetable juice 4,945.3 5,136.0 5,333.0 5,509.4 5,676.4 3.5
NH 100% juice 4,779.3 4,975.3 5,176.1 5,356.2 5,526.4 3.7
NH superfruit juice 166.0 160.7 156.8 153.1 150.0 −2.5
NH superfruit 100% juice 27.6 27.1 26.7 26.3 25.9 −1.6
NH superfruit juice (up to 24% juice) 97.1 93.6 91.0 88.4 86.0 −3.0
NH superfruit nectars 25%-99% juice) 41.3 40.0 39.2 38.5 38.1 −2.0
NH Non-cola carbonates 0.6 0.6 0.7 0.7 0.7 3.9
NH RTD[1] tea 11,450.7 12,055.1 12,681.9 13,268.6 13,837.5 4.8
NH RTD green tea 6,389.6 6,704.1 7,018.5 7,308.4 7,575.9 4.3
Other NH RTD tea 5,061.1 5,351.0 5,663.4 5,960.2 6,261.6 5.5

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

[1]: RTD = Ready-to-drink

Company shares

Ito En Ltd. led in naturally healthy beverages in 2017 with a 20.0% value share thanks to a portfolio containing a number of strong brands across several product categories, including the overall market leader, Oi Ocha, which holds the top brand in both NH green tea and NH RTD green tea. Ito En Ltd., which leads sales in NH other tea and ranks second in NH fruit/vegetable juice behind Kagome, as well as leading in NH green tea and NH RTD tea, benefits from operating both branded stores and concession stands within department stores and airports.

Suntory Holdings Ltd. (17.2%) and the Coca-Cola Co. (14.4%) were ranked the second and third largest companies respectively in market share for their naturally healthy beverages in 2017.

Kagome Co. Ltd. was one of the fastest-growing players in naturally healthy beverages in 2017 (CAGR: 3.7%, 2013-2017), thanks mainly to the rapid expansion of its eponymous tomato juice brand. Kagome has successfully renewed its tomato juice with an FFC certification focused on its capacity to treat high cholesterol, an issue that concerns many Japanese consumers. Moreover, in October 2017, the company introduced a new FFC certification to its renewal of Kagome Yasai Juice, a mixed product containing tomato and vegetable juices with gamma-aminobutyric acid (GABA) naturally derived from vegetable ingredients. GABA is claimed to help decrease high blood pressure by reducing the constriction of blood vessels. Yasai Seikatsu Smoothie and Greens contributed to Kagome's development of fruit and vegetable mix juices, as the brands developed sales among the increasingly important consumer bases of working females and seniors, who tend to be particularly interested in products with natural ingredients (Euromonitor, 2018).

Top ten companies in NH beverages and their retail market share (% breakdown), 2013-2017
Company 2013 2014 2015 2016 2017 CAGR* % 2013-2017
ITO EN Ltd. 19.4 19.4 19.7 19.8 20.0 0.8
Suntory Holdings Ltd. 16.2 16.6 16.7 16.8 17.2 1.5
Coca-Cola Co., The 14.9 14.8 14.8 14.7 14.4 −0.8
Asahi Group Holdings Ltd. 8.7 8.7 9.0 9.2 8.8 0.3
Kagome Co. Ltd. 4.5 4.4 4.3 4.8 5.2 3.7
Kirin Holdings Co. Ltd. 4.1 3.9 4.1 4.9 5.2 6.1
PepsiCo Inc. 1.2 1.3 1.2 1.4 1.3 2.0
Harada Seicha. 1.3 1.3 1.3 1.2 1.2 −2.0
Fukuju En. 1.2 1.2 1.2 1.1 1.1 −2.2
Dydo Drinco Inc. 1.0 1.0 0.9 0.9 0.9 −2.6

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Brand shares

In 2017, the top three brands in NH beverages were Qi Ocha (9.5%), Iyemon (6.0%) and Ayataka (5.7%). The other two brands, Kenko Mineral Mugicha (4.6%, ITO EN Ltd.) and Namacha (3.5%, Kirin Holdings Co. Ltd.), recorded the highest compound annual growth rates of 12.2% and 12.3% respectively from 2013 to 2017.

Top ten brands in NH beverages and their retail market share (% breakdown), 2013-2017
Brand Company 2013 2014 2015 2016 2017 CAGR* % 2013-2017
Oi Ocha ITO EN Ltd. 9.6 9.7 9.8 9.7 9.5 −0.3
Iyemon Suntory Holdings Ltd. 4.7 5.5 5.7 5.9 6.0 6.3
Ayataka Coca-Cola Co., The 4.6 5.0 5.3 5.5 5.7 5.5
Kenko Mineral Mugicha ITO EN Ltd. 2.9 3.3 3.6 4.1 4.6 12.2
Tennensui Suntory Holdings Ltd. 4.4 4.5 4.4 4.5 4.6 1.1
Namacha Kirin Holdings Co. Ltd. 2.2 2.1 2.3 3.1 3.5 12.3
Yasai Seikatsu 100 Kagome Co. Ltd. 2.7 2.7 2.6 3.1 3.3 5.1
Sokenbicha Coca-Cola Co., The 3.2 3.1 2.8 2.8 2.8 −3.3
Suntory Oolong Tea Suntory Holdings Ltd. 3.7 3.3 3.0 2.8 2.7 −7.6
Jurokucha Asahi Group Holdings Ltd. 2.4 2.6 2.6 2.7 2.6 2.0

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Distribution channels

The top three NH beverage distribution channels are superstores (31.7%), convenience stores (28.6%) and direct selling (17.0%). Together, they account for 77.3% of all distribution channels, and their status remained almost unchanged from 2013 to 2017. There was little growth in the share of internet retailing for NH beverages as consumers preferred to buy them when shopping for their weekly groceries within modern grocery retailers or from independent small grocers.

The increasing purchasing power of the growing elderly Japanese demographic will enhance purchases of more processed products, particularly through supermarkets. Furthermore, manufacturers are likely to continue adopting marketing methods to appeal to younger Japanese consumers, whose focus will increasingly be on products offering a high level of convenience in addition to health attributes (Euromonitor International, 2017).

Distribution of NH beverages by format: % value 2013-2017
Channel 2013 2014 2015 2016 2017 CAGR* % 2013-2017
Store-based retailing 74.7 74.7 74.7 74.7 74.7 0.0
Grocery retailers 63.2 63.1 63.1 63.1 63.1 0.0
Modern grocery retailers 60.2 60.4 60.3 60.3 60.3 0.0
Convenience stores 28.5 28.6 28.6 28.6 28.6 0.1
Supermarkets 31.7 31.8 31.7 31.7 31.7 0.0
Traditional grocery retailers 3.1 2.8 2.8 2.8 2.8 −2.5
Independent small grocers 2.8 2.5 2.5 2.5 2.5 −2.8
Other grocery retailers 0.3 0.3 0.3 0.3 0.3 0.0
Non-grocery specialists 4.2 4.3 4.3 4.3 4.3 0.6
Non-store retailing 25.3 25.3 25.3 25.3 25.3 0.0
Vending 5.5 5.5 5.5 5.5 5.5 0.0
Home shopping 0.4 0.4 0.4 0.4 0.4 0.0
Internet retailing 2.4 2.4 2.4 2.4 2.5 1.0
Direct selling 17.1 17.0 17.0 17.0 17.0 −0.1
Total 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Opportunities for Canada

On March 8, 2018, Canada signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with ten other countries: Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. CPTPP represents a significant step toward closer trade and investment between Canada and Japan. Significant gains are possible for Canadian producers, who could gain market share in economies such as Japan's. Once in force, the CPTPP will provide Canada with greater market access to Japan than other competitors not currently party to the agreement and with access to the same tariff levels as major regional competitors, such as Australia and New Zealand, for key sectors such as beef, pork, seafood, cereal and many others. Find specific tariff reductions in Japan (PDF) under CPTPP.

Definitions

Naturally Healthy (NH)
NH is one of the health and wellness categories. The Euromonitor definition states that it includes food and beverages that naturally contain a substance that improves health and well-being beyond the product's pure calorific value. These products are usually a healthier alternative within a certain sector/subsector. High-fibre food (wholegrain/wholemeal/brown), soy products, sour milk drinks, nuts, seeds and trail mixes, honey, fruit and nut bars, and olive oil are considered NH foods; while 100% fruit/vegetable juice, super fruit juice, natural mineral water, spring water, RTD green tea, etc. are considered NH beverages. While many of these products are marketed on a health basis, this might not always be the case.
Foods with Functional Claims (FFC)
FFC helps to add legitimacy to healthy products, making sure that consumers are aware of the legitimacy of the product's health claims, invigorating consumers' perception that these product claims are scientifically backed and approved as beneficial to health.

For more information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

For additional intelligence on this and other markets, the complete library of Global Analysis reports can be found on the International agri-food market intelligence page, arranged by region.

For additional Information on FoodEx Japan 2019, please contact:

Ben Berry, Deputy Director
Trade Show Strategy and Delivery
Agriculture and Agri-Food Canada
ben.berry@canada.ca

FOODEX is the largest food and beverage show in Asia, and is an important event for Canadian exporters as it brings in key buyers from Japan and Asia. This year's show attracted 3,250 exhibitors from 78 countries and regions and 77,000 professional visitors. FOODEX is a flagship trade show, which means there will be a Canadian pavilion and potential financial booth-space support available for eligible Canadian companies.

More details and contact information can be found under the Canada pavilion program, delivered by Agriculture and Agri-Food Canada.

Resources

Health and wellness series – Naturally healthy products in Japan
Global Analysis Report

Prepared by: Hongli Wang, Market Analyst

© Her Majesty the Queen in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2019).

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