Commodity Innovation Series - Snapshot of Opportunities in Japan's Grain Sector

May 2017

• United States dollar (US$)

Market trends

Japan is the twenty-second largest importer of baked goods in the world

• Canadian non-durum wheat (Canadian Western Red Spring) is used by Japan's bakery industry, primarily for bread-making.
• Canadian wheat is also blended with United States and Australian wheat for manufacturing other bakery products.
• Canadian durum wheat is used for manufacturing pasta noodles.
• Wafer biscuits are the most popular biscuits in Japan, representing 44.5% market share.
• Japan accounts for 17.6% of the Asia-Pacific biscuit market, following India (24.8%) and China (23.8%)
• Premium products in smaller packages and that feature health claims are particularly popular among the large aging population.

Factors of consideration

• There are some speciality importers who focus on specialty grains such as organic wheat - there may be opportunities in these areas for Canadian exporters.
• Securing access to distribution channels is a key challenge for potential entrants.
• Because Japanese trading houses import large volumes of wheat at regular intervals from established, large and trusted Canadian suppliers, it can be challenging for smaller exporters to access the market. They are often unable to supply at the volumes, and with the regularity, that trading houses demand.

Recommendation for entry

• End users will typically source from Japanese importers or distributors rather than import directly. This is especially true of bulk grain purchases, and generally true of processed products such as cereal bars. Exporters should be aware of this and be prepared for the need to find an importer or distributor for their products.
• Grains are subject to inspection by Japanese authorities under the Plant Protection Act.
• Products must conform to the basic requirements of Japan's Food Sanitation Act and to Japanese Maximum Residue Limits for agricultural chemicals. Processed products must also conform to all regulations related to food additives.

Grains in bulk

Canada was the third largest supplier of cereals to Japan in 2016

• Canadian grains are typically shipped in bulk for use by Japanese processors and manufacturers.
• Trade between Canada and Japan is dominated by major Canadian grain exporting companies and major Japanese trading houses that import and re-sell to end users. The trading houses import grains through Japan's Ministry of Agriculture, Forestry and Fisheries, which acts as the actual buyer in a state trading enterprise capacity.
• Canada accounted for 29.4% market share of Japan's wheat imports in 2015, representing 1,660,459 tonnes
• In 2016, Japan mainly imported cereals from the United States, Brazil, Canada, and Australia.
• About 75% of imported corn is consumed by the feed sector, and 25% is used for processing – mainly for manufacturing cornstarch.
• Japanese cereal imports from Canada increased by 6% from 2015 to 2016.

Japan's feed industry relies almost entirely on imported grains

Sales of breakfast cereals in Japan grew by 11.8% in 2016

• The baked goods market in Japan saw retail sales of US$20.6 billion in 2016, while breakfast cereals had sales of US$777.5 million.
• From 2012 to 2016, sales of baked goods grew 0.8% at a compound annual growth rate of 0.2%, while those of breakfast cereals grew by 92.1% at a growth rate of 17.7%.

Breakfast cereal sales are expected to grow 18.8% from 2017 to 2021

• Sales of baked goods in Japan are expected to grow 1.7% in 2017, while sales of breakfast cereals are expected to grow 3.7%.
• Volume sales of breakfast cereals are expected to grow by 12% from 2017 to 2021; those for baked goods are expected to decrease by 0.1%.

Grains as an ingredient

Japan's innovation in food has produced cereal products that are gmo and preservative free, low calorie/fat, and fortified with calicium and fiber.

• From 2012 to 2016, 29,577 cereal products were launched in Japan
• 69% of product launches were new products, variety, and range

Increase in healthy convenience foods

Growing claims:

1. Ethical
2. Limited edition
3. No additives/preservatives
4. Microwaveable
5. Genetically Modified Organism (GMO)-free

Declining claims:

• Seasonal
• Economy
• Premium
• Viatmin/mineral fortified
• Low/no reduced calorie

Focus on environmental & convenience packaging:

Top package type:

1. Flexible
2. Tub
3. Bottle
4. Flexible sachet
5. Can

Top packaging material:

1. Plastic unspecified
2. Polypropylene plastic
3. Metallised film
4. Board plastic lined
5. Polyethylene terephthalate plastic

Sixth largest innovative grain market in the world

Sources

• Canadian Trade Commissioner Service
• United States Department of Agriculture (USDA) Foreign Agriculture Service Global Agricultural Information Network (GAIN) Report
• Mintel Database
• Euromonitor
• Global Trade Tracker

How we can help

We offer multiple programs and services to help you achieve your international business goals, such as the Agri-Food Trade Service, AgriMarketing Program, and Canada Brand. International Trade Commissioners are also an excellent point of contact for export advice and can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions, and local business contacts.

Have we piqued your interest?

For more information on opportunities in Japan or to join our distribution list, contact Single Window at aafc.mas-sam.aac@canada.ca

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