Sector Trend Analysis – Meat trends in Japan

Japan's meat market

Japan is an island country surrounded by oceans, and its population is well known for its fish and seafood consumption. Although eating meat was previously considered to be unfavourable for maintaining good health, Japanese consumers have slowly come to accept the idea that high protein intake is important for maintaining health and that meat is a great source of protein, as well as iron, vitamins and amino acids. Japanese people are increasingly consuming meat, and this trend is expected to continue.

It is relatively cheaper to import certain products, like beef, than to rely on domestic supply. This has increased demand for beef and veal. In 2019, beef and veal recorded solid growth in total volume terms, driven by the decline in the category's average unit price. The cheaper price was partially due to the signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on December 30, 2018, which saw reduced tariffs on imported beef from CPTPP countries to Japan. Meat is projected to see slower growth over the forecast period than was seen over the review period in total volume terms. This is due in part to demographic factors with Japan's further decrease in total population.^{Footnote 1}

Despite Japan's rapidly aging and declining population, the Japanese meat production industry is expected to experience growing sales due to the ongoing westernization of the typical Japanese diet. In particular, it is expected that young Japanese consumers will continue to consume meat as a staple food and will follow an increasingly modern and less traditional diet. The anticipated shortage in the supply of fish and seafood, leading to higher prices for these products over the forecast period (2020 to 2021), may influence consumers to substitute fish with meat. In addition to younger generations, older generations show a tendency to continue with their meat diet as they age. Other reasons for a decline in seafood consumption are the younger generations' lack of knowledge and skills to cook seafood at home, and the price difference between meat and seafood.

In 2019, total food retail sales value reached US$172.9 billion. From 2016 to 2019, the top two retail sales among all food categories were bakery and cereals (US$24.7 billion in 2019) and meat (US$24.4 billion). They grew 1.6% and 1.3% respectively over the past four years. In 2019, bakery and cereals had a market share of 14.3%, while meat represented a 14.1% share. Both retail sales together occupied almost one-third of the total market in Japan. Fish and seafood accounted for 5.5% of the market share in 2019. Japanese consumers spent almost three times more on meat than on fish and seafood.

In 2019, in terms of retail sales value, the top three categories of meat were pork (US$10.9 billion), chicken (US$7.9 billion) and beef (US$5.5 billion). Pork grew at a CAGR of 1.3%, chicken at 2.7% and beef at 1.0% from 2016 to 2019.

In 2019, in terms of retail sales volume, the top three categories of meat were chicken (525.2 million kilograms), pork (485.7 million kilograms) and beef (277.0 million kilograms). Since chicken is less expensive than pork, this led chicken to surpass pork in retail sale volume. Furthermore, given that chicken is regarded as a healthy low-fat choice compared to beef and pork, its consumption has been on rise for the past ten years.

Breakdown of retail sales of pork, chicken and beef

Pork

Fresh pork was the top seller in retail value (US$6.1 billion in 2019) and volume (299.7 million kilograms) for the past four years (2016-2019), growing slightly at a CAGR of 0.9% and 0.4% respectively. Chilled raw packaged pork followed, reaching sales of US$1.8 billion and 78.5 million kilograms in 2019.

Chicken

Fresh chicken was the largest category in value (US$4.5 billion in 2019) and volume (388.2 million kilograms in 2019) for the past four years (2016-2019), growing at a CAGR of 1.5% and 1.0% respectively. , followed by processed chilled chicken, reaching sales of US$1.1 billion and 38.8 million kilograms in 2019.

Beef

Fresh beef was the top seller in retail value (US$2.6 billion in 2019) and volume (156.7 million kilograms) for the past four years (2016-2019), with a CAGR of 0.3% and −0.2% respectively. Chilled raw packaged beef followed, reaching sales of US$1.5 billion and 76.3 million kilograms in 2019.

Japanese consumption of pork, chicken, beef, turkey and lamb has been on the rise. On average, each person consumed about 90 grams of meat every day in 2018,^{Footnote 2} which corresponds to over 30 kilograms per year. In 2019, per capita expenditure on meat was US$304.7, compared with US$300.1 in 2018.

Japan's meat trade summary

In 2019, Japan was ranked the world's second largest meat importer (US$10.8 billion), after China (US$18.8 billion). As a supplier, China recorded the highest CAGR of 29.0%, followed by South Korea at 9.2%, Germany at 6.2%, and Japan at 6.0%, from 2015 to 2019. Canada was the 14th largest meat importer in 2019, with negative growth at a CAGR of −4.9% (US$1.8 billion in 2019 from US$2.2 billion in 2015).

By volume, Japan was the second largest meat importer (2.3 million tonnes) globally in 2019, after China (6.0 million tonnes). China's meat imports grew the fastest at a CAGR of 22.0% from 2015 to 2019, followed by Japan at a CAGR of 4.4%.

Among the top ten meat suppliers to Japan by value, Canada was the third largest supplier in 2019, exporting US$1.5 billion, or 13.7% of the total world meat supply (US$10.8 billion), to Japan. Canada's meat supply to Japan had a CAGR of 14.1% from 2015 to 2019.

Among the top ten meat suppliers to Japan by volume, Canada was the fourth largest supplier in 2019, exporting 318,471 tonnes, or 13.7% of the total world meat supply, to Japan. Canada's meat supply to Japan grew at a CAGR of 11.0% from 2015 to 2019.

In 2019, Canada exported meat to the world at a value of US$5.6 billion. Japan was Canada's second largest market (US$1.3 billion, 23.4% share) after the United States (US$2.6 billion, 46.7% share). The CAGR for Japan was 13.4%, while the US recorded a low CAGR of 1.7% from 2015 to 2019.

In the last two years (2018 and 2019), Japan surpassed the U.S. and became Canada's largest pork export (US$1.1 billion) destination. China recorded the highest CAGR of 26.7%, while Japan gained a CAGR of 9.4% from 2015 to 2019.

Canada's beef exports to the world increased at a CAGR of 8.6% from 2015 to 2019. In 2019, Japan was Canada's second largest beef export destination, at a value of US$267.1 million, with a CAGR of 38.3% from 2015 to 2019. Although Vietnam obtained the highest CAGR of 203.5% for the past five years, the export value (US$6.1 million) remained much lower than Canada's beef exports to the U.S. and Japan.

Canada's total meat exports to Japan in 2019 were US$1.3 billion. Of that amount, meat of swine, fresh, chilled or frozen, accounted for US$972.5 million, whereas frozen bovine accounted for US$117.3 million.

The top meat products are mainly pork and beef, and their offal. From 2015 to 2019, fresh or chilled bovine gained the highest CAGR of 61.9%, followed by frozen bovine with a CAGR of 42.9%.

In 2019, Canada exported 301,779 tonnes of meat to Japan. Of that total, fresh, chilled or frozen swine accounted for 73.3% (221,252 tonnes). Fresh and chilled bovine gained the highest CAGR, at 61.6% from 2015 to 2019, followed by frozen bovine at a CAGR of 41.3%.

E-commerce in Japan

About 90% of the Japanese population is connected to the Internet nowadays. Japan is the world's fourth largest market for online sales revenue in the e-commerce market, expected to reach US$99.1 billion in 2020.

• Revenue is expected to show an annual growth rate (CAGR 2020-2024) of 5.0%, resulting in US$120.6 billion by 2024.
• The market's largest segment is fashion, with a market volume of US$38.3 billion in 2020.
• User penetration is 72.9% in 2020 and is expected to hit 76.6% by 2024.^{Footnote 3}
• 2.64% of food, beverage and alcohol sales were in the e-commerce market in 2018.^{Footnote 4}

According to Japan's Ministry of Economy report, Japan's top three online retailers in the last few years were Amazon Japan, Rakuten and Yahoo Japan.

Meat distribution channels in Japan

In 2018, hypermarkets and supermarkets were the largest meat distribution channel, at US$15.3 billion with a 63.5% share, followed by food and drink specialists (US$6.99 billion, 29.1% share) and convenience stores

(US$1.4 billion, 6.0% share). It is worth noting that e-retailers are the fifth largest meat distribution channel (US$125.2 million, 0.5% share) and recorded the highest CAGR at 2.4% among all meat distribution channels from 2015 to 2018.

Opportunities for Canada

The benefits of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

The CPTPP gives Canadian agriculture and agri-food products preferential market access to key export markets, including Japan. Under the agreement, tariffs will be eliminated or reduced on a wide range of Canadian exports for the agricultural sector, including meat, grains, pulses, maple syrup, wines and spirits, seafood, and other agri-food products.

Japan eliminated tariffs on close to 32% of tariff lines on agriculture and agri-food products after the CPTPP entered into force on December 30, 2018. A further 9% of tariff lines will provide preferential tariff treatment through permanent quotas and country-specific quotas for Canada. The remaining tariff lines will provide tariff elimination or reductions over a period of up to 20 years, or reductions of the in-quota or out-of-quota tariffs. Read the Global Affairs Canada overview of the CPTPP and Canada's agriculture and agri-food sector for more information.

In May 2019, Canada also obtained expanded market access to Japan for beef from cattle older than 30 months. Based on industry estimates, the expanded access announced has the potential to further increase exports of beef by up to 20%.

One of the first steps before entering the market is to determine whether a product is authorized for sale in Japan. Restrictions due to phytosanitary or food safety concerns can prevent a product from being imported. Products must meet Japanese regulations for food ingredients, especially with regard to food additives.

Exporters are strongly recommended to work with the local import agent, the distributor and the end user to make sure the products are in compliance with Japanese regulations and all proper documentation has been completed. For more information, please consult the following resources: Exporting food out of Canada (Canadian Food Inspection Agency), Step-by-Step Guide to Exporting (Trade Commissioner Service of Canada) and Standards and Regulations (Japan External Trade Organization).

Exporters should also determine the import classification and tariff rate for products. The Tariff Finder tool can assist exporters in determining tariff information for specific products and countries where Canada has a free trade agreement. Additionally, Japan Customs has a website for requesting an advance ruling on tariff classifications, which is available to importers and related parties.

FOODEX JAPAN is the largest food and beverage show in Asia, and is an important annual event for Canadian exporters as it brings in key buyers from Japan and Asia. The 2019 show attracted 3,316 exhibitors coming from 94 countries and brought in 85,000 visitors (Source: Japan Management Association).

FOODEX is one of Agriculture and Agri-Food Canada's flagship trade shows, with customizable turnkey booths and streamlined access to financial support via the Canada Pavilion Program.

It is worth noting that CanExport provides funding to small and medium-sized enterprises (SMEs) to reach export markets and execute strategic marketing projects such as participation in trade shows. Interested Canadian SMEs are encouraged to apply for this funding.

If you have questions about exporting your agriculture or food products, or are looking for support, please contact the Market Access Secretariat, Agriculture and Agri-Food Canada, at aafc.mas-sam.aac@canada.ca.

Conclusion

The growing demand for meat is due mainly to the ongoing internationalization of the Japanese diet, which has increased the popularity of meat over fish, especially among young Japanese people. Older generations also show a tendency to continue their meat diet as they age. Other reasons for a decline in seafood consumption are the younger generations' lack of knowledge and skills to cook seafood at home, and the price difference between meat and seafood.

The expected shortage in the supply of fish and seafood will most likely lead Japanese consumers to favour meat. The growing popularity of fish and seafood at a global level, especially in Europe, North America and China, is expected to continue, and a shortage in the supply of fish and seafood is expected to occur as the source of these types of food will become limited. There is also a movement towards sustainable fisheries to protect the ocean's natural resources. As a result, the price of fish is expected to increase, and many consumers are expected to prefer meat as a cheaper alternative to seafood.

In 2019, Canada was the third largest supplier of meat to Japan, and was the largest supplier of pork to Japan in 2018 and 2019. Canada still has room to improve by competing with the top two meat suppliers: the United States and Australia.

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.

• Overview of Trade Commissioner Services in the Japan
• Find a Trade Commissioner

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

For more information about FOODEX JAPAN 2020, please contact:

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

Sector Trend Analysis – Meat trends in Japan
Global Analysis Report

Prepared by: Hongli Wang, Market Analyst

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