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The following is a report based upon my work experience in a Japanese store, from September 8 to November 6, 1997. In this report I will outline the basic trends and opportunities for Alberta companies that I observed while working in the store, and give suggestions about effective ways to take advantage of those opportunities.
There are many opportunities available for Alberta companies in this market. However they must be able to adapt their product to the preference of the Japanese consumer.
The areas which I will be commenting on are:
The trends that I observed while working in the grocery section of the store were:
There also seemed to be an emphasis on low calorie and low fat products in the sweets area of the grocery section. This is due to the fact that most of the advertising of candies is directed mainly towards young females.
For an imported and/or new product to survive in the Japanese marketplace, it must be well advertised. If the product is the first of its kind, consumers should be educated about the product's benefits and uses. For example, the health benefits of canola oil are not well known by consumers. If the consumer knew this it could be an incentive to buy the higher priced canola oil over the regular cooking oil. The product will not have a long life unless money is spent on advertising it.
Because consumers are concerned with product freshness and because of the e. coli. bacteria epidemic in 1996, all food products have a "best before" date printed on them. Thus the producer is responsible to guarantee its product up until the "best before" date. If an Alberta company would like to sell a product in the Japanese market, it would be expected to make the same guarantees.
When guaranteeing the product for a certain time length packaging must be reliable. For instance, if it is announced that a competitor's package keeps the product fresher than yours, no matter how small the difference in length of freshness, consumers will no longer buy your product.
The trends that were apparent in the daily and frozen foods section were:
The frozen foods section (i.e. frozen vegetables and home meal replacement food products) has grown over the years. TV dinners and other frozen prepared dinners are gaining in popularity. Microwave pizzas are popular with young people because they are quick and simple to make. Meal replacements, such as frozen chicken karage (fried chicken), for making bentos (packed lunches), are used by mothers to make their job easier. The main problem with frozen TV dinners is that most of them lack taste. Consumers may purchase a product out of curiosity at first, but if the product does not live up to their expectations the word spreads and the product loses its "novelty".
Opportunities for Alberta companies exist in the frozen foods section. Most of the imported foods were in this section. For example, mixed vegetables and corn are imported from America, and edamame (green soybeans) from Thailand. The reason Albertan/Canadian vegetables are not imported is not because the quality is poor but price and consistent availability seems to be a factor.
Alberta vegetables are said to have high quality and good taste. If vegetables can be combined with processed meat, Alberta might have a chance to introduce some reasonably priced meal replacements into the market. Again, because of the e. coli bacteria problem in 1996, all of the products in the daily and frozen foods section have expiry dates printed on the packages.
In order to become competitive and to prepare for possible tariff reductions on value-added products, Alberta needs to diversify its supply and add value to its basic commodity supply materials, such as canola seed and wheat. Without value-added processing, Alberta will lose out on a potential high profit market.
Regarding the beer market, the three major beer manufacturing companies (Asahi, Kirin and Sapporo) have control of the "regular beer" market. With the amount of money that they spend on advertising, added to their brand name recognition, they make this market virtually impossible to penetrate. Although the regular beer market may not be a profitable area, there may be an opportunity for novelty beers, such as happoshu and beer produced for women.
One way a beer manufacturer could penetrate this market, is to slowly introduce its beer to the consumer seasonally. That is, sell the beer only during the "gift giving" season, as a novelty gift.
Another way to introduce a new beer is to only sell it in restaurants at first. Again, because of the beer's rarity, consumers will take an interest in it. Once its popularity grows, then it can be sold in supermarkets.
Hard liquor will only survive if it is heavily advertised. Almost all of the hard liquor that was sold in the store was heavily advertised. Brands that were not heavily advertised had already established a name for themselves.
The main trend in the fruits and vegetables section is the move toward organically grown food. Although the organic section is still small, it is expected to grow substantially in the next couple of years. The prices of organically grown fruits and vegetables is high compared to regularly grown fruits and vegetables but consumers are willing to pay the difference.
In order for a product to be classified as "organic" it must be grown in soil where no pesticides, chemical fertilizers or drugs have been used for 2-3 years. The organic fruits and vegetables that are grown in Japan include: carrots, daikon (radishes), Japanese green tea, potatoes, sweet potatoes, burdock roots, and any other root vegetables as well as tomatoes, eggplants and pumpkins. The reason for the dominance of root vegetables is the fact that they are easier to grow than other vegetables which are more vulnerable to disease and insects.
A problem that is being experienced is that there are companies that put an "organic" sticker on their product even though the product is not organically grown at all. Regulations defining organic are not in place in Japan.
A company that wants to enter the Japanese market should not expect to have high sales immediately. They must slowly introduce their product into the market, whether by introducing it as a type of "seasonal" gift item, or by selling it at the foodservice level. Once the product gains recognition, then advertising becomes key for survival against competitors. One way to cushion oneself against the high cost of advertising is to find a Japanese partner. A Japanese partner can help cover some advertising costs and act as an advisor for the foreign company. That is, help introduce the foreign company to the preferences of consumers in the market. However, because of the country's poor economic situation, this may be difficult. Japanese companies are just starting to go through the "streamlining" phase that Alberta went through a couple of years ago. Therefore, most Japanese companies are hesitant to accept small foreign companies as partners.
Some areas in the Japanese food industry are constantly changing. New fads are selling well, while old ones are dying off. The key is to follow the trends and produce a product accordingly.
The Japanese consumer will try anything once, however; if the impression is unfavourable or if they tire of it quickly the life span will be very short. The challenge is to get the consumers to accept the product and continue to buy it.
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