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Food makers look to supply rising global demand for healthier, high-quality products

Article - September 17, 2016

Rising demand for healthier foods in the U.S. and Europe and the growth in popularity of Japanese food across the globe translates to big opportunities for Japanese food makers, who exemplify the Monozukuri philosophy grounded in high quality and craftsmanship

As the world shrinks in size but grows in terms of population, new and forward-thinking products, as well as variations on traditional favorites, are gaining ground. The companies at the forefront of the segment are in a continuous search for products that combine consumer attraction with health benefits, at the same time being careful to preserve the reputation for responsible and sustainable manufacturing that Japan has become globally renowned for.

Such has been the surge in the global popularity of Japanese food over recent times that today it is undoubtedly one of the world’s best-loved cuisines, eclipsing even the internationally adored pizza, if certain surveys are to be believed.

And it’s not hard to believe, either, when you take a look at the figures.

According to a study by Japan’s Ministry of Agriculture, Forestry, and Fisheries, in July 2015 the number of Japanese restaurants in all markets outside Japan was nearly 89,000. This was up considerably from the 55,000 tallied in 2013 and more than triple the 24,000 counted in the 2006 survey.

The rise in Japanese food is part of a wider trend, particularly in the United States, of an increase in preference for Asian cuisines. Asian restaurants are now the fastest-growing fast food category in America, growing 10% in 2014 alone, according to data from market research firm Technomic, while the Washington Post also noted that global sales for Asian food have grown by nearly 500% since 1999, “the fastest growth seen in any food category around the world, according to data from market research firm Euromonitor.”

However, when considering the factors behind the sharp spike in popularity and demand for Japanese food in particular, unlike a lot of Asian cuisine, Japanese dishes (such as sushi and soba) are actually seen as a healthy option. In fact, the global Japanese food boom started with sushi back in the 1970s, spreading throughout the U.S. due to a drift towards health-conscious eating. As time has progressed and the trend in global health consciousness has continued to broaden across continents, so too has the image of Japanese food as “health food”, resulting in its explosive popularity.

But there is much more to Japanese cuisine than maki rolls and noodles. The country’s vibrant food manufacturing industry, among which products such as confectionaries and rice crackers are perhaps two of the most well-known exports, have also contributed heavily to the Japanese food boom.

Whereas car and electronics manufacturers like Toyota, Sony and Nintendo may have once served as symbols of national identity, today they have arguably been replaced by the country’s food products, owing to their heightened global reputation and demand. And like all national products, Japanese foodstuff is characterized by high quality, innovation and trademark attention to detail.

“We are keen to expose the Japanese way and quality. Especially in this sector, it is all about taste, quality and safety. We want to commercialize our products by appealing to the growing demand for Japanese quality,” says Tomiya Takamatsu, President of Dydo Drinco Inc., a company engaged in the manufacture and sale of beverages.

“We can see that people have a positive impression of rice crackers with them being gluten free, low in calories, and good for allergies, because we are experiencing rapid growth of our product”

Michiyasu Tanaka, Chairman & CEO, Kameda Seika Co., Ltd.

Indeed, producing such high-quality food products often requires heavy investment in R&D and innovation, which is also something that Japanese firms are renowned for.

“We are trying to boost our research and development, in order to meet the demands of the client and customers; that is our goal. Technology is a fundamental part of the business,” explains Kunio Otani, President of Nichirei Corporation, Japan’s largest frozen food producer which also engages in the transport and refrigeration of fresh produce.

“First and foremost, our emphasis is on quality and innovation,” says Yasushi Yoshida, President of food and beverage processor, Bourbon Corporation, highlighting a value held widely across the country’s manufacturing industry.

“We take great measures for product development. In Japan, consumers are always requesting new products, and that is why we come up with at least three new products per month. On top of that, we also have the full line of products, from biscuits to chewing gum, which allows us to be probably the number one in the world in terms of product range,” adds Mr. Yoshida, whose company’s product range includes rice crackers, bean snacks, wheat crackers, tea-based soft drinks, and fresh and frozen desserts.

While such products as biscuits and frozen desserts may not be the first things that spring to mind when you think of the healthy and nutritious food that Japan has become famous for, Mr. Yoshida explains that an increasingly health-conscious society is driving product innovation at his company.

Sources: Japanese Ministry of Agriculture, Technomic, Washington Post

“In the post-war period, the trend was to sell large quantities of inexpensive things,” he explains. “Nowadays people do not want to eat a lot even if something may be cheaper, because people are also concerned about their health. Japan is not a country where people are starving or where we cannot sustain the food demand – we have this part satisfied. However, there is a new demand for the health food, and we believe there is a new market growing in this area.”

Therefore, food processing companies like Bourbon are not only developing new products to cater for this market, but also innovating their existing products to make them healthier. As well as catering for higher demand in Japan, where a rapidly aging population is one of the major driving forces in the heightened demand for health products, Japanese manufacturers are also especially targeting the growingly health-conscious U.S. market.

“We can see that people have a positive impression of rice crackers with them being gluten free, low in calories, and good for allergies, because we are experiencing rapid growth of our products, especially in the American region,” says Michiyasu Tanaka, Chairman & CEO of Kameda Seika Co., Ltd., the leader in the Japanese and U.S. rice cracker markets with around a 30% and 60% share respectively. “I believe there is more potential for growth in the health food market in the U.S. We have plans to put more force into the health-related domain, which I believe puts us in sync with the trend of society in the U.S.”

Kameda Seika’s business doesn’t just end with rice crackers, however. In a bid to continue innovating and developing its products, the company set up the state-of-the-art Rice Research Center in order to help it conquer even more markets. “The reason we created the center is because rice has so many possibilities,” explains Mr. Tanaka. “Low-protein rice, for instance, is specifically prepared for people with kidney disease. We just began developing some research for brown rice. Not the brown rice you eat as it is, but the kind that goes into packaged foods or drinks. We have developed many supplements for pets with allergies or cosmetic products as well. In addition, we provide space foods to the international space station, which is a big selling point.”

Yet despite the healthy eating trends in the United States and Europe, consumption of sugar, which has now replaced fat as enemy number one on the lists of most nutritionists and dieticians across the world, remains incredibly high when compared to Japan. According to Masaaki Iida, President and CEO of Mitsui Sugar Co., Ltd., the average Japanese person consumes less than half the amount of sugar that a person consumes in the U.S. or Europe.

“As we are in the food industry, we have to provide safety and security as well as tastiness. We always put the customer first and provide healthy ingredients to society”

Kineo Okada, Chairman, Ariake Japan

“In the States a person consumes about 35 kilograms of sugar, in Europe it is 37 kilograms. Swiss people consume 55 kilos; and Japanese consume 17 kilos,” says Mr. Iida. “Many researchers and scholars from Europe and the U.S. say sugar is not good for you.

“Coca-Cola is trying to convert Japanese people to other kinds of artificial sweeteners. But if your consumption is at a level of 17 to 18 kilograms, it’s okay for you to enjoy sweets using sugar.”

With the rise of obesity and diabetes in the U.S., reducing consumption of sugar is a grave challenge for policymakers, as is cutting consumption of genetically modified (GM) crops, which are also understood to have adverse health effects. GM crops take less time and effort to produce than their traditional counterparts. But with the growing demand for non-GM crops, an increasing number of farmers in the U.S. are returning to the cultivation of traditional crops. An added incentive for farmers is the premiums buyers are offering for non-GM produce. Reports state GM crop cultivation in the U.S. has reached a plateau as more farmers opt for traditional varieties.

“In the American market, there is a movement and it’s shifting towards the non-genetically modified crops. Of course every year, we go and talk to the local farmers. We see what they do and we listen to their opinions. If we compare the GM and the non-GM, by far, GM is the most efficient and the easier to process and produce,” says Junji Torigoe, President of tofu maker, Sagamiya Foods Co., Ltd.

“But in Japan, there are only non-genetically modified crops. It is in the base, it is the core of the Japanese food culture. Of course we’re very happy that the U.S. market is shifting as well.”

Working with Sagamiya, snack food and cereal maker Calbee Inc. began marketing a tofu variety of granola in Japan’s Kanto region in March. Domestic production of granola has multiplied six-fold over the past five years, according to the Japan Snack Cereal Foods Association, as producers look to meet the increased demand for healthier breakfast cereals amongst Japan’s rapidly rising elderly population.

Nicherei’s President, Mr. Otani, shares the typical Japanese preference and enthusiasm for natural, healthy and high-quality produce.

“Of course as a company that deals in the food-related business, it is all about utilizing natural resources that are safe and high quality. In order to do that, we need to have a stable supply of these resources,” he says.

Mr. Otani explains that Nichirei, like many Japanese companies, is also concerned with global food shortages as population growth and climate change impact food supply and demand. Japan, he believes, can lead the global fight against food shortages. “Looking at the bigger picture, the world is facing food shortages. We need to address this situation,” he adds.

“Looking at the bigger picture, the world is facing food shortages. We need to address this situation”

Kunio Otani, President, Nichirei Corporation

Nichirei has been active in the U.S. market since 1979 and brings popular foods from Japan to America, through its Seattle-based subsidiary, Nichirei USA.

Another Japanese food processing company which has not only established itself in the U.S. market, but also become one of many domestic manufacturers to have led the way in bringing Japanese food products to a truly global audience is Ariake Japan, a leading producer of natural seasonings. Ariake has made major investments totaling around 20 billion yen ($195.4 million) over the past couple of years alone in order to expand the natural seasonings business throughout the world, and has constructed a “global eight-pillar system” with production and sales bases centered in Japan, China, Taiwan, Belgium, France, Indonesia and the U.S.

Chairman Kineo Okada explains that the first major milestone of the company came 26 years ago when it decided to expand to the United States. “It was triggered by an unstable supply of livestock here in Japan, and we entered the market at a very early stage,” says Mr. Okada.

Like most Japanese companies, Ariake not only holds the value of quality and innovation in high esteem, it also has special regard for sustainability and social responsibility. “Contributing to society has always been important to us,” says Mr. Okada. “As we are in the food industry, we have to provide safety and security as well as tastiness. We always put the customer first and provide healthy ingredients to society. We have also invested a lot in social contribution; for instance, our company has invested 10 billion yen ($97.7 billion) in a private scholarship fund. This was made possible thanks to the company stocks we had accumulated, and this fund is the largest educational fund in Japan.”

Environmental concerns also come high up on the list of priorities for Japanese manufacturers such as food packaging manufacturer NASCO Nakamura Sangyo. “In terms of the environmental focus, our tactic is to produce products that are more sustainable and do not have to get disposed as easily,” says President Gotaro Nakamura. “We have to comply with the different demands from the convenience stores and supermarkets, and our goal is to work together with them in order to find solutions to prevent environmental exploitation.”