Value sales of packaged food remain flat in 2013
Packaged food registered little change in value sales in 2013. Performance across various categories is mixed. Consumers continued to cut back on non-essentials, such as confectionery and sweet and savoury snacks, as consumer confidence remained low for most of 2013 and a mood of austerity prevailed. Demographic factors and lifestyle changes played important roles affecting packaged food demand. Baby food continued to be one of the worst performing categories due to a declining birth rate. On the other hand, convalescence which caters to the elderly population, registered strong growth. There was also increasing consumption of Western-style food, such as olive oil, pasta and cereals, accompanied by the decline of rice. This can be attributed to busier lifestyles.
Convenience food and convenience stores gain popularity due to busy lifestyles
More women have entered the workforce, and working adults are spending more time at work. The prevalence of the internet and rising standards of living also mean consumers, especially the younger generation, are spending more time on modern distractions such as surfing the internet, instead of cooking or doing groceries. As a result, food that is ready for consumption or requires short preparation times grew strongly in 2013. Some examples include ready meals, soup, yoghurt, pasta and breakfast cereals. Convalescence products also grew at a strong rate, because consumers have less time to prepare traditional meals for the elderly. Convenience store chains have seized the growing demand for convenience by offering an increasing variety of ready meals at affordable prices. Online ordering and free delivery services for the elderly have become more common.
Domestic players continue to dominate packaged food
Packaged food continued to be dominated by domestic players in 2013, with the top ten players all being Japanese-based companies. Foreign multinationals like Häagen-Dazs Japan Inc and Nestlé Japan Ltd had a small presence compared to the leading domestic players. This is due to the presence of a large number of local players, which benefit from having established brands. Domestic players have long been providing products that are tailored to consumers’ palettes. Multinationals have limited presence in Japan. Even major players like Nestlé Japan Ltd and Danone Japan Co Ltd have not seen significant increases in value shares over the review period. Smaller international players faced high barriers of entry due to the difficulty in understanding local culture.
Modern grocery retailers gain value share over traditional grocery retailers
Convenience stores and supermarkets both gained value share in 2013, continuing their steady rise over the review period. On the other hand, the value share of independent small grocers continued to slide. More consumers are shopping at modern grocery retailers due to their extensive presence, convenient opening hours and large variety of products. The leading convenience store chains, such as 7-Eleven Japan Co Ltd have not only expanded their geographical spread, but also offered an increasing variety of products and services.
Economic recovery expected to boost packaged food
According to Euromonitor International data, Japan’s real GDP is projected to maintain a similar pace of growth in 2014 and return to a slower rate of around 1% for the rest of the decade. Towards the end of 2013, there were signs indicating that the Japan economy is on the road to recovery. The government appears committed to inflating the economy which will likely boost wages and consumer expenditure over the forecast period. Consumers who have previously cut back on non-essentials are expected to increase spending on packaged food. However, the increase is likely to be offset by the declining birth rate and an ageing population which reduces volume sales.
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The Packaged Food in Japan market research report includes:
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- What are the major brands in Japan?
- As economic prospects slowly improve, are consumers starting to eat out more and spending less time cooking at home?
- How is private label performing in the wake of retail consolidation and the global economic hangover?
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This industry report originates from Passport, our Packaged Food market research database.