Unit price increase drives growth in value sales of packaged food in 2015
Despite the slow economic growth within the country, the increase in the average unit price of packaged food hits Japanese households. The Japanese yen continued to weaken during 2015, due to the effects of the economic policy implemented by the Japanese government. The VAT increase from 5% to 8%, which was introduced by the government in April 2014, together with the negative impact from the weak Japanese yen, contributed to the increase in unit prices. Production costs increased due to the increase in the cost of ingredients, logistics and packaging, which put pressure on manufacturers to increase their unit prices. Manufactures have also been actively launching premium products and not just competing on price. Premium products are widely available within packaged food and are selected by mainly older consumers, although consumers from other age groups also purchase these products.
Food safety becomes concern for consumers
During the review period, stories surfaced that various manufactures had failed to maintain food safety in Japan. An agricultural medicine, foreign objects and expired ingredients were mixed up in a variety of different products across packaged food. These incidents did not only involve packaged food sold through retail channels but also products sold through foodservice. The issue of food security became a primary concern in the latter years of the review period. Since Japanese consumers have high expectations and previously placed strong trust in the food safety of Japanese brands, these incidents panicked consumers. Social networking sites played an important role in spreading information and causing hesitation among consumers when purchasing packaged food. This exposure led consumers to unite together to attack manufacturers, especially when these consumers did not receive a satisfactory response from those manufacturers. In many cases it drove consumers to avoid purchasing particular types of packaged food altogether.
Packaged food is dominated by domestic players
In Japan, domestic players continued to dominate sales of packaged food in 2015, due to their strong brand presence which they have established over a long period of time and the strong trust held by Japanese consumers in these products. Japanese manufacturers have established strong brand names and develop products to meet the needs of Japanese consumers. Although Japanese manufacturers have been successful in finding out what Japanese consumers want, companies often just redesign their existing brands to keep consumers interested in them. Even just a different design on the packaging can be effective in attracting interest from consumers, as well as holding special promotions at the store front in supermarkets. Major manufacturers continued to promote aggressively using various media platforms, often featuring famous celebrities. However, there are multinational companies with established brand names around the world which continued to perform well in 2015 such as Häagen-Dazs Japan Inc and Nestlé Japan Ltd.
Modern grocery retailing continues to gain share in packaged food
Store-based retailers continued to dominate value sales of packaged food in 2015. With the largest number of outlets among store-based retailers, supermarkets and convenience stores were the most popular shopping channels for packaged food. These stores are located nationwide and are often the closest provider of dairy products for consumers. With its premium and economy private label products, the supermarkets channel offers the widest range of products. Meanwhile, convenience stores outlets continue to expand the range of packaged food products that they sell. During the review period, due to the increase in the number of single-person households, smaller-sized products were launched by the major manufacturers and distributed to convenience stores. These products include vegetable and seed oils, salad dressings, and mayonnaise, which all recorded a positive performance in current value terms in 2015 thanks to the support of consumers who use convenience stores for grocery shopping. Due to their long working hours, there are a significant number of Japanese consumers who cannot get to a supermarkets outlet before they close. Unlike supermarkets, convenience stores do not use discounts, but Japanese consumers continue to visit these outlets due to their convenience.
Demographic change impacts the shape of packaged food
Driven by the decline seen in the Japanese population with a significant decline in the birth rate and a growing population of elderly people, the shape of packaged food continued to change in 2015. Sales of baby food saw low current value growth of 1% in 2015 due to the smaller number of new born babies, while packaged food products targeting senior citizens continued to see positive growth. Due to the increase in small-sized households and the number of professional females, time-saving packaged food products saw strong current value growth in 2015, such as ready meals, wet/cooking sauces and frozen processed vegetables.
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Discover the latest market trends and uncover sources of future market growth for the Packaged food industry in Japan with research from Euromonitor's team of in-country analysts.
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The Packaged food in Japan market research report includes:
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Our market research reports answer questions such as:
- What is the market size of Packaged food in Japan?
- 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?
- Do consumers want value for money or added value?
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This industry report originates from Passport, our Packaged Food market research database.