Unit price increase drives growth in value sales of packaged food in 2014
Packaged food experienced 2% value growth in 2014, accelerating from less than 1% growth in 2013, supported by an increase in the average unit price of packaged food. The Japanese government implemented a tax rise and increased VAT from 5% to 8% in April 2014. The cost of many ingredients used for producing packaged food, such as milk, flour and fruit, increased during 2014, primarily due to a weak Japanese yen increasing import costs, and a decline in domestic production volume causing a shortage of products. The rise in unit price was also supported by growth in the popularity of premium products that provide added-value to consumers. The popularity of premium products was supported by the growth in the number of senior citizens in the population, who do not mind paying more for better quality products.
Demographic change impacts the shape of packaged food
With Japan facing a declining birth rate and a growing proportion of elderly people, the shape of packaged food continued to change in 2014. While baby food sales continued to shrink, sales of convalescence foods increased. Leading players in baby food forayed into the convalescence market by utilising their know-how in baby food, in light of the growing ageing population and the potential in the convalescence industry. Also, due to households getting smaller and an increase in the number of working women, ready meals, especially prepared salads, grew, with their convenience appreciated by busy consumers.
Modern grocery retailing continues to gain share in packaged food
Supermarkets and convenience stores continued to dominate value sales of packaged food in 2014, as Japanese visit these channels most frequently for daily grocery shopping. Among store-based retailing channels, supermarkets and convenience stores have the largest number of outlets located across the country. Supermarkets have the largest range of products, retailed at reasonable prices, including high quality private label products. The popularity of convenience stores is supported by long opening hours and convenience of purchasing without waiting in a long queue. Nevertheless, internet retailing continues to emerge in many packaged food categories, due to the convenience and reasonable prices of products.
Packaged food is dominated by domestic players
Japanese companies continued to dominate sales of packaged food in 2014, due to their strong brand presence established over years. There are multinational companies with established brand names around the world, such as Häagen-Dazs Japan Inc and Nestlé Japan Ltd; however, they have a smaller presence. Domestic players have established strong brand names through the long history of developing packaged food products specifically targeted for meeting the needs of Japanese consumers. The leading domestic companies have been making substantial investments in implementing marketing campaigns and developing a range of new products every year by quickly responding to the fast changing preferences of Japanese consumers. As a result, packaged food in Japan continues to have high barriers for the new entrants from overseas.
Economic recovery expected to support packaged food
Packaged food is expected to continue to see slow growth over the forecast period, despite a reduction in the population. There was slowdown in economic recovery due to the rise in VAT and limited growth in the income of Japanese households. However, it is expected that economic recovery will accelerate, as small and medium companies start to benefit from the strong performance of large companies being supported by “Abenomics” – the Japanese government’s economic initiative. The economic recovery is expected to support growth in the income of Japanese households and increase household budgets for purchasing packaged food.
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The Packaged food in Japan market research report includes:
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- As economic prospects slowly improve, are consumers starting to eat out more and spending less time cooking at home?
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This industry report originates from Passport, our Packaged Food market research database.