Japan Food and Drink Report Q4 2012

Private consumption growth in Japan is expected to continue to wane, as the employment outlook remains sombre and government subsidies for fuel-efficient cars come to an end. Given that private consumption accounts for around 60% of Japan’s GDP, weak domestic demand can be expected to weigh on the country’s growth for the rest of 2012 and into 2013. Longer term, the contracting growth opportunities in Japan’s food, drink and retail sectors mean that overseas expansion will continue to be a strategic priority for local players such as Lawson and Asahi.

Headline Industry Data (local currency) ? 2012 per capita food consumption = +0.9%; five-year compound annual growth rate (CAGR) to 2016 = +0.5% ? 2012 alcoholic drinks value sales = +2.8%; CAGR growth forecast to 2016 = +1.2% ? 2012 soft drinks value sales = +4.7%; CAGR growth forecast to 2016 = +3.8% ? 2012 mass grocery retail sales = +1.5%; CAGR growth forecast to 2016 = +0.6%

Key Industry Trends Itochu Acquires Dole’s Asian Assets: US produce group Dole has recently announced a deal to sell its global packaged food and Asian fresh businesses to Japan-based trading conglomerate Itochu in a transaction worth US$1.7bn. Itochu aims to almost double profit from its food businesses to JPY40bn in three years, according to the company’s annual report. The company expects to benefit from Dole’s brand image and gain stability by establishing a new revenue stream other than natural resources, which can be vulnerable to price fluctuations.

Tesco Exits Japan: In summer 2012, UK mass grocery retail (MGR) player Tesco ended its nine-year struggle in Japan by offloading its loss-making business to Japanese MGR operator Aeon. Tesco’s decision to leave Japan can be attributed to the retailer’s expansionary ambitions in other higher-growth Asian MGR markets, and its proposed divestment of its Japan business is likely to leave it better positioned to pursue growth across the region. For Aeon, an acquisition of Tesco Japan will help facilitate its ambitions of consolidating a stronger foothold in its domestic market.

Risks To Outlook With domestic demand likely to remain subdued, there is a growing risk that a quick deterioration of growth in global markets could tip the Japanese economy back into recession. Given our poor economic outlook for China and Western Europe, we expect Japan’s export growth to stall for the remainder of 2012, which will have further consequences for local demand.

Table of contents

Chapter 1 - BMI Industry View

Chapter 2 - SWOT Analysis

Japan Food SWOT

Japan Drink SWOT

Japan Mass Grocery Retail SWOT

Chapter 3 - Business Environment

BMI’s Core Global Industry Views

Table: Core Views

Asia Pacific Food & Drink Risk/Reward Ratings

Table: Food & Drink Risk/Reward Sub-Factor Ratings, Q (score out of )

Table: Asia Pacific Food & Drink Risk/Reward Ratings, Q

Japan’s Food And Drink Business Environment Rating

Macroeconomic Outlook

Table: Economic Activity, -

Chapter 4 - Industry Forecast Scenario

Consumer Outlook

Food

Food Consumption

Table: Food Consumption Indicators – Historical Data & Forecasts, -

Confectionery

Table: Confectionery Value/Volume Sales – Historical Data & Forecasts, -

Table: Sugar Confectionery, -

Canned Food

Table: Canned Food Value/Volume Sales – Historical Data & Forecasts, -

Drink

Alcoholic Drinks

Table: Alcoholic Drinks Value/Volume Sales – Historical Data & Forecasts, -

Table: Beer, -

Table: Wine, -

Hot Drinks

Table: Hot Drinks Value Sales – Historical Data & Forecasts, -

Table: Tea, -

Soft Drinks

Table: Soft Drinks Value Sales – Historical Data & Forecasts, -

Table: Carbonated Soft Drinks, -

Table: Fruit & Vegetable Juice, -

Table: Bottled Water, -

Mass Grocery Retail

Table: Mass Grocery Retail Sales Value By Format – Historical Data & Forecasts, -

Trade

Table: Trade Indicators – Historical Data & Forecasts, -

Chapter 5 - Food

Key Industry Trends And Developments

Japan Food & Drink Report Q

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Sapporo Seeks Expansion Through US$bn Investment

Dole Sells Asian Assets To Itochu

Foreign Expansions Accelerating

Innovation To Provide Exciting Opportunities For Confectionery Players

High-Spending Consumers Appeal To Foreign Investors

Market Overview

Food Consumption

Confectionery

Functional Food

Canned Food

Frozen Food

Trade

Agriculture

Chapter 6 - Drink

Key Industry Trends And Developments

Happoshu Category Squeezed At Both Ends

Japan Beer Sales Up

Securing A Stronger Foothold

Opportunities Abound In EMs For Yakult

Pursuing Geographical Diversification …

…As Well As Sectoral Diversification

Market Overview

Alcoholic Drinks

Beer

Wine

Hot Drinks

Soft Drinks

Functional Drinks

Chapter 7 - Mass Grocery Retail

Key Industry Trends And Developments

Tesco To Make Waves In Asia After Japan Exit

Convenience Retail Outperformance In

Pursuing Sectoral And Geographical Expansions

Seven & I And Daiei With Differing Results

Market Overview

Leading MGR Players

Table: Structure Of Japan’s Mass Grocery Retail Market By Estimated Number Of Outlets, -

Table: Structure Of Japan’s Mass Grocery Retail Market – Sales By Format (US$bn), -

Table: Structure Of Japan’s Mass Grocery Retail Market – Sales By Format (JPYbn), -

Table: Average Annual Sales Per Outlet By Format –

Table: Grocery Retail Sales By Format

Chapter 8 - Competitive Landscape

Key Players

Table: Key Players In Japan’s Food & Drink Sector

Table: Key Players In Japan’s Mass Grocery Retail Sector

Chapter 9 - Company Monitor

Food

Japan Food & Drink Report Q

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Ajinomoto

Drink

Asahi Breweries Ltd

Kirin

Mass Grocery Retail

Seven & I Holdings

Lawson Inc

Aeon

Seiyu

Chapter 10 - Country Snapshot

Table: Japan’s Population By Age Group, - (‘)

Table: Japan’s Population By Age Group, - (% of total)

Table: Japan’s Key Population Ratios, -

Table: Japan’s Rural And Urban Population, -

Chapter 11 - Risk/Reward Ratings Methodology

Table: Rewards

Table: Risks

Weighting

Table: Weighting

Chapter 12 - BMI Food & Drink Industry Glossary

Food & Drink

Mass Grocery Retail

Chapter 13 - BMI Food & Drink Forecasting & Sourcing

How We Generate Our Industry Forecasts

Sourcing

Related research categories

By sector: General drinks

By market: Japan (in Asia)