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Market Focus: Trends and Developments in the Confectionery Sector in Japan by Canadean
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Weak
economic growth and squeezed disposable income makes Japan’s Consumer Packaged
Goods (CPG) markets one of the lowest growth markets in the region – factors
that are exacerbated by the country’s aging population, which has contributed
to a stagnant confectionery market. However, higher consumer expenditure and
mild inflation is expected to boost demand for consumer goods in Japan in 2013,
according to leading consumer specialist Canadean’s new report: Market Trends
and Developments in the Confectionery Sector in Japan.
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Key Market Trends
In order
to capitalize on this opportunity for growth in a challenging market, Confectionery
providers must be reactive to key market trends:
Luxury Consumption
Like the
mature markets in the US and Western Europe, Luxury Chocolate is a fast growing
segment in Japan: consumers are choosing to buy a smaller number of expensive
but high quality chocolates rather than conventional bars and countlines. Their
motivations range from gifting or special occasions, or simply the desire for a
luxurious treat. Indeed, this demand for luxury chocolate has even seen premium
brands focus on the development of high-end flagship stores and lavish product
launches.
Health & Wellness
The
functional benefits of Confectionery products are a growing driver in the
overall market, which includes Food For
Specified Health Use (FOSHU) items, which have been approved by the
Ministry of Health, Labor, and Welfare. For the Confectionery sector, the
functional Gum segment offers the most significant opportunities, with chewing
gums containing xylitol – which helps prevent tooth decay – being particularly
popular in Japan. Indeed, sales of sugar-free gum have grown strongly in Japan,
even whilst sales of conventional sugar gum have stagnated.
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Fragmented Tastes
Confectionery
items in Japan are often closely targeted to suit the taste and preference of
specific consumer groups, either by:
- Age
- Geography
- Income
Level
- Propensity
to seek indulgent or new experiences
This
translates to a high number of new product launches, with exotic flavors and
different pack sizes and value propositions, such as Nestle’s Matcha Green Tea
KitKat, which offer white chocolate covered with a green colored layer that is
made with matcha green tea.
This
variety of product is replicated in marketing activities, with use of popular
TV shows and social media vital to reaching the target audience.
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Japan’s
weak economic growth has resulted in one of the slowest growing CPG markets in
the region. However, Japan still remains one of the most affluent societies
worldwide, and its CPG market is one of the largest and most mature. Higher
consumer expenditure and mild inflation is expected to boost demand for
consumer goods in Japan in 2013. The Japanese prefer less sweet and soft
confectionery products compared to North America and Europe. The functional
benefits of Confectionery products are major growth drivers in the overall
market. Moreover, the demand for individually packed items, such as bags of
chocolate mini bars that can be taken as quick snacks, is high. Exotic
flavours, including green tea, soy sauce, and watermelon are highly favoured by
Japanese consumers.
The demand
for Sugar Confectionary will grow briskly between 2012 and 2017 helped by stiff
competition between pharmaceutical companies and traditional sugar
confectioners leading to multiple product launches claiming functional benefits
ranging from medicated candies to vitamin enriched lozenges. The Confectionery
sector is the largest Flexible packaging category in the Food market in Japan
and accounted for 23% of total Flexible packaging consumption in volume terms
in 2012. Films account for almost half of the packs used, with Wrappers and
Foils the other key packaging types. Meanwhile, very few packs use a closure or
an outer.
Japan’s
aging population is driving increased demand for functional products such as
sugar-free gums containing xylitol, which prevent tooth decay, or breath
freshening mints. Meanwhile, the low number of children is causing slower
growth in the bubblegum segment.
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Table of Content
Country Context
A weak economy and an aging population make it increasingly challenging to succeed in Japan's Confectionery market.
Hypermarkets and Supermarkets account for majority of Food and Grocery sales
Confectioners are adopting a multi-channel distribution strategy for greater consumer reach.
Busy lives and the increasing number of single person households is driving change in Japanese eating habits
A weak economy and an aging population make it increasingly challenging to succeed in Japan's Confectionery market.
Hypermarkets and Supermarkets account for majority of Food and Grocery sales
Confectioners are adopting a multi-channel distribution strategy for greater consumer reach.
Busy lives and the increasing number of single person households is driving change in Japanese eating habits
Sector Analysis
Premiumization and Health and Wellness benefits are key market strategies of major Confectioners.
Targeting a wide variety of tastes and seasonal sales are key to success in the Confectionary market in Japan
Mints and Medicated confectionery are driving growth in the Sugar Confectionery category.
Chocolate sales growth to be driven by seasonal demand; Sugar-free and Breath freshening Gum to record higher sales
Premiumization and Health and Wellness benefits are key market strategies of major Confectioners.
Targeting a wide variety of tastes and seasonal sales are key to success in the Confectionary market in Japan
Mints and Medicated confectionery are driving growth in the Sugar Confectionery category.
Chocolate sales growth to be driven by seasonal demand; Sugar-free and Breath freshening Gum to record higher sales
Brands and Private Labels
The top five confectionery companies - Meiji, Lotte, Morinaga, Ezaki Glico, and Mary Chocolate account for almost half of the total confectionery sales in Japan
Low Private label penetration in Japan's Confectionery sector
High growth in Private labels is unlikely to challenge major brands because of their low penetration
The top five confectionery companies - Meiji, Lotte, Morinaga, Ezaki Glico, and Mary Chocolate account for almost half of the total confectionery sales in Japan
Low Private label penetration in Japan's Confectionery sector
High growth in Private labels is unlikely to challenge major brands because of their low penetration
Packaging Insight
Rising Confectionery consumption is creating demand for Flexible Packaging Films, Wrappers, and Foils.
Increasing consumption of Sugar Confectionery means demand for Flexible Packaging will grow
Rising Confectionery consumption is creating demand for Flexible Packaging Films, Wrappers, and Foils.
Increasing consumption of Sugar Confectionery means demand for Flexible Packaging will grow
Future Outlook- four key trends in
Japan's Confectionery sector
Japan's aging population is driving new product formulation in Gums
Rising production costs make price vs. size a key trade-off
Product innovation is key in the Gum and Sugar Confectionery categories
A multi-channel distribution strategy is needed to ensure greater consumer reach
Japan's aging population is driving new product formulation in Gums
Rising production costs make price vs. size a key trade-off
Product innovation is key in the Gum and Sugar Confectionery categories
A multi-channel distribution strategy is needed to ensure greater consumer reach
Data Appendix and Summary
Methodology
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