Getting to know the Market
The success of important organic foods into the Japanese market largely depends on the match between the product and the Japanese market characteristics, including distributor organization, product distribution channels, and product planning. The importance of knowing how the Japanese market works and how Japanese operators function cannot be stressed enough. Three characteristics of the Japanese market are the teikei-style transactions, organic and other certifications, and the food safety and reliability trend.
Teikei-style Transactions
The Teikei concept has penetrated the general market, introducing the Teikei concept as a way to differentiate products from their conventional counterparts, such as the disclosure of producer information and production history and direct contracting of production with producer associations. The Teikei methodology has also expanded across borders believed to be affecting the international trade of certified products, along the concept of fair-trade. Small-scale producers are advised not to focus only on fair-trade, but also to incorporate these principles of international Teikei into their production and supply systems. For example it would be advisable for a supplier to supply products that are characteristic of the region and climate, while also addressing food safety and environmental concerns. They must use safety management and environmentally friendly practices. International suppliers must also consider various factors such as import lot size, stable supply, and transport cost. It may be advantageous for small-scale producers to group themselves together and form a unified front for negotiation purposes. Furthermore, it would be beneficial to set up a system to disclose production history information, which is expected to become commonplace in the general market as well as in more specialized niche markets.
Organic and Other Certifications: Ingredient Supplies
Imported Organic JAS certified ingredients for processing have come to dominate the market, helped by low prices and insufficient domestic supply. Processing ingredients that are characteristic of the region, stable in supply, sufficient in quantity, and also low in price, would have potential for export to Japan. Products certified by programs involved in environmental preservation and fair-trade, and which can be prepared locally are also favorable. Example of a such product would be fruit juices.
Food Safety and Reliability: Japanese Distributor Trends
The market for safe and reliable foods is forecast to become significant in the future, most particularly with large corporations branding schemes. The driving forces behind the growth are various initiatives to satisfy consumer demand for food safety and reliability. The administrative reforms and legal revisions to enhance environmental preservation and food safety efforts, the establishments of traceability and information disclosure systems, and the encouragement of practices to reduce the use of pesticides and chemical fertilizers, are examples of such measures. In this context, products produced in socially and/or environmentally responsible manners are divided into five groups.
(1) Products with the guarantee of quality by means or third party certification, such as organic.
(2) Foods produced according to national level guidelines, such as specially grown agricultural products.
(3) Foods produced in accordance with prefectural level production standards and operational guidelines
(4) Products certified by international standards
(5) Foods that are produced according to private production standards and management systems that are implemented voluntarily by distributors (e.g. retailers, processors)
System certifications can range from ISO14001, ISO9001, HACCP, ISO22000(Food Safety Management Systems), and MAFF`s incorporation of the Japanese version of GAP, a Guide to the Phytosanitary Management of Fresh Vegetables, which was developed by Japan Greenhouse Horticulture Association in 2003. The National Federation of Agricultural Cooperative Associations Japan has developed the Zen-noh Reliability System and is in the process of spreading it nationwide.
Prior to accessing the Japanese market it is crucial to study these systems of food safety and reliability among distributors. Examples of key points to consider when searching for Japanese business partners are: what type(s) of product and transaction standards the Japanese operator uses and what kind of management methods it requires. Exporters must adjust their operation depending on the standards that their Japanese partner uses. It is also important to know, Japanese retailers perceive that one of the challenges in participating in the organic market is finding business partners for product development, as well as suppliers, who could provide them with products that qualify for their standards. Foreign exporters should initiate contact proactively by providing information that is appropriate for Japanese distributors` needs and interests.
Export Strategies
While organic foods are expected to become more widely distributed in the future and imports of high quality products are expected to increase, it must be emphasized that items relying on a certification or a labeled the Organic JAS mark alone will succeed. Imported products must not underestimate the importance of marketing strategies. With an already saturated food market it is difficult to motivate suppliers and consumers to consider any new product simply because their certified organic. Exporters should take the initiative to motivate their Japanese business partners to help promote positive images of the region along with the product, and also take into account social factors which are expected to continue to increase, such as food safety, environmental preservation, social justice (fair-trade). It is recommended organic operators obtain certifications available locally as well as some quality management certifications (ISO). They should actively promote such certified products in Japan using marketing strategies matching the styles of business respected in Japan. Japanese people respect business efforts that are based on a long-term vision into the future. Most organic products are expensive items and therefore should be promoted as being small in quantity but high in quality. Suppliers should form medium to long-term business partnerships with Japanese operators in order to stabilize and steadily expand their trade with Japan. Product quality, quantity, and price are of core importance for Japanese importers and domestic distributors, as well as for exporters.
Ingredients for Processing
Final buyers of ingredients are either processors, who use these ingredients to make their own brand products or retailers such as supermarkets and specialized retailers who subcontract a processor to process and sell the final products under their brand names. These brand owners have the final authority to decide about basic conditions for the product, such as its place of origin, quality, price, quantity and delivery punctuality. However, in many cases it is the importers who handle the actual procedures.
Products for Retail
Japanese consumers are not only concerned with the quality of a product, but also in the images of its place of origin, packaging, and the quality of design. Their tastes are quite distinct from European and American consumers. For example:
Australia: nature, the Southern Cross, and cows raised on big ranches are associated with health and nature
United Kingdom: tea blended and packaged in a stylish fashion to give an image of tradition
Italy: delicious Italian cuisine and olives are connected with beauty
In order to appeal to Japanese consumers it is essential to invest into promotional activities, such as an initial campaign promoting the product in stores.
Quality Management
It is very important that exporters have an ongoing and stringent quality management system set up. One of the biggest problems with imports from developing countries is that products sometimes differ in quality from the sample in which the agreement is based upon. Even if quality is the same, but alien substances, such as dust and sand are mixed in or the count of bacteria is significantly higher, the product may be rejected as a substandard quality item. Ongoing transactions are not exempt from this risk. Once such a mistake occurs, exporters can loose their credibility.
Japanese Retailers
Supermarkets
Daiei
Seiyu
Aeon
Ito Yokado (7-Eleven)