Marketing

The growing middle-class with increased per capita spending power combined with the large ageing population have transformed this society into very health conscious consumers. As a result, the Japanese consumers are very inclined to splurge on products that claim to have added health.

Not surprisingly, the retail value of the Japanese functional packaged food was about 8 billion US$ in 2015 with an 8% increase in retail value since 2010. The functional beverages sector, however large has been stagnant for the past five years, with a retail value of 6.5 billion US$ in 2015. Among other characteristics of this market, research institutes often point out the high degree of local loyalty of Japanese customer, always more at ease with Japanese made products. Importers into are far better off with local partners. Manufacturers can have mass appeal when functional products are launched under popular brands. The recent launch by The Coca Cola Company of an exclusive tea with Japan: Functional Drinks Foshu claims is a perfect example. and Health Claims in an Era This tea, sold for 140 yen ($1.60) for a half liter bottle, was developed in of Post-“Foshu” partnership with 1,600-year-old Kyoto- based tea grower Kanbayashi Shunsho. This tea features a taste A common definition of functional The Japan’s population of 126.8 million test by Kyoto apprentice geishas and products today usually states that they in 2015 is expected to drop to 124.5 Japanese chefs vouching that its flavor contain health ingredients and can claim million by the year 2020. This state of health benefits beyond their nutritional contraction has to be combined with value. a serious ageing trend where 30% of the population will be over 65 years of Trendy and hype, functional foods and age by 2025. Following Euromonitor beverages are kings on the Japanese International’s 2015 study, Japan’s supermarket shelves. The country is extended period of economic stagnation often considered as the home of healthy has resulted in Japanese consumers food innovation, maybe due to ’s becoming increasingly price conscious. entry into the market around 1935. Later This trend was further encouraged the Foshu system (or Food For Specified when the government increased the Health Uses) started to strictly regulate sales tax from 5% to 8% in April 2014. the claims. However, last year new rules According to a survey conducted by the came into effect and widened the scope Bank of Japan in March 2015, 60% of of health claims, opening brand new respondents reduced their consumption grounds to manufacturers of all size. of goods and services after the sales tax increase. But despite this shrinking and Dominique Huret and Jean Schrurs price sensitive population, Japan keeps from Cape Decision, the Brussels based the highest per capita spending power in consultancy practice, report from Tokyo. Asia (BMI Research 2015).

10 drink Technology + Marketing · March 2017 Marketing

to supply the drinker with all nutrients Oronamin has been on the market and electrolytes lost when sweating. for more than 50 years: it contains isoleucine, amino acids and the daily Green Dakara is a Suntory drink with suggested intake of various vitamins. 14% of market shares. Between a and a flavored water, it is presented The drink's slogan “genki hatsuratsu" or as "a less fruity tasting version of "lively vigor" is also well known. This drink Vitamin Water” with juices and extracts is very present in the Japanese pop, sport of 14 different ingredients. Other than and TV culture. It comes in a distinctive fruit extracts, it contains aloe vera, salt, glass bottle which has not changed much seaweed , sesame seed, sugar, and honey. since the drink was first sold. It also has a distinctive cap which can be removed Kirin also has an offer of sport drink with by pulling the plastic lever connected to Kirin Amino. This drink includes 1000mg it. In 2000, a "sister" product Oronamin of Vitamin C and 400mg of an amino acid C Royal Polis was introduced, with royal called Ornithine. jelly and propolis extracts.

The energy drink category has experi- Real Gold is a Japanese energy soda enced an impressive 6% growth in retail made by Coca-Cola Japan. It contains sales the last 6 years in Japan. Several ingredients intended to give your day products share the shelves, but Oronamin a boost, including royal jelly, ginseng (24%) Red Bull (16%) and Real Gold (11%) extract for 140 calories a can. Toughman are top three. Also an Otsuka product, V is sold by Yakult. This drink contains

Retail Sales of functional beverages by segment in US$ Period Growth in % % CAGR Categories 2010 2015 2010-2015 is undistinguishable from tea from a Sports drinks 3.082 2.791 -2 teapot, although packed in a PET bottle. Energy drinks 1.446 2014 +6.8 Carbonates 732 861 +3.3 As can been seen in the table below representing retail sales in 2015, the top Bottled water 1.183 651 -11.2 three segments for beverages are sports Fruit/ veg Juices 231 339 +8 drinks, energy drinks and carbonates. Asian speciality The top segment within functional 210 239 +2.7 drinks beverage is sport drinks. The Coca-Cola Company is leading with 43% market RTD coffee & tea 53 73 +6.7 share for . Current prices- fixed 2015 Exchange Rates Source: Euromonitor International A similar product is , the runner up with 23%, manufactured Retail Sales of Functional beverages by segment in US$ by Otsuka Pharmaceutical Co. It was % CAGR launched in 1980, and is available all over Categories 2016 2020 2016-2020 Asia and the Middle East. Sports drinks 2772 2880 +1 Pocari Sweat is a mild-tasting, relatively Energy drinks 2133 2558 +4.6 light, non-carbonated sweet beverage Carbonates 831 815 -0.5 and is advertised as an "ion supply Bottled water 629 587 -1.7 drink". Like many sports drinks it has a fruity, flavor. The reference to Fruit/ veg Juices 346 377 +2.1 sweat in the name of the beverage has Asian speciality 237 241 +0,5 an off-putting or humorous connotation drinks for native English speakers. But the name RTD coffee & tea 68 64 -1.6 was chosen originally for marketing purpose. In Japan, English words are Current prices- fixed 2015 Exchange Rates used differently and the drink is intended Source: Euromonitor International

12 drink Technology + Marketing · March 2017 Marketing vitamins, niacin, ginseng extract and sports drinks, as sales are expected to Takashi Wasa, senior vice-president royal jelly. Usually energy drinks of this increase of 20% in retail value from at Coca-Cola Japan, at a recent press sort contain caffeine but this drink is now to 2020. But another drink that is meeting at the company’s Tokyo head- unique in that it does not contain any. “controversially” functional is taking a quarters said “Coca-Cola has had 850 leading edge: . Over the past different beverages in Japan alone, not Finally, functional carbonated drinks in decade or so, green tea has grown into counting discontinued brands. The odds Japan are also on the rise in the last a $8.9 billion packaged beverage market of having a are maybe just three out five years. in Japan. Many Japanese now prefer tea of a thousand. It is so difficult to survive conveniently packaged in plastic bottles, in Japan.” Non-cola represent 75% of the segment. rather than steeped in teapots. Their functional key ingredients are Raymond Shelton, senior executive vitamin C, polyphenols and fiber. The Unlike acidic bottled Coke, green tea officer for Coca-Cola East Japan con- Suntory CC is the third most requires special precautions during is cludes: “I have travelled the world for popular drink in Japan after the two bottling to prevent spoilage and preserve Coca-Cola and never seen such a variety giants Cola. It has 28% market share its flavor. Coca-Cola has invested about of products and such an intensive pace of and often bears the Simpsons cartoons. $458 million since 2014 to double its new launches”. It is followed by Kirin Wets and Match. assembly lines in Japan to nine and In the coming years a slight decrease accommodate such aseptic production. The notoriously fad-loving Japanese is expected. On the functional cola Coca-Cola’s competitors in this tea swaps from one trend to another across segment, low calorie and fortified cola growing nation, led by Ito En, a traditional an array of healthy but also often weird saw a decline of about 15 % in the last tea maker that pioneered bottled green product offerings. They drink across two years and a similar drop is expected tea in Japan, were quick to imitate Coca- beverage categories each and every in the next 5 years. Cola’s lead in adding powdered tea to its day so the set of demands is clearly green tea drinks to make them cloudier broader there than elsewhere. The As the numbers show, the future is and more evocative of richer-tasting teas market remains amazing to monitor. bright for energy drinks and also in out of a teapot. Key No. 90158

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