Japan

Point of View: Japanese Nutrition Industry Dynamics

By Takeshi Takeda

The Japanese nutrition market is the second largest market in the world with approximately 10 billion US dollars in sales and it is expected to be tripled by 2010. The growth will be driven by several factors including the aging population and reforms of the national insurance system, which will result in the increase of medical expenses and consumers’ awareness to prevent diseases.

Although the Japanese market is attractive with the high growth, there are a lot of challenges for new entrants. One of the key challenges is to understand Japanese unique and complex regulations. There are several regulations that manufacturers and marketers of health foods have to comply with, such as the Food Sanitation Law regulating ingredients allowed to use and the Medicine Act regulating food/drug classifications.

However, once players clear all necessary regulatory process, there is a huge opportunity to develop a big market, because Japanese love and always look for “new” products and/or ingredients. For instance, CoQ10, L-Carnitine, MSM and Biotin were recently approved as food/supplement ingredients, and all of them are significantly growing. Now alpha-lipoic acid draws the industry’s attention as it was deregulated in June, 2004. Likewise, opportunities will remain to exist with further deregulations and introduction of new products/ingredients.

While most of functional foods/beverages and dietary supplements are classified as “general foods or so-called health foods” from a regulatory perspective, there is another category called “Food with Health Claims”, with two subcategories, “Food with Nutrient Function Claims” and “Food for Specified Health Uses (FOSHU)”. Although general nutrition products are not allowed to make health claims, products in the category of “Food with Health Claims” are allowed to make health claims. It will require significant efforts to have a FOSHU status, however a FOSHU product will be highly competitive as the registered health claim can be used only by the registered product, but not by similar products.

In addition to a marketplace for nutrition products, Japan is also an attractive place for new product seeds. Since the Cabinet Office announced “Biotechnology Strategy Outline” in April 2003, targets of the central and local governments were changed form drug discovery to functional foods. Ministry of Economy, Trade and Industry and Ministry of Education Culture, Sports, Science and Technology are developing an idea of establishing intelligent clusters in cooperation among industries, academia, and the government, as one of the measures to revitalize local industries. And their focus is research and development of functional foods. Based on such circumstances, it is expected that scientifically proven, innovative functional foods will be developed in Japan, and that will provide opportunities for international collaboration.

There are opportunities in Japan for nutrition industry players as a marketplace to market their products and also as a place of R&D of new functional ingredients. However, high level of knowledge around the market and also the culture will be essential.