The Japanese nutraceutical market, currently worth around €18 billion, is set to more than double by 2012, finds the latest report from Paul Yamaguchi & Associates, Japanese nutritional research and consulting company. And although dominated by probiotics and dairy foods, Western ingredients are becoming increasingly popular.
The Japanese people prefer taking nutrients through conventional food forms rather than in tablets or capsules, say the analysts. This explains why functional foods are today the most promising sector for the Japanese food industry, growing 12.5 per cent per year and currently estimated at a value of $12.7 billion.
Within this segment it is milk products which lead the way, note the analysts, and most specifically probiotics, in the form of yoghurts or yoghurt drinks, to improve gastrointestinal health. Following closely behind however are functional foods for lowering cholesterol and high blood pressure and managing diabetes.
The fastest growing market is FOSHU foods (Foods for Specialised Health Use) which is growing at an impressive 21 per cent each year, according to the report. The FOSHU health claims regulation started in 1991 and by 2002 there were 324 registered FOSHU products, with sales reaching $4.1 billion.
But despite these figures, it is the non-health claim functional category which the analysts state represents a dominating 68 per cent of total functional foods, with a value of $8.68 billion.This market was initiated by the success of Yakult in the sixties and since then has been led by companies such as Othuka, Morinaga, Meiji and Snow Brand.
In the use of dietary supplements Japanese and Chinese ingredients are still said to lead the category but, say the analysts, more and more so-called 'western type ingredients' are gaining momentum. In addition they note that research and development of natural ingredients by Japanese companies is also increasing, particularly, in the areas of probiotics and phytochemicals.
"The market for Japanese nutritional supplements has grown to $8.5 billion," writes Yamaguchi. "Now they spend $166 a year per capita on supplements, which is higher than any other country." This can be compared to $136 per capita in the US and $92 in Europe.
However much of this growth was in 2001 when the market grew at a rate of 22 per cent. In the last year, the economic slowdown appears to have caught up with the supplement industry resulting in a relatively poor gain of only 4 per cent in 2002, finds the report.
"Experts explained that last year's slowdown was due to a lack of stimulation in the market and they felt it was only temporary" write the analysts. They also cited imported dietary supplements, BSE and false food labels as having scared consumers away.
Direct sales and multi-level marketing drive sales in the Japanese market, with Amway, Herbalife, NuSkin, Nutrition for Life, Neways and its Japanese counterpart Miki and DHC all currently expanding their territories via these methods.
The most popular ingredients in Japan include several at the top of the rankings in Europe and the US too. Echinacea has doubled in sales in one year to $33.3 million, St. John's Wort trebled in sales from $10.3 million to $33.1 million also in a year and lutein is up 300 per cent to $25 million. Glucosamine is also said to have tripled in the last two years to $58 million and although still considered new, the estimate for CoQ10 is $50 million.
And ingredients currently popular in other markets, such as MSM, Omega-3, Pycnogenol, stanol esters, folic acid, selenium and grape seed, are also starting to be recognised in Japan.
This impressive growth in the nutritional market is thought to be due to various factors, most notably the ageing populations, the relaxing of regulations, the high cost of healthcare and the popularity of western ingredients. Yamaguchi summarises the Japanese nutraceuticals market for potential entrants as: "emerging, highly specialised and, needless to say, highly competitive" .
The full 114 page report 'Nutraceuticals Japan 2003: Industry Insights' is available from Paul Yamaguchi & Associates.