The companies decided to establish TSD Wellness with capital of Y50m (c €0.35m) because the FOSHU (food for specified health uses, known as TOKUHO in Japan) and health foods market is growing on an annual basis, yet it is already crowded.
In order to make their mark in this environment, companies need to develop sophisticated, value added products and back them up with strong evidence, they say. According to US-based market researcher Paul Yamaguchi and Associates, the Japanese nutrition market is valued in the region of US$27 bn (c Y3100bn, €21bn) but FOSHU foods account for only $6 bn (Y690, €4.7bn) of this. Non-FOSHU functional foods account for $11 bln (Y1264 bln, €8.7), and dietary supplements around the same.
Toyo Shinyako is an R&D company that claims to have the largest number of FOSHU products in Japan, and which develops products in-house for major food and pharmaceutical manufacturers. It also offers contract research services.
The new venture will leverage Toyo Shinyako's product development expertise. Dentsu's contribution (an advertising agency) will be to advise on what consumers are looking for in healthy food products, as well as communication strategies tailored to the product type, sales channels and other variables.
Toyo Shinyaka holds a 66 per cent share of the new company, and Dentsu 34 per cent.
Yamaguchi told NutraIngredients.com earlier this year that innovation is crucial to Japan's success in the global marketplace.
"Japan has to innovate to come to the global market for any industry," he said. "We cannot compete with China over low cost manufacturing, or with other developed countries in other ways. So we have to innovate in new areas to survive in the local market. Health is part of this."
Japan was the first company to introduce a programme of health claims approvals in the 1980s.
But Yamaguchi said that the high cost of FOSHU registration, which can amount to as much as a million US dollars, can put some companies off. He maintains that, FOSHU or not, a healthy food product will still sell if it is a good one.