Want to enter the Japanese market? Isn't it too difficult for foreign companies? Actually many have succeeded and it's one of the most profitable in the world. Perhaps you should reconsider?

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An introduction to building consumer
goods businesses in Japan rupert@exigomarketing.com
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Topics
• Health warning!
• Japan overview
• History &
Language
• Consumers
• Why Japan is
attractive to
FMCGs
• Trade structure
• Product
adaptation
• Inside a Japanese
company
• Thought starters
for launching in
Japan

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Health warning!
This presentation is designed
as a short introduction to the
marketing and sale of
consumer products in Japan.
We have written this for those
individuals and companies
who have limited experience
of this market. The focus of
the presentation is the
packaged food & beverage
categories.
We welcome your comments
and suggestions and
encourage you to contact us
should you have any
questions.

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Japan is an island nation with an island
mentality
• 4 main islands
– Honshu is the largest
• Mountainous
– 60 active volcanoes
• Urban
– Greater Tokyo has a
population exceeding
30 million Largest
metropolitan area in
the world
• Wide variations in
climate between the
regions
– Large snowfalls in
Hokkaido
– sub-tropical in the
South

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Japan’s history dates back to 10000bc
• Early Chinese
influence
• 16th Century first
contact with western
world
• Closed to outsiders
until 1853
• Meiji era: a period of
enlightenment
• Pacific war
• Rapid post-war growth
– World class
infrastructure &
public transport

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Japanese is a difficult language for foreigners
• 3 different character sets
– Katakana, Hiragana and
Kanji
• Over 10,000 Kanji
• Kei-go
– “Queen’s English”
• Most Japanese are unable
to speak English, or any
other language

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Japan’s population is 127m
• Consumers are
notoriously fickle
– More demanding than most
other developed countries
– Quality and attention to
detail is critical
• Aging population
– Growing demand for
products & services for
elder people
• Consumer preferences
can vary between regions
• Increasing polarisation
between premium and
economy brands

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Why Japan is attractive to FMCGs
• 3rd biggest economy in the world.
High GDP/capita
• Can be very large & profitable
– Coca Cola
• No 2 market worldwide. High retail
price/litre
– Nestlé
• One of the most profitable markets
– Haagen Dazs
• US$300m sales. Biggest market after
the US
• Japanese consumers love brands
– Louis Vuitton: Japan 35% of worldwide
sales
• Source of global innovation
• An opinion leader for Asia
– Japanese goods have credibility
across the region
– 20m+ tourists

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Many foreign brands enjoy a premium image in
Japan

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Retail channel structure
CVS
Super
market
Dept
Store
Home
Centre
GMS
Drug
Import
Vending
Liquor
shop
Railway
Online
Grocery Impulse Specialist Discount
ChannelsExamplesof
chains
Product
Range
Pricing
100
Yen
shop
Agricultural
Fresh to ambient to frozen, “take
home” items
Limited. Top brands.
Immediate consumption
Wide range within a
given category
Limited, Take
Home
Premium to economy. Monthly
and weekly bargains common
List prices, almost no
discounts
Standard to
premium
Discount

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Food Service channel structure
5
Star
Hotels
Fast
Food
Bars
Top
Restaurants
Airlines
Coffee
Shops
B2B
Offices
factories
Schools
Hospitals
Home
delivery
Parlours
Travel Leisure Industrial
Inns
Wide. Fresh to ambient to
frozen. Branded and generic
Limited. Branded items with
proven history
Ingredients/commodity
Premium - Standard Premium - Standard Economy
ChannelsExamplesof
chains
Product
Range
Pricing

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Understanding the trade structure takes time
• Fragmented
– Largest retail groups (Aeon, 7&I
holdings, Daiei) account for less
than 10% of sales combined
– Most manufacturers have large
sales teams
• Many chains are regional
• Supply is typically through a
plethora of wholesalers
– Some moves to direct trading in recent
years
• Many manufacturers invoice
through Shosha (trading houses)
Careful selection of which trade
channels to launch in is a key
success factor

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Japan Trade, Route to Market Structure &
Cost of Business
We
conduct
tailormade
analyses
for
clients
on
channel
&
route
to
market
structure
in
Japan,
these
include:-­‐
• Researching
and
profiling
new
distribu-on
partners
• Benchmarking
compe--on
• Channel
coverage
and
partner
capability
assessments
• Trading
terms,
margins
and
costs
of
doing
business

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There is a whole retail channel selling imported goods
Retailers include:-
• Seijyo Ishii
• Ikari Super
• Daimaru Peacock
• Pantry
• Sony Plaza
• Most department stores
• Catalogue/internet sites
Generally speaking less
product and packaging
adaptation is required

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To become a “mass market” brand in Japan, local
adaptation is often necessary
• “Georgia” is Coca Cola’s biggest brand
– This brand is unknown outside Japan
• Haagen Dazs has a Japan R&D centre
– Developed best selling Green Tea, Royal Milk
tea and Azuki flavours
• Taste preferences quite different from
Western palate
– Less sweet
– Few additives or colourings
• Local packaging
– Smaller pack sizes
– Labelling and claims
New entrants must have a very strong
understanding of their competitors
Image:
workingwithgrace.wordpress

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Features involving food and drink are
common in the media
• 6 main TV stations
– Chat shows dominate
– High media costs
• Large range of newspapers and weekly
and monthly magazines
• High broadband & mobile penetration and
highest level of fibre in OECD
Mainstream media
is not a realistic
option
for small brands.
Instead more
targeted marketing
like in-store demos
and events is often
more effective

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Inside a Japanese company…
• Focus on customer service
• Little attention given to shareholders’
interests
• Structure can be different from Western
companies
– Many Japanese companies don’t have a
“Marketing Department”
• Initiatives often start from the “bottom”
• Group decision making
– Consensus is crucial
– “nemawashi”
Negotiations
take time. Many
people are
involved.
Patience and
resilience is
required!

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Thought starters for launching in Japan
• Gather a team which includes people who have relevant
experience and contacts in the market
• Research the market thoroughly
– Consumers, category, channels, competition, routes to market
– Understand the key success factors in your category
• Be very clear about what you are bringing new to the
market
– Product, brand, positioning, technology…
• Test market before full-scale launch
• If importing pay very close attention to quality
– Most retailers will delist quickly if there are problems
• Stay focused

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Examples of FMCG categories where foreign
brands have succeeded…
• Pet Care
• Coffee
• Ice Cream
• Confectionery & gum
• Vitamins, Minerals, Supplements
• Toiletry
• Home Care
• Mexican sauces
• Canned goods
• Yogurt
• Meats
• Wines & liquor
• McDonalds, Pizza Hut

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rights
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20
Export
&
Expand
with
Exigo
An introduction to building consumer
goods businesses in Japan rupert@exigomarketing.com
www.exigomarke-ng.com
/exigomarke-ng