Nutraceuticals in China and Japan: Emerging opportunities and their crossover potential for Western markets+

Nutraceuticals in China and Japan: Emerging opportunities and their crossover potential for Western markets+

Nutraceuticals in China and Japan

Emerging opportunities and their crossover potential for Western markets



With slowing economic growth in Europe and the US, companies are taking a closer look at the fastest growing, innovative, and emerging markets for foods and beverages. China and Japan are key Asian markets for providing novel ideas and market potential for functional foods and drinks. Japan is considered the hub of functional food innovation; and China is a market with the world’s largest economic potential. It is vital to understand current regulation, consumer behavior, economic and market trends for the identification of new and emerging opportunities in these countries.



Nutraceuticals in China and Japan is a new report published by Business Insights that provides an understanding of underlying consumer purchasing triggers in Japan and China as well as an in-depth analysis of fiscal, regulatory, and product innovation insights on a domestic and global level.



Develop a clear understanding of the changing demographic and economic factors within China and Japan, and their influence on future product development and innovation with this new report...



Key issues examined by this report...

• Use of labels and logos in the Japanese market. The market has become focused on giving consumers another criterion for choosing products in addition to taste and price. One popular option is to provide unique labels/logos on the packaging to represent environmental sensitivity and product safety.



• A complex regulatory system in China. The Chinese system of regulatory control in relation to foods, beverages, supplements and ingredients (FBSI) is complex. At present there are three main agencies that regulate the sale, manufacture and advertising of FBSI.



• Japan is the world’s third largest importer of agricultural products, importing almost 60% of its food. The US currently delivers over a quarter of Japan’s agricultural imports, representing over $12bn.



• Food safety is a significant concern. Recent food scares, including infant milk powder melamine contamination in China in February 2008, are likely to further stress trade between China and the West as well as erode domestic consumer confidence.



This new report will enable you to...



• Quantify the size and growth potential of nutraceuticals in China, Japan and the wider Asian markets, based on this report's epidemiological, economic and demographic data.



• Predict future market growth levels based on this report's sales breakdown of the Asian food and beverage markets to 2011, including sales of functional food and drinks, energy drinks and OTC products.



• Improve the targeting and effectiveness of your NPD strategies based on this report’s analysis of Product Launch Analytics data of over 10,000 products launched in China and Japan between 2005 and 2008. The data is analyzed in terms of healthy and functional product launches and provides insight into the most innovative country in Asia-Pacific.



. • Understand how current regulations are influencing the marketing and import/export of functional foods and how your company should navigate this complex landscape with this new report.



Your questions answered...



• How fast will the functional food and drinks market in China and Japan grow over the next 4 years?



• Who are innovative players in the Chinese and Japanese markets?



• What are the current factors influencing the organic market in Japan?



• Why are Japan and China key markets for launching products and increasing sales?



• Which Asian countries will provide the most opportunity for growth in functional food and drinks?



Some key findings from this report



• The Asian functional food and beverage market and is set to increase at a CAGR of 5.6% from $36.6bn in 2007 to $48.0bn by 2012. Japan and China are leaders in category, with growth for each country set to continue at a CAGR of 5.3% and 5.9% respectively.



• Between 2005 and 2008, beauty foods increased from a share of 2.3% of all functional products launched in 2005 in China, to 5.2% in 2008. The beauty segment as it relates to functional ingredients and foods is an extension of the Japanese model of using innovative ingredient combinations.



• In 2007 the total food and drinks market in China and Japan was $209.9bn and $253.5bn respectively. By 2011 China is expected to grow to $292.7bn in food and beverage sales, making it by far the largest market in Asia.



• In China, there are 27 categories of product-specific health claims which are defined as either nutrient function claims or reduction of disease claims. According to the State Food and Drugs Administration (SFDA), only 27–33% of all products submitted between 2003 and 2005 were authorized, with only 30% of those approved making it onto the market.

Table of Contents
Nutraceuticals in China and Japan
Executive Summary 10
Understanding Asian markets 10
The Chinese nutrition market 11
The Japanese nutrition market 12
The Asia-Pacific market 13
Key product trends and innovation 14
Conclusions 15
Chapter 1 Understanding Asian markets 18
Summary 18
Introduction 18
A special focus on China and Japan 19
The Chinese consumer 20
Chinese demography 22
The Japanese consumer 23
Japanese demography 25
Chapter 2 The Chinese market 30
Summary 30
Introduction 30
Economic analysis 31
Stalling growth 31
The pressure of inflation 32
Food economy 33
Food imports and exports 33
Imports 33
Exports 34
Long-term economic issues 35
Market insights 36
Making brands work in China 36
Consumer food purchasing patterns 38
Distribution channels 41
Regulation 42
Regulation of functional foods in China 44
Labeling and the advertisement of functional foods in China 45
Substantiation of health claims in China 47
The role of traditional Chinese medicine (TCM) 49
A regulatory update 50
Threats and opportunities 51
Deadline for raw materials registration approaches 51
Development of international standards 53
China: a key player in the organic food market 54
Chapter 3 The Japanese nutrition market 58
Summary 58
Introduction 58
Economic analysis 59
Food economy 60
Food imports and exports 61
Imports 61
Exports 62
Maximum self-sufficiency 63
Market insights 64
Branding food in Japan 64
Japan’s food consumer 65
Retail trends 67
Regulation 69
Regulation of functional foods in Japan 70
Process of registration of functional foods (FOSHU) in Japan 71
The process 72
The FOSHU dossier 73
Non-FOSHU healthy foods 74
Labeling and the advertisement of functional foods in Japan 76
A regulatory update 77
Threats and opportunities 79
Japan goes labeling crazy 79
Japan goes eco-friendly 80
JAS labeling revision helps promote food safety 81
Zero calorie confusion 82
Chapter 4 The Asia-Pacific market 86
Summary 86
Introduction 87
Asia-Pacific markets 87
Food and drinks sales 88
Food and drink innovation 90
Healthy food and drinks in Asia 91
Functional food and drinks in Asia 92
Energy drinks 94
OTC sales 95
Innovation in healthy food and drinks 96
China 96
Japan 98
Chapter 5 Key product trends and innovation 102
Summary 102
Introduction 102
Asian trends influencing Western markets 103
Innovation in China 103
Nutritional trends 105
Westernization of taste 105
Hot drinks: a tea focused market 106
Convenience set to drive out-of-home snacking 108
Safety issues to boost kids’ nutrition in 2009 110
Product trends 112
Bone and joint health 113
Heart health 114
Energy and sports 119
Digestive health 123
Beauty 127
Weight control and diet 131
Innovation in Japan 135
Nutritional trends 135
Internationalization of the Japanese diet 135
Dairy innovation 138
Organic food 139
Packaging to boost tea and ingredient sales 140
Product trends 141
Bone and joint health 142
Heart health 146
Energy and sports 151
Digestive health 155
Beauty 158
Weight control and diet 163
Chapter 6 Conclusions 172
Summary 172
Introduction 173
Overcoming threats and new opportunities 173
China 173
Demographic and economic outlook 173
Marketing opportunities and challenges 176
Imports/exports 177
Challenges 179
Japan 179
Demographic and economic outlook 180
Marketing opportunities and challenges 181
Import/export 183
Challenges 183
Index 185
References 187
List of Figures
Figure 1.1: Population by age and gender in China (m), 2007 23
Figure 1.2: Population by age and gender in Japan (m), 2007 26
Figure 2.3: Exchange rate: Chinese Renminbi (RMB) to one US dollar (USD) 34
Figure 2.4: Average annual growth in household income, and food expenditure in China, 2000-03, by income quantile 39
Figure 2.5: Per-capita food expenditure at home and away from home, by urban household income quantile in China (Yuan), 2003 40
Figure 2.6: Chinese government-approved functional foods logo 45
Figure 4.7: Japanese Consumer Confidence Index (CCI) 62
Figure 3.8: Dole Japan Ltd safe food marketing campaign 67
Figure 3.9: FOSHU seal of approval 70
Figure 3.10: Number of FOSHU product approvals, 1992-2010 72
Figure 3.11: Size of the FOSHU market in Japan ($bn), 1996-2008 74
Figure 3.12: Carbon footprint logo 80
Figure 3.13: Japanese Agricultural Standards (JAS) label 81
Figure 3.14: Coca-Cola Zero launch April 2007 83
Figure 4.15: Share of food and drinks launched in Asia-Pacific, by category, 2005–2008 90
Figure 4.16: Share of healthy food and drinks launched in China and Japan, as a percentage of total food and drinks launched, 2005–08 91
Figure 4.17: Share of functional food and drinks launched in China, by trend, as a percentage of total healthy food and drinks launched, 2005–2008 97
Figure 4.18: Share of functional products launched in China, by trend, 2005–2008 98
Figure 4.19: Share of functional food and drinks launched in Japan, by trend, as a percentage of total healthy food and drinks launched, 2005–08 99
Figure 4.20: Share of functional products launched in Japan, by trend, 2005–08 100
Figure 5.21: Nestlé Nesvita Cereal Drink 114
Figure 5.22: Ocean Nutrition’s OMU Yogurt Drink 115
Figure 5.23: Morinaga’s Dars Chocolate 116
Figure 5.24: Dars chocolate temperature-sensing sticker 117
Figure 5.25: Black Fury energy drink from Silver Bird Group 117
Figure 5.26: Oishi Bread Pan from Oishi China Co. 118
Figure 5.27: Vitamin energy drink from Red Bull Vitamin Drink Co 120
Figure 5.28: Suntory Super Ultima sports drink 121
Figure 5.29: Aodeli Multi-Vitamin 7% from Lotte Aodeli Beverage Co 122
Figure 5.30: Imperial Concubine vinegar from Jiangsu Hengshun Group 124
Figure 5.31: Mai's Golden Soymilk Powder from Shantou Wisdom Star Foods 125
Figure 5.32: Nestlé’s Water Care bottled water 126
Figure 5.33: Lactasoy Light Plus Collagen Soymilk from Lactasoy Co 128
Figure 5.34: Bright Herb Yogurt from Bright Dairy Industrial Stock Co., Ltd 129
Figure 5.35: Beauty fruit juice from Tianjin Huaweisite Industry Co 130
Figure 5.36: Yili Nutrition for Women Milk Powder 132
Figure 5.37: Weichuan Qingyang yogurt from Weichuan Food Co 133
Figure 5.38: Yuejia lemon-flavor water with oxygen from Shanghai Yuejia Food Co 134
Figure 5.39: Milk Curry Cup oodles from Nissin Food Products 139
Figure 5.40: CIC Co bottle technology 140
Figure 5.41: Aoijro health drink integrating new twist technology 141
Figure 5.42: Snow Brand Glucosamine 500 Skim from Yaizu Suisan Kagaku Kogyo Co 143
Figure 5.43: FANCL Shokubutsu Umare Calcium from FANCL 144
Figure 5.44: Ajinomoto Amino Vital Daily Walker 146
Figure 5.45: Suntory Goma Mugi Cha 147
Figure 5.46: Nabisco Choco Chip Cookie with GABA 149
Figure 5.47: Nisshin Pharma LivLon Sardine Peptide Drink from Nisshin Pharma 150
Figure 5.48: JT Roots Custom Blend Bit Style Bito 151
Figure 5.49: Iwatani Healthy Suppon energy drink 153
Figure 5.50: Bubblicious Amino Quench from Cadbury 154
Figure 5.51: Kracie Otoko Kaoru chewing gum from Kracie Holdings 156
Figure 5.52: Melodian Gyunyu ni Iremasho from Melodian, Co 157
Figure 5.53: Danone Bio Yogurt Aloe four pack from Danone 158
Figure 5.54: Astalift Beauty Drink from Fuji Film Group 159
Figure 5.55: Kanebo Lifting Collagen 160
Figure 5.56: Minute Maid Beautia from Coca-Cola 161
Figure 5.57: Nescafe Excella Coffee Mix from Nestlé Japan Group 162
Figure 5.58: Weight control chewing gum 164
Figure 5.59: Lotte Zero Mild from Lotte Shoji 166
Figure 5.60: Ajinomoto Capsiate Nensho Aojiru 167
Figure 5.61: Love Body Jasmine Slim from Coca-Cola 168
Figure 5.62: Meiji Perfect Plus Nen Kei diet jelly from Meiji Seika 169
List of Tables
Table 1.1: Life expectancy at birth, by gender, 1990-2006 27
Table 2.2: Approved health claims in China 47
Table 2.3: Health claim assessment criteria in China 48
Table 3.4: FNFC nutrient function claims and warnings 75
Table 3.5: FNFC nutrient function claims and warnings, cont. 76
Table 4.6: Top 15 countries, food and drinks launched in Asia-Pacific, 2005–2008 88
Table 4.7: Sales of food in Asia-Pacific, by country ($m), 2007–2011 89
Table 4.8: Sales of drinks in Asia-Pacific, by country ($m), 2007–2011 89
Table 4.9: Sales of functional food and drinks in Asia-Pacific, by country ($m), 2002-2012 92
Table 4.10: Sales of energy drinks in Asia-Pacific, by country ($m), 2002–2012 94
Table 4.11: OTC healthcare sales in Asia-Pacific, by country ($m), 2007–2011 95
Table 5.12: Top 20 product tags on food and drinks launched in China, 2005-2008 109