CHANGING FOOD & BEVERAGE TASTES IN JAPAN
Looking at our survey of Japan’s top 100 brands, one of the clearest trends to emerge is a change in consumer tastes of food and beverage brands. Sure, Japan’s biggest dairy and drinks brands Meiji (ranked third overall), Suntory (5) and Morinaga (6) still dominate and held their positions this year. But outside the top 10, we see a different picture. Packaged food giant Nissin (12), isotonic drink Pocari Sweat (37), snack food company Calbee (40) soy sauce maker Kikkoman (48) and beer giant Sapporo (86) all dipped slightly. Coffee retailer Doutor (72) and tomato juice maker Kagome (98) both slipped four spots. But more drastic were the double-digit slides we saw from domestics like jam producer Aohata (-12), snacks maker Koikeya (-12), brewer Kirin (-17) and ready-made tea brand Ito-en (-25).
In fact, among Japanese packaged F&B brands, only Asahi beer (31) and Glico biscuits (53) managed to buck the trend by edging up a single notch each, while seafood brand Maruha Nichiro (97) also edged up from 100th place last year. On the flipside, we’re seeing multirank gains from the likes of Coca-Cola (16), Nestle (22) and Lipton (80), while on the restaurant side McDonald’s (47) rose 11 spots to finish in the top 50.
Multinational marketing strength
As pointed out in our top 100 analysis, money is a key factor at play here. Many of the above-mentioned Japanese packaged goods makers like Aohata, Kikkoman and Koikeya are not spending much at all on mass campaigns, especially TV, says Reiko Ogata, general manager of the global branding department at Dentsu’s Solution Intelligence Center. Brands like Nissin (whose 2019 Naomi Osaka campaign earned well-deserved backlash over whitening Osaka's skin colour) and Pocari Sweat have found success with strong digital marketing this past year, but these are often more targeted and less visible to all.
“Coca Cola, McDonald's and multinationals are the ones that have the most dominant advertising expenditure these days,” Ogata says. Coke especially has used its position as the official sponsor of the Olympic torch relay to heavily promote its awareness in Japan in the lead-up to the postponement of the Games, she adds. (See a compilation of Coke's Olympic ads in Japan below.)
Global food companies also have significant efficiencies of scale, allowing them to produce, distribute and sell their goods at a better price point, something that will continue to be top of mind for cost-conscious Japanese consumers in a struggling economy.
But beyond volume and ad budgets, multinationals may also have a strong edge when it comes to pure marketing skill. Brands like Kikkoman may be global, and Nissin and Pocari Sweat have strong presences in Southeast Asia, notes Tomo Murakami, director at UltraSuperNew in Tokyo, but the vast majority of the others do not, which can hinder their ability to sell strategically. “Coca-Cola, Nestle, McDonald’s and Lipton just have so much knowledge from conquering global markets. I think they do a better job marketing than the Japanese brands,” Murakami says. He points out that Japanese quality and packaging design still holds the edge, “but in terms of marketing, these [global] gainers are miles ahead.”
Adapting to changing tastes
This worldwide marketing experience helps F&B brands in multiple ways. For one, they have more practice at adaptation to local markets, so they’re used to change. McDonald’s, for instance, continually taps local culture for its marketing by collaborating with local celebrities like popular band Arashi, and by localising its menu. This year, McDonald’s came out with its first range of rice burgers for Japanese who don’t like bread in their meals. “[Consumer’s don’t feel] like an imported brand from the US has come to Japan. It’s behaving more like a local restaurant these days.”
It’s not as though Japanese brands don’t innovate and adapt. There is a high appreciation for seasonal specialties in the market, and Japanese food brands are frequently updating their flavours and recipes, note observers. In fact, at times it can be a little much, and poorly thought out. Markus Winter, co-CEO of cultural consultancy Yuzu Kyodai, feels packaged goods makers of snacks and cup ramen like Calbee and Nissin need to “stop playing around with continuous ‘new launches’ that are always just a crazy new flavour that will quickly disappear.”
Yukiko Ochiai, president and CEO of Grey Tokyo, agrees. “Although Japanese manufactures are also frequently updating their flavours and recipes, it is the MNCs like Coca-Cola who have noticeably done well with launching seasonal products such as Frozen Coke and Salty Lemon Water,” she says.
The other strategic advantage multinational food groups have, of course, is in capitalising on their international footprint to bring new tastes to market—something Ochiai says is increasingly welcome.
“Japanese consumers are becoming much more open to new and foreign tastes,” she explains. “New spices and menus have been introduced into the packaged foods category too—Thai, Mexican, Indian, Moroccan, Turkish and other cuisines are now all available and even sought after. Brands that have foreseen these new trends, and have managed to develop their menus and maximise on their international capabilities, such as McDonald’s and Domino’s Pizza, have soared in the fast-food market.”
Pointedly, the only Japanese fast-food restaurant brand listed in the top 100 (which like McDonald’s jumped 11 spots higher) was Saizeriya, which serves Italian food. Known for its cheap eats like spaghetti and pizza, the family restaurant is ubiquitous in Japan. It also recently showed off its flair for invention by developing a combined napkin-mask for diners to be able to eat and drink at their restaurants throughout the pandemic while keeping their masks on (see below).
Societal shifts are also playing a large role in reshaping the food industry. As the ratio of women in the workforce increases, expectations around ease and convenience in food preparation is shifting, with frozen and ready-made foods becoming much more acceptable, say Ochiai and Winter. After French frozen-food chain Picard announced a tie-up with Aeon in 2016, the frozen-food category itself has been growing strongly in Japan in recent years, notes Winter.
“However, the need to serve healthy, high-quality, and well-balanced food to the family has not changed the core values,” notes Ochiai, who feels that companies like Ajinomoto, which have understood the change in lifestyle and can offer greater hygiene and food safety, can continue to lead the industry.
Food companies that can cater to growing demand for healthier fare without raising price points too much may have the best chance of success, suggests Yuzu Kyodai Co-CEO Sven Palys. He points to Oisix stores, which are doing well at promoting healthy foods delivered conveniently. Another store, Shunpachi, has found a niche in selling quality vegetables for low prices. These are vegetables with minor imperfections that prevent them from being sold at supermarkets. “[It’s] a fantastic business model,” Palys says.