Overview of Health Food Market in Japan

Health-promoting food in Japan was a 2 trillion JPY market in 2018, according to president of Japan Health Magazine Co., Ltd. 大矢均who made a speech during the NHC 2019 conference (Healthplex Expo 2019,Natural & Nutraceutical Products China 2019).^[1] 1evolving_regulatory_system_of_health_promoting_food_in_jp.png

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The overall market size is limited due to its territory and population despite Japan boasting a wider array of health food categories compared with China and some other countries (read analysis on Japan’s evolving regulatory system of health-promoting food)^[2]. Yet the growing demand for health-promoting food amongst Japanese consumers has seen the valuation of the market grow in great leaps and bounds over the course of the last decade. (see image below). 2market_size_of_health-promoting_food_except_for_tokuho (1).png

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Sales Channels: Online Shopping on the Rise, Conference Marketing on the Decline

Conference marketing, cosmeceuticals shops and long-distance sales (including TV shopping and online shopping) are major sales channels of health-promoting food in Japan. A decade ago, conference marketing was #1 channel and was able to grow by leveraging advertising and promotion which relied on word of mouth and face to face interactions, while at the same time avoid the watchful eye of regulators by ensuring not to indicate any function claims in written form e.g. on labels, advertising material etc. As the number of netizens grew, online shopping gradually took the place of TV shopping and conference marketing. Sales attributed to conference marketing have halved in the last ten years. 3sales_channels_of_health_promoting_food_in_2018_japan.png Sales of health-promoting food in cosmeceuticals shops are expanding rapidly. Frustrated by the falling price of pharmaceutical drugs, pharmacies are pooling more efforts to sell health-promoting food. In 2018, sales of health-promoting food accounted for 1% of all sales in pharmacies.

Food for Specified Health Uses is Losing Market

The TOKUHO sector has experienced three decreases in 10 years and dropped from 679.8bn JPY in 2007 to 643.2bn JPY in 2018. The first drop took place after 2007 when Kao Corporation’s TOKUHO edible oil was found to contain high levels of a carcinogen. Consumers’ trust in the government endorsed TOKUHO was at a record low. The second drop in 2014 was a result of an increase in consumption tax from 5% to 8%. Later in 2015, “food with function claims” became another avenue to target Japan’s markets for health-promoting food and offered lower regulatory barriers when compared to the stringent requirements required to launch a TOKUHU. Registration of a TOKUHO product usually takes 300 million JPY and over 3 years because of clinical trial requirements, which is not required by food with function claims. Stakeholders then shifted focus from TOKUHO to food with function claims. The third decrease was seen in 2018.

TOKUHO: function segment s

Despite the decline witnessed in the TOKUHO sector, specific segments such as products which regulate intestinal function, lower cholesterol and improve bone density continue to perform well and have recorded steady growth from 2007 to 2018.

Regulating intestinal function is the most popular TOKUHO function, taking up 59% of the TOKUHO market, up from 51.1% in 2007. In terms of ingredients, over 90% of this growing niche market is driven by lactobacillus, followed by food fiber and oligosaccharide.

n Market of regulating intestine, by raw materials
Unit: bn JPY

	2007	2018
lactobacillus	324.93	346.8
food fiber	15.25	20.84
oligosaccharide	7.18	11.84

Functions relating to the reduction of metabolic risk factors including triglycerides, cholesterol and body fat ranked #2, making up around 24% of the TOKUHO market. This niche witnessed a decline in recent years and was down from 30.2% in 2016 and 2017 to 23.6% in 2018.

Food with Function Claims Set to Overshadow TOKUHO

Foods with function claims was established as a separate and distinct category of foods by authorities in 2015 to stimulate the health industry and offset the negative influences of deflation and slowing growth. Food with function claims has performed reassuringly over the past 4 years. The leap in market value from 34.4 bn JPY in the first year of its launch to 220 bn JPY has been a revelation and most analysts are predicting the sector to reach 250 bn JPY in 2019.

As of June 10, 2019, a total of 2105 foods with functional claims have gained approval, doubling that of TOKUHO. Food with functional claims exists in three forms: 1) supplements in the form of capsule etc.; 2) prepackaged food in the form of beverage, gummy etc.; 3) fresh foods including fruits, vegetables and even fish. The first two types are major categories. 8forms_of_food_with_function_claims_as_of_jun._10_2019.png

8forms_of_food_with_function_claims_as_of_jun._10_2019.png

Notification of food with function claims

The approval of food with function claims is based on scientific evidence supporting the safety and effectiveness of the product. Evidence is usually taken from scientific research papers instead of clinical tests. Among all the applications submitted to Consumer Affairs Agency, 93.04% are based on scientific literature collected by applicants. 6.91% are based on results of clinical tests and the report written after the trial, and 0.05% (only 1 product) is supported by a research on this product.

n Scientific bases of food with function claims, as of Jun. 10, 2019

Scientific literature	93.04%
Clinical trials	6.91%
Research on final product	0.05%

Of all the applications, top 1 most frequently used raw material is resistant dextrin and the top 1 functional claim is combating the absorption of fat.

n Most commonly used raw materials in food with function claims

	Efficacy ingredient	Application amount
1	Resistant dextrin	258
2	GABA	239
3	DHA·EPA	150
4	Bifidobacteria	100
5	Lutein	99
6	Ginkgo biloba	89
7	Hyaluronic acid	72
8	L-Theanine	71
9	Rose flower isoflavone	69
9	Glucosamine (hydrochloride)	69

n Most commonly claimed functions in food with function claims

	Function claim	Application amount
1	Combat the absorption of fat	417
2	Combat blood lipid	324
3	Combat the absorption of sugar/control blood sugar	286
4	Prevent/ alleviate high blood pressure	184
5	Improve memory	174
6	Moisturize skin	160
7	Reduce emotional stress	159
8	Relieve eye fatigue	158
8	Reduce body fatigue	158
10	Improve sleep quality	113

Best seller list: Fancl sweeps the board

n Point of Sale Data: Top 15 Best Sellers

No.	Product	Form	Manufacturer
1	大人のカロリミット 30日分 120粒	tablet/capsule	Fancl
2	内脂サポート 30日分 120粒	tablet/capsule	Fancl
3	カロリミット徳用3袋 120粒×3	tablet/capsule	Fancl
4	カロリミット 30回分 120粒	tablet/capsule	Fancl
5	えんきん 30日分 60粒	tablet/capsule	Fancl
6	内脂サポート 15日分 60粒	tablet/capsule	Fancl
7	カゴメトマトジュース食塩無添加スマートPET720ml	juice	Kagome
8	ヘルスエイドビフィーナスーパー 30日分	tablet/capsule	森下仁丹
9	ピルボックス onaka60粒	tablet/capsule	Bill box japan
10	Bifixヨーグルトほんのり甘い加糖 375g	Yogurt	江崎Greer
11	DHA 60日分 240粒	tablet/capsule	DHC
12	ロートV5粒 30粒	tablet/capsule	Rohto製薬
13	くるんパックソーセージ 75g×4	Sausage	maruhanichiro
14	メタバリア葛の花イソフラボン 60粒	tablet/capsule	fujifilm
15	大人のカロリミット 15日分 60粒	tablet/capsule	Fancl

7 out of 15 best sellers are produced by Fancl, which in part could be attributed to its investment in promotion and advertising.

Japanese Consumer Demand for Health-Promoting Food

The top 15 demand for specific functionality in health promoting foods (which include TOKUHO, food with function claims and food with nutrient function claims) are:

n Top 15 popular health claims among Japanese consumers

	Demand	Consumer market (bn JPY)
1	Intestinal environment	495
2	General wellbeing	310
3	Anti- obesity/lose weight	146
4	Beauty	131
5	Arthritis	75
6	Eye care	56
7	Blood circulation	55
8	Vigor	50
9	Immunity	48
10	Control blood sugar	45
11	Sports and fitness	45
12	Liver function	39
13	Tooth decay/oral care	23
14	Brain	21
15	Blood pressure	17

n Top 20 popular ingredients among Japanese consumers

	Ingredient	Consumer market (bn JPY)		Ingredient	Consumer market (bn JPY)
1	lactobacillus	510	11	Plant enzyme extract	42
2	amino acid	218	12	DHA	39
3	Resistant dextrin	63	13	Sesame	38
4	Prunes	57	14	Blueberry	34
5	Tender barley grass	55	15	Nucleic acid	33
6	Collagen	53	16	Hyaluronic acid	31
7	Glucosamine	45	17	Kale	28
8	Bifidobacterium	45	18	Ginger	28
9	Royal jelly	44	19	Lutein	25
10	Black vinegar	43	20	Propolis	25

It is important to note that the function of enhancing the immune system is not recognized by the Japanese government, therefore it only ranked the ninth in the ranking of top 15 popular health claims.