05 July 2018
Shintaro Nakamura / Business Development Manager / NZTE Tokyo
Japan’s senior consumers are wealthy and ready to spend, and focused on health and quality, but it takes more than “made in New Zealand” to win them over. Read on to take a closer look at this promising consumer group - and uncover the secrets of long-term success in the Japanese F&B market.
Japan at a turning point
If you thought Japan was a slow market, you’d have been right until just a few years ago. After 25 years of stagnation, Japan’s GDP has returned to growth, and you can feel the difference in the market.
Growth is picking up thanks to the Japanese government’s successful financial policies, as well as a focus on growing tourism - with US$35 billion spent by tourists in Japan last year and much more to come during the 2019 Rugby World Cup and 2020 Olympic Games.
At the same time, Japan is undergoing one of the biggest demographic shifts happening anywhere in the world. One in four people in Japan are now over 65 years old. That’s 36 million people. By 2060, people over 65 will make up 40% of Japan’s population.
An ageing population definitely brings some challenges for Japan as a country, including a smaller workforce and tax base. Some F&B businesses will have to adapt too, with a likely decline in family-oriented products and mass-market packaged food.
But change brings opportunity as well as risk. Here are several reasons why Japan’s senior consumers are potentially great news for New Zealand F&B exporters:
Japan is a wealthy country in general. Even after years of sluggish economic growth, Japan still has more millionaires (in US$) than any country except the United States, and twice as many as China. This wealth tends to be concentrated in older age groups.
Japanese seniors are willing to spend. People in their 60s and 70s are Japan’s biggest-spending consumers. Last year, Japanese seniors spent US$1 trillion – more than the national budget of the United Kingdom - and that spending is growing by US$10 billion every year.
Consumers are increasingly focused on health and quality. Functional and “healthy” food spending is on the rise in Japan, including among elderly consumers. The health-related market is worth US$15 billion and growing by US$450 million annually. At the same time, there’s also an increasing preference for high-quality foods – good news for New Zealand F&B which has traditionally been seen as expensive.
Many seniors have a positive view of New Zealand. New Zealand was the number one honeymoon destination for Japanese newlyweds in the 1980s, and those couples are now part of the senior consumer group. Positive memories, plus a general Japanese view of New Zealand as clean and eco-friendly, are a good starting point for New Zealand F&B marketing.
Put it all together and Japan’s seniors are a promising consumer group for New Zealand F&B products. But if you want to turn this potential opportunity into real business, there are two vital things you need to do.
The secrets of success
After several years in banking, I discovered what I see as the secrets of success when doing business in Japan. They sound simple, but they can make a huge difference to your in-market potential.
1. Define a narrow target segment.
Mass marketing is on the way out in Japan, as tastes and consumption patterns become more diverse among the population.
In recent years even some of the biggest companies in Japan have tried to market on ‘high quality’ alone to a mass consumer audience, with very disappointing results.
Do as much research as possible on the right target segment for your product, then focus on succeeding in that niche. When you’ve reached a critical mass of loyal customers, the benefits will cascade out in the market, and draw in other groups of buyers for you to learn about.
2. Offer a solid solution, with a story to match.
Quality on its own isn’t a selling point in Japan. It’s expected. The real question that discerning buyers will ask is “does this product deliver value to me”.
Once you know who your Japanese customers are, make sure you have a sound value proposition that addresses their needs – but always deliver it with a compelling story.
This is about the power of emotion. People forget facts quickly, but they remember stories and repeat them to other people, sometimes for generations. Tell a meaningful, human story that your target segment can identify with, and you’ll be much closer to achieving success.
Looking closer at senior consumers
Japan’s 36 million older people fall into three main consumer groups – active, non-active and passive seniors.
Active seniors (30% of the senior population) are early-adopters who seek out new products and experiences, keep up with lifestyle and health trends, and aren’t afraid to spend more for quality – an attractive target demographic.
Non-active seniors (50%) are more conservative and usually follow the example of active seniors before they give new products a try. Passive seniors (the remaining 20%) generally stick to products and brands that they’re already comfortable with.
Within the senior consumer age group, smart targeting and value propositions for the right target segments can be very effective.
After finding that ‘health’ was too broad a category to convince active seniors, kiwifruit exporter Zespri sharpened its Japanese marketing to focus on specific health needs – such as potassium content for consumers with high blood pressure, and fibre content for consumers with diabetes or high blood sugar. The result was a 20 percent increase in Zespri’s revenue in Japan.
Putting it all together
Once you’re active in the Japanese F&B market, work closely with your distributor. Visit often – at least three times a year, for more than a few days at a time – and invest time in-market to understand the right pricing and quality requirements.
Draw on distributor knowledge to help you understand the latest technology trends, especially those pertaining to the needs of senior consumers, as well as packaging trends to enhance convenience especially for the elderly - for instance, introducing functional products that have larger font sizes and clearer explanations of product benefits.
The more you learn and the closer you get to your Japanese customers - whatever their age - the better your chance of turning opportunities into golden results.