Significant Opportunities Opening in Japan

Significant Opportunities Opening in Japan

Japan represents a challenging, but significant, market for U.S. dietary supplement companies. American firms have captured roughly a $500 million share of Japan's $7.5 billion annual market for these products. Reflecting a trend in recent years of modest market openings achieved through eased regulatory restrictions on dietary supplements, U.S. sales in Japan have been increasing and were up about 5 percent in 2000.

With per capita consumption of dietary supplements by Japanese consumers still only about one-sixth the level found in the United States, the potential for continued growth in this market is enormous, especially as Japan's aging population turns increasingly to preventive nutritional and health care measures. The range of supplement products being marketed in Japan is quite extensive, with more than 100 separate products achieving annual sales of at least 500 million yen (US$4.2 million).

Japan's nutritional supplements sector is a major market for U.S. firms and one that appears likely to continue to exhibit steady growth for the foreseeable future. The American dietary supplements sector generates annual sales estimated at $28 billion, four-times the size of Japan's market. Japanese prices for dietary supplement products tend to be quite expensive--on average, three times those in the United States.

Within the supplement sector, the current five top selling items in Japan (annual sales) are:

Within the herb sector, eased Japanese regulations are allowing previously unavailable ingredients into the market. Some of the strongest sellers among these recently permitted herbs include:

In the United States, multi-vitamins are the largest selling item, representing 30 percent of the total market, followed by single vitamins with 21 percent of the market. However, in Japan, the multi-vitamin market (18 billion yen/US$150 million annually) is only one-third that of the largest selling single vitamin. In fact, multi-vitamins are only Japan's 8th largest seller among supplement products.

Consumer Trends

There are several conspicuous new trends in the Japanese market, including an increased consumer interest in prevention of "life style diseases." Japanese consumers increasingly view dietary supplements as an important component to maintaining good health.

According to the results of market research conducted recently by the Health Industry News, the most popular items among Japanese consumers are products that are presumed to provide a benefit in areas such as high blood pressure/circulation, weight control, diabetes, immune function, cancer prevention, nutritional deficiency, constipation and menopause.

Each year, Japan's Ministry of Health Education and Welfare publishes a report entitled "Outline of Survey Regarding National Nutritional Intake." According to the latest edition, many Japanese are deficient in their intake of such minerals as calcium and iron. This is especially true of women between the ages of 15 and 19, who are taking only 73 percent of the recommended levels of calcium. The report also pointed out that the portion of Japan's population that is considered obese has reached 23 million. In the past, weight control was viewed as a concern primarily by young women. But recently middle-aged consumers have been buying more weight control items than any other generational group.

The National Laboratory for Health and Nutrition in Tokyo recently disclosed the results of its research, Studies on manufacturing, importing, sales, and intake of health foods and dietary supplements. This study was conducted in both Tokyo and Osaka, surveying more than 13,000 persons. In this survey, 78 percent of respondents agreed with the statement, "Dietary supplements are effective in helping to maintain a well-balanced diet." The survey also found that 68 percent agreed that "dietary supplements are easier to take than drugs," and 55 percent believe that "dietary supplements are useful for health promotion." While many respondents regarded dietary supplements as useful products, there were some common concerns raised. For example, 54 percent believe that "dietary supplements might have some safety problems," and 69 percent believe that "prices are too expensive."

Another indicator of market trends comes from a survey conducted by Dentsu, Japan's largest ad agency. This research found that the size of Japan's senior citizens food market, including dietary supplements and blended foods, will expand from the current 6.6 trillion yen to 10.9 trillion yen (US$91 billion) by 2015. Presently, the senior citizen share of Japan's total food market is 24.5 percent, projected to increase to 31 percent by 2015.

Japan's aging population is also expected to favor higher demand for dietary supplements. Japan has the longest life expectancy in the world, and it also has the most rapidly aging population of any industrialized nation. By 2007, it is estimated that Japan will have 26 million people over the age of 65. As this population ages, demand for health-promoting products is expected to grow.

The state of Japan's health care system also suggests expanded demand for dietary supplements. Fueled by the aging population, Japan's annual health care expenditures reached 30.7 trillion yen (US$256 billion) in fiscal year 2000. The Japanese government is projecting health care spending will rise rapidly, reaching more than 100 trillion yen by 2025. This growing demand for health care has resulted in financial challenges for many insurers, hospitals and government programs, resulting in the possibility of reduced benefits for many Japanese. This is causing many consumers to consider health care alternatives such as dietary supplements.

The Japanese market for dietary supplements and health-promoting products is expected to grow for the foreseeable future. While regulations governing the sale of these products are challenging, the Japanese government is continuing to liberalize rules. Companies willing to invest the time and effort to enter this market have significant opportunities for success.

Editor's Note: All U.S. figures computed at 120 yen/U.S. dollar.

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Information for this article was sourced from the following reports:

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