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Japan Food and Drink Report Q2 2011
Business Monitor International, April 2011, Pages: 89
The Japan Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Japan's food and drink industry.
The 8.9-9.0 magnitude earthquake and tsunami that struck Japan on March 11 2011 has dealt the Japanese consumer a severe blow. Struggling with stagnating wage growth and a declining household savings rate, there is hardly any bright spot on Japan’s consumer outlook. Damage resulting from the Tohoku Pacific earthquake on Friday should place an additional drag on the consumer and this impact is borne out in the sharp sell-offs in consumer equities in the wake of the quake. Longer term, with the consumer outlook remaining subdued, Japanese consumer goods manufacturers such as Sapporo and AEON will continue to focus expansion efforts abroad to secure future growth.
Headline Industry Data:
- 2011 Per Capita Food Consumption = -0.2%; forecast to 2015 = +9.3%
- 2011 Alcoholic Drinks Value Sales = -1.3%; forecast to 2015 = +13.4%
- 2011 Soft Drinks Value Sales = -0.3%; forecast to 2015 = +33.9%
- 2011 Mass Grocery Retail Sales = -0.9%; forecast to 2015 = +2.0%
Key Company Trends:
Hurdles On The Road To International Diversification – Despite ongoing international diversification efforts, Japanese brewers have faced hurdles in securing acquisition assets, while some have faced difficulties in generating strong overseas growth. As an example, Asahi has curbed speculation that it would bid for Australian brewer Foster’s beer unit, citing the high acquisition cost and challenging conditions in the Australian beer market as deterrents. To provide another example, Kirin has been forced to slash its 2010 profit forecast to JPY10bn (US$123.6mn) from its previous forecast of JPY35bn (US$432.6mn) after recording an impairment loss of JPY38.8bn (US$479.5mn), reflecting a deterioration in National Foods' brand value and earnings since 2007.
Many Jumping On The International Bandwagon – With little demand growth expected in Japan over the long haul, Japanese consumer goods manufacturers are being forced to prioritise international expansion to revitalise their growth. Recognising this, AEON, Japan's second-largest retailer, announced that it has earmarked around JPY208bn (US$2.6bn) for its expansion plans in China and South East Asia with the aim of doubling its operating profit by FY14 (end February). AEON is not alone in pursuing expansions abroad. Japanese brewer Sapporo is setting aside an investment war chest of JPY125bn (US$1.5bn) for acquisitions and partnerships between 2012 and 2016 as it looks to develop higher-growth assets to revitalise its long-term growth.
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