Although dairy sales remain relatively low in Japan, they are rising fast, and ice cream in particular has shown dynamic growth in recent years. However, an aging population means manufacturers need to innovate to maintain growth – as Euromonitor International reports in depth.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Low birth rates have presented ice cream manufacturers with a tricky demographic problem. Figures based on Japan’s most recent population census of 1995 show a 2.3% decrease in the number of children in the under 15-year age group since 1990. As a percentage of the total population, this age group has fallen from 37% during the baby boom of the 1950’s to 17% in 1995, a figure that is still rapidly declining.
Projected population figures suggest this section of the population will continue to contract well beyond the year 2050. With children, traditionally the most ardent ice cream purchasers, thin on the ground and the elderly population rapidly growing, Japanese manufacturers have over the review period been forced to innovate and restructure in order to survive.
Hot summer expands sales
The seasonal nature of ice cream sales is another limiting factor with which manufacturers have struggled to come to terms in recent years. With 75% of ice cream sales estimated to fall in the four months between June and September, sales had suffered over the forecast period with a succession of cool summers since 1998. The influence of summer temperatures is perhaps best illustrated by 2001 sales, which boomed thanks to record July temperatures and quickly fell as unseasonably cool temperatures returned once again in August.
Change in focus – Hey ladies!
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataResearch by the Japanese Ice Cream Association indicates that during high season purchases, 43% of woman reported they bought ice cream on a daily basis against just 22% of men. Female purchasing trends which favoured the added value premium cup type products against men’s preference for the ¥100 (US$0.85) sandwich style illustrate why manufacturers have come to rely heavily on the female consumer to rescue falling value sales.
Ice cream makers mugged by coffee shops
In 2001 the most obvious trend affecting ice cream manufacturers came from the boom in gourmet coffee shops that began in the late 1990s with the arrival of the Starbucks chain. Coffee shops appear to be winning the battle for custom with air-conditioned outlets seemingly on every street corner. Summer menus of iced coffee attract young women who make up two thirds of their clientele. The fall in 
ice cream sales which coincided with the arrival of these retail chains, although not totally attributable to them, has certainly been hastened by their presence. This has been compounded by the lack of a counter trend developed by any manufacturer other than Häagen-Dazs and Glico.
Let’s make Granny eat ice cream
Research carried out by the Japanese Ice Cream Association indicates that not only are manufacturers keen to develop sales amongst the ‘Pocky Generation’ but older women in the over 50 age group. With the quickening pace of the greying of Japan, the grey Yen has become as significant a force in retail sales as the grey vote has become to politicians. With sales to youths and middle aged consumers collapsing, we have seen the introduction of more traditional flavours such as Azuki and Green Tea. On the one hand this has opened sales opportunities to older, more conservative consumers, while also encouraging younger females with ingredients that are associated with health consciousness, the prevailing social trend of the modern era.
The importance of being well packaged
According to Glico’s research, the effectiveness of this repackaging and promotion increased the number of respondents who wished to try the product from 37% under the old branding to 75% in the new 2002 style. With profits squeezed and consumers dwindling in the ¥100 segment manufacturers in 2001 have increasingly reduced their inventories and relied on updating products as a simple and cost effective method of maintaining sales. Glico’s Handy Shake however was by far the most interesting of the new packaging releases in 2001 with its squeeze bottle format proving popular with younger boys. Even the Häagen-Dazs packaging received an upgrade in 2001 with the introduction of gold coloured tops to give the brand a more luxurious feel.
Vanilla ice tops flavours
Vanilla remains the flavour of choice with the majority of the population and underlines a general Japanese preference towards simple tasting products throughout the food market. Other than vanilla there has been great fluctuations in the popularity of other flavours with chocolate losing out to more traditional flavours such as Azuki and green tea. The decline of chocolate also has been speeded up by a process that has seen most chocolate or chocolate chip brands move towards the super premium price bracket leading to higher average unit prices.
Top three players get a licking
The battle to be number one ice cream manufacturer continued in 2001 with the gap between Meiji and Morinaga Milk narrowing slightly. Meiji remained number one with a 12.4% share of value sales in 2001 closely followed by Morinaga Milk with a 12.2% share. Both companies found market conditions difficult in 2001 resulting in a loss of sales, which Glico failed to capitalise on in third place as its market share also fell. Lack of product development and the absence of a hit product undermined all three firms, which ended 2001 with only ¥4bn in sales separating Meiji in gold and Glico in bronze position.
Ice cream a go go
Multiple grocers and convenience stores have continued to dominate distribution of ice cream products in Japan over the review period. Despite diminishing volume sales these two dominant retail types have slowly grown to control over 80% of sales in 2002. Convenience stores have been particularly successful in capturing more trade from competitors such as independent food stores and street vendors.
The convenience store, which extends throughout Japan’s urban centres, has proven to be the perfect vehicle for the sale of this kind of seasonal impulse commodity. Impulse sales are aided by the range of goods that the convenience store can carry, consumers often purchasing ice cream even if their intention was originally not to buy any. Large open freezer compartments display the often appealing looking products next to the cash register. Convenience stores mostly carry products that cost little more than ¥100 for a single serving portion and so consumers in these stores tend to be younger and more likely to eat ice cream products.
Slump to continue
The market for ice cream products in Japan is set for some significant structural changes over the forecast period in line with the trends established through 2000 and 2001. Given cultural norms and competition from other non ice cream products it seems unlikely that the market will grow significantly enough to raise per capita consumption in line with other developed nations. Per capita consumption is likely to remain largely unchanged, illustrating that comparisons with Western nations to determine market potential have limited use.
Functional future?
With continued interest in functional foods across Japan’s food manufacturing sector expected to continue over the forecast period, a degree of repositioning is thought to be likely in the market for ice cream. Already a number of health-orientated ingredients including blueberries, cocoa and green tea have succeeded in boosting sales of a number of brands. Further development in this direction is likely when the close correlation between trends in the ice cream and yoghurt market are taken into account. It would appear likely that a probiotic frozen yoghurt or ice cream, if possible, would be a strong competitor in the market place.
By Euromonitor International
For full details of Euromonitor research reports in this area, click on one of the below:
The Global Market for Ice Cream
The Market for Packaged Food in Japan
Euromonitor Profile: Meiji Dairies Corp
The Global Market for Dairy Products
