While demand by volume (production plus imports minus exports) for chocolate confectionery in Japan has increased, demand for sugar confectionery and cookies (biscuits with added sugar) has decreased in the period from 1990 to 1998.

Demand for chocolate confectionery in Japan has increased by 5.4% by volume since 1990 to reach 190,500 tonnes in 1998. The market is slowly expanding, but growth in imports has slowed, probably due to the recession in Japan. The volume of chocolate imports rose steadily in the early 1990s, reaching a peak in 1996. Imports were down 10% in 1998 but may improve once the recession is over and consumer confidence returns. Imports had 7.6% market share by volume in 1998, down from over 8% in 1995-1997. The proportion of imports in 1998 was higher for chocolate (7.6%) than for cookies (3.9%) or candy (6.6%).

Demand by volume for cookies (sweet biscuits) has decreased by 8.6% since 1990. In 1998 imports were up 69% on 1990 but down 37.6% on 1995. Demand for sugar confectionery in 1998 was down 10.4% on 1990. Imports too were down by over 42% on 1990. The decline in demand by volume for sugar confectionery may be partly due to demographic changes. The birth rate in Japan continues to decline while life expectancy increases, resulting in an aging population and a smaller proportion of young people.

Table 1. Confectionery Market Size
(Units: tonnes)

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Confectionery Market Size by Value
In terms of retail sale value, the chocolate confectionery market peaked during 1991-1992 and has now fallen back to below the 1990 level. This is because, although demand by volume has increased, prices have fallen. The reason for the fall in prices was the need to compete with cheaper imports as well as to maintain volume.

The retail sale value of the cookies market has slowly declined by 4.6% from 1990 through 1998. The retail sale value of the sugar confectionery market has also declined by 4.8% over the same period.

The retail market values in 1998 were as follows:

Chocolate confectionery Y395.6 billion, down 0.7%
Cookies (sweet biscuits) Y302.4 billion, down 1.3%
Candy (sugar confectionery) Y240.0 billion, down 2.0%

Figure 1. Confectionery Market Size Trends in Japan 1990-1998
(Units: thousand tonnes)

Impact of New Products on Chocolate Confectionery Market
One of the reasons why the chocolate confectionery market has shown some growth while cookies and candy have declined is the stimulation of the market by new chocolate products which have become hit products. These include low-melting point chocolate for the winter months that “melt in the mouth like snow” and chocolate for the summer that is placed in the freezer before consumption. When the chocolate has cooled to the correct temperature a message written in temperature-sensitive ink appears on the pack to tell the consumer that the chocolate is now ready to eat.

The strong functional foods market in Japan has also benefited sales of chocolate twice. The first time was back in 1995 when publicity on the health benefits of cocoa caused a surge in demand. The most recent surge in demand occurred in 1998 and continues now. This time it is because chocolate contains natural polyphenols similar to those in red wine, which act as natural antioxidants helping to prevent arteriosclerosis and other diseases of aging. All the top chocolate manufacturers have launched high polyphenol chocolate aimed at the adult market, especially the growing market of people over retirement age.

Market Leaders
The market leaders in Japan are Lotte, Meiji Seika Kaisha, Morinaga & Co., Ezaki Glico and Fujiya, in descending order of confectionery sales. The following table of confectionery sales includes all types of confectionery (sugar confectionery, flour confectionery and even snack foods in some cases) as well as chocolate. Lotte is well known as chewing gum market leader and for its large affiliate company in Korea (some people mistakenly believe Lotte to be a Korean company). Meiji Seika Kaisha is unusual in that 40% of business is pharmaceuticals. Ezaki Glico too is unusual in that this company produces curry and stew preparations as well as confectionery and ice cream. Morinaga & Co. suffered a 23% fall in confectionery sales in 1998. Although Fujiya has a chain of retail outlets, the great majority of Fujiya’s chocolate confectionery is sold though its wholesale division and thus competes in the market in the same way as the other top companies. Fujiya was the only company to show an increase in confectionery sales in 1998.

Table 2. Confectionery Sales of Market Leaders
(Units: Yen billion)

Imports of Chocolate Confectionery
The top brands of imports in 1998 were Hershey, Snickers, m&m’s, Hawaiian Host, Godiva, Rocher and Lindt. Although the USA is still the top country of origin, Australia may overtake as both Mars and Cadbury have switched production of exports to Japan to Australia. Top brands Snickers and m&m’s in 1998 were produced in Australia.

Table 3. Imports of Chocolate Confectionery into Japan by Country of Origin
(Units: tonnes)

Future Prospects
Future growth in chocolate confectionery in Japan lies with the development of new functional products aimed at adults and the elderly in particular. Several functional food chocolate products have already been launched and some even have FOSHU approval, i.e. permission to make specified health claims. There are also many functional chocolate products on the market for which no claims are made, such as products containing non-cariogenic sweeteners, products fortified with calcium and/or dietary fiber and/or oligosaccharides, etc. The key to success with these products is consumer education. This is illustrated by the present boom in demand for polyphenols in Japan, which is a result of television and media coverage given to the theory that French people live long lives despite a diet high in animal fats, because they drink red wine high in polyphenols.

The above information was extracted from the market report “Chocolate Confectionery in Japan” September 1999 edition, published by Japanscan. For further information on this and other reports please click here.