Zen and the Art of Japanese Beverage Packaging...


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Photo: Stefan/Flickr
Photo: Stefan/Flickr

Related tags Coffee Convenience store

As EP Resources reports on a changing Japanese beverage landscape marked by a C-store surge, report author Stuart Hoggard talks trends including taller, slimmer bottles, and a willingness among global giants such as PepsiCo to let local partners manage this complex market.

Hoggard, who penned the EP Resources report ‘Zen & the Technology of Packaging in Japan’​, explains that for more than a decade big city center department stores and supermarkets have lost ground to neighborhood stores – with Japanese consumers spreading their spend more throughout the week.

By 2020, he says, most urban Japanese will live no more than 200m away from a C-store run by one of the three main operators – Family Mart, Lawsons and Seven &I (7-Eleven) – with 56,820 such stores open by 2013.

This C-store revolution means, Hoggard says, less shelf space – since such outlets need a wide product range but fewer stock keeping units (SKUs); this means retailers are asking for just-in-time (JIT) delivery from suppliers via smaller shipments with less secondary packaging, or at least packaging that is shelf ready.

What does this mean for the beverage industry? We caught up with Hoggard to find out.

BD​: ‘With formats and portion sizes shifting down in Japan – does this mean we are seeing a marked move to smaller pack sizes for, say, sodas?’

SH:“In general, they are downsizing, yes…. But the Japanese aren’t big on CSDs/sodas –  Suntory and Kirin dominate the RTD market (e.g. Coke’s biggest sale in Asia & Japan is Heaven & Earth Tea) But not really because of convenience stores… but to fit the 25m vending machines nationwide (a different aspect of the retail revolution).

“That said, in a supermarket I did see a 5L PET bottle of whisky (with in-moulded handle to make it easier to pour & carry home, though I’m not sure I’d want my neighbors seeing me lug home a 5L whisky bottle – when in fact a 2L aseptic gable top carton of sake would be more acceptable.”

BD:​ ‘If this is happening, does the size downshift also relate to consumer health concerns we see elsewhere Stuart, with sugary sodas in the US and Europe and consumers buying less often, and then buying smaller pack sizes?’

SH:“See above – they don’t really drink them, never have… as long as I recall. Green tea is big”
BD:​ ‘I imagine this is a mixed blessing for beverage manufacturers? I suppose they have to shift their pack mix from family and large-sized (for larger style stores) to smaller, single serve?’

SH:“By ‘family packs’, I assume you mean 1L or 2L…. Depends on the product…. You don’t see tubular (round) Family Packs anymore – they’re all rectangular PET – they fit in the fridge door compartment better.“

BD:​ “This must be a higher margin business for them, but there must be quite a lot of distribution re-purposing going on, while the JIT (just-in-time) system must be hard for some suppliers to manage, especially when the NPD run rate is so high in Japan.”

SH:“Not really [in margin terms]. Apart from the demand for slimmer pack sizes what the JIT really means is same volume of product – just delivered in smaller corrugated cartons. (i.e. where 7-11 might have ordered 2m bottles of 1l tea from Suntory packed 24 to a carton, they now want them packed 6 to a carton.”

BD:​ ‘Do you think such complexities help those larger companies that can afford to invest a lot in logistics/distribution – i.e. the likes of Coke and Pepsi?’

SH:“Hmm… Western brands don’t do business on their own in Japan, by law, but in a Joint Venture with a local partner (Pepsi with Suntory) as a former Senior Exec at Pepsi Asia told me about the Japanese market, "It’s so complex that we leave all that to our partner".

“Portion size, marketing, and of course Japan's all-encompassing Containers & Packaging Law, the most strict environmental packaging legislation in the world.”

BD:​ ‘Can you think of any good examples of taller, narrower beverage packages in Japan, to fit the C-store profile?’

SH:“Bamboo Shaped Green tea bottles from either Kirin or Suntory.”

BD:​ ‘Also, is this trend affecting all materials – i.e. cans, bottles (glass, PET), cartons?’

SH:“Yes – but glass is virtually been completely phased out except for beer bottles.”

BD:​ ‘Turning to secondary packaging, is the shelf-ready packaging you mention a growing fixture in the beverage aisle?’

SH:“It’s hard to generalise: most beverages in the convenience store are sold from a chiller, or as hot-vending (looks like a chiller except that the beverages are hot). For example, bottle cans (screw-top metal cans shaped like a bottle) for coffee etc., are squat & are either chilled or hot - all brands agreed that hot-vending beverages should have an orange top regardless of product, brand owner, or material – metal/PET, etc. this aids consumer identification. It’s covered in our report.

“That leaves products like sake in cartons and wine (in either glass or PET) on the regular shelf – and yes the shelf-ready package is seen there (but the bulk of one wall of the average convenience store is a chiller/hot-vending machine – not a great environment for a corrugated carton.

BD:​ ‘Finally, is the climate in Japan replicating itself anywhere else in Asia, or is it specific to this relatively affluent, aging population in the region, and Japan’s relative urbanisation?’

“Do you mean, are the minimarts expanding in the rest of Asia just as fast? If so yes, but for different reasons: Indonesia for example Alfa-Mart and Indomaret are doing battle in every mid-size village along most main trunk roads & competing with Mom & Pop stores.

“But the Japanese packaging formats are being seen in remote places in Indonesia.... mainly because of the expansion of Japanese packaging manufacturers into Indonesia, Vietnam & Thailand & they bring their IP & formats with them.”

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