Meiji Holdings takes the top spot, followed by Yamazaki Baking Co, JA Group (Japan Agricultural Cooperatives) and Nissin Foods Holdings. The fifth place is taken by South Korean giant Lotte Group.
The highly competitive and fragmented sector is underscored by the fact that the top five brands account for only 12.5% of the total packaged food market. Meiji, for example, has a 3.4% share.
Globally, the top five packaged food firms are Nestlé, PepsiCo, Mondelez, Unilever and Danone, but not of them have been able to crack Japan’s domestic market.
The data was revealed by market research firm Euromonitor as Japan’s industry gathers in Chiba, Tokyo, for the FoodEx Japan show.
According to analyst Megumi Matsunaga, the packaged food market food saw only sluggish growth in 2017, with sales continuing to be challenged by demographic trends.
“The Japanese population is not only continuing to age rapidly, but it is also diminishing in number.
“Players are therefore looking to add value rather than pushing for volume sales growth.”
She added that domestic brands were continuing to dominate the market because they were tapping into consumer concerns over health and wellness, with metabolic diseases a particular worry.
“Players are tailoring new products accordingly, with reduced sugar, reduced carbohydrate and reduced salt products increasingly prevalent.”
There has also been an increase in products carrying Food with Function (FFC) claims, which were introduced in 2015. These allow food products to carry a range of health claims under less stringent requirements than the long-established FOSHU regime.
Meiji and Yamazaki have proved particularly adept at meeting consumers’ health needs, with the former launching more health-related packaged foods and the latter meeting rising demand for premium fresh bread.
Meiji has recently released a new range of dextrin-based yogurts and Sonton spreads, which claim to lower blood pressure.
Matsunaga said that supermarkets remained the leading distribution channel for packaged food. However, convenience stores are continuing to gain share, with 7-Eleven performing well by tailoring the product range to local communities.
While the market will “continue to see challenging consumer trends”, she predicts that companies which tap into demands over health, convenience and premiumisation will be able to thrive.
One company seeking to break into the market is Philippine bakery firm Lemon Square. The company was showcasing its range of packaged cheesecakes, biscuits and cakes.
Japan is the second-largest export market for Philippine foods, but this is largely dominated by fresh fruit and seafood goods.
Lemon Square’s head of business development Clarita Elvira S. Guevarra said: “We already export to the US, Canada, Korea, Taiwan and the Middle East, but we know that Japan will have to be a really big project.
“The domestic brands are strong but we have been operating for 32 years so we hope that will help us find distributors and retailers here.”