Prepared Foods, July 1996 v165 n8 p59(3) Japan thirsts for RTD tea; screams for ice cream.

(ready-to-drink) Abstract: Japan's ready-to-drink (RTD) tea and ice-cream markets are both performing robustly. RTD sales rose by over 25% in 1994 and by an additional 6.2% in 1995. The market's four largest segments are oolong tea (47.6%), black tea (25.4%), green tea (14.2%) and barley tea (6.8%). The Japanese ice cream industry was booming in 1994 due to extremely high summer temperatures, falling prices and a flood of imports. However, consumption dropped by 2% in 1995 as a result of belowaverage temperatures and late summer weather. Foreign products, particularly Haagen-Dazs, continue to dominate Japan's ice cream market. Full Text: COPYRIGHT 1996 Delta Communications Inc. It's a small, small world after all...and when it comes to new products, new ideas, and new technologies, it's growing even smaller. Kindred food trends are found on opposite sides of the globe despite differences in culture and in nutritional concerns. Exploring these trends benefit both companies seeking new product ideas for domestic markets and for those looking to expand overseas. In the following article, Editor Carole Burke of Japanscan, a publication which tracks new food product introductions and trends in Japan, offers an overview of several product categories in this not so far away part of the world. - Claudia D. O'Donnell, Technical Director

The ready-to-drink (RTD) tea market is the fastest growing beverage segment in Japan. Sales increased more than 25% in 1994 with another 6.2% volume increase in 1995, according to the Japan Soft Drinks Assoc. Some estimate that these beverages

may shortly outsell both RTD coffees and carbonated drinks. In 1994, European ice tea consumption rose to more than one million kiloliters (264 million gal.), half the U.S. volume, while consumption in Japan rose to 713 million gal. In 1995, the Japanese drank 766 million gal. In dollar terms, 1994 retail sales reached $5.2 billion in Japan (compared to $2.6 billion in the U.S.). In the U.S., growth in this area slowed this past year (see Last Bite, PF June, 1996, page 130). However, a seemingly endless stream of new RTD tea products has helped advance the market in Japan. Four major tea categories dominate the Japanese market. * Oolong teas (made from semi-fermented tea grown mainly in China) form the largest category at 1.2 million kl. and are 47.6% of the RTD tea market. This category is led by Suntory Ltd.'s Tea Tree brand with a 35% share followed by Coca-Cola Japan's Saryusaisai brand which controlled 21% of the market at the end of 1994. * Black tea drinks are the second biggest sellers with 25.4% of the RTD market. Kirin's Gogo no Kocha is the leading brand with 33.3% market share followed by Coca-Cola Japan's Kocha Kaden at 14%. * Green tea, with a 14.2% share of the RTD tea market, is growing substantially (up 46% in 1994). Ito En's Oh-I O-Cha brand accounted for 34.3% of sales in 1994 with Suntory second at 14.8%. * Barley tea has been consumed in Japan for years. The RTD version, however, is fairly new to the market. Demand accelerated in 1993 and by the end of 1994 sales had grown 49% to take a 6.8% share of total tea drink sales. The top seller, Kagome, has a 29.8% share but may soon be outsold by Coca-Cola's barley tea drink. TEAS FOR HEALTH The search for new tastes and varieties has resulted in numerous health tea drinks. Tochucha, a Chinese, caffeine-free gutta percha tea, supplies minerals such as calcium, potassium, zinc and iron. Health claims have been made including weight reduction and improved metabolism and bowels. (Japanese regulations do not prevent health claims.) A South African Rooibos tea has become fashionable. It is rich in minerals and super oxidase dismutase (SOD), and claims to inhibit allergies through antihistamine effects. Some 100 RTD teas were introduced in 1994. Hot summers in 1994 and 1995 also played an important role in accelerating tea drink sales. Although, unlike the leaf tea

market, RTD teas are not seasonal and are purchased either hot or cold throughout the year. Tea drinks have received a great deal of positive press. Japanese consumers are aware of teas' potential health benefits (e.g., disease prevention), especially green tea varieties. The trend is toward using multiple ingredients and flavors, some claiming medicinal benefits. Nearly all new tea drinks are sugar-less and made with "natural ingredients" such as spring water and organically grown tea. Producers are forecasting further consumption to take total tea drink sales to 597 billion yen ($5.37 billion) in 1996. Although the Japanese have consumed tea for many centuries, RTD tea - an invention of the West - is gaining in popularity along with other Western-style foods. THE WORLD SCREAMS FOR ICE CREAM Japan's ice cream industry enjoyed a bumper year in 1994 thanks to record-breaking summer temperatures, price-discounting and a flurry of imports which focused attention on the market. Market conditions in 1995 reversed, however, with a drop in consumption attributed to below-average temperatures and late summer weather. Thus, the ice cream market, which grew by 17% to 2.6 million gal. in 1994, fell by 2% in 1995. Valued at $3.5 billion in 1995, this is a 10% decrease from the 1994 value. Four types of companies are involved in Japan's ice cream market: dairy companies, confectioners, ice cream manufacturers and, most recently, large supermarket chains. During 1994-95, the yen's sharp climb against the dollar coupled with a slump in consumer spending sparked an increase in food imports, including ice cream. Seizing this opportunity, supermarket chains such as Dalel Inc. and Ito-Yokado began selling direct imports of ice cream as in-store brands for half the price of national brands. Ice cream is mainly imported from the U.S., followed by growing imports from Australia and New Zealand. Ezaki Glico (a major confectionery company) has headed the ice cream market since 1991, but now has dropped to third spot behind Meiji Milk Industry and Morinaga Milk Industry (Japan's second and third largest dairies, respectively) in 1995. Each of these three leaders has 12-13% market shares. Japan's top dairy company, Snow Brand Milk Products, ranks at number four in the ice cream market. This company is licensed to use the Hershey logo on certain ice cream products and has been producing Nabisco's Oreo brand ice cream products

under license for about seven years. The star player of the Japanese ice cream market is Haagen-Dazs Japan which sells only premium products. The company entered the market in 1983 and has enjoyed great success since 1984 when it opened its first outlet in Tokyo's upscale Aoyama district. Ice cream parlors were almost unheard of in Japan, and long queues of customers waiting to indulge their taste buds were a common sight. Today, the company has 90 outlets and intends to continue expanding its sales network. Vending machines are another of Haagen-Dazs' competitive weapons. Used by the company since 1992, it now operates 2,000 machines. With the recent introduction of new slimmer machines, the number is expected to increase to 10,000 within five years. Haagen-Dazs sales jumped from 5.7 billion yen ($51 million) in 1987 to 29 billion ($261 million) in 1995, taking the company to seventh position in the ice cream market with almost a 7% market share. NEW PRODUCTS The premium ice cream category is dominated by foreign products. Japanese ice cream makers have scrambled to introduce new premium products with a focus on not only ingredients, but also packaging (Japanese consumers regard a food's visual presentation as very important). Generally, life cycles for individual products are short and most companies introduce new or revamped items every spring and summer. Many 1995 introductions featured a healthy image or claims of richer flavors, balanced acidity, and higher quality or specially selected, good-for-you ingredients. Some ice creams have been reintroduced with an increase in the milkfat content...and also claim a healthy image. At the other extreme, and following the launch of its sugar-free chocolate bar, Lotte launched Zero - a sugar-free ice cream. It was expected that other companies might follow suit, but to date none have appeared. This year has started slowly with unfavorable weather conditions for ice cream sales. Most players expect similar results to 1995 but individually hope for sales increases and another hot summer. After all, what consumers have found pleasing in one part of the world, generally so too will consumers in others. Bus. Coll.: 95P2135 Article A18598416

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