"Japan Food & Drink Report Q4 2013" Published

From: Fast Market Research, Inc.
Published: Thu Nov 21 2013

BMI's five-year outlook for Japan's food and drink industry is downbeat, as the economy faces significant structural challenges. A lack of political will and popular support for comprehensive reforms and unsustainable economic stimulus measures will leave Japan's economy struggling over the coming years. Moreover, a precarious demographic situation and a looming fiscal crisis will also weigh on consumer spending, negatively affecting most consumer industries, including food and drink.

Prime Minister Shinzo Abe's combination of ultra-loose monetary policy and higher public spending has bolstered economic growth over the past several quarters. As such, BMI has revised its forecast for Japan's real GDP growth to 1.8%, from a previous forecast of 1.4%, in 2013. However, we believe that even this moderate growth rate is unsustainable over the coming years, as the effects of Abe's monetary and fiscal measures will gradually wane and as the government takes action to manage its excessive national debt. As one of the measures to increase its revenues, the government is considering gradually raising the consumption sales tax - from 5% to 10% - by 2015. If passed, the tax increases will put additional pressure on consumer spending power.

Full Report Details at
- http://www.fastmr.com/prod/712791_japan_food_drink_report_q4_2013.aspx?afid=301

Headline Industry Data (local currency)

* 2013 per capita food consumption = +0.2%; compound annual growth rate (CAGR) to 2017 = +0.4%
* 2013 alcoholic drinks value sales = +0.3%; CAGR growth forecast to 2017 = +0.8%
* 2013 soft drinks value sales = +3.5%; CAGR growth forecast to 2017 = +3.5%
* 2013 mass grocery retail sales = +0.6%; CAGR growth forecast to 2017 = +0.4%

Key Industry Trends

Danone To Boost Yoghurt Production: In April 2013 it was reported that French dairy company Danone is to invest US$141.5mn in Japan between 2013 and 2017 to increase yoghurt production capacity in the country by 50%. The company is also likely to invest an additional US$141.5mn between 2017 and 2022 to introduce three new product lines to its eight existing lines at the Tatebayashi plant in Gunma Prefecture. Danone aims for this investment to double the plant's current production capacity.

Weaker Yen Could Provide Boost To Craft Beers: In June 2013, The Japan Times reported that the president of Japan-based Yo-Ho Brewing, Naoyuki Ide, said a weaker Japanese yen will boost sales of craft beers, as foreign beers will become significantly more expensive. In order to meet this anticipated rise in demand for the beer, Ide is increasing production capacity at its microbrewery in Nagano by 50%. The weaker Japanese yen and a hike in consumer spending may strengthen Japan's craft-brewing industry, which had already been outperforming before the prime minister launched a campaign to stimulate the economy and end deflation.

Risks To Outlook

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