• The organic segment in Japan is led by artisanal products with a value share of 26.7% in 2021, followed by Alce Nero Gruppo with a value share of 4.4% and Takanashi Dairy Co Ltd with a value share of 2.3%.
• Japan ranks 14th in market size globally with a value of US$602.6 mn in 2021. However, the market is expected to record marginal growth of 0.4% for the forecast period 2021-2026, rank outside of the top 50 globally for this indicator.

• Organic packaged food and beverages in Japan recorded a market size of US$602.6 mn in 2021, representing 1.0% of global demand and roughly 9.4% of demand in the Asia Pacific in 2021. 
• With weak economic growth and a low level of awareness on the benefits of organic products, the category is expected to record slow growth, with a forecast value CAGR of 0.4% for the period 2021-2026.

• Retail value sales of organic packaged food decreased by 1% in current terms in 2021 to US$416.6 million.
• Organic beverages saw a negligible increase in retail volume terms and a 1% increase in current value terms in 2021 to reach US$186.0 million.
• Organic packaged food and beverages remain a fairly niche category in Japan, with limited potential for notable growth over the forecast period.

• Organic food and beverages continue to show modest growth in Japan, with one of the main reasons for this being that consumers are not aware of the health and wellness benefits of organic products. Due to lack of demand, there is also poor investment by manufacturers in the category, and product availability is extremely low. Poor availability of organic ingredients in Japan means that manufacturers of organic packaged food usually have to use imported ingredients, which causes higher production costs compared with using non-organic domestically harvested ingredients. This drives up the price of organic products which is also a key factor limiting demand, especially in the wake of the Covid-19 pandemic when disposable incomes declined. Organic packaged food is often not available in major supermarkets in the country. Online retailers and food and drink specialists are often the only channels selling organic packaged food.
• Although organic beverages remain a niche category, it saw a slight retail volume and current value growth in 2020 and 2021, after several years of decline. Though the pandemic led to financial hardships, it raised awareness of environmental and social issues. Consumers made a larger effort to consume ethically which indirectly led to higher sales of organic beverages. Organic fruit/herbal tea saw the best performance in retail volume terms in 2021 (albeit from a small base), benefiting from home seclusion.

• Organic packaged food in Japan is led by Nichifutsu Boeki KK, with a value share of 6.4% in 2021, followed by Takanashi Dairy Co Ltd and Ajisenshioji Co Ltd, with respective value shares of 3.3% and 1.7% in 2021. Artisanal products held a significant 38.6% share in 2021. Private labels, such as the AEON Group’s TOPVALU Green Eye Organic range, offer various organic packaged food products. Most of them are made using imported ingredients amid low availability of domestic ingredients. The product variety of organic offerings from TOPVALU Green Eye Organic, which have organic certificates from JAS, USDA and the EU, has been diversifying. As of November 2021, there was a wide range of products available, including organic frozen vegetables, nuts and dried fruits, sauces, dressings and condiments, sweet spreads, pasta, breakfast cereals, and soy milk. Nevertheless, while larger AEON outlets offer a good variety of TOPVALU Green Eye Organic products, small AEON outlets, and the group’s small supermarket retailers, including My Basket, operating in the cities, sell a very limited number of products from the range. Thus, although AEON is becoming the go-to place for consumers looking for organic products in Japan, the impact on the overall market remains limited.
• Organic beverages remained highly fragmented in 2021. ITO EN, Japan’s leading tea company, held the largest value share in 2021 amongst companies, capturing 4.9% of the market. ITO EN witnessed a slight growth over the pandemic, as consumers increased their consumption of organic green tea, the largest category within organic beverages. Consumers increased their demand for organic green tea due to the associated health benefits and as they spent more time at home. Still, the high costs of obtaining Organic JAS certification and importing organic ingredients typically deters manufacturers from introducing organic beverages, especially given the general lack of interest in and demand for these products in Japan. Organic tea producers account for the largest value shares, with most of these being small-scale operators offering premium products which appeal to a niche group of middle- to high-income consumers.

• Organic packaged food and beverage consumption is forecast to exhibit a CAGR of 0.5% over 2022-25, with organic packaged food forecast to show a CAGR of 0.6% over this period. The Covid-19 pandemic led to a decline in disposable incomes and some consumers in Japan who used to purchase organic products switched to non-organic products as they sought cheaper prices. This shift is most significantly seen in organic vegetable and seed oil. Organic olive oil, which accounts for a large share of organic vegetable and seed oil, enjoyed a sales increase during the review period thanks to consumers’ strong interest in the health benefits of organic olive oil. However, with financial uncertainty due to the ongoing pandemic, some consumers who used to buy organic olive oil traded down to non-organic olive oil or to even cheaper oils, such as non-organic rapeseed oil. The price disadvantage of organic products is expected to continue to hamper the category moving forward. In addition, the Japanese economy is expected to see slow growth moving forward and consumers are expected to continue to appreciate lower prices over organic offerings. Organic products will have to be more price competitive and as tasty, if not tastier than regular products for the mass population to be interested. Currently, demand caters to niche middle- to high-income groups.
• Middle- to high-income parents are a niche group that underpin demand for organic food in Japan as they drive sales for organic baby food, which is forecast to witness a CAGR of 2.7% over 2021-26. Organic other baby food, which includes snacks and drinks for babies, and organic prepared baby food, are expected to see the strongest current value growth amongst all organic packaged food products over the forecast period as parents look for healthy and safe options for their babies.
• Over the forecast period 2022-25, organic beverages is expected to post a CAGR of 0.2%, to reach US$185.4 million in 2025. Although the organic trend is not yet particularly active in soft drinks and hot drinks, organic wine gained popularity over the last few years, and players have continued to position it as a more ethical choice to activate sales of wine. Organic wine is favored by consumers not only from an environmental viewpoint, but also for reasons of health-consciousness. If organic wine succeeds in further increasing its share within overall wine in the forecast period, this is also likely to increase consumers’ awareness of organic products in general, potentially contributing to growth in organic beverages in the forecast period. In addition, organic wine has recently been added to the US-Japan organic equivalence agreement, further boosting prospects for the category.
• E-commerce is also an up-and-coming trend in organic products in Japan, accelerated by the Covid-19 pandemic, when consumers increased their purchases via e-commerce to avoid having to leave their homes and risk contracting the virus. New platforms that directly connect producers with consumers are also gaining popularity, such as the website Tabe-choku. Through such D2C platforms, producers can directly communicate the value of their products to consumers, making them a good match for organic products. As organic beverages is a fragmented category, the expansion of e-commerce should help to boost sales of such products.

• Health and wellness is more of a lifestyle than a trend in Japan. Japanese consumers generally cook a majority of their meals at home, and they are perceived to be relatively healthy. The Covid-19 pandemic further increased health-consciousness in Japan and with consumers looking for ways to boost their health to help to combat the virus, fortified/functional packaged food and beverages generally performed well in 2021. The most notable example is the growth of Milo from Nestlé Japan in fortified/functional malt-based hot drinks. Milo mainly targets growing children aged 7-12 years old, but in recent years, adult consumers also saw this product as a convenient way to boost their nutrition as it is a good source of calcium, iron and vitamins in only a cupful. With the expansion of its consumer base, Milo recorded dynamic sales growth both in 2020 and 2021.
• Coca-Cola (Japan) Co Ltd was the leading player in the health and wellness category in Japan in 2021, holding a retail value share of 10.8%. Suntory Beverages & Food came in second, capturing a retail value share of 9.6% in 2021, largely attributed to their decision to increase the pack size of their Pepsi brands, including the zero-calorie variant, from 490ml to 600ml. With consumers spending more time at home, they continued to value affordability over convenience. This resulted in a volume shift from small size packs to big sizes, as unit prices are usually lower for the latter. Companies continued to launch large-sized products to cater to increased home consumption.
• The Covid-19 pandemic also led to a significant decrease in the number of marriages and the number of children born in 2020 and 2021. This is expected to further accelerate the ageing of what is already the world’s oldest population. Thus, products that support healthy ageing, such as replenishing nutritional deficiencies, controlling weight, and improving brain health are expected to perform well.

Economy:

• Japan’s economy is forecast to grow by an average annual real rate of 0.7% over 2021-2040, significantly below regional and global averages.
• Inflation is forecast to gradually increase but remain below the central bank’s target of 2.0% over 2021-2025.
• Public debt surged from 238% in 2019 to 266% of GDP in 2020 and is anticipated to remain elevated over 2021-2022, due to large fiscal support.

Population demographics:

• The population of Japan declined to 125.4 million in 2021 and is expected to further decline to 123.2 million by 2025.
• The drop in population is mainly driven by the falling birth rate, leading to an ageing population, and shrinking workforce. Net migration is also low as Japan’s economy is in the midst of a crisis, worsened by the pandemic.
• As of 2021, Japan has the second-highest median age in the world, standing at 48.6 years. Japan also has one of the lowest infant mortality rates in the world, which contributes to the calculation of a high life expectancy.

Income & expenditure:

• Over the 2020-2030 period, Japan is projected to drop by six positions and rank 27th out of 84 countries in Euromonitor International’s Wealth Index.
• Per capita gross income in Japan is forecast to increase by 21.1% in real terms over 2021-2040. Mid-Lifers are projected to remain predominant in the top-income band by 2040, shaping luxury spending patterns in Japan.
• Per capita gross income levels in Japan are among the highest across Asia Pacific countries. However, the country has one of the largest gender wage gaps among OECD countries. Income inequality is estimated to increase over the long term but remain moderate by global standards.

[1] Health and Wellness Definition: Health and wellness is the aggregation of organic packaged food and beverages, fortified/functional packaged food and beverages, naturally healthy packaged food and beverages, better for you packaged food and beverages and food intolerance products. The above definition and more can be referenced from the definitions table at the end of the report.

Top 5 Cities By Population

Top 5 Grocery Retailers By Sales

Top 5 Export Commodities To Japan

Note : Total organics is the sum of all exports in a particular year  

Authorized Government Agency(s):

Ministry of Agriculture, Forestry and Fisheries (MAFF)

Agency(s) Contact Information:

Standards and Conformity Assessment Policy Office, Food Manufacture Affairs Division,
New Business and Food Industry Department, Minister's Secretariat,
Ministry of Agriculture, Forestry and Fisheries
Telephone: +81-3-6744-2098
Email: jas_soudan@maff.go.jp
Web

Organic JAS 

Name(s) of Regulation and/or Standard:

Japan and the United States have an Equivalency Arrangement which began January 1, 2014.

Organic Japanese Agricultural Standard (JAS) and Technical Criteria (website in English)

Date of Implementation: 2000

Regulation and/or Standard Scope:

The standards cover plants, processed foods, livestock feed, and livestock products, as well as transportation, selection, processing, cleaning, storage, packaging, and other post-harvest processes for domestic and imported products.

Japan also has equivalency arrangements with Argentina, Australia, Canada, European Union, New Zealand, Switzerland, Taiwan and United Kingdom.  The scope of the arrangement for Argentina, European Union, New Zealand and Taiwan are limited to organic products of plant origin and organic processed products on plan origin. Only the U.S., Australia, Canada and Switzerland arrangements include organic livestock products and organic livestock processed products. 

Importers must be certified. Technical criteria for importers cover facilities, methods for acceptance and storage of imported product, qualifications and number of persons in charge of acceptance and storage of imports and for those in charge of grading labeling, and for attaching grading labels. Companies importing products to Japan must assign a well-trained and knowledgable person to ensure the receipt, storage and packing of organic products maintains all organic requirements. In addition, the Organic Japanese Agriculture Standards (JAS) label on products must meet specified size parameters and be attached on a conspicuous location on every organic product. As of October 1, 2022, the organic JAS Seal is now allowed on certified Organic Alcohol Beverages by obtaining organic JAS (for Processed Foods) certification.

Japan has approved rules and standards of some countries as equivalent with the Organic JAS system. The equivalent grading system of another country does not mean that it is identical to the Organic JAS system. The integrity of the Organic JAS system is maintained through setting the terms of exports to Japan for crucial differences between both grading systems.

The United States has an Equivalency Arrangement with Japan.

Ways to Import and Sell Organic Products to Japan

A list of certified importers is available.

JAS system – Third party certification.  

Certification is conducted in accordance with ISO standards, 17065 and 17021

List of Accredited Certification Bodies. 

The Ministry of Agriculture, Forestry and Fisheries (MAFF) accredits certification bodies and laboratories, according to ISO 17011. Technical assessment is performed by the Food and Agricultural Materials Inspection Center (FAMIC) to ensure the quality and proper labeling of agricultural, forestry and fishery products: https://www.maff.go.jp/e/policies/standard/jas/system.html#Outline%20of%20required%20formalities%20for%20RCB

Reference Standards:

Based on Codex Guidelines for the Production, Processing, Labelling and Marketing of Organically Produced Foods

Additional Information:

Japan is on the EU's third country list.

U.S. International Trade Administration

USDA’s GAIN Report Japan - Organic Market Review (2021)
USDA's GAIN Report Japan Exporter Guide (2023)
USDA's GAIN Report General Instructions for Shipping Product Samples to Japan (2023)
USDA's GAIN Report Japan Food Processing Ingredients (2022)
USDA's GAIN Report Japan Retail Foods Retail Sector (2023)
USDA’s GAIN Report Japan HRI Food Service Sector Report (2023)
USDA's GAIN Report Japan Health Foods Market Overview (2020)
USDA’s GAIN Report Japan Feed Import Regulations and Standards (2021)
USDA’s GAIN Report Japan to Establish Voluntary Government Standards for Vegetarian and Vegan Food (2021)
USDA’s GAIN Report US-Japan Organic Equivalency Arrangement Expanded to Include Animal Products (2020)
USDA’s GAIN Report Japan To Begin Enforcement of Organic Regulations for Turkey Products (2021)
USDA’s GAIN Report MAFF Releases Interim Report on Green Food System Strategy (2021)
USDA’s GAIN Report Japan Introduces a New JAS Logo for Differentiated Products (2018)
USDA’s GAIN Report Japan Regional Retail Foods (2018)
USDA’s GAIN Report HRI Food Distribution Patterns in the Tokyo-Yokohama Metropolitan Area (2021)
USDA’s GAIN Report The Japanese Processed Fruit Market-Opportunities and Challenges (2017)
USDA’s GAIN Report An Overview of the Food Labeling Standard (2017)
USDA’s GAIN Report Revised Country of Origin Labeling Requirements for Ingredients (2017)
USDA’s GAIN Report Japan Revises Organic Law Allowing Imported Organic Feed (2017)
Agricultural Trade Office talk: Food, Agriculture, and U.S. Market Prospects: Agriculture in Japan (March 6, 2017)
USDA's GAIN Report Japan Translates Amended Japanese Agricultural Standards Act (2019)
USDA's GAIN Report Japan Food and Agricultural Import Regulations and Standards Country Report (2023)
USDA's GAIN Report Japan Food and Agricultural Import Regulations and Standards Export Certificate Report (2023)
USDA's GAIN Report General Instructions for Shipping Product Samples to Japan (2020)