As organics come of age in North America, the EU and Australia, Asia is just discovering this important sector. Japan is leading Asia into a new way of eating, and as Bruce Hoggard reports from Biofach Japan, the seeds are being sown for an organic revolution.
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The organic industry in 2001 generated more than 26 billion dollars, having seen an average year on year growth rate during the past ten years of approximately 20%. This growth rate, although slowing in 2002, is expected to drive organic food sales to US$80bn by 2005.
In the year 2000, the European organic food market represented 1.4% of the entire $130bn European food market. In 2002 this had reached 3.0% and is certain to beat the 3.3% predicted for 2005, adding to the likelihood that the worldwide total of $80bn in 2005 will be attainable.
Adding to this growing global total is Japan, home to more than 126 million people and the third largest market for organic products, after the European Union and the United States respectively. Even through its recessionary times, Japan remains the largest consumer market for organic and natural products in Asia. The high growth rate of the past is expected to continue as several factors support the trend of buying organic products characterising the Japanese consumer and culture. These include:
- They traditionally have close ties to nature
- Food is a cultural asset in Japan and it is the largest importer of food in the world
- Growing health consciousness to avoid allergies and other related food scares
- Demanding high quality for consumer goods and supported by service and support
- Willingness to pay higher prices for quality products when delivered in a timely manner
- Two-thirds of Japanese farmers are preparing to retire during the next few years
It is in this setting that Nürnberg Global Fairs, a subsidiary of the Nürnberg Messe, teamed up with Nihon Keizai Shimbun, Inc. (Nikkei) of Japan to hold BioFach Japan in 2001. The show, similar to the very popular and successful BioFach held in Germany during February each year, was a success in its first year with 172 exhibitors from 22 countries. Of those participating, 121 were foreign exhibitors while 51 were domestic exhibitors. The total number of attendees was just under 13, 800 people.
Tokyo, the permanent home of BioFach Japan, was again the location of the second annual BioFach Japan organic trade show held from 5 to 7 December. The show was held at the Tokyo Big Site, a modern international exhibition centre in the Tokyo Bay Ariake area south across the bay from the Ginza. Tokyo has more than 12 million people and during the day more than five million people travel through the main railway hub, Tokyo Train Station, located just on the north edge of the Ginza. In the evening the Ginza comes alive under the brilliant light from the neon signs, rivaling Times Square or Piccadilly Circus.
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By GlobalDataTraceability and labelling paramount
Several dignitaries including Ms Herta Krausmann, the President of Nürnberg Global Fairs, Mr. Watanabe, the Vice Minister of the Ministry of Agriculture Forestry and Fisheries of Japan and the EU Commissionaire to Japan, attended the opening ceremonies. Their comments reconfirmed the importance of the organic industry in Japan, as Japan is the world’s most lucrative and largest importer of food products. The speakers all addressed the need for the industry to be more vigilant concerning food safety, where organic food has a competitive advantage. They also stressed the importance of traceability and labelling of organic food.
The broad range of products at the show included meat, dairy, vegetables, fruit; semi-finished food and beverage products; convenience and deep-frozen foods, (one of the fastest growing segments within the organic industry); agricultural and marine products; and wine, coffee, tea, juices, and soft drinks, to name a few.
However, the show’s main underlying focus was food safety, food security, and food traceability and labelling. These are issues that have gripped the organic industry throughout the world. The same is true in Japan where several organic food and labelling scandals, the BSE scare, pesticides in products from China, and nails in Korean product, rocked consumers’ confidence during the later part of 2001 and throughout 2002.
Novel products on display
On the show floor there were again several novel and interesting organic products, expanding on the show’s success in 2001. One of the Japanese companies at the show was Takara Bio, a company operating one of Japan’s first organic juice bars. It is also selling juice making machines and delivering the ashitaba (tomorrow’s leaf) leaf, used to make juice, to homes throughout Japan. The company has three Ashita-bar Organic Juice Bars with one each in Tokyo, Osaka and Shizuoka. Takara Bio makes one of its most popular drinks from the ashitaba leaf. This popular leaf, still eaten to help with skin complexion and stomach ailments, is now grown in green houses to protect its organic nature. The green leaf provides a lime-green liquid that has a very bitter taste, definitely an item requiring an acquired taste.
POLAN, the not-for-profit network of Japanese farmers, processors, wholesalers, retailers and consumers of organic products was at the show in its leading role as the promoter of organic farming in Japan. At present there is approximately 4000 ha. of agriculture land being organically cultivated in Japan, accounting for only 0.2% of all the farmland in production.
With the move to the new JAS organic certification, the organic industry in Japan is going through a readjustment period as producers and importers apply for the new certification. What had been recorded as 2.5 billion dollars in 2001 was adjusted downwards to only 200 million because of the new certification rules and regulations. This figure is expected to grow rapidly once again as more producers, processors and importers obtain their JAS certification.
Other organic products on display included bananas from Columbia and the Philippines; beef from Australia’s OBE Beef, having one of the largest organic herds in the world at more than 80,000 head, and Green Circle from the United States; gummi bears from Austria, Germany and the United States; and potatoes from Austria’s Anderst Agrarhandel GmbH.
Latin American attendance strong
This year’s exhibition also marked the first time attendance at the show from nine South America countries and 94 companies. Arranged and supported by Japanese External Trade Organisation (JETRO) the South American companies were promoting numerous organic products including corn, jams, spices, fruit concentrates, wines, olive oil and coffee.
Northern Lights, the newest Canadian Food Company, was also at the show with its organic wild rice and mushrooms. The 2001 Export Award winner for Canada, the company has captured 60% of the organic wild rice market in Europe plus making inroads in the United States. The products are organically grown in northern Canada and are still harvested by many of the local aboriginal people who inhabit the northern lakes and forest regions of Canada.
One of the highlights at this year’s BioFach Japan was the seminar series delivered with simultaneous translations in English and Japanese. Several topics during the two days included; North American – Japan Trade: Organic Regulations and Realities; How to Promote and Communicate Organic Products and Philosophy to Consumers; Latest Developments in Japan, US and EU organic markets; and the Latest Organic Market in Asia.
Equivalency a contentious issue with the US
The topic of interest in the North American – Japan Trade seminar involved the JAS and NOP regulations and the issues surrounding “equivalency” – the recognition and acceptance of organic standards between countries. Also discussed were the three methods that companies can use to export their product to Japan. The first is using JAS registered foreign certifiers, accredited directly by JAS from Japan. The second is for JAS certified importers to use the US certification and then obtain the JAS market in Japan. The third and most widely used is to have Japanese certifiers go to the United States and give certification there.
The President of the newly formed ECOCERT-QAI Japan Ltd. was also on hand. He provided further insight into the new JAS regulations and how they were affecting businesses involved in the organic industry. ECOCERT-QAI represents a partnership between Europe and the United States respectively that saw the merger of the two organisations in Japan in September 2002. It became very clear from Mr Nordeng’s comments that the new NOP and JAS regulations had made it more difficult for the farmers/producers to be able to sell their products in Japan. Also, since the Japanese Government has only just applied for equivalency in the United States, no JAS certified products can be sold in the US as organic products. The same problem does not seem to be affecting the 15 EU countries and Australia, both of which have equivalency arrangements with Japan.
Organic retail channels maturing
Another very informative speaker was Christine Neidhardt of ec menta, located in Germany and working with the Nürnberg Messe as a consultant. Her topic was: “How to Promote and Communicate Organic Products and Philosophy to Consumers.” As the organic industry has grown and matured during the last 40 years the channels of distribution and sales have changed. Now only 40% is through specialised channels while conventional channels, such as major grocery retailers, account for 50%. The remaining 10% consists of direct marketing and other smaller channels of distribution. Christine also put forth five trends and theses for success in the organic market. These were:
- Markets and companies will become completely transparent in the future
Individuality will dominate the market
- Value in transactions will be essential as consumers are less brand faithful
- Consumers will search for simple concepts and services such as Internet and home delivery
- Companies that economise resources – reducing costs and creating more efficient production will succeed
Christine’s co-presenter was Mr. Toshiaki Ono, the president of MOTHER’S Japan, and the largest organic supermarket retail chain in Japan, with eight branches. When MOTHER’S started in 1997, Ono literally had no products and had to develop the market and consumer education of the organic market from an almost zero recognition level. In 2001, the MOTHER’S store in the new Carrefour store in Makuhari, 45 minutes from down town Tokyo, and carrying 400 items did ¥6 trillion in sales. Toshiaki also noted several trends in the Japanese market, including:
- The customers are in their 30s
- The “fastfood kid generation” has developed allergies and is turning to organic products to relieve this
- Home delivery is growing
- Consumers are looking for clearer and less confusing labelling
- Singles and younger consumers want to eat organic meals in restaurants instead of taking organic products home to prepare meals.
EU leading in organic revenue
On the Friday afternoon, Amarjit Sahota of UK organics consultancy Organic Monitor delivered the topic the “Latest Developments in Japan, US and EU Organic Markets.” This session provided an excellent comparison and in depth review of the organic market in the major markets of Europe, Asia and North America. In 2001 worldwide organic cultivation was 17.3 million hectares. However, Australia accounts for 7.6 million, while Argentina (2.8 million) and Italy (1.2 million) have the next two largest areas of organic cultivation. On a percentage basis by region, Oceania accounts for 44.6%, followed by Europe at 27.8%, South America at 21.4%, North America at 5.6% and finally Asia at 0.5%.
With organic food revenue, the greatest contributor was the EU with 53% of the total. North America held second place with 44% while the remainder of the world only accounted for 3%. The highest worldwide consumption of organic products based on population was Denmark ($118.20) followed by Switzerland $68.50 and Austria $61.70. As a region the EU was at $29.64 with France being the lowest at $24.0.
In North America the per capita spent on organic food is $32.1 with the United States at $33.1 and Canada at $23.1. The trend in North America is seeing organic products move to more mainstream distribution and marketing as organic food continues to experience a rising profile among consumers. In Asia, Japan accounts for 90% of the organic market, with a per capita expenditure on organic food at $1.98. Singapore is the next largest organic market in Asia, with a per capita of $0.90. The latest trend in Asia is Government’s realisation that the organic industry offers a real economic benefit, which is encouraging a growing state involvement in the organic movement. However, the divide between the developed and developing countries remains dramatic, even for Japan.
Further information
This represents a brief overview of the information and topics presented and discussed to full rooms on each day of the Conference portion of the Trade Show. Although it is only three days long and in its second year, BioFach Japan has established itself as an integral and active part of the Japanese organic market.
Exhibiting at BioFach Japan offers an excellent opportunity to be present in this growing major market for organic products. Since personal relationships are the key for success in Japan, BioFach Japan is an ideal platform to present yourself to business partners, to expand the awareness of your brands, and to stay in touch with the Japanese organic industry.
In closing, the International Federation of Organic Agricultural Movements’ (IFOAM) head office will be moving in the new year. IFOAM has negotiated a 25-year lease for complimentary office space from the city of Bonn. As the former capital of West Germany, Bonn is attempting to fill the office space left vacant with the move of the Federal Government back to Berlin, and is inviting NGOs (non-governmental organisations) to establish their international headquarters in this picturesque city.
Dates for your diary
Also with regards to IFOAM, individuals involved in the organic industry may wish to keep the following dates and events in mind. The 7th IFOAM International Conference on trade in organic products, called ‘Mainstreaming Organic Trade: New Frontiers, Opportunities and Responsibilities’ will be held in Bangkok Thailand, from 5 to 8 November, 2003.
For more information please contact:
7th IFOAM Trade Conference 2003,
c/o Green Net,
183 Regent House,
Rajadamri Road,
Patumwon,
Bangkok 10330,
Thailand
Tele: +66-2-651-9055/651-9056/651-9073
Fax: +66-2-651-9072
e-mail: greennet@asia access.net.th
Other important dates include: The 22nd Annual Organic Conference, Trade Show and Sampling Fair: ‘Organic goes mainstream’, 24-26 January, 2003 at the University of Guelph, in Canada, and BioFach 2003, 13th – 16th February 2003 in Nuremberg, Germany.
