How beverage firms can put the fizz back into Japan’s flat soft drinks market

The carbonated market in Japan has been stagnant for several years, in part due to the country’s sluggish economy and growing health awareness among consumers.

However, according to experts at market research firm Euromonitor, carbonated brands have shied away from fortifying their brands with healthier ingredients, fearing that this would not be enough to offset the success of categories, such as bottled water.

Instead, firms have been  producing products with  stronger carbonates, referred to as Kyo-Tansan, which contain higher elements of caffeine, ​said analyst Akari Utsunomiya

“For instance, in cola carbonates, Suntory renewed its Pepsi Strong brand by launching Pepsi Strong 5.0GV and Pepsi Strong 5.0GV Zero, in which GV refers to Gas Volume. ​

“The main features of these brands are their strong caffeine content, which makes them the strongest carbonates produced in the Pepsi line, offering strong stimulation and refreshment.”​

Data released to us to coincide with the FoodEx Japan show in Japan reveals that Suntory is currently the second-biggest soft drinks company in the country with a market share of 17.1%, behind Coca Cola on 22.4%.

The remaining three top five firms are ITO EN, Asahi Group and Kirin Holdings.

“The market remained fairly consolidated with the top five players accounting for three-quarters of value sales during the year,”​ added Utsunomiya

“Asahi witnessed the strongest share growth, moving up one ranking to third place mainly because the Calpis brand was merged under Asahi’s soft drinks portfolio.”​

Bucking the trend

None of the other global brands that join Coca-Cola in the top five of total sales — PepsiCo Inc, Danone, Nestlé SA and Dr Pepper Snapple Group — appear in Japan’s top five.

Euromonitor believes the Japanese soft drinks market will remain flat in volume terms in the next few years.

However, categories, such as flavoured bottled water and healthier options are set to buck the trend, recording much more positive growth, “as consumers will continue to embrace the health and wellness trend, seeking soft drinks that hydrate, and which taste good in addition to being good for them.”​

One firm seeking to tap into this trend at FoodEx Japan was Philippine firm AgriNurture.

The company was showcasing its La Natural coconut-water beverage product line. The products are made with 100% pure coconut water, has no fat, and no cholesterol.

The company is now looking to introduce carbonated versions into the Japan market.

Export manager Bernard Pae Jr told us: “These products will be solely for export. We can see in Japan that consumers want more healthy beverage options. Although the market is still dominated by local companies, we think consumer awareness of coconut water is growing, especially among younger consumers.”​

“We will be launching the carbonated range very soon and I think it will be a popular, more healthy, energy-providing drink for teenagers and young adults.”​

The company already has some business in Japan for its plain coconut water range, but said it was hopeful that its new product development would open up new opportunities.

“This could become a very big market for us,” added​ Pae Jr. “We are working hard on our packaging and understanding the requirements of local retailers.”​

Healthy Ageing APAC Summit 2018: Our next event will assess how the food and nutrition industry can meet the needs of APAC’s rapidly-ageing populations of today and tomorrow. The event, in Singapore on June 12 and 13, will bring together policymakers, academics and industry experts from the likes of Nestle, Blackmores, Swisse and Japanese ‘engay’ food pioneers Nutri co.  Find out more here​.