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Coffee, Black Tea & Coffee Cream/
Creamer Industry in Japan 2012
(Subtitle: New Product Development Trends & Sales Strategies at
Japanese & Foreign-Owned Companies in the Coffee, Black
Tea & Coffee Cream/Creamer Industry in Japan 2012)
Sample
Universal Data Resources, Inc.
Coffee report 1 INTRODUCTION TO REPORT
Sales of non-essential foods such as coffee, tea and home use coffee cream/creamer have been
struggling because of this year’s earthquake and high summer temperatures, but in autumn and
winter when the temperature drops, the demand for hot food products rises. This is the time to aim
for sales of these non-essential foods to grow. Especially this autumn and winter, there is a rising
trend of eating at home, economizing and conserving electricity, so the industry plans to boost
demand for home non-essential foods. The home coffee market uses the expanding mix (stick)
coffee products as the engine for growth and aims to turn the negative growth into positive. Tea
companies plan to lift consumption by strengthening items mainly with product updates and
revitalizing sales floors. The home coffee cream/creamer market seeks to increase usage amounts
with market stimulation measures such as sales promotions.
The home coffee market is struggling somewhat. The reasons are that product supply was
delayed in some cases because of earthquake and there was falling demand following rising
temperatures in summer. The main categories—regular coffee (RC) and instant coffee (IC)—are
basically declining. On the other hand, mix (stick) coffee products are growing and continue to do
well with double-digit growth.
An issue for the coffee industry this year is rising product prices. Raw material costs rose
steeply from the end of last year to the beginning of this year, so that the four major companies
modified their manufacturer shipping prices. This was true for RC and IC products, which use more
raw coffee beans. Prices of other products will not be altered this time. However, the companies
cannot make up the coffee bean cost increases with this price increase alone, but the range of the
price increases was set to 11% to 20% on average, considering the impact on demand.
The hottest sales war this autumn/winter season in the home coffee market seems to be among mix
(stick) coffee products. This product category has grown this summer and is currently pulling the
home coffee market. This category offers a variety of items including café au lait and caramel
macchiato (which is usually enjoyed at cafés), and these items appeal mainly to the younger
generation and expand the range of demand.
Besides coffee, other products such as matcha green tea latte and black tea latte have become
popular and are supporting the growth of this category. This autumn and winter, companies will
release a number of new and updated products, so these beverages are expected to rise more.
The international market price of raw coffee beans was unstable: in May the market price at one
point passed 300 cents and another price increase in autumn seemed to be possible. However, from
spring to summer, the market price started to stabilize, though at a high level, so many of the
manufacturers seemed to put off autumn price increases.
The autumn/winter season has now started and the period of black tea demand is here. Mainly in
the East Japan home black tea market, consumption is declining as a result of the earthquake. In this
season, however, there have been noticeable attempts in the market to strengthen items with updates
and revitalized sales floors.
Tea leaf imports, an indicator of black tea demand including ready to drink (RTD) tea products,
grew 8% in volume by May, so the market is good.
For tea bags and tea leaves, which have been stable, changes in consumption as a result of the
earthquake would be the current issue. In the light of these circumstances, the biggest topic this
autumn is expected to be Lipton’s achievement of 100% Rainforest Alliance (RA) certified tea
2 Coffee report leaves. This is the most significant environmental happening in the black tea industry so far and
could quite possibly appeal to consumers. There is a presently some social influence that
discourages enjoyment of non-essential food products; RA certified products could draw attention
as a new way to energize the market.
In the home coffee cream/creamer market, for instant cream powder (ICP), the three companies
Morinaga Milk Industry, Nestlé Japan and Ajinomoto General Foods have about a 98% share. This
autumn, Morinaga Milk Industry’s Creap, which has the top share in monetary terms, will celebrate
its 50th anniversary. Therefore the company is stepping up sales promotion and that should
revitalize the ICP market. Nestlé Japan will also stimulate the stagnant cream/creamer market by
releasing new products.
The coffee and black tea industry in Japan features domestic companies such as UCC Ueshima
Coffee and Key Coffee and foreign companies such as Nestlé Japan and Unilever Japan; the
competition among them is very heated. This study discusses new product development and sales
strategies at each company in detail.
The report also includes plenty of statistics from the All Japan Coffee Association such as
amount of coffee imports in Japan, Japan’s raw bean import amounts by country, Japan’s regular
and instant coffee import amounts by country, and non-essential beverage consumption in Japan. It
also contains many photographs of each company’s main and new products.
We believe this study will be very useful for your company especially for creating new product
development and sales strategies.
Coffee report 3 Table of Contents
<1> Trends in the Coffee, Coffee Cream/Creamer and Black Tea Industry
P5
<2> Coffee Market Trends
P12
<3> Coffee Trends by Category
(A) Instant Coffee
(B) Regular Coffee
(C) Mix (Stick) Coffee
(D) Easy Extraction Regular Coffee
(E) Bottled and Portion Coffee
P13
P13
P14
P14
P15
<4> New Product Development Status and Sales Strategies of Major Coffee Companies
(A) Nestle Japan, Ltd. (B) UCC Ueshima Coffee Co., Ltd. (C) Key Coffee Inc. (D) Ajinomoto General Foods, Inc. (E) Art Coffee Co, Ltd. (F) Kataoka & Co., Ltd. (G) Ishimitsu & Co., Ltd. (H) Nippon Coffee Trading Co., Ltd. (I ) Meiraku Group
P15
P17
P19
P21
P21
P25
P25
P28
P28
<5> Auction of Msmeralda Special High-Quality Coffee Beans
P31
<6> Coffee Cream/Creamer Market Trends
P31
<7> New Products Development Status and Sales Strategies at Major Coffee Cream/Creamer
Companies
(A) Morinaga Milk Industry Co., Ltd. P31
(B) Nestle Japan, Ltd. P33
(C) Ajinomoto General Foods, Inc. P33
(D) Meiraku Group
P33
(E) Melodian Co., Ltd. P37
<8> Black Tea Market
<9> New Product Development status and Sales Strategies at Major Tea Producers
(A) Morinaga Milk Industry Co., Ltd.
(B) Mitsui Norin Co., Ltd.
(C) Kataoka & Co., Ltd. (D) Meito Sangyo Co., Ltd. P39
P39
P42
P45
Plenty of tables, figures and color photos
4 Coffee report <1> Trends in the Coffee, Coffee Cream/Creamer and Black Tea
Industry
.
The non-essential food market for coffee, black tea and coffee cream/creamer emphasized iced
products for the summer. For home coffee, along with regular coffee and instant coffee products,
liquid products such as bottled coffee and portioned coffee products are energizing retail sales. In
the black tea market, many companies are taking measures to respond to consumers’ diversified
lifestyles by keeping the key products as the core and subdividing items around those key products
to support them and meet the needs for different ways to enjoy beverages. In the home coffee
cream/creamer market, companies are trying to increase the purposes of black tea and matcha green
tea to increase consumption and strengthen sales. Through such means they are working to step up
market demand since sales are on the decline. Even though the non-essential food market
environment continues to be challenging because of rising raw material prices and slumping
consumption, the companies aim to expand the range of demand by actively suggesting products
and advertising.
The market is now more diverse and there are not only regular and instant coffee products but
also coffee mixes and bottled coffee products. More consumers are drinking multiple categories of
coffee products.
An issue for the coffee industry this year is rising product prices. Raw material costs rose
steeply from the end of last year to the beginning of this year, so that the four major companies
altered their manufacturer shipping prices. However, the companies cannot make up the coffee bean
cost increases with this price increase alone, but the range of the price increases was set to 11% to
20% on average, considering the impact on demand.
The New York Coffee (NYC) raw bean market price is perhaps what the domestic coffee
industry watches most closely. NYC, an index for raw material prices, had already been high, but
since the middle of last year, it has risen even higher. The industry has been keeping close watch of
the price trends, but the outlook remains uncertain.
Raw coffee beans in Japan
Producing countries imported from/imported volume/YOY change (AJCA)
Table 1
Rank
No. 1
No. 2
No. 3
No. 4
No. 5
No. 6
No. 7
Producing country
Brazil
Colombia
Indonesia
Vietnam
Guatemala
Tanzania
Ethiopia
2010
2,050,988
1,315,806
984,330
912,290
569,591
174,761
170,644
2009
1,836,847
1,277,173
872,309
964,416
555,185
232,673
18,464
Change (%)
+11.7
+3.0
+12.8
-5.4
+2.6
-24.9
+824.2
No. 8
Papua New Guinea
127,385
107,794
+18.2
No. 9
No. 10
Honduras
El Salvador
105,555
84,482
106,106
115,102
-0.5
-26.6
Other
346,338
429,567
-19.4
6,842,169
6,515,635
+5.0
60 kg bags Total
Coffee report 5 Change of coffee imports by item in Japan
Table 2
Unit: ton
Year
Raw
coffee
beans
Roasted beans
Instant coffee
Coffee extract
products
(sweetened)
Coffee extract
Total of raw
products
beans
(unsweetened) equivalent
Raw
Raw
Raw
Raw
Amount
Amount
Amount
beans*
beans*
beans*
beans*
2001
381,745
3,630
4,320
8,387 21,806
2,956
1,537 13,078 11,901
2002
400,771
4,070
4,843
8,465 22,009
2,485
1,292 11,895 10,824
2003
377,647
4,292
5,107
9,057 23,548
1,622
843
9,945
9,050
2004
400,977
4,150
4,939
7,633 19,846
1,727
898 10,410
9,473
2005
413,264
4,776
5,683
7,778 20,223
1,940
1,009 11,458 10,427
2006
422,696
5,588
6,650
7,444 19,354
1,148
597 10,121
9,210
2007
389,818
5,816
6,921
7,089 18,431
1,128
587 11,012 10,021
2008
387,538
6,652
7,916
7,850 20,410
108
56
8,502
7,737
2009
390,938
6,020
7,164
7,400 19,240
102
53
8,836
8,041
2010
410,530
6,311
7,510
7,445 19,357
120
62
7,723
7,028
Note: Raw benas means raw beans equivalent amount.
Source: Custom statistics by Ministry of Finance
Amount
amount
421,309
439,739
416,195
436,133
450,606
458,507
425,778
423,657
425,436
444,487
6 Coffee report <2> Coffee Market Trends
FY2010 export volumes (source: ICO) have been confirmed, and Brazilian exports were at a
historic high.
Export volumes from coffee producing countries for 2010 have been released. Since NYC reached
250 cents, it was thought that supply would decline, but on the contrary, the export volume
increased by 1,340,000 bags. This is historically the second highest level and only slightly different
from 2008. Robusta sharply decreased and other milds increased by 2.3 million bags. Arabica may
have completely sold out even at a high price. When monthly export volumes are compared to the
past, months in the first half were less but the volume increased in the latter half when prices started
to rise. The increase of 2.66 million bags from Brazil, which had greatly increased production,
actually seems rather small. Vietnam and Indonesia sharply decreased, probably due to damage by
torrential rain caused by global warming. Ethiopia had a comeback and India and Peru increased.
Tanzania and Kenya, which are in the Colombia mild group, decreased along with Colombia.
All Japanese consumption figures for 2010 are out. Estimated consumption was unexpectedly 7.33
million bags, the second highest historically.
[Imports]
The total for FY2010 was a 5% increase compared to last year. Brazilian coffee, which is less
expensive and has stable quality, increased steeply. Colombia also rose even though the production
volume is expected to be poor. Indonesia and Vietnam are competing for third place. Tanzania’s
production declined and imports from there steeply declined. Tanzania’s export volume last year
declined 50%. Ethiopia rose but is still not comparable to its one-time level of 600,000 bags.
[Price]
What got the most attention in 2011 was import prices, since NYC at the end of December 2010
was 240 cents. That means a rise of 85%. However, with the high yen, 10% of that is assumed to be
absorbed by the exchange rate. In FY2010, for raw beans only, there were imports of 410,000 tons.
If Japan were to import the same amount at a price of 100 cents more on average in FY2011, 80
billion yen would be borne at the shoreline. Raw beans contain close to 20% moisture, a price
which must also be borne, so it means 20 billion yen would evaporate.
[Consumption]
Consumption recovered in 2010. There seem to be various reasons including the knowledge of
coffee as a health drink among consumers, people who were heavy coffee drinkers at companies
have retired and started drinking coffee at home, instant coffee (IC) that is considered
comparatively cheap has made a comeback, and big chain stores are competing with price and
quality and this has vitalized the coffee market. There seem to be more reasons as well.
[Summary]
In any case, the recovery of consumption is a positive. The year 2010 ended peacefully and
uneventfully. Currently consumers’ disposable income has not improved. So, if the 250-cent level
continued for one year and this price increase were shifted to users, they would have to bear 100
billion yen (345 cups x 3 yen x 100 million people = 103.5 billion yen).
1. It is generally estimated to be 12 million bags less since it is a secondary crop year. CONAB
estimates 43.3 million bags.
Coffee report 7 2. The year 2011 is also considered a good year for demand. The newly rising nations (Asia and the
BRICs) are especially active. The International Coffee Organization (ICO) and trading companies
that specialize in international trading estimate 134 million bags (a 3 million bag increase).
3. However, consumer price increases could reduce demand, though an increase of 3 to 5 yen per
cup might have limited impact.
4. Long periods of rain caused by abnormal climate because of global warming could lower quality
and production. In Colombia’s case, 2009/2010 production was 8.1 million bags and the next year’s
production forecast is 8.9 million bags (Colombia’s export volume was 11 million bags each in
2007 and 2008, and about 7.9 million bags each in 2009 and 2010).
<4> New Product Development Status and Sales Strategies of Major
Coffee Companies
<A> Nestlé Japan, Ltd. (http;//www.nestle.co.jp)
.
Nestlé Japan aimed to catch summer iced beverage demand by releasing new products in the
spring/summer season of 2011. The company updated bottled coffee product Nescafé Clear Taste.
The product emphasizes a refreshing coffee aftertaste and is even more user-friendly and ecofriendly than before. Responding to consumer opinion that it is hard work to separate the materials
for recycling, the company made the size of the label about half that of the previous product. That
makes it easier to separate the material for recycling and also reduces waste from households.
Nestlé Japan released a dilutable portion type coffee, Nescafé Excella Portion. The product has
the rich flavor and deep body that Excella is known for, and consumers can choose how much milk
to use according to taste and enjoy various ice coffee lattes. Additionally, for users who are
concerned about calories and sugar content, it has a large display of the caloric value of each
portion.
Along with this item, the company added Royal Milk Tea Latte to the Home Café Portion series.
This item uses 100% select Assam tea leaves so it has a strong tea taste that milk does not diminish.
The company also added Darjeeling, Earl Grey and Jasmine tea to the Nestea portion series and
with these items the company tried to catch customers and charge up the market.
For mixed coffee products, the company released new varieties in the Nescafé Home Café series
and Nestlé Home Café series. The new varieties are Italian Espresso Latte that has strong espresso
8 Coffee report Coffee report 9 flavor with refreshing aftertaste and Framboise Tea Latte that has a flamboyant sweet and sour
berry flavor. With these items, the company aims to catch new users.
The company added the new item Hokkaido no Bokujo Milk Tea (Hokkaido farm milk tea) to the
Hokkaido no Bokujo series that was released last year. There are two package sizes: eight sticks and
25 sticks.
Through the end of April 2011, the company conducted a new campaign called Nescafé
Uchinaka (in the home) Café Present to promote coffee consumption at home.
Nestlé Japan’s non-essential food strategy this autumn is expanding demand for coffee at home
using two aspects: a sense of luxury with the Nescafé brand, and economical products. The
company also aims to boost coffee consumption at home by proposing, mainly to younger
consumers, drinking latte beverages at home, in addition to black coffee with the original coffee
taste.
The coffee machine Nescafé Barista had sold over 500,000 units by the end of May. Sales of the
Eco & System cartridges used by the Nescafé Barista are growing.
For the premium aspect, the company developed topmost Nescafé brand President into a regular
soluble coffee by using a milled bean enveloping method, and a refill cartridge Eco & System Pack
was added to the lineup. The package of Nescafé Komi-baisen (flavor roasted) has been updated. It
now uses a blue colored jar to make it stand out and differentiate it from existing IC products.
Through the sale of such products, the company aims to establish regular soluble coffee as the third
category after RC and IC.
The mixed coffee product Nescafé Home Café Premium is offered as a premium type by adding
a very fine regular coffee powder as added value. Along with coffee, the company also released a
tea series as Nestlé Home Café Premium.
To meet the need for economy, the company sells a refill bag type of Nescafé Maroyaka Latte
ga Tsukureru Excella (Excella for smooth lattes). The price is set at an affordable price of 298 yen
for 90 g and 498 yen for 180 g. Nestlé Japan hopes to revitalize refill bags and recover sales with
such affordable prices.
The company also added the new product Uji Matcha (green tea) Latte to enrich its line.
10 Coffee report Coffee, Black Tea & Coffee Cream/Creamer Industry in Japan 2012:
New Product Development Trends & Sales Strategies at Japanese &
Foreign-Owned Companies in the Coffee, Black Tea & Coffee
Cream/Creamer Industry in Japan 2012)
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January 2012
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Author
Hiroshi Shimizu is an independent consultant analyst. After worked at a consulting firm,
Yamasaki International, he founded Pacific Research Consulting. He offers market research
and a consulting service in a wide variety of industrial fields at leading foreign firms and
public organizations’ request.
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Coffee report 11