Japan has historically been U.S. pork’s leading value market and has continued this trend in recent years as the leading destination for U.S. chilled pork loins. In 2017, U.S. pork export value reached $1.63 billion (up 4 percent) and was the 3rd largest volume market at nearly 868 million pounds (up 2 percent) compared to 2016. Japan’s per capita pork consumption has remained fairly steady over time and sits at roughly 45 pounds. As of 2017, the U.S. held 35 percent market share of total pork and pork variety meat imports in Japan, followed by the European Union (31.5 percent), Canada (20 percent), and Mexico (8 percent). However, U.S. exports of chilled pork to Japan were down slightly to 480 million pounds, whereas value was up 4 percent to $1.03 billion. Canada’s market share in the chilled pork segment is a growing concern (market share up 2.5 percent in 2017), as is growth of the European and Mexican frozen pork supplies. Top imported U.S. pork and pork variety meats to the country include loins, tenderloins, Boston butts, picnics, spareribs, back ribs, jowls, cushion meat, bellies, 3-piece hams, and ground seasoned pork. The National Pork Board, along with the U.S. Meat Export Federation (USMEF), remains focused on defending market share and increasing the volume and variety of cuts sold by highlighting U.S. pork as a supplier of safe, high-quality pork that consistently meets buyers’ expectations. Building and reinforcing long-term purchasing loyalty is a key component in this top value market for U.S. pork.
In early 2018, the U.S. elected to withdraw from the Trans-Pacific Partnership (TPP). As a result, the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) was signed, pending ratification by top U.S. competitors. At the end of September, the U.S. and Japan announced intentions to enter negotiations on a bilateral trade agreement. The CPTPP and the Japan-EU Economic Partnership will be the basis for negotiations for a bilateral agreement with Japan and would ensure similar market access for U.S. pork. In mid-November, the U.S. Meat Export Federation (USMEF) submitted comments to the U.S. Trade Representative (USTR) on the proposed bilateral trade agreement with Japan. Comments emphasized the urgent need to restore the competitiveness of U.S. red meat products as Japan moves forward with implementation of the CPTPP and the Japan-EU Economic Partnership Agreement which will leave U.S. pork at a disadvantage to competitors.
Overview of Japan:
Situated in the Pacific Ocean, Japan is an island country in East Asia and lies off the eastern coast of the Asian continent. Japan’s name translated to mean “sun origin” and as such is often referred to as the “Land of the Rising Sun.” Japan is a very unique country in that it is comprised of over 6,800 islands, of which Honshu, Hokkaido, Kyushu, and Shikoku are the four largest and make up roughly 97 percent of Japan’s land mass. Japan has a population of 127 million, the world’s eleventh most populous country. Nearly 14 million people live the capital city of Tokyo and the Tokyo metropolitan area is considered the most populous in the world with over 37 million people. In 2017, the U.S. exported $11.9 billion worth of agricultural products to Japan, ranking 4th among U.S. agricultural export markets and up 17 percent from $10.2 billion in 2007.
Animal Protein Consumption:
Fish consumption dominates per capita protein consumption in the Japanese diet. Following fish, other proteins drop considerably with pork, poultry, and beef consumption ranking similarly followed by very little consumption of lamb. Per capita consumption of fish has steadily decreased over the last ten years, and pork and poultry consumption has seen a slight increase over time, whereas beef and lamb have remained constant. Within the Japanese diet, pork lends itself to a wide variety of dishes, but one in particular called Tonkatsu or deep-fried pork loin, has taken off dramatically and has become very popular. One of the key attributes of high importance to Japanese consumers is the umami flavor. USMEF has launched a new Japanese marketing campaign termed Mitsuboshi-Three-Star American Pork to highlight U.S. pork’s superiority in juiciness, tenderness, and umami. This campaign helps support the Gochipo campaign aimed at consumer recognition of U.S. pork at the point of sale.
Fish, Japan’s most widely consumed animal protein, also ranks highest among domestic animal protein production. Fish production largely dominates domestic animal protein production followed by poultry, pork, and beef. Domestic self-sufficiency for Japan’s pork production is approximately 47 percent. The Foreign Agriculture Service in Tokyo estimates Japan’s total pig crop has increased slightly as the industry showed signs of recovery from disease outbreaks between 2013 and 2016. However, the number of swine operations has continued to decline with an increasing reliance on pork imports.
According to a recent Global Agricultural Information Network (GAIN) report on the retail food sector in Japan, in 2017 the total value of all retail food and beverage sales in Japan was $474.3 billion dollars. Supermarkets represent the bulk of the retail food market, at 72 percent, but the rapidly growing convenience store sector now represents 14 percent of sales. Ready to eat meals (REM) or take home food items represent a very strong area of growth and are key to sales throughout the food & beverage retail industry. According to the Japan Ready-made Meal Association, total sales in 2017 represented a 2.2% growth rate compared to the previous year.
Retailer segments that are increasing sales include convenience stores, drugstores, and the internet. Convenience stores are now the second leading format for food and beverage sales, while drugstores are increasing food and beverage offerings. The growth of drugstore food and beverage sales are often supported by strong sales in areas (e.g. rural locales and small towns) where no supermarkets are located. Meanwhile, internet food and beverage sales are experiencing double-digit annual growth. Department stores generally carry premium food items and rely on sales of ready to eat meals, but their sales have been decreasing for the past ten years. Top retailers and convenience stores include AEON Retail, Ito Yokadao, Familymart UNY Holdings, Seven Eleven Japan, Lawson Inc., and Ministop.
Japan is a country which heavily relies on imports – which account for 60 percent of its caloric intake. As the fourth largest economy in the world and the second largest in East Asia, Japan’s GDP was $4.88 trillion in 2017. The U.S. is the largest foreign supplier of food and agricultural products to Japan with over 25 percent of the total import market share. Japanese consumers look for and rely upon convenience, quality, and single-serving sizes as an estimated 13.491 million people commute via a combination of train and walking in Tokyo every day. In October 2018, U.S. pork and pork variety meat exports to Japan reached 728 million pounds (up 2 percent) year-to-date. A bilateral trade agreement with Japan would enable U.S. pork to enter Japan competitively and remain the leading value market for U.S. pork products.