24 Apr A snapshot of changing demographics and consumer trends in the Japanese beef industry
Japan Trip Report by Ruth Corrigan
Please note: This report is a summary of my thoughts compiled over the trip, using anecdotal and published evidence we received whilst on our industry tour. It is my interpretation of what’s happening with regards to beef trends in Japan and by no means a thorough examination of literature or information available across the industry.
Introduction
Japan is a fascinating country to visit with rich traditions and food culture, colliding with the fast-paced modern world of the world’s 3rd largest economy. Whilst travelling in Japan we were exposed to a number of key players with in the beef supply chain from genetics providers and farmers, through to processors and retailers, along with service and education providers. It became evident that food and beef consumption trends are evolving within the Japanese economic and social climate. And while tradition remains important, there are some new trends emerging.
Demographics
Japan is facing a rapidly aging population following decades of improved life expectancies and falling birth rates. At current rates its population will fall by 25 million people by 2050 and the number of people over 65 will increase from 27% to 38% (Reynolds 2017). This poses a number of problems for government including labour shortages, increasing public debt with pensions and social welfare, and threatens the existence of rural communities. It also has implications for the food and beef industry which will be discussed further.
The average age of farmers in Japan is now 66 and 93% of Japanese live in urban areas. Urban sprawl is eating into prime farm land. The Japanese beef herd is in decline, from 2011 to 2016 it fell from 2.76M head to 2.48M head (including Wagyu, Holstein and F1) (ALIC in MLA 2018). Japan’s food self-sufficiency is 39% and it relies heavily on imports for over half of food consumed (Austrade 2018). A presentation by The Department of Food and Water (DAFW) highlighted plans to tap into lucrative export markets for high quality Japanese beef. These factors present challenges in the future for Japanese beef production and there are some parallels which can be drawn with the situation in Australian farming in recent times.
It would seem to me, as a young farmer, that the tides have changed in Australia and a combination of favourable seasons (in southern Australia), commodity prices and plenty of optimism and opportunities surrounding the future of food production have reignited interest for young people in farming and agribusiness. On a positive note, at the Japanese ICMJ competition we met a number of young professionals working in the meat industry and even one young female farmer who had returned to her family’s wagyu farm in Hokkaido following study.
Competition from other protein sources
Meat is an important component of the Japanese diet. The Japanese consume 6kg of beef per head per year and this figure is steady. The consumption of cheaper proteins – chicken and pork – has risen from 1kg in 1960 to around 12kg today, and continues to rise, providing competition for cheaper cuts of beef. Seafood is the most important protein source for the Japanese and peaked at 40kg per person in 2000. It has since declined to 27kg, as other proteins grow in popularity and fish stocks are over-exploited (McDonalds Japan 2018).
Japanese bred beef, mainly Wagyu with some Holstein and Holstein-X, accounts for 40% of beef consumption. Country of origin labelling ensures consumers are able to distinguish local beef from imported beef and Japanese consumers have a clear preference for home grown beef (Nason 2018). This high quality and highly marbled meat goes primarily into traditional dishes and for special occasions. At home beef is traditionally eaten at Ubon (a festival to honour ancestors), causing a spike in August, and also increases around Christmas and holidays (ALIC in MLA 2018).
ALIC reported that 70% of Japanese beef is consumed out of the home, particularly at the ever increasing number of yakiniku restaurants or fast food chains. Fast food can be basically split between western style burger chains or Japanese style beef brisket and rice bowls or ‘Gyodon’ chains. The majority of grinding beef going into hamburger chains is Australian (McDonalds Japan use 100% Australian beef), while the ability of the US to provide cheaper and large quantities of low quality cuts such as short plate briskets means the US is the main supplier for the latter (pers comm. A. Cox).
Affordability
Japan has been through a 20 year period of deflation and low or negative economic growth. Throughout our tour of Japan we were exposed to anecdotal evidence of the high cost of living in comparison to low wage growth, and the unaffordability of traditional highly marbled domestic beef for the young and older generations in Japan. Students we met were more likely to eat cheaper forms of beef at fast food restaurant chains, aside from special occasions. Japanese from the over 65 category older generation, made up of many retirees and pensioners, are also struggling to afford traditional high quality wagyu beef. In many cases beef is substituted in the home with more affordable chicken or pork.
Food trends
A presentation by Austrade (2018) made note of the ‘polarisation of eating out patterns – fast food restaurants versus full course menu restaurants’. You really got a feel for this during our stay in Tokyo where cheap and quick beef is available on every street corner through burger or Gyodon chains. Comparatively, Tokyo is jam packed with modern and more traditional full menu restaurants. At these restaurants there tended to be highly marbled domestic beef on the menu which lends itself to the traditional yakiniku style BBQ or shabu shabu cooking methods. We ate 200 day grain fed Australian rump at one of these BBQ restaurants and interestingly the staff sliced the beef thinly following cooking like the Japanese beef on the menu (though this is thinly sliced prior to cooking).
There has been significant growth of western style steakhouses across Japan. In some supermarkets in Hokkaido and Tokyo we found Australian and US beef sold as steaks, including ribeye, sirloin, porterhouse and fillet cuts – these were still vastly outnumbered by traditional cuts of meat. A recent article on Beef Central (Nason 2018) reported on the trend of ‘fast steak houses’. Since 2013 the Ikinari restaurant chain has opened 130 outlets in Japan where customers dine standing up to maximise space and time efficiency.
Consumers place great importance on packaging and the presentation of food and meat. We were blown away on many occasions by the amount of packaging in supermarkets and retail outlets. Individually portioning is common, and often smaller portions are packaged within larger packaging. An aging population has meant the growth of easy to eat, single portioned packaged, natural, healthy and functional food (Austrade 2018). The question which plagued our group on many occasions was what on earth do they do with all the waste?! (Burning and sea containers is the answer, pers. comm. Fujimoto).
Health
The Japanese have one the highest life expectancy rates of any nation (Reynolds 2017). In some instances it seemed like the health issues which plague western society, obesity and high blood pressure and cholesterol, were not a prominent public health concern. Whilst visiting McDonalds the issue of ‘healthy choice options’ was raised and whether or not they use nutrition as an important part of their marketing campaigns. McDonalds did not view this as a major factor for the Japanese fast food consumer. As an observation, we rarely saw anyone overweight whilst travelling in Japan.
Rather the two factors underpinning brand integrity are high quality product, and food safety and traceability. In 2014, a chicken contamination scandal saw McDonalds brand trust fall from 40% to 10% overnight (MLA 2018), following a long term decline. A marketing campaign emphasising the ‘clean, green’ Australian beef supply chain followed and has been successful in turning around consumer trust. McDonalds is once again increasing sales and opening new stores in Japan.
In contrast to what was suggested by McDonalds, health concerns associated with consuming highly marbled meat were expressed on numerous occasions. At Oono Farms near Obihiro, farm owner Yasuhiro Oono expressed his preference for leaner Holstein or F1 beef, and his experience with the growth in demand for leaner beef. He stated 30-40% of Japanese prefer lean beef to heavily marbled meat (pers. comm. Yasuhiro Oono). Oono farms produce 4000 head of Wagyu, F1 and Holstein feeder steers a year, and currently Holstein and F1 steers far outnumber purebred Wagyu. Their main restraint is the cost of Wagyu calves being $5000 US versus $1500 US for Holstein calves.
Hokubee beef at Sapporo produce ‘Meltique Beef’, a product where lean Australian beef primals are infused with natural animal tallows to improve meat quality. It is promoted as a healthier alternative to highly marbled wagyu beef, providing a comparable eating experience, with only half the calories of naturally marbled meat. Hokubee promote the advantage of using Australian product and reference ‘Australia is one of the safest beef exporting countries in the world’ (pers comm. Fujimoto). Food safety is once again the number one issue of importance.
Summary
Beef is culturally very significant to the Japanese people. Beef production in Japan faces pressures from an aging population and urbanisation. At a consumption level beef is competing against cheaper protein sources. Dining trends in Japan are evolving and there is a stark contrast between convenience and fast food chains, and traditional full course dining restaurants. The highest level of product quality and food safety remain the most important factors in ensuring Japanese consumers continue enjoying their beef.
Acknowledgments:
Reynolds, Isabel. 2017. Bloomberg Quick Take, https://www.bloomberg.com/quicktake/japan-s-shrinking-population 2
Nason, J (2018).Beef arms race steps up in Japan. Beef Central, Online at: https://www.beefcentral.com/trade/export/beef-arms-race-steps-up-in-japan/
Nason, J (2018). Steaks with chairs: a booming trend in Japan. Beef Central. Online at: https://www.beefcentral.com/trade/export/steak-without-chairs-a-booming-trend-in-japan/
McDonalds Japan, 2018. Supply Chain, Beef Sourcing. (Powerpoint)
Austrade, 2018. An introduction to the Japanese food and beverage market. (Powerpoint)
MLA, 2018. Presentation to Australian ICMJ Delegates. (Powerpoint)
DAFW , 2018. Japan: Trade and Agriculture Overview. (Powerpoint)
Personal Communication Acknowledgements:
Yasuhiro Oono. Farm owner and manager. Oono Farms, Memuro
Andrew Cox, Meat and Livestock Australia, Regional Manager
Shin Fujimoto, General Manager R&D, Hokubee Beef, Sapporo