UNDERSTANDING FOOD AND BEVERAGE MARKET IN JAPAN

The food and beverage industry has its very own ecosystem that can be challenging to apprehend. Understanding the nature of this landscape, and identifying the significant players are vital to succeeding in Japan!

The unique $424 billion (USD) is made up of business relationship dynamics and a multi-layered distribution system that was able to generate ¥46 trillion (JPY) in 2019 food and beverage sales in Japan.

Major players:

  • GMS, SM and DS channels (47%),
  • CVS (17%),
  • Other modern trade channels (12%).

Food and beverage sales are worthy on average 71% of GMS, SM, AND DS channels total sales with numbers going as high as 95% regional supermarkets. It is crucial to note that Japan’s retail landscape is on an evolutionary path of unfolding consumer culture and other external perspectives. As a result of inherent challenges and stiff competition between players in the industry, this has driven several players to form strategic partnerships across sectors to protect operating margins.

With 57k Japanese convenience stores, it has become a significant part of Japan’s infrastructure. Numerous stores or popularly know as “Konbini” are a vital catering in populations everyday life with both rural and urban areas of Japans store’s working 24/7 to serve a nation with headstrong working population and densely populated areas where people live in tight spaces with small, packaged food preferences.

Due to this consumption of small, packaged food throughout the week there are three large companies taking advantage of this culture.

  • 7 Eleven,
  • Family Mart,
  • Lawson.

These companies manage 90% of convenience those convenience stores. This has caused the sector to grow and consolidate, making it tough for new players to get in. However, CVS growth has started to fall in the past two years, as a result top chains have begun to accommodate new measures like; increased hiring of non-Japanese staff and investigating opportunities to reduce operating margins.

CVS has a large selection of food and beverage offers making up 60%of total sales. CVS leading food sales come from ultra-fresh products such as rice balls, salads, and other ready to eat meals.

National players have set course for refreshing business models; Innovations in technology propelled by artificial intelligence and IOT, alongside growing interests for delicatessen/ ready to eat and fresh baked goods. Furthermore, three significant actions have accelerated the consolidation recently observed in the industry; Seven & IHD and Izumi’s strategic alliance, New Japans’ Supermarket Alliance, and Pan Pacific International HD creation have spurred competition in this scene.

33% of total food sales in Japan account for regional retailers such as GMS and SM. They represent a third of the entire F&B market share, and 80% of all GMS/SM channel sales. By focusing on competitive advantages like product freshness supremacy alongside shopper experience GM and SM grew in size by paying close attention to local preferences and seasonality.

These regional players are responsible for driving innovations and growth as they compete with one another on product development through the establishment of private brands and the importation of direct value-added value products, which presents a unique opportunity to exporters.

These regional players are facing challenges in relation to Japan’s aging society and depopulation. However, this change within demographics has inspired a new retail revolution that will have to provide an elder-friendly environment, products, and services.

Join Japan’s F&B Market Today!

Import Products to Japan!

Let COVUE’s regulatory experts help you to speed up the market entry process so can that you can focus on your business. We’re here to help! It’s what we do best.

At COVUE IOR, we seek to make the import process simple, compliant, and accessible to all sellers of all sizes. COVUE is not an ACP. COVUE is the direct IOR: we own our license, and our compliance support is in-house. We trusted by 000’s of Sellers and Shipping providers.

Japan Import Restrictions and Prohibitions

Any person wishing to import goods must declare them to the Director-General of Customs and obtain an import permit after necessary examination of the goods concerned

Japan’s customs require foreign online sellers to comply with import declaration and product labeling rules. COVUE IOR ensures Foreign Online Sellers are fully compliant before shipping of the merchandise.

Importing non-regulated products require No Government agency approval. However, all non-regulated products require some compliance for importing.

Furthermore, certain items importing into Japan may be prohibited or restricted. It is your responsibility to confirm whether the items you plan on bringing with you to Japan are allowed or not. 

Plants without a certificate of inspection will be disposed of by the Plant Protection Act. For some quarantine pests which are technically difficult to detect at the point-of-entry inspection, the plants are required to undergo phytosanitary inspection in the field during the growing period in exporting countries. As soon as it has been confirmed that there are no pests, and then they can be brought into Japan.

Most meat products can’t be brought into Japan. There are however times when items attached with inspection certificates for Japan are permitted.  All animal products, including meat, organs, eggs, bone, fat, blood, skin, hair, feathers, horn, hooves, tendon, raw milk, semen, feces, and urine, must be subject to animal quarantine upon arrival at a Japanese port, even if the products are refrigerated, frozen, cooked or in vacuum-sealed packaging.

Make sure to contact the Animal Quarantine Station beforehand when bringing over domestic dogs and cats, as it is required to have import inspections for rabies and leptospirosis. Cats and dogs that have met import conditions can finish their inspection in a short duration.

If the conditions are not met, they will have to be inspected in the holding facility at the Animal Quarantine Station for a maximum of 180 days.

Japan imposes restrictions on the sale or use of certain products including those related to health such as medical products, pharmaceuticals, agricultural products, and chemicals.

For these products, Japanese Customs reviews and evaluates the product for import suitability before shipment to Japan. Licenses from relevant regulatory bodies may also be required for the importation and sale of those products.

Japan also prohibits fruits, vegetables from certain countries and regions. For those hoping to bring these goods, there’s a possibility that they may contain harmful vermin that don’t naturally exist in Japan and a high risk of generating great economic losses to our agricultural production if they invade Japan.

Furthermore, if you are importing items that infringe on intellectual property such as fake brands and counterfeit goods is prohibited. If you intentionally import a large quantity of these items, you may be arrested, your goods confiscated, or both.

Importing Products to Japan?

YOU’RE IN THE RIGHT PLACE!

Let COVUE’s regulatory experts help you to speed up the market entry process so can that you can focus on your business. We’re here to help! It’s what we do best.

At COVUE IOR, we seek to make the import process simple, compliant, and accessible to all sellers of all sizes. COVUE is not an ACP. COVUE is the direct IOR: we own our license and our compliance support is in-house. We trusted by 000’s of Sellers and Shipping providers.

What is a FOREIGN ONLINE SELLER in Japan?

Foreign Online Sellers in Japan

A “Foreign Online Seller” is a person or company outside of Japan selling and shipping to online buyers in Japan.

Foreign Online Sellers cannot fully comply with Japan import and tax rules for importing and selling products in Japan. To resolve this, the government of Japan has implemented new rules for foreign online sellers to ensure sales and import tax compliance.

Declared Import Value:

Online sellers with no company established in Japan must declare the online sale value of their imported product to be the same as the import value on their shipping invoice. Japan Customs will apply Duty and Consumer Import Tax based on the online selling price. Japan Customs also requires supporting documentation in the form of a Foreign Online Seller Report (FOSR) to be part of the Shipping Invoice. This report displays your store name or website, inventory, and selling price of all products being imported to Japan.

To ensure Sellers do not undervalue their import, Japan Customs will conduct a selling price search to ensure your selling is within an acceptable margin of the same or similar products. If your Declared Value/Selling price is below the acceptable margin, Japan Customs will apply a Fair Market import value to your shipment. You will then be charged import and duty tax based on the revised value.

During the import process, Japan Customs will:

  1. Review your Store/website and Product selling price to confirm it is the same as the import value.
  2. Check your pricing history to ensure the pricing was not recently lowered to avoid import tax
  3. Monitor your selling price to ensure your pricing does not increase excessively after import.

Sales Tax: Foreign Online Sellers

Profit Tax in Japan: all companies must comply with Profit Tax laws. To claim wholesale, purchasing, import tax, or manufacturing costs on your commercial/shipping invoice, you must sell (transferring) the product to a distributor or subsidiary (another company who will resell the products or to your subsidiary) in Japan.

  • Online sellers with no company established in Japan, cannot comply with Japan profit tax laws. Therefore, Japan Customs and Tax have implemented import requirements for online sellers. Online sellers must declare the online sale value of their imported product and pay the Duty and Taxes based on that value.
  • Japan Customs has become very strict with online sellers. Imported products will be stopped. Japan Customs will review your online account to compare your sale price to your declared value. If they do not match, you will be charged additional taxes and possible penalty fees. Multiple infractions (failure to comply) can result in your company being restricted to import products into Japan.
  • Do not modify your online pricing during import. Japan Customs has access to online seller pricing history. If Japan Customs believes you have intentionally changed your online pricing to avoid taxes, you may be restricted from all future imports.
  • As a policy, COVUE IOR services are fully compliant with Japan Customs and Tax laws. COVUE does not accept shipments that do not comply with Japan import and Tax rules and regulations.

Want to Export your Products to Japan?

Let COVUE’s regulatory experts help you to speed up the market entry process so can that you can focus on your business. We’re here to help! It’s what we do best.

At COVUE IOR, we seek to make the import process simple, compliant, and accessible to all sellers of all sizes. COVUE is not an ACP. COVUE is the direct IOR: we own our license, and our compliance support is in-house. We trusted by 000’s of Sellers and Shipping providers.

TOYS : What you need to know about? Japan Requirements and Regulations

To distribute and sell toys in Japan, manufacturers must demonstrate that they are compliant with the Japan Food Sanitation Act, commonly known as the ‘Japan Food Sanitation Law (JFSL)’ and/or with the Japan Toy Safety Standard (ST Standard). In addition, all toys compliant with the ST standard must qualify to display the Safety Toy Mark (ST Mark). Partner with Approved Laboratory to confidently bring toys to the Japanese market.

GENERAL REQUIREMENTS

The requirements for toys destined for Japan are:

  • The regulatory requirements of the ‘Japan Food Sanitation Law (JFSL)’.
  • The voluntary Japan Toy Safety Standard (ST Standard) and Safety Toy Mark

JAPAN FOOD SANITATION LAW (JFSL) – REGULATORY REQUIREMENT

Enacted as Act Number 233, 1947 by the MHLW, the specifications and standards for food under the JFSL are set out under Notification No. 370, 1959 ‘Specifications and Standards for Food and Food Additives, etc.’

How JFSL Applies to Toys?        

The Notification also provides technical specifications and standards for toys. The law requires the use of a toy in the form in which it will be marketed (finished goods), including paints and similar surface coatings materials on toys, to be tested for demonstration of compliance. Toys falling within the scope of the JFSL, are defined as:

  • Toys, including pacifiers, intended to come into direct contact with the infant’s mouth (e.g. harmonicas).
  • Balloons, clays, dolls, housekeeping toys, intellectual development facilitating toys (only those which have the potential to come into contact with an infant’s mouth), masks, origami (folding papers), rattles, Roly-Polies, toy animals, toy building bricks, toy telephones, toy jewellery, toy vehicles, Utsushi-e (decal sticker toy) and wooden blocks.
  • Toy accessories to be played in combination with toys mentioned in the bullet points above (e.g. rails for a toy train set).

ST STANDARD AND ST MARK PROGRAMME – VOLUNTARY REQUIREMENT

ST Standard In 1971, the JTA, a public interest entity approved by the Ministry of Economy, Trade and Industry, established the Japan Toy Safety Standard (ST Standard) to ensure the safety of toys for children. It covers all the legal requirements from the JFSL for toys as designated by the MHLW. The ST Standard consists of three safety standards:

  • ST Part 1 – Mechanical and Physical Properties.
  • ST Part 2 – Flammability.
  • ST Part 3 – Chemical Properties.

Under the ST Standard, a designated Foreign Testing Laboratory (a laboratory other than a designated Testing Laboratory in Japan) can only service ST Standard Part 3 ‘Chemical Properties’.

ST Mark

The ST Mark Programme in brief:

  • The JTA enters an ST Mark License Agreement with a business who manufactures, imports or sells toys. • A JTA approved designated testing body conducts ST Standard conformity tests on toys manufactured, imported or sold by the business.
  • The JTA licenses the business to place toys, or their packaging, bearing the ST Mark on the market.
  • The JTA indemnifies ST Mark Licensees caused by defect toys bearing the ST Mark

FOCUS ON CHEMICAL TESTS (ST PART 3)

  • Evaporation residue
  • Formaldehyde
  • Heavy Metals
  • Migration of colouring matters
  • Phenol
  • Potassium permanganate consumption
  • Phthalates (BBP, DBP, DEHP, DIDP, DINP and DNOP

Know more about the process and regulations of Importing Toys in Japan

Want to Export your Products to Japan?

Let COVUE’s regulatory experts help you to speed up the market entry process so can that you can focus on your business. We’re here to help! It’s what we do best.

At COVUE IOR, we seek to make the import process simple, compliant, and accessible to all sellers of all sizes. COVUE is not an ACP. COVUE is the direct IOR: we own our license, and our compliance support is in-house. We trusted by 000’s of Sellers and Shipping providers.

What is the Difference between Consignee and Importer of Record?

When trying to navigate the complex legislation involved with the customs process, it’s helpful to understand the definition of the most important roles involved in an import transaction – and the differences between them

In this article, we are going to discuss the difference between an Importer of Record and a consignee.

Consignee

Once the goods are cleared through customs, the consignee is the entity who takes ownership of them. In a straightforward import/export transaction, the consignee is usually the party paying import duties and taxes.

If a business has imported its own goods, either for its own internal use, for storage, or for distribution at a later date, it is both the importer and the consignee.

The different roles and responsibilities involved in customs clearance can be complex and vary from country to country. It’s worth getting expert advice if you’re not familiar with the process.

Who can be a consignee?

The consignee can be a private individual consumer (ordering goods from an overseas business), or it can be another business.  A consignee is an individual or a firm to whom the cargo is consigned by the shipper.

The consignee may or may not be an actual buyer of goods. A consignee is considered an exporter when the imported goods are solely shipped for internal use.

Importer of Record (IOR)

Many people often confuse consignees and Importers of Records (IOR) because both entities deal with imported goods. However, there is a significant difference between the two.

Customs compliance requires a very important role, known as the importer of record or declarant. The importer of record is an individual or a firm authorized by the government to act as an ‘Importer’ to bring goods or services to a country.

The appointed importer of record is the person or entity officially responsible for ensuring the import transaction complies with all the regulations in that country, that goods are correctly valued, pays the relevant taxes and duties and files all the correct documentation and permits.

Unlike consignees, IOR services have the knowledge of customs laws of various countries because they are taking care of imports to many different coastlines.

Who can act as the importer of record?

The requirements for who can act as the importer of record differ between countries. Interestingly, a consignee can also assume the role of an Importer of Record (IOR). However, it only serves the purpose of any individual or the company.

Sometimes, particularly in less straightforward transactions, it’s necessary to appoint an agent or broker or some other legal entity in the destination country, to act as the importer of record on their behalf.

Where importer of record IOR Services Shine the Most?

Appointing an importer of record can help to avoid confusion about who actually has ownership of the goods when a transaction involves suppliers, distributors, and end-users. The IOR becomes the temporary owner of the goods until the goods have been accepted by a distribution center.

The professional IOR services, on the other hand, facilitate the importing shipments of all those who don’t have any presence or business connections in the destination country.

Import Products to Japan!

Let COVUE’s regulatory experts help you to speed up the market entry process so can that you can focus on your business. We’re here to help! It’s what we do best.

At COVUE IOR, we seek to make the import process simple, compliant, and accessible to all sellers of all sizes. COVUE is not an ACP. COVUE is the direct IOR: we own our license, and our compliance support is in-house. We trusted by 000’s of Sellers and Shipping providers.