What are the hot topics in Japanese foodtech closing out 2023?

As 2023 draws to an end, three major foodtech topics Meros followed this year: the growing interest in circular economy, sustainability and Japan’s emerging cultivated meat sector, were all still front and center at the annual Foodtech Japan, Drink Japan and the Smart Restaurant EXPO at Tokyo Big Sight this month. Not only could we glean insights into where the Japanese market is focusing now, but we could also get a sense of what issues may be the hot food industry topics of 2024.

Circular economy and food loss

Initiatives and technologies utilizing ‘non-standard’ or discarded fresh produce are increasing. Projects are being seen everywhere, from large companies to start-ups. Meros has been working closely on food loss projects in the Japanese fresh food industry this year and so of particular interest to us was Astra Food Plan.

Astra Food Plan is a Japanese Series A start-up that uses superheated steam technology to dry food waste rapidly into powder. Astra Food Plan offers a range of examples, including lemons, onions, eggshells, and green tea leaves. Upon smelling the lemon vials, we were pleasantly surprised to discover a very strong smell of lemons, even in this powdered form, suggesting clear commercial applications.

A noticeable difference between Astra Food Plan’s idea and other circular economy-based products focusing on compost was that this is one of the dew start-ups focusing on upcycling and re-commercialization. Each dry food waste powder has tailored individual usages, taking into consideration their characteristics: the lemons for baking, the eggshells for high-end beauty products and green tea to mix with plastic, potentially to create rubbish bags that prevent odor. This diversity of potential commercial applications makes Astra Food Plan one we will continue to watch.

DX & the Japanese Labor Crisis

The reoccurring theme across all the events at the EXPO was DX (digital transformation), with many companies displaying AI-based products aimed at alleviating the strain placed on the food and beverage industry from Japan’s growing labor shortage.

There were certainly samples of the now-familiar delivery robots found in many Japanese restaurant chains – new prototypes of these ever cuter delivery robots were delivering boxed lunches to customers in the food court area of the event. However the more interesting innovation targeted automation for food manufacturing and central kitchens. For example, machines that automate the task of stir-frying were on display and may soon be found in industrial kitchens in Japan. Add the ingredients into this machine and it will then stir-fry the dish with no human help.

Sustainability: Including human rights and labor issues

Meros attended a number of seminars and a top topic was sustainability. For example, Ms Shihumi Takamori from Asahi Holdings Japan, producer of Japan’s #1 beer, presented on their domestic sustainability initiatives and policies and also discussed some of their challenges in this space. Seeing such major Japanese food companies taking center stage to speak bluntly about sustainability issues would have been rare just two years ago. But there is a growing movement among the major Japanese manufacturers to take global sustainability issues more seriously.  

A few takeaways from this seminar were:

  • The five pillars of Asahi’s sustainability global policy are environment, communities, responsible drinking, health and human rights.
  • Asahi has initiatives covering each sustainability pillar at each stage of their supply chain (sourcing, distribution, manufacturing and retail). For example, one of the issues of concern under human rights is the working conditions of truck drivers in their distribution system. An example initiative to address this is collaboration between Asahi, Kirin (Japan’s other giant brewery), and Japan Rail (JR) train services for distributing their beers. This kind of collaboration between companies (even rivals!) as well as effective use of the Japanese train system is likely to be of increasing importance, as the industry anticipates the shortage of truck drivers in Japan to become a ‘very hot’ topic in 2024.
  • However, Asahi Holdings feels there is still big differences between Asahi Japan and their international companies in terms of sustainability progress. Asahi has purchased numerous major beer brands in Europe, Australia and elsewhere in recent years and Takamori admitted that differences in sustainability policies and the progress towards sustainability goals within the Japan parent company and their international business is something they continue to tackle.

Cultivated meat in Japan

This has been a major area of interest to Meros this year, as we worked on several market assessments for international clients interested in Japan’s cultivated meat industry and also mentored the award-winning cultivated seafood start-up Forsea, as they explore Asian markets.

We were particularly interested in a seminar featuring the CEOs of two of the four main Japanese cultivated meat startups: Diverse Farm and Organoid Farm.

The key takeaways from Mr Jiro Ono, CEO of Diverse Farm and Ms Taeko Yamaki, CEO of Organoid Farm, included:

  • Cultivated meat is not yet commercially available in Japan but to create solid legislation for the manufacture and sale of cultivated meat, safety requirements, providing a sense of security (to consumers and stakeholders), licensing and labeling are the critical areas that must be agreed on.
  • There is still debate about the different factors and perspectives to consider when choosing which animal cell to cultivate. They cited research that suggests cultivated chicken meat actually has a carbon footprint 4% higher than conventional chicken, compared to the significant decrease in the carbon foodprint of cultivated beef (down by 92%) and pork (down by 52%). However when considering animal welfare, cultivated chicken has arguably the biggest improvement compared to conventional chicken.
  • The Japanese industry has a goal of harvesting over 1 ton of cultivated meat, but still faces significant challenges in scaling up.

Looking ahead

In 2024 Meros will continue to track the topics of circular economy, sustainability and the emerging cultivated meat industry in Japan.

We also expect to keep an eye out on the issue of shortage of truck drivers and other labor issues in the supply chain as well as follow the growing discussions on biodiversity as a critical aspect of sustainability initiatives. Meros, a co-founder of the Japan Impact Investing Network (J-IIN) will be holding a series of webinars on natural capital, including biodiversity in 2024 and we invite you to follow our page and the J-IIN page on LinkedIn for updates.

Improving seafood freshness at the port markets of Phu Quoc, Vietnam with Japanese seafood technology pilot

For three weeks in July and August, Meros senior analyst Hiroki Seki dove into the Vietnamese seafood industry, moving from Phu Quoc Island, the largest island in Vietnam and a part of Kien Giang province, to Rach Gia, the capital city of Kien Giang province, to Ho Chi Minh City, interviewing seafood experts, visiting fish markets and discussing the growing market for premium fresh fish. This research is all part of an on-going pilot project funded by JICA (Japan International Cooperation Agency) to increase the incomes of fishermen and reduce food-loss by improving the freshness of the fish sold in Phu Quoc. The project is led by three fishery companies from Japan’s Yamaguchi Prefecture, the westernmost tip of Japan’s main island. The three companies, Yutaka, Fujimitsu and Nishi-F, aim to introduce Japanese technologies for maintaining fresh fish quality into Phu Quoc’s main seafood market, and Meros is supporting by investigating the regional market demand for fresh seafood among seafood end users in Phu Quoc, Rach Gia and Ho Chi Minh.

Seafood today is mostly sold at markets on the streets in Phu Quoc and is rarely sold at supermarkets. Seafood is sold by fishmongers who sell many kinds of locally sourced seafood such as horse mackerel, squid and octopus. These markets are visited by not only by general consumers but also buyers from the local restaurants. Therefore, the markets can get extremely crowded during busy times of day.

Fishmongers selling fish on the streets of Phu Quoc.

Two challenges dominated the struggle to maintain seafood freshness along the supply chain in Phu Quoc

1. After the seafood is caught, proper refrigeration measures are not taken on the boat, causing an immediate decrease in quality

2. After seafood is landed, the freshness deteriorates during the distribution process before reaching the end-users due to inadequate refrigeration.

As a result of these cold chain weaknesses, much of the seafood arriving at the Phu Quoc market does not end up sold for human consumption, but instead ends up as feed for farmed fish or discarded. To address these challenge, we are conducting a pilot project between January 2022 to August 2024 to introduce several Japanese technologies that may be able to increase incomes of the fishermen as well as decrease food-loss and maintain good prices for high quality fresh seafood.

Specifically, we are:

1. Manufacturing and installing a machine to produce slurry ice at the port in Phu Quoc

Slurry ice is a sherbet-like ice that can penetrate the fish, cooling its body temperature quickly. The machine was designed by Japanese companies Remice and Yutaka and manufactured in Japan. It will soon be shipped and installed at Phu Quoc port.

2. Converting existing ships’ wooden tanks to FRP fish tanks

FRP (fiber-reinforced plastic) fish tanks have a higher tolerance to heat than wooden fish tanks.

3. Bringing cold storage boxes from Japan

These boxes are made of styrofoam with a special coating and have enhanced heat-resistance. By putting the rem ice inside these boxes, fish can be transported from the harbor to end-users without a decrease in freshness.

Here is an example of bonito kept fresh using slurry ice in Amami Oshima, an island in Japan.

Over the next months, our partners will monitor the boats, like those pictures below, which installed FRP fish tanks filled with slurry ice to see whether this has improved the freshness of fish compared with fish caught by conventional methods. We also use the cold storage boxes to see whether the fish can maintain freshness all the way to the end users, such as restaurants and supermarkets.

But to make these cold chain investments sustainable long-term, it is critical to know- is there really demand from Vietnamese end users for fresher fish?

This was Meros mission. We investigated the interest in fresh fish among Vietnamese end users through interviews and visits with over 30 restaurants, hotels, and fish processing companies in Phu Quoc, Rach Gia, and Ho Chi Minh City.

And indeed, we found out that there’s very high demand for fresher fish, driven both by the growing hotel and restaurant industry, as well as the fish processing industry.

Development on Phu Quoc island is advancing rapidly, with many luxury hotels and an increasing number of tourists coming to enjoy its beaches and seafood delicacies. Hotels and restaurants are seeking fresher fish to meet the demand of tourists who are willing and interested in paying for premium seafood.

In Rach Gia, there are many fish processing companies and they too are looking for fresher fish. In particular they process squid in a large volumes into ready-to-eat forms, mainly for export. They are looking for fresher squid in order to produce higher quality products that they can sell at higher prices.

In Ho Chi Minh City, with rising incomes and a boom in Japanese cuisine, the demand for raw fish dishes like sashimi and sushi continues to grow. While Vietnamese consumers can already eat raw fish dishes at many restaurants in Ho Chih Minh City, this fish is often imported from overseas, such as salmon from Norway.

We visited a Japanese restaurant in Rach Gia that serves a variety of sushi and sashimi, mostly sourced from overseas. Japanese cuisine such as sashimi and sushi is increasingly popular in Vietnam, and demand for raw seafood ingredients sourced from Vietnam is growing

The pilot fishing expeditions in Phu Quoc using the new technologies are expected to be completed by the end of this year. If we can demonstrate capacity to maintain greater freshness in domestically caught seafood compared to conventionally caught seafood, along with strong market demand for fresh seafood at restaurants, hotels and processors, similar initiatives may begin in other regions of Vietnam. If all goes well, in the near future, it might be possible to enjoy delicious sashimi and sushi from domestic Vietnamese fish in many restaurants and hotels across the country.

We were so appreciative to the dozens of Vietnamese seafood end-users who shared their views and experience, including a fish freezer manufacturer in Ho Chi Minh City (left) and the chef of a Japanese restaurant in Phu Quoc (right).

If you are interested in learning more out this project or Meros’ wide range of other experience in Vietnam and in global seafood and fisheries, please don’t hesitate to reach out!

Meros Fieldwork: Japanese premium fruit struggles to stay on top in an increasingly innovative Hong Kong market

After years of aiming at a one trillion yen export goal, in 2021, for the first time, Japanese agricultural, forestry and fishery products’ export value finally exceeded one trillion yen ($9.09 billion USD).

Export Value of Japanese Agricultural, Forestry and Fishery Products (2017-2021)

Source: Japanese Ministry of Agriculture, Forestry and Fisheries

Hong Kong has long been a core market for Japan’s food and agriculture exports and it accounted for about 20% of Japan’s total exports in 2021. In particular, Japanese fruit is very popular in Hong Kong as premium fruit.

There are three main reasons why Japanese fruit has long been considered a premium fruit in the Hong Kong market. First, the fruit itself is considered by consumers to be extremely tasty with a beautiful appearance. Secondly, Japanese fruit tends to be nicely packaged, so  between the appearance of the fruit itself and the attractive packaging, Japanese fruit is often used as a gift in Hong Kong. Finally, Hong Kong consumers’ general image of Japan as a supplier is positive: Japan is considered to be clean and safe with high quality products.

Strawberries, apples, and grapes are especially in high demand, with each export value exceeding two billion yen ($18.18 million USD). In recent years, however, other countries have been putting effort into developing new higher quality varieties, improving growing methods for existing varieties, developing creative gift packaging, and actively marketing their products. As a result, Japan’s position is increasingly under threat.

Meros recently worked in Hong Kong on issues of fruit branding and fruit variety market protections. We looked at three important premium fruit markets and what the rising new suppliers are doing to take on Japan’s long-time lead in the Hong Kong market.

Strawberries in Hong Kong

Japanese strawberries are exported to Hong Kong mainly from winter to spring. Korean strawberries are also exported during this same period. However, according to fruit importers and retailers in Hong Kong, Japanese and Korean strawberries are not in direct competition. The reason is that consumers feel Japanese strawberries are superior in taste and juiciness and are willing to pay higher prices (at the highest end, Amaou, the most common Japanese variety in Hong Kong costs about 130 HKD (16.90 USD) per pack). Korean strawberries are about half the price of Japanese strawberries, but have typically been inferior in taste and juiciness to the Japanese berries. But newer Korean brands and varieties are catching up.

A new variety called Kingsberry, which began to be imported from Korea a few years ago, reportedly has almost the same quality and similar price range as Japanese strawberries. At present, Kingsberry is not a threat to Japan because of its limited supply and low recognition, but Korea appears to be marketing Kingsberry in Hong Kong with Korean government support. If consumers awareness grows and the supply increases in Hong Kong, it is likely to become a strong rival to Japanese strawberries.

Japanese Yuubeni variety strawberries from Kumamoto Prefecture, $109 HK per pack (left) and Korean Berry Licious brand strawberries $89 HK (right) sold side by side in Hong Kong.

Apples in Hong Kong

Japanese apples are exported to Hong Kong mainly from fall to spring. Hong Kong also imports apples from countries other than Japan, including the US, China, and New Zealand. Imports from New Zealand in particular have increased in recent years. New Zealand has been putting effort into developing new varieties and is actively marketing these new apple varieties to other countries. Because New Zealand is located in the southern hemisphere, their apple season is the opposite of Japan, and New Zealand apples are mainly exported from spring to summer. However, improvements in storage technology are lengthening the period when apples can be sold, and the sales periods of Japanese and NZ apples are beginning to overlap. This should be worrying to Japanese apple exporters.

The New Zealand apple brand most commonly available in Hong Kong is Envy. According to importers and retailers in Hong Kong, Envy sales are increasing in recent years because of its good taste, juiciness, and crunchiness, with a price is less than half of the typical Japanese apples. New Zealand also began selling an apple called Rockit, which is very small in size but not much different in price from Japanese apples. Rockit is sold in a unique vertical tube package and makes a good gift. It is already selling well in China among the wealthy. The supply of Rockit in Hong Kong is still limited, but there is no reason to think it won’t increase in the future.

New Zealand’s Rockit apples are marketed in branded plastic cylinder packaging and seem to be good as gifts in Hong Kong.

Grapes in Hong Kong

Japanese grapes are exported to Hong Kong mainly from summer to winter. In recent years, the most popular Japanese grape variety in Hong Kong has been the Shine Muscat. Shine Muscat is also grown in China and Korea and these countries sell during similar months as Japan in Hong Kong. Even though Japan, China and Korea are growing the same variety, there are differences in taste, crispness and size, and Japanese Shine Muscat tends to excel in these aspects.

However, according to local traders, the quality of Chinese Shine Muscat has been improving recently because of the improvement in cultivation methods, and some Chinese grapes are getting close to the Japanese quality level with a price is sometimes less than half of the Japanese Shine Muscat. In addition, Autumn Crisp, a grape brand developed in the US, has become increasingly popular in recent years in Hong Kong. Autumn Crisp is green seedless grape and looks quite similar to Shine Muscat, but is much less expensive.

Until recently, Japanese fruit were far ahead of fruit from other countries in terms of their taste, appearance, packaging, and recognition as premium fruit. However, because of the efforts of other countries, that gap is narrowing. In order to break out of this situation, Japan will need to put effort into developing new higher quality varieties, improving cultivation methods for existing varieties, trying more innovative and unique packaging, and actively marketing their products. Otherwise, there is a strong possibility that Japanese premium fruit will be replaced in Hong Kong by supply from other countries in the not-too-distant future.

Conversely, from the perspective of countries other than Japan, there is potential to gain even more share of the premium fruit market that has long been dominated by Japan. The gift market is particularly large in Hong Kong, where the number of people sending fruit as gifts is increasing, partly due to growing health consciousness. By focusing on packaging and effective marketing, it should be very possible for newer suppliers to take share in the fruit gift market in Hong Kong – and this should be wake up call to Japanese exporters to avoid becoming complacent in the changing Hong Kong market.

Carefully packaged Korean grapes (below) and similarly bright, but less expensive unpackaged Australian grapes (above) may rival Japanese premium Shine Muscat.

What were the high value products that Japan exported to tip it over the one trillion yen mark? Here is Japan’s exports by value by major category in 2021. Within Japan’s global trade, apples rank #13 in value.

Source: Japanese Ministry of Agriculture, Forestry and Fisheries