Yes, plant-based meat has exploded in the Japan market, but it looks quite different from the alternative protein booms in Western markets

In spring of 2020, we observed a sudden explosion of plant-based meat and dairy products in the Japanese market, with new launches nearly every week. A year later, the launches continue, one after another.

While the conversation in western countries is often dominated by well-funded imitation meat products like Beyond Burger or Impossible Meats, in Japan the new alternative protein products were launched by domestic companies; nearly all major meat processors have released a plant-based meat alternative as well as products from major plant oil crushers and soy-based processors, dairy processors, frozen food manufacturers, health food & drink manufacturers, as well as many major retail chains and major café and hamburger chains.

However, interestingly, nearly all of these plant-based meat and dairy alternatives are soy-based, in contrast to Western countries where there is a much more diversity in the plant-based proteins used in meat alternatives, including pea protein, mung beans or seaweed.

The pioneers of alternative meat and dairy in the Japanese market are the major traditional soybean players. For example, Fujioil, the largest soybean cooking oil crusher, with a 50% share of the soy-based meat market, recently launched their fermented soy-based cheese, mainly for food service players and food processors. We heard from a cheese distributor that these soy-based alternative cheese products are quite price competitive and is starting to develop a market. Marukome, the largest traditional soybean seasoning paste (miso) manufacturer, was also one of the early players in the alternative meat market, with their plant-based ground meat. They have both retail and food service products. The retail sales of they ground soy “meat” grew quickly during COVID19 lockdowns, because some consumers who were limiting their grocery runs liked its long shelf life.

March 2020 was the magic month for meat alternatives in Japan with a sudden explosion of new products.

Almost all major meat processors entered the market. Starzen, one of the leading meat integrated company, together with a leading health food and drink manufacturer Otsuka, developed a brand called ‘ZEROMEAT’, and is selling plant-based sausages, meat ball and hamburg steak patties made from soy protein and egg whites. Ito Ham, one of the leading meat processors, also entered the market with a ‘Soy Meat’ brand in the last Spring. In the same week, the largest meat processor, Nippon Ham entered the market too with a brand called ‘Natu Meat’, which utilize konnyaku (the root of the konjac potato) to add chewy texture to the soy protein.

Of course, various manufactures of savory snacks as well as frozen ready-to-eat products also followed this trend. Koikeya, the second largest player in the savory snack market, expanded their pilot sales of a soy-based protein snack called ‘Guiltless Fried Chicken’ to nationwide in June 2020. Yonekyu, a leading meat and frozen food manufacture, developed a frozen ready-to-eat food brand called ‘AIR MEAT’, which includes curry, dim sum, meat balls and Sichuan-inspired mapo tofu.

In addition to those food manufacturers, the retail and food service chains are also main drivers of this soy-meat trend. In 2020, almost all convenience store chains, including Lawson, Seven Eleven, Family Mart, as well as several food service and cafe chains jumped into the market, but again, all of them are soy-based products. For example, Lawson, one of the leading convenience store chains, released various ready-to-eat products containing soy-based meat last year, including soy-based hamburgers, deep-fried soy-based cutlets, rice balls with soy meat, and deep-fried soy meat nuggets. The leading café chain, Doutor, also launched a soy-based burger in autumn 2020.

What is driving the alternative meat boom in Japan?

Most of these soy-based products are mainly developed for health-conscious consumers, and not necessarily in response to vegan or vegetarian trends, nor any particular focus on the environmental benefits of plant-based products. Many of these products contain eggs or dairy. The number of strict vegans or vegetarians is limited in Japan. A consumer survey conducted by a consulting firm Frembassy in Dec 2019 indicated that about 5.7% of Japanese consumers say they follow a vegan or vegetarian diet. However following a vegan or vegetarian diet in Japan is not necessarily driven by any ethical or lifestyle philosophy. Instead the concept of ‘vegan’ or ‘vegetarian’ in Japan in particular often refers to the type of food desired for a day or meal. “Let’s have vegan food on Friday!” is a common way to hear the term.

Furthermore, there is also hardly any mention of any environmental benefit of soy-based meat in the marketing messages. Japanese consumer concern about any negative environmental impact from the livestock industry is low in Japan, as seen by the surprise in Japan when the Japanese Minister of the Environment Shinjiro Koizumi was denounced in the Western media for eating steak when he went to New York to attend the UN Climate Action Summit in September 2019. Similarly, consumer awareness of the concept of animal welfare is also still very low in Japan.. An online survey conducted by the Animal Rights Center in March 2020 showed that 85.8% of consumers responded that they had never heard about animal welfare.

In fact, these newly launched soy-based plant protein products primarily rely on the existing positive image of soy embedded in the Japanese mind. “Soy is healthy” is a widely accepted concept among consumers in Japan. Japan has a long history of eating local soy-based products, like tofu and natto (fermented soybeans). Many Japanese consumers believe that Japanese traditional cuisine is ‘healthy,’ and the heavy use of various soy-based products in the traditional cuisine is considered as one of the reason traditional cuisine can be considered “healthy”. According to a survey conducted by My Voice Com in Dec 2019, 63% of consumers said they are making a conscious effort to include soy foods in their regular diet[1].

In addition to the overall positive health image of soybeans, Japanese consumers’ growing interest in protein in general is also helping these soy-based protein products. Demand for protein-enriched drinks and food began to increase in Japan in 2015, and this trend was further accelerated by the government’s increase in the recommended target protein requirement for seniors in 2018 to prevent frailty caused by aging. This led to increased consumption of products like whey protein powder, protein bars, and protein drinks. Such demand for protein further expanded after COVID19 as Japan consumers worried about the negative health impacts of “stay at home” restrictions in 2020.

As in Western markets, plant-based protein is a growing food innovation trend in Japan, but the context is very different. Marketing related to environmental benefits, sustainability or animal welfare are not part of the message. Japan is a soy-based alternative protein market, relying on consumers’ strong positive image toward soy as well as on the price competitiveness of soy protein compared to animal-based protein.

What does the future look like?

The trend towards increased protein consumption overall suggests that alternative meat is not just a fad, but has a chance to develop a permanent market in Japan, not necessarily as an alternative to meat or dairy, but as an additional source of affordable protein. We expect to see diversification from soy and into other plant ingredients. Konnyaku (konjac potato) is one that is getting recent play in alternative seafood products such as imitation unagi eel and pea protein suppliers from overseas have shown interest in the Japanese market.

However we expect that successful meat alternatives in Japan will need to continue to focus their marketing on taste, competitive price and “healthier” messaging, and not assume that mainstream Japanese consumers will pay a premium at the moment for plant-based products marketed as a sustainable or eco-friendly “alternative”.

[1] My Voice Com, Dec 16 2019, Survey on Soy Food Products
https://prtimes.jp/main/html/rd/p/000000820.000007815.html

Farming in the US during a Pandemic: Video “Report from the Farm” in Iowa

Iowa corn and soybean farmer April Hemmes gives a quick video update here on farming in May 2020, as she deals with both planting a corn crop and juggling the social distancing needs during corona restrictions. It’s a peek at her field, a look at her tractor and discusses changes brought to farming families and farmers by COVID19.

May 2020 is a time when farmers are planting crops, despite knowing that the harvest prices are likely to be low. They are watching the heartbreaking choices that livestock farmers are making when there are few channels to send their livestock.

April Hemmes is an award-winning farmer-leader in Iowa and advocate for agriculture, for women in agribusiness and enthusiastic about sharing her insights from the field in the US. Her energy and practical optimism is something we at Meros really appreciate.

Our friends at Women in Agriculture (WIA) in the US produced this report from the field as part of their new Women in Agriculture Resource Center, which offers current insights and responses from US farmers and agribusinesses on the impact of COVID19 on global food and agriculture supply chains. WIA has kindly added Japanese subtitles to this video for us! 日本語字幕付き!

https://www.youtube.com/watch?v=Wkiy2MmFu0M&t=3s&fbclid=IwAR3_rLjbJf_XxlECNe6Mak0mGGKkXsXowphWzWqxu8cJF83leB69jx-ITPw

Meros in the Media: The Disappearing US-China Soybean Trade

Meros discusses how China was able to substitute US soybeans so quickly.

Meros’ Lucia Vancura recently chatted with Nathan VanderKlippe of Canada’s Globe and Mail newspaper about how China was able to so quickly and completely eliminate US soybean imports in the last few months since the 2018 marketing year started in September. Did they find alternative suppliers? Did they substitute for other feed ingredients?  How could US soybean exports to China, which are 25% of US production, really be substituted out so quickly, particularly since US soybeans are still price competitive with Brazil, Argentina and other sources, despite the 25% tariffs?

The Chinese government may not have explicitly forbidden Chinese traders from importing US soybeans, but as VanderKlippe reports from our conversation “in a country where political favour remains a key factor in corporate success, China’s reach extends deep into the private sector, too.” The Chinese government does not need to issue a ban on buying US soybeans. It just has to send a clear message that avoiding US soybeans, despite the favorable price, is the expected approach.

The full article is behind a paywall but available here:  https://www.theglobeandmail.com/business/article-soybean-trade-shows-resolve-of-china-as-it-pushes-back-on-us-demands/

In the short-term, since September, China has used a variety of tools to make up for the elimination of US soybeans. This has included increased soybeans from Brazil and other countries and increased use of soy protein substitutes, including rapeseed or canola meal, pea and domestic Chinese DDGS. The Chinese government also released new guidelines for a lower-protein swine feed ratio that decreases the amount of soy protein needed (the Chinese soy protein ratio in feed has been much higher than, for example, in the US swine feed ratio because the price of soy has been so reasonable but there is not necessarily a nutritional need for so much soy in China’s swine feed) and China’s major feed mills have agreed to these new standards. Other measures have included releasing soybeans from government stockpiles and using more of their domestic soybeans for feed (rather than food).

Looking at the longer term, China may import some US soybeans later this year to fill the remaining gaps, but their on-going efforts to find alternative suppliers, substitute products and a big-picture effort by China to invest and expand in agriculture supply channels world-wide are only opening more opportunities and risk diversification for Chinese traders. The longer the trade war goes on, the more chance Chinese traders will more permanently replace US soybeans in their trading portfolio.

 

Meros Consulting is a Tokyo-based strategic business advisory. We work with companies and governments globally to advising on trade dynamics and support business development in food and agriculture industries.