While the organic food movement in Japan is showing some signs of progress, it is still very small. In terms of per capita consumption (about 1,000 yen/person/year) and penetration levels (0.4% of the food market), Japan is way down the list compared with other countries. About 45% of the global organic food market is in Europe and about 45% in the U.S. The rest of the world accounts for the remaining 10%, and Japan itself just 2%.
One company aiming to help wake up the Japanese market is MIE PROJECT. Duco Delgorge, founder and president, has long believed in the benefits of organic food for health and the environment, as well as in its business potential.
Established in 2005, MIE PROJECT (MIE stands for Meaning, Inspiration and Effectiveness) is progressively expanding distribution to a wide variety of retailers with products such as Clipper tea, Mount Hagen coffee, Provamel soya milk, Nature’s Path cereals, CLIF Bar energy bars, and Fiordifrutta fruit spreads, to mention just a few.
Born in Prague, Duco lived in New York, Mumbai and Sydney before venturing to his native Netherlands where he completed a traineeship with Philips. In the 1980s, he joined Unilever in England and was posted to Japan from 1988 until 1992 as marketing manager. In 1995, Duco joined Puratos Japan, a Belgian food ingredients company, as general manager, before leaving in January 2008 to concentrate on MIE PROJECT.
Japan Today editor Chris Betros visits Delgorge at the MIE PROJECT office in Shibuya to hear more.
How have sales in 2014 been so far?
The first six months have been pretty good but we expect faster growth in the second half. Next year will be our 10th anniversary, so we are planning a few special things to celebrate.
Did the sales tax hike in April affect your business?
Unfortunately, like many other importing companies, we had to increase prices of many of our products at the same time as the VAT increase, due to adverse exchange rate movements and increases in product prices. Sales growth slowed a bit in April-May but has since picked up again.
What is the state of the organic food movement in Japan?
There are signs of progress. However, the organic food market in Japan is still seriously underperforming compared to the rest of the developed world. In Japan, organic food is just 0.4% of the total food market, whereas the global average is around 2%. This is also apparent in the availability of organic food in supermarkets and the number of organic specialist retailers, both significantly lagging the situation in Europe and the U.S.
Why is progress so slow in Japan?
It is a combination of many factors, but principally supply side constraints. The reasons are the hot and humid climate, small-scale farming, no support from the government and the big influence that JA (Japan Agriculture) has on the industry. Most farmers get their finance, materials, pesticides and fertilizers through JA and it seems to be difficult for farmers to leave JA and go organic. Also, it is cumbersome and costly for farmers to get organic JAS certification so some do not bother. Imports have also been rather limited until recently. We are trying to address that aspect.
What about on the consumers’ side?
From the consumers’ point of view, price will always be one factor. Because most of the organic food in Japan is imported, and many items have high import duties, organic food will be more expensive compared with Europe or the United States where a lot more organic food is locally produced. Availability is another issue. You don’t have as many choices in Japan. The selection in stores here is nothing like what you’ll find in Europe and the U.S. where stores have really big organic selections. If we consider organic specialist retailers, there is Natural House but it has only about 30 stores, which tend to be quite small. This contrasts sharply with Whole Foods in the U.S., or the organic retail chains you find in many European countries. Natural Lawson is also a high profile retailer but actually carries very few organic items.
But there are signs that consumers are getting increasingly interested in organic food and in healthier diets. This is a stable long-term trend, which augurs well for the future of organic food in Japan.
How do you market the brands you import?
Like most small importers, we have a limited marketing budget. We want to grow to the point where we can properly promote the brands. At present, we depend on merchandising, in-store tastings, social media, word of mouth and PR events. It is all about awareness and trial. Most people who try our products become loyal customers.
Where are your products sold?
We are in about 1,500 stores – department stores, high-end supermarkets, mainstream supermarkets, health food stores, specialty stores and cafes. Our presence in home lifestyle stores like Muji, as well as mainstream supermarkets such as AEON, is growing. We are aiming to cover as much of the market as possible, though this will take time.
After 10 years experience, I can say that getting your products onto store shelves is only 50% of the job. No matter how great the products are, tremendous effort is required to ensure they sell. A brand may be big in the part of the world where it is from but more often than not, that is not the case here in Japan. It takes time for people here to get to know the products.
What about online sales?
Apart from our own online store www.choosee.com, we also sell to specialist online retailers like Amazon, Kenko.com, and some others. Altogether, these account for about 15-20% of our total sales.
Where do you see growth potential?
Although some of our brands are quite widely available, there is a lot of scope to expand distribution of all of our products – some more than others – within our existing customer base and beyond.
Geographically, we also have excellent growth potential. We have some presence around the country but many gaps remain. Also, while our product range is quite elaborate, we still find new exceptional products – and sometimes they find us – which have great potential. With a food retail market worth over $300 billion per annum, there is plenty of long-term growth potential in Japan. And we may consider opportunities outside Japan one day.
Have any products had to be modified for the Japanese market?
CLIF bar was reformulated for the Japanese market. As an energy bar, it has certain ingredients that are allowed in the U.S. but not in Japan. So that had to be adapted.
With Nocciolata, an organic hazelnut chocolate spread produced in Italy by Rigoni di Asiago, we did not adapt, but we had to wait several years because it contains sunflower lecithin. Japan had allowed only soya lecithin and rapeseed lecithin until a few months ago, but now Japan has aligned with the EU and the U.S. in accepting sunflower lecithin, seen by many food companies as the best option. So finally we could launch it now. Generally speaking, we face few problems regarding ingredients, as organic regulations are already so restrictive.
Where do you source your products?
Most of our products come from Europe, but we also source from the U.S., Canada, Australia and Sri Lanka. We source from 11 countries in total. For a long time, we were hesitant about importing from the U.S. because there was a slight incompatibility between organic regulations in the U.S. and Japan. That changed last November when the two countries signed a mutual recognition agreement on organic products. That has opened the door for more U.S. organic products to come to Japan.
What are your best-selling brands?
Our bestsellers are Clipper Tea, Mount Hagen coffee - on Amazon, it is often the best-selling instant coffee; also, Provamel soya drinks, Rigoni di Asiago – Fiordifrutta fruit spreads, and Mielbio honey. More recently, we have launched CLIF Bar energy bars and Nature’s Path cereals and granolas, both of which are really taking off.
How many staff do you have?
We have a great team of 16 people.
What is a typical day for you?
I usually work around 14 hours a day, seven days a week. There is always plenty to do and I enjoy it. It is my life. Although I need to spend a lot of time in the office, I also get out to the market and customers as much as possible, and then there are periods traveling overseas to find and meet suppliers.
How often do you eat organic foods?
Everyday, as much as possible. I usually buy organic fruit and vegetables once a week, they taste so much better than non-organic ones. And I eat our products everyday. I love them. The tagline for CHOOSEE, our online website, is “Every Reason to Love” ... and it is true.