Taking a bigger bite out of the Japanese cookie market

AgExporter, March, 1993

In Japan, some of the most popular cookies are rice crackers flavored with seaweed or a confection that tastes of Japanese lake eel. But that doesn't mean the Japanese market isn't ready for chocolate chip cookies or Fig Newtons.

U.S. cookie exporters interested in expanding their overseas sales would do well to consider the Japanese market, where demand for cookies is growing annually at the rate of about 2.5 percent. The market is expected to continue expanding as new products are sourced from abroad and the complex Japanese distribution system becomes more streamlined and open to foreign products.

Tapping into the Market

Although much of the yearly growth is directly related to the fluctuating strength of the Japanese yen, there is a tradition of cookie buying and eating in Japan that exporters can tap into, especially now that foreign cookies and cakes are growing in popularity.

The trend is toward upscale cookie assortments. Products that offer either traditionally simple or new tastes that can be sourced advantageously from abroad will continue to grow in popularity. With the Japanese market becoming more liberalized, the likelihood that Japanese importers will consider importing foreign cookies is stronger than ever before.

Cookies account for roughly 10 percent of Japan's confectionery/snacks market. In 1990, retail sales totaled $2.1 billion.(*)

At present, several U.S. cookies are available in the Japanese market, including Oreos, Fig Newtons, Chips-A-Hoy, Mrs. Fields, Famous Amos and Aunt Stella's. These cookies can be found in specialty supermarkets that carry foreign brands. Both Famous Amos and Mrs. Fields cookies have their own shops and are expanding their number of franchises in Japan. Oreo cookies is perhaps the most successful of these brands, having achieved distribution in most Japanese supermarkets and convenience stores.

Getting to Market - the Channels

The five main avenues for retail sales of cookies are: supermarkets; small maker/retail shops; franchise shops; convenience stores; and large, upscale department stores. The avenue chosen by an exporter often will depend on the type and price of the cookie.

Supermarkets: The current trend in Japan is for regular chain stores to place greater importance on modernizing and broadening their product lines, which augurs well for imported cookie products.

Small Maker/Retail Shops: Most retail stores in Japan are still small, local neighborhood shops, which for the most part have failed to modernize despite growing demand among consumers for new varieties and attractive gift assortments. As modernization is difficult for small shop owners, sales growth is likely to remain stagnant in this sector. The more than 31,000 small maker/retail shops account for a significant percentage of cookie sales. Many of these stores specialize in senbei, which are savory (as opposed to sweet) Japanese-style rice crackers flavored with soy sauce or seaweed.

Franchise shops: Franchise stores that feature cookies such as Famous Amos or Mrs. Fields have had a strong influence on consumer tastes and the nature of the cookie industry in Japan. Franchise shops often make their cookies on the premises and provide a unique, high-quality cookie not available in other distribution channels. These shops also have spurred the modernization of confectionery shops and the variety of cookie products available in the Japanese market. More and more, franchise shops will represent a new option for small shop owners who want to own their own businesses but lack the capital or training to modernize and provide new, unique products.

Convenience stores: Japanese convenience stores have limited shelf space. At present, many of these stores are reducing their confectionery product lines (including cookies) to make way for other products.

Large, upscale department stores. The big-name department stores carry a wide selection of attractively packaged gift items with upscale appeal. These stores often carry imported cookie products in their imported food section, which is usually located in the basement of the store. This type of product is almost exclusively intended for the Japanese gift market, which is a big sector. (See March 1992 issue of AgExporter for an article on the Japanese gift market)

Packaging Trends for Cookies

Cookie packaging targeted toward children often features popular animation characters, boxes shaped like toys and simple, bright colors. In general, cookie packages targeted toward children are sold through mass merchandising or large department stores. Currently, there are very few imported brands in this sector.

For gift items sold in upscale, large department stores, cookie packaging is elegant and attractive. Cookies are often given as gift items for friends and business associates, especially during the summer gift-giving season (ochugen) and the year-end gift-giving season (oseibo). Gift items can be found in several of the distribution centers, including convenience stores, department stores, supermarkets and specialty shops.