Nutraceutical Beverages In Japan

Beverages primary delivery form for new nutraceutical products

By Ron Bailey

There have been many interesting developments in the nutraceutical beverage market in Japan, with new beverage product introductions remaining very popular. For many companies, beverages are the ideal product form when new products are being considered.

Why beverages? One statistic that helps explain the interest in new beverages relates to vending machines. There are now well over two million beverage vending machines (one for every 60 people) in place in Japan, not including those for alcoholic beverages. Vending machines account for nearly 40% of soft-drink sales in Japan, according to the Japan Vending Machine Manufacturers Association. Beverage products and even packages (such as the “Cartocan” paper-based can sold by Toppan Printing) are designed specifically for distribution, handling and storage in vending machines. Although finding available space for new vending machine placements in large cities is becoming difficult, the growth of new machines still averages around 2% per year in Japan.

Another factor in the success of new beverage introductions is the strong consumer acceptance of the product form. Traditional medicine drinks are often sold in small 50 ml bottles from pharmacy kiosks and the popular “tonics” usually in slightly larger 100 ml bottles, also often from pharmacy kiosks. More recently, tonic drinks such as the popular “Lipovitan D” fortified beverage from Taisho Pharmaceutical have been allowed by the Ministry of Health and Welfare to be sold from non-pharmacy locations such as convenience stores and supermarkets. According to the June issue of JapanScan Food Industry Bulletin, annual sales of Lipovitan increased from 560 million bottles in 1998 to 715 million bottles in 1999 as a result, a nearly 30% increase in annual sales.

Beverages are also very easy to consume “on the go” (which often means during the daily commute by public transportation), although until recently it was more common to consume the beverage at or very near the point-of-purchase. This is one reason why the smaller portion sizes were so popular in the early stages of beverage market development. More recently, larger package sizes have become more popular, however, particularly 500 ml size PET bottles of mineral water and the new category of “near water” drinks, so portability has now become acceptable.

From a marketing point of view, ac­cess to company-owned vending ma­chines (the Coca-Cola group now has over 900,000 machines in Japan) has allowed controlled market tests of new products. New products can be placed in as many machines as desired or easily restricted to a limited area. A recent Nestlé Japan purchase arrangement of vending machines from another Japanese company includes a plan for establishing the first “mixed brand” vending machines, which will include beverages from Nestlé Japan, Pokka, UCC Ueshima Coffee and Otsuka Beverage in the same machine.

Recent Product Development Activity

A large segment of the market for Foods for Specified Health Use (FOSHU) is made up of yogurts (including popular drinking yogurts) and fermented milk drinks from such companies as Yakult Honsha. These beverage products often contain as their functional component an oligosaccharide bifidogenic compound, or special live organisms that have been shown to im­prove gastrointestinal health.

Other FOSHU beverages include “Fibe-Mini” and “One a Night” from Otsuka Beverage, which use polydextrose and lactosucrose as the functional ingredient respectively, “to maintain a good intestinal environment.” In addition “Calcium Parlor” uses calcium citrate malate (CCM) technology licensed by Procter & Gamble to Takara Shuzo as a high bioavailability calcium supplement and “Tekkotsu Inryo” from Suntory uses Meiji Seika’s calcium absorption-enhancing casein phosphopeptide (CPP) as the functional component. The initial success of Fibe-Mini when it was first introduced as a non-FOSHU functional beverage was nothing short of phenomenal, even for the Japanese market. Over 400 million bottles of Fibe-Mini were sold during the first year after introduction and this overwhelm­ing market success generated consid­erable competitive interest very quickly.

Many food and beverage companies also discovered that new beverages with “better-for-you” positioning were of significant interest to consumers and could often be developed and distributed more quickly than products with sim­ilar functional components in non-beverage food form. At the same time, packaging developments such as government approval of the larger size 500 ml and 350 ml PET clear packages provided additional incentive for new beverage developers. The mineral water success led more recently to the development of nutraceutical “near water” beverages, usually slightly sweetened and often fruit-flavored. The near water beverages are often fortified with vitamins, minerals and healthful ingredients such as green tea poly­phenols, for example. The leading near water drink “Supli” from Kirin Beverage has now converted to FOSHU status with gastrointestinal health claims for the indigestible dextrin content. This conversion will increase the size of the FOSHU market by another several hundred million dollars per year at retail.

With new regulations in Japan re­garding recycling of food and beverage packaging, beverage developers must also consider disposal of the packages at the product design stage. Although re­cycling of steel, aluminum and glass beverage containers is now around 80% in Japan and increasing, the fast-growing PET bottle beverage market continues to lag behind, with only a 17% recycle rate in 1998. New PET recycling facilities are being developed, however, which should help to avoid more serious problems for PET packaging in the future.

There is no question that the market for nutraceutical beverages will continue to grow in Japan. More non-FOSHU beverages will convert to FOSHU status with on-label health claims. Beverage companies will seek to gain a marketing advantage by introducing through their network of vending machines specialty nutraceutical beverages targeted to the nutritional and health needs of regional target populations. Advanced recycling systems will be in place to reduce the strain on the overburdened incineration and landfill facilities. Committed beverage manufacturers will be willing and able to support a level of non-drug clinical research suitable for the nutraceutical beverage market and will be able to make on-label claims for those products through the FOSHU regulatory process. In the end, both consumers and companies will benefit.

NW

Ron Bailey is president of California Functional Foods and has been an independent consultant for the past 15 years, focusing primarily on the transfer of food technology between the U.S. and Japan. He can be reached at 165 Almond Street, Ashland, OR 97520; 541-488-3184; Fax: 541-488-3274; E-mail: bailey@mind.net.