Japan 2004 Yearend Update

With the Japanese economy turning a corner, there may be several positive developments for nutraceuticals in 2005.

By Ron Bailey

On the macroeconomic side it is generally agreed that the Japanese economy has finally emerged from the extended downslide, although there are still areas of weakness in the overall economy. Consumer spending remains soft, with most consumers not yet fully convinced that the economy has safely recovered. Capital spending by businesses is picking up, including a recent trend toward new high-tech plant investment in Japan, a reversal of the “hollowing out” of Japanese industry that resulted in new plant investment priorities in overseas markets. Deflation remains a concern for the Japanese government and industry, but is welcomed by consumers as retail prices for necessities such as food continue to decline.

Demographics Update

The relevant demographic trends in Japan have not changed significantly. The population continues to age, as the birth rate remains low and life ex­pectancy continues to increase for both males and females. Immigration policies have so far not been adjusted to impact these trends, and are not likely to be in the near future.

The National Institute of Health and Nutrition (NIHN) in its most recent annual report, which summarized the 2002 national nutrition survey, confirmed that the Japanese population is getting heavier, with 30% of males in their 30’s through 60’s and 30% of females over 60 years of age classified as obese by the Japanese obesity standard (a body mass index-BMI- of greater than 25). At the same time, however, there may be some indications in the survey that important health conditions are improving, for example in the high blood pressure category. In the most recent survey, 55% of women over 70 and 55% of men over 60 had high blood pressure (greater than 140 mm/90 mm). This a notable reduction when compared to the higher percentages experienced by these groups as reported in the previous survey. Cholesterol levels for the older population specifically remain high, however, with 50% of the male and female population having total cholesterol levels over 200 mg/dl (over 240 mg/dl is considered high in Japan).

Regulatory Update

There have been no major changes in the food regulations in Japan recently, which include the FOSHU (Foods for Specified Health Uses—”Tokuho” in Japanese) category and the popular dietary supplement category. The Ministry of Health, Labor, and Welfare (MHLW) is considering a significant change in the regulations, however, for possible implementation as early as April or May of next year.

The Japan Health Food and Nutrition Food Association (JHNFA), the non-governmental organization responsible for the administration of the FOSHU product approvals and the health food industry monographs in Japan, is now helping to develop these new rules. What apparently started as a proposal from MHLW to develop a new regulatory system for health foods, including potential on-label health claims, has now evolved to a complicated system of permitted claims under the overall FOSHU umbrella, based on the level of evidence available in support of the claim to be made. It is not clear from the limited official information available how this new system will work, or how it will maintain the integrity and credibility of the popular and successful FOSHU category. It is also not yet clear when the new regulations can actually be ready for implementation.

FOSHU Category Update

The FOSHU category in Japan has continued to grow, both in numbers of products approved and in the retail sales of the approved products. As of the end of September 2004, there was a total of 452 FOSHU products on the market, up from 398 at the end of the last year. There have been 60 new products approved (a few previous approvals dropped off the official list), which is not a record number but certainly a respectable increase. JHNFA reported earlier this year (as translated and summarized in the May 2004 issue of the Japanscan Food Industry Bulletin) that retail sales for the 398 products was over $5 billion U.S. dollars in 2003, nearly a 40% increase from the last official report only two years ago.

In terms of retail market value, “gut health” products continue to have the leading share (64%), although the percentage has declined from over 90% just six years ago. Up-and-coming growth categories include dental care (14%) and “neutral fats, body fat” (11%), both up from zero market shares only six years ago.

A more detailed analysis of the 60 new FOSHU products approved so far this calendar year is instructive:
• Ingredients: The active “functional ingredients” responsible for the efficacy of the 60 new FOSHU products include 18 (30%) using indigestible dextrin and another nine (15%) using psyllium husk fiber. Soy isoflavones accounted for another six (10%), and another 17 functional ingredients accounted for the remainder of the approvals.
• New Ingredients: Of note are wakame seaweed peptide and GABA (gamma amino butyric acid), both of which were included in products claiming to lower blood pressure. Wakame is a popular food ingredient in Japan, particularly in soups and GABA has become very popular in a wide range of non-FOSHU foods and dietary supplements over the past few years.
• Health Claims: As usual, the new FOSHU approvals include several new and improved health claims, even for previously approved functional ingredients, as new clinical support is developed. For example: recent soy isoflavone FOSHU products have been granted a bone calcium claim; indigestible dextrin applications have shifted from gastrointestinal health to a reduced blood sugar claim; the mid-chain triglyceride frying oil and fat spread products are claiming reduced body fat and obesity; a green tea catechin product was allowed a similar body fat claim; a fructo-oligosaccharide sweetener product claims both calcium and magnesium absorption im­­­­­provements and a breakfast cereal combines wheat bran with indigestible dextrin for a gut health claim.

The body fat and obesity claims are particularly interesting because traditionally diet and weight loss product claims for foods have not been encouraged. The link between obesity and diabetes and other health conditions is well known, however, and it is clear that the MHLW is now encouraging the connection. Sales in the “neutral fats, body fat” FOSHU category are now well over $600 million at retail and growing, reflecting the consumer interest in such products.
• Product Forms: Once again the soft drink product form (including powdered soft drinks) dominated the new FOSHU approvals, with over one-half of the new products in this form. Yogurts and chewing gum were tied for a distant second place, with 13 other product forms making up the remainder. Soft drinks (which include ready-to-drinks teas and coffee in Japan) remain a popular product form for new product introductions in Japan (not just FOSHU) in part related to the availability of over 2.5 million beverage vending machines.

Non-FOSHU Functional Foods

In addition to the continued growth in the FOSHU category, a review of the “hit products” lists confirms that the interest in non-FOSHU products with off-label and/or implied health positioning also remains popular. The ready-to-drink green tea market, often fortified with additional green tea catechin polyphenols, shows few signs of saturation. Chocolates with added cocoa polyphenols, with the milligrams of polyphenols indicated on the label, remain strong. Anthocyanin-rich berries for eye health continue to grow in a range of foods and beverages, as well as dietary supplements. Just as the popular GABA functional ingredient was able to obtain FOSHU status this year, new clinical research in support of the green tea catechins for body fat and obesity will open up that huge market to potential FOSHU status in the future.

Expectations for the Future

It is clear that the Japanese MHLW is using the positive FOSHU experience and the findings in the annual nutrition surveys to adjust its policies regarding potential on-label health claims. This will continue into the future, as long as the population continues to age and the healthcare costs continue to rise. More of the FOSHU functional ingredients are being incorporated into foods outside Japan, including the very popular diacylglycerol cooking oil from Kao Corporation that is the functional ingredient in the Enova cooking oil now being expanded nationally in the U.S. by the ADM:Kao joint venture company. Others will surely follow.NW

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Note: Important sources of information for this summary include the Japan Health Food and Nutrition Food Association, the National Institute of Health and Nutrition annual survey, and the Japanscan Food Industry Bulletin published in the UK.