TT-662 -- Health Food Boom Continues, ebiz news from Japan

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
(http://www.terrie.com)

General Edition Sunday, May 20, 2012, Issue No. 662

+++ INDEX

- What's New -- Health Food Boom Continues
- News -- Rakuten invests JPY4-5bn into Pinterest.com
- Upcoming Events
- Corrections/Feedback
- Travel Destinations Picks -- Wakayama and Tochigi
- News Credits

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+++ WHAT'S NEW

This weekend we traveled out to Hidaka town in Saitama,
nestled up against the verdant foothills of the Okuchichibu
mountain range. We were there to join dozens of others to
celebrate Alishan's 2012 Food Festival, at their wonderful
riverside warehouse/home/cafe. For those of you who don't
know, Alishan is one of Japan's leading organic food
importers and is run by Jack and Fay Bayles. You might know
them for Amy's macaroni cheese, Alvarado sprouted grains
breads, Aubrey Organics personal care products, and a bunch
of other natural goodies. You can find their web page at
www.alishan-organics.com.

Alishan is one of the pioneers in imported natural foods in
Japan and chatting with Jack we learned that his business
is booming more than ever. Against a general trend towards
vegetarian and organic food, the Fukushima power plant
crisis last year accentuated the number of people looking
for alternative food sources -- particularly natural food
and ingredients imported from abroad. Right up Alishan's,
well, ally...

It's been a pleasure to watch a business that is bringing
obvious benefits to Japanese consumers grow from less than
10 staff a few years ago to more than 40 now. The Hidaka
location is really out of the way, but Alishan has become
famous enough that during the summer floral festival in
that area the cafe can get as many as 800 customers a day.
That's a lot of people! The company's wholesale and Tengu
Foods mail order businesses are also doing well, and
Alishan now brings shipments in by the container load.

Another company which is doing well from a renewed
awareness in health is Ohio, USA-based Vitamix, the food
blender company. Vitamix has two businesses in Japan --
commercial blenders and consumer-level ones. The commercial
business has always been solid, but the consumer business
struggled for a while. However, their wholesaler told us that in
the last year their volumes have zoomed up from just
hundreds to now thousands of units. It's interesting
that retail experts in the past would tell Vitamix that
their machines were too big and too expensive, and it is
true that their machines sell for 3 times the price of the
next most expensive blender. But in the current market,
consumers are so focused on staying healthy, they are
willingly paying for products that offer clear advantages.

[Continued below...]

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[...Article continues]

The growth that the folks at Alishan and Vitamix are
witnessing is being repeated across the country in a
variety of other companies that have created base
followings for diet, anti-aging, and general health.
Talking to people in the health food and health devices
industry, the biggest demographic groups of customers are
people in their 40's and 50's who want to keep looking
good, followed by younger mothers who are concerned about
food safety after Fukushima. Health awareness is not a new
trend, but the internet and availability of products means
that awareness is high, people are finding value in efficacy
and not just price, and companies in the sector are making
money.

Actually, we find it interesting that this boom in health
is juxtaposed with another trend of people cutting
expenditures and trying to live more cheaply. The two are
obviously not mutually compatible, and so there appears to
be a polarization in the food (and devices) market, with
staples going ever lower in terms of pricing, but at the
same time new supplements and specialty foods moving up
the value chain due to high buyer demand. Thus bread prices
go down while maca, aojiru, and other supplements go up in
desirability and price.

The rise in demand for functional foods is happening across
the board and is having a strong positive effect on the
sales volumes of companies involved. Kagome is best
known for ketchup, but is also a big player in vegetable
juices and probiotics. The company has announced
that it is going to double the output of both drinks due to
surging demand. This means that they will be producing
about 7.5 megaliters of mixed juice and 12m bottles of
probiotic drinks a month.

Kagome is fortuitously in the middle of another
mini-boom as well. After a finding in February by
researchers at Kyoto University that tomatoes contain a
fat-burning compound, sales of anything related to tomatoes
has started soaring. Supermarkets around the country are
reporting sales are up by 20%, while Yahoo Japan's shopping
site merchants dealing in tomato beverages are saying their
sales are up 32 times over last year. This level of demand is
surprising, given that tomatoes are currently 30% more
expensive than they were last year...

Yoghurt is another hot area for development. After a TV
program in January claimed that Meiji's R-1 yoghurt, which
has a high concentration of exopolysaccharides in its
Bulgarian strain lactobacillus, stimulates the immune
system, Meiji said that sales quintupled for the rest of
that month and stayed as high in February and March as
well. As a result, competitor Morinaga is now releasing a
lactoferrin product which is derived from colostrum, the
first milk produced by cows for their calves after birth,
and which also stimulates the immune system.

Yoghurt is a big business in Japan and was worth around
JPY250.8bn in FY2011, up 1.9% over the previous year. Given
that the number of kids is falling, the growth can mainly
be attributed to women in their 50's, who are concerned
about losing bone density as they age, and this is the
exact demographic that Danone is targeting.

From the examples above, we think that the market for
health food is nowhere near saturated and that there are
plenty of opportunities for new players, especially those
with imported products. How long will this boom last?
Well, so long as it is the older age groups, who tend to
have the most savings and who are doing the buying,
probably to boom will run for some time to come.
However, we imagine that when the consumption tax
goes up in 2014, this will put a crimp in all luxury goods
for a couple of years, so now is the time to establish a
beach head with products that are efficacious and
build a loyal following.

...The information janitors/

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+++ NEWS

- Rakuten invests JPY4-5bn into Pinterest.com
- Sumitomo buys NZ forestry resource
- Runners fitness boom good for business
- Consumer Agency rules against Gree, DeNA on games
- Solar cell sales up in Japan

=> Rakuten invests JPY4-5bn into Pinterest.com

Rakuten has invested an undisclosed amount, but which is
speculated to amount to around JPY4bn-JPY5bn, in fledgling
US SNS operator, Pinterest.com. The Rakuten investment was
part of a US$100m tranche that now values Pinterest.com at
around US$1.5bn. The 2-year old company had 12m unique
users earlier this year, and this number is expected to
double by year-end. Rakuten says that it will create a
Japanese version of Pinterest.com and use it to increase
traffic to Rakuten's other sites. ***Ed: We started using
Pinterest.com a few months back -- not sure whether we like
it or not, but the idea of letting people collect images
certainly makes it visually appealing...** (Source: TT
commentary from redorbit.com, May 18, 2012)

http://bit.ly/KmbSmu

=> Sumitomo buys NZ forestry resource

While politicians argue about whether Japan should restrict
foreign purchases of forest land here, a misguided
discussion in our opinion, they should look at the freedom
Japanese companies have in other countries. Sumitomo has
just announced that it has bought for JPY8bn a forest
management company that will give it control of 36,000
hectares of trees in the north island of New Zealand.
Sumitomo bought the rights to the forests from Wood One, a
wooden housing materials company. Sumitomo says it will
export the harvested timber to buyers in China and India.
(Source: TT commentary from e.nikkei.com, May 17, 2012)

http://e.nikkei.com/e/ac/tnks/Nni20120517D1705N02.htm

=> Runners fitness boom good for business

The current running boom is having a beneficial effect on
the nation's top three sporting goods companies. Mizuno
said its net profit jumped 11% to JPY3.1bn, with running
shoes growing 12% to 8.4m pairs. Asics net profit was also
up 14% to JPY12.6bn, and Descente profit was up 18% to
JPY3bn. All three companies are predicting further gains
for FY2012 as well. ***Ed: When can we as consumers get
wide-toed running shoes here? Oh, and big sizes as
well...** (Source: TT commentary from e.nikkei.com, May 17,
2012)

http://e.nikkei.com/e/ac/tnks/Nni20120517D1705N03.htm

=> Consumer Agency rules against Gree, DeNA on games

The practice by Gree, DeNA and other successful online
games companies, of selling consumers lucky tokens that if
matched can be exchanged for online tools and weapons that
allow the player to be more successful in their game
playing, may soon be a thing of the past. The Consumer
Affairs Agency has ruled such token sales are too close to
gambling and are unjustifiable premiums and misleading
representations. The Agency says it will set new rules
governing online incentives for gamers from July. As a
result, the stock prices of both DeNA and Gree have been
falling recently, Gree in particular, which is down a
cumulative 49% this year. (Source: TT commentary from
bloomberg.com, May 18, 2012)

http://bloom.bg/K3LJuz

=> Solar cell sales up in Japan

The Japan Photovoltaic Association has issued data
showing that the demand for PV cells rose 32.1% in FY2011
over the year earlier. The demand of 1,404MW is mainly
being driven by private consumers who are outfitting their
houses with alternative power sources. Sales in
January-March alone apparently jumped 38.1% over the
previous year. (Source: TT commentary from reuters.com, May
18, 2012)

http://reut.rs/JGD43U

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.

***------------------------****-------------------------***

+++ CANDIDATE ROUND UP/VACANCIES

=> BiOS, a Division of the LINC Media group, is actively
marketing the following positions for customers setting up
or expanding in Japan, as well as other employers of
bilinguals.

** HIGHLIGHTED POSITION

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The candidate will be responsible for directly negotiating
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for the company’s bilingual data center facility and IT
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clients and internal engineer teams to schedule
installations, maintenance, etc. You will also be
responsible for attending internal sales meetings for
revenue forecast.

Due to the technical nature and demanding work environment,
this position is suitable for someone with more than 3
years of experience selling Data Center Services or IT
Infrastructure services. In addition, since this role
requires direct coordination with both regional and global
IT teams, native-level Japanese and business-level English
will be required.

Remuneration is JPY5m – JPY8m depending on your experience
and skill level.

** POSITIONS VACANT

- Sales/Recruitment Assistant, BiOS, JPY2.5M – JPY3.5M
- Project Mgr (Network), global telco, JPY5.5M – JPY7M
- Data Center Engr (Tape Change), global ibank, JPY3M–JPY4M
- Senior Support Engineer, BiOS, JPY5M – JPY6M
- Bilingual Desktop Support Engr, global telco, JPY3.5M–4M

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+++ UPCOMING EVENTS/ANNOUNCEMENTS

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If you have been considering setting up your own company,
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founder of over 17 start-up companies in Japan, will be
giving an English-language seminar and Q and A on starting
up a company in Japan.

This is an ideal opportunity to find out what is involved,
and to ask specific questions that are not normally
answered in business books. All materials are in English
and are Japan-focused.

For more details:
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***------------------------****-------------------------***

+++ CORRECTIONS/FEEDBACK

In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to editors@terrie.com.

=> No feedback this week.

***------------------------****-------------------------***

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+++ TRAVEL DESTINATIONS PICKS

=> Kumano Kodo Pilgrimage Trails, Wakayama-ken

Pilgrimage – "a long journey or search of great moral
significance", according to Wikipedia, is usually
associated with religious or spiritual quests. The Kumano
area, a mountain range full of scenic beauty, tradition and
mystery, is often referred to as the spiritual heartland of
Japan.

For over 1,000 years Kumano has attracted Japanese
worshippers and seekers. Old trails, more or less intact,
cross-cross the Kii-Peninsula, leading to some sacred sites
well-worth a detour from the well-trodden “Golden Route”
between Hiroshima and Tokyo that most visitors travel on.
Both the Nakahechi trail and the Kohechi trail lead to the
Hongu Taisha, the Hongu Grand Shrine, which is one of the
Kumano Sanzan, the Three Grand Shrines of Kumano -- which
are all sacred sites for the Japanese.

http://bit.ly/Jprt9i

=> Tosho-gu Shrine’s Secret Magic, Tochigi-ken

Tokugawa Ieyasu was the founder of the Tokugawa Shogunate
and his political power continued for 260 years, passing to
his descendants. Ieyasu was born in 1542 and died in 1616
in Shizuoka. He left precise instructions concerning his
burial service, directing that his body be buried at
Shizuoka, but that the funeral ceremony should be held in
Edo, and that a shrine be built in Nikko one year later.
Why have three different rituals in three different places?

Apparently this was a secret magical technique created by
Ieyasu to assure the continuation of the Tokugawa
Shogunate. In the ancient days, Polaris was believed to be
the King of Stars in the Eastern world and all the other
stars moved around it. Ieyasu was really well informed
about asian beliefs such as Shintoism, Buddhism,
Confucianism, Taoism, and Onmyo-do (way of Yin and Yang).
Making full use of these religious learnings, he sought to
immortalize his own soul and protect the Shogunate by using
special lines to connect his birthplace, his burial place,
Mt. Fuji, the Edo Castle and his place of enshrinement.

http://bit.ly/KGbcbm

***------------------------****-------------------------***

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+++ ABOUT US

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Written by: Terrie Lloyd (terrie.lloyd@japaninc.com)

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