Japan is New Zealand's fourth largest export market, fourth largest investor, fifth largest in-bound tourist market and third largest source of international students. Japan's Gross Domestic Product (GDP) is NZ$5.289 trillion, 33 times greater than New Zealand's. Japan's GDP per capita is NZ$56,356 (ten times that of China), and Japanese households have average savings of NZ$200,000.

New Zealand exports to Japan peaked at NZ$4.08 billion in 2001. In recent years exports have been steady between NZ$3.3 - 3.5 billion, despite financial crises and natural disasters. This data doesn't account for the growth in New Zealand food & beverage products re-exported to Japan after processed in third countries such as China, Thailand, and The Philippines.

Japan is New Zealand's fifth largest trading partner (bilateral trade was worth 6.95 billion in 2014). New Zealand's goods exports to Japan in 2014 were valued at NZ$2.9 billion; the top exports were aluminium (19.8 percent), dairy (14.6 percent) and wood (11.1 percent). During that period New Zealand's imports from Japan were predominantly vehicles (59.7 percent), followed by industrial (17.6 percent) and electronics 2.4 percent).

Health and functional foods

The growth in the Japanese market for health and functional foods can be attributed to a number of key population trends including the rapidly ageing society, an increase in lifestyle related health issues and a strong interest in health and beauty.

Major contributors to this recent market growth include products for intestinal regulation, lifestyle disease prevention, nutritional value, bone and joint support, dietary management and skin and beauty enhancement.

Examples of these products include:

  • ‘Tokuho’ drinks such as Lemon Tokucha (green tea by Suntory), Juuroku cha (blended tea by Asahi) and Karada Sukoyaka cha W (blended tea by Coca Cola)
  • yoghurt products containing special lactic acid bacterium which improves immunity from influenza and/or improves intestinal regulation
  • energy drinks which claim nutritional value.

New Zealand is seen as a trusted and safe supplier of food and beverages due to its strict quarantine policy, advanced food safety and quality assessment system.

Tourism

Japan tourism is currently in double digit growth to New Zealand. Japanese visitors are valuable from a ‘total lifetime’ perspective with visitors on average returning to New Zealand 2.7 times following their first trip. Air New Zealand has recently announced an increase in capacity for the Japan market. Tourism New Zealand is marketing to two demographic sectors in Japan: the aging and wealthy population for the high-end market; and the younger (FIT) segment. While this segment is more price-sensitive to airfares and currency fluctuations, they remain crucial in Tourism New Zealand's  strategy to grow shoulder season arrivals from Japan.

Education

Japan is New Zealand’s third-largest source of international students and there are long-standing ties with New Zealand institutions. New Zealand is considered a safe destination with high quality education opportunities and appeals to parents of school-aged children.  There continues to be strong demand for short term opportunities such as group visits from Japan, particularly from junior high schools, high schools and universities. 

Sporting events

Sport is becoming an important part of people’s lives in Japan. 40.4 per cent of the adult population regularly participated in some form of sport in 2015 and the government is aiming to increase this figure to 65 per cent within the next 10 years.

In 2011, the Japanese Government made a comprehensive revision to the Basic Act on Sport for the first time in 50 years and established Japan’s first Sport Basic Plan in March 2012. The goal of the Sport Basic Plan is to create a society where all people can enjoy a happy and fulfilled life through sport. The 10-year plan aims to achieve the following agenda through coordination and cooperation amongst national government agencies, local governments, schools, sport organisations, private companies and other entities involved in sport:

  • increasing sport opportunities for children
  • promotion of sport activities in line with life stages
  • improvement of community sport environments where residents can actively participate
  • training human resources and developing the sport environments in order to enhance international competitiveness
  • promotion of international exchanges and contributions through bids for and holding of international competitions such as the Olympic and Paralympic Games
  • improvement in the transparency and fairness/equity in the sporting world
  • creation of a virtuous cycle in the sporting world.

Japan offers significant commercial opportunities for New Zealand businesses with demonstrated experience in delivering global sporting events, including world-class sporting technologies, services, knowledge and products.

Cosmetics

Japan is the world’s third largest cosmetics market. Although the market continues to shrink due to the nation’s demographic changes, it remains important in the global context. Brands that are successful in Japan also raise their profile in other northeast Asian markets. With a growing mature domestic market, products that promote anti-aging and skin moisturising properties are expected to continue to be popular. This market segment is showing a preference for low maintenance beauty regimes which in turn translates to high functionality. Skin care has traditionally been more popular in Japan (in comparison to make up in Western countries) and consumers of all demographics are well versed in brands and quality. Expectations of packaging design and quality amongst consumers are exceptionally high.

The Japanese market is always looking for innovative new cosmetics brands that attract new consumers. Brands must demonstrate a strong concept and unique ingredients to gain buyers’ attention. Consumers tend to be influenced by the whole product (functionality, packaging, appeal) so maintaining brand awareness and education is extremely important. Use of celebrity endorsement is still effective in this market.

New Zealand cosmetics are expected to be made in New Zealand. The clean and green image of New Zealand also equates to the expectation of the use of the cosmetics ingredients. Organic cosmetics are expected to have certification from an internationally known organic accreditation organisation.

Fruit and Vegitables

The Japanese market for fresh fruit and vegetables has traditionally been dominated by domestic suppliers, with imports limited to a narrow range of products. Due to decreasing competitiveness in the domestic farm sector, global climate change, natural disasters and the opening up of the import market, Japan has steadily increased import volumes in order to secure sufficient supply to meet the country’s demand.

Processed Foods

The processed food sector covers a diverse range of products – from lightly processed fruit and vegetables to ready-to-eat meals. The Japanese processed food market is very competitive and sophisticated, catering for increasingly quality and price conscious consumers. New Zealand has an outstanding reputation among Japanese food importers and consumers as a supplier of safe, healthy and high quality food. With diversified market needs for food and lifestyle products, Japanese consumers are purchasing imported food products from department stores, specialty food stores, supermarkets and online. These consumers are willing to pay higher prices for products that promote a certain lifestyle and image or have a unique value proposition that cannot be offered by any other products.

Trends include:

  • Ageing demographic: Japan’s ageing population and rising single person households is increasing the demand for food products such as ready-to-eat meals.
  • Unique products: Wholesalers look for products that are ‘interesting’ for consumers. ‘Unique’ and ‘high quality’ attributes are seen as strong selling points and are often used in marketing strategies. For instance, in many cases, products with a distinct ‘Australian’ flavour or feature are at an advantage
  • Seasonal gifts: There is a strong gift culture in Japan around seasonal events such as Valentine’s Day, Christmas, New Year and Obon. Opportunities are open for food products that can be tailored to meet this seasonal demand.
  • Natural products: The natural and organic market continues to gradually expand, opening up new opportunities. The emphasis is on natural ingredients which minimise additives and preservatives. New Zealand products in this area remain well regarded in terms of quality. However, competitive pricing remains a challenge.
  • Sweets and snacks: Demand for confectionery and savoury snacks remain high with the focus on quality and uniqueness rather than the overall size of the product.
  • Health food: Demand for healthy food is increasing due to an ageing and more health conscious population. In response, Japanese manufacturers are focusing on healthy, functional and anti-ageing products.
  • Growing cities: There is a growing demand for high quality, gourmet and uniquely packaged food products in some of Japan’s major cities. For example, as Japan’s overall population continues to decline, Tokyo’s population is expected to expand.

Wine

Wine consumption in Japan is on the rise and the market has increased by 3.6 per cent from 2010 to 2015, with 889.3 million litres sold annually. Convenience store wine sales continue to push sales volumes for wines in the JPY500-1000 price range. This sales channel alone has boosted by 7.8 per cent in 2015 and now makes up more than 11.1 per cent of the sales of all imported wines. Despite wine sales being only 10 per cent of total alcohol purchases across Japan, new retail stores are increasingly stocking wine in order to compete. Supermarkets have expanded their volume of wines sold by more than 7.2 per cent, from 2014 to 2015. The number of new concept wine bars or casual, standing wine bars is also on the rise

Private label products are increasing in market share, mainly with major retailers such as AEON, Seven & I Holdings, some convenient stores, and mid-sized supermarket chains. Most of these private label products are developed from imported bulk wines and are bottled in Japan.

Amongst total wine consumption in Japan, the most popular and biggest volume category remains at the retail price of JPY500-JPY1000 for a 750ml bottle

Imported wines hold 60 per cent market share of this price range with fierce competition between France, Italy, Spain (with the influence of the strong yen against the Euro), Chile, and the US.

Premium wines for special occasions, when supported by established reputation, ratings, or awards, retail between NZ$21-$45 and are distributed through specialised wine outlets, online shopping, mail-order/catalogue, high-end hotels and restaurants.