2012-09-06 07:51:11 - Japan Food and Drink Report Q1 2012 - a new market research report on companiesandmarkets.com

While the lives of Japanese consumers are slowly returning to normal after the March tragedy, they are now facing growing external headwinds of a sovereign debt crisis in Europe, a hard landing in China and economic stagnation in the US. Although retail sales and consumer confidence are on the mend, the global headwinds are likely to increasingly weigh on consumer confidence and prompt consumers to keep a firm grip on their purse strings in the near term. With hardly any sign of optimism in Japans consumer outlook, both in the near term and over the long run, domestic consumer goods manufacturers such as Asahi and AEON are looking afield for stronger growth opportunities and will continue to seek out desirable

 

 

acquisition assets to fulfil their diversification ambitions.

Headline Industry Data

.. 2012 per capita food consumption = +2.6%; CAGR growth forecast to 2016 = +3.3%
.. 2012 alcoholic drinks value sales = +2.6%; CAGR growth forecast to 2016 = +3.4%
.. 2012 soft drinks value sales = +7.0%; CAGR growth forecast to 2016 = +5.3 %
.. 2012 mass grocery retail sales = +0.8%; CAGR growth forecast to 2016 = +0.5%

Key Industry Trends

Strong Yen Prompts Consumer Players To Embark On An Acquisition Spree – Japanese consumer-facing companies are embarking on an acquisition spree as the yen climbs to a post-World War II high of JPY77.8/US$ at the time of writing. AEON agreed to acquire all outstanding shares in Japanese supermarket chains Marunaka and Sanyo Maraunaka for JPY44.9bn (US$577mn) in October while Kirin recently agreed to buy an additional 49.54% stake in Brazilian brewer Schincariol, taking its total purchase price to BRL6.3bn (US$3.5bn). Meanwhile, Asahi agreed to acquire New Zealand alcoholic drinks company Independent Liquor for US$1.5bn and the mineral water and juice businesses of Australian soft drinks producer P&N Beverages for AUD188mn (US$203mn). The yen strength has equipped Japanese consumer goods investors with a stronger buying power, bolstering their appetite for overseas acquisitions.

Switching Sights To Higher Growth Markets – US-based fast food chain Yum! Brands has agreed to offload its Long John Silvers restaurants to LJS Partners and its A&W All-American Food chain to the National A&W Franchisees Association and A Great American Brand for undisclosed prices. Both A&W and Long John Silvers make little strategic sense with Yums ambitions of building an international profile. A&W and Long John Silvers are both relatively underweight in international markets, when compared with Yums other fast-food chains such as Pizza Hut, Taco Bell and KFC. Outside of the US, A&W has stores in only four international markets, namely Indonesia, Malaysia, Thailand and Japan, while Long John Silvers only operates in Singapore. Also looking to lock in higher growth opportunities abroad, Japanese ingredients producer Ajinomoto set up a sales company in Bangladesh in August to sell seasonings and processed foods to local consumers. This investment forms part of Ajinomotos broader strategy of growing its footprint across international markets with a particular focus on emerging markets (EMs) in the Middle East, Africa and South Asia.

Risks To Outlook We are mindful of the external risks posed by economic uncertainties in Japans key trading partners, especially in the eurozone and the US. With the fiscal crisis in Europe spreading from Greece to larger countries including France, we are concerned that the contraction in spending in these areas would result in a sharp drop in demand for Japanese products from European consumers. Similarly, with the uncertain employment conditions amid the Standard and Poors downgrade of US government debt to AA+ from AAA – the first time in history – the growth prospect for the US economy remains precarious as well. Should the economic performances in these countries turn out to be worse than expected, Japans growth would be penalised, potentially resulting in an economic recession that extends beyond 2012. This scenario clearly would not bode well for the consumer and could deal another blow to domestic demand growth. The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.

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