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					                                                                                                         C-3. Coffee & Tea


3 Coffee & Tea

1.Market Conditions in Japan
(1) Definition of Category
   This section covers Coffee and Tea.

 [Coffee]
  In this report, “Coffee” includes coffee beans (raw unroasted beans, roasted beans so called regular coffee,
instant coffee and coffee extracts or essence).
  Raw beans are stripped of their outer skin, flesh and inner skin and then are dried, or processed in other ways.
Roasted beans include ground and blended products. Instant coffee means dehydrated product of extracted
soluble solids from coffee beans. Coffee extracts or essence is extracted and soluble solids from coffee beans.
Coffee extracts or essence is extracted and condensed coffee essence, which are used at food service or process
industry as canned coffee and raw material for candy.

 [Tea]
  “Tea” means in this report the leaves of tea shrubs classified as Genus Thea (green tea, black tea, oolong tea,
pauchong tea and etc.) and so called herb teas like mate of which materials are the vegetables and plants other
than tea leaves. The products of materials of other than tea leaves are not classified as “tea” in strict meaning
although they are commonly called as tea.
    “Tea” from tea leaves are classified depending upon its
different production process, as unfermented tea, partly                     Unfermented tea         Green tea
fermented tea and fermented tea. Green tea is the                                                    Pauchong tea
unfermented type. Oolong tea and pauchong tea belong to
partly fermented tea. And black tea is the fermented                Tea     Partly fermented tea
product.                                                                                             Oolong tea
    So called “tea” of materials other than tea leaves are
                                                                             Fermented tea           Black tea
  treated differently under trade statistics classified by
vegetables or plants name and parts utilized (roots, leaves, flowers and etc.) or existence of ingredients of
medicinal effects.
    For trade statistics purpose, herb tea is classified in chapter 9 (coffee, tea, mate and spices), while rooibos tea,
hibiscus tea and etc. may fall in chapter 12 (oil seeds, and oleaginous fruits; miscellaneous grains, seeds and
fruits; industrial or medicinal plants; straws and fodders).
    Here, instant tea refers to the extracts, essence or their concentrated products from tea leaves or mate and their
preparations. Extracts and essence are the products other than instant tea.
    Classifications under trade statistics and their HS numbers are shown below.
                                   HS Numbers                                    Commodity
                 0901. 11-000, 0901.12-000                          Coffee, not roasted
                 0901. 21-000, 0901.22-000                          Coffee roasted
                 2101. 11-210, 2101.12-121                          Instant coffee
                 2101.11-100, 2101.11-290,
                                                                    Extracts, essence and concentrates
                 2101.12-110, 2101.12-122
                 0902. 10-000, 0902.20-200                          Green tea
                 0902.30-010, 0902.40-210                           Black tea
                                                                    Others (partly fermented teas as
                 0902.30-090, 0902.40-220
                                                                    Oolong tea or Pauchong tea)
                 0903.00-000                                        Mate
                 2101.20-110                                        Instant tea of tea or mate
                                                                    Extracts, essence and concentrates of
                 2101.20-120
                                                                    tea or mate


 (2) Market Trends
 [Coffee, Overall View]
  The statistics of the International Coffee Organization (ICO) shows that Japan is the third consuming country
of coffee following U.S.A. and Germany (2004, raw beans bases). Coffee is rooted and widely accepted in

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ordinary Japanese family as daily drinks and the domestic consumption is in upward tendency. Although Japan is
the third consuming country in total quantity basis, in terms of the per capita consumption, the country is far
behind the 10th position. A Japanese consumed 321 cups of coffee in 2003 (calculated 10gr raw beans for a cup),
whereas an American took 425 cups and a European 500-1,000 cups. By this comparison, per capita
consumption in Japan is still small and there exists rooms for more takings.
  In recent years, the Japanese coffee market shows the increase of consumption quantity especially of regular
coffee, which is attributed to the wide use of coffee maker and the tendency of consumers’ favorite selection of
products of real value.
  Instant coffee and coffee drinks develop steady consumption. As one of the background of total expansion of
coffee market, we can count the increase of coffee shops like Starbucks or Doutor chain stores. On the other hand,
many conventional tearooms stop their services. The market of canned coffee drinks is shrinking as from 2000.
(see Fig. 1)
  The new differentiated coffee market, although still in small scale, is being established these days with “Fair
trade” or “Organic” for marketing solicitations. Many retailers show their interest in “Fair trade” products. The
products are handled by high quality coffee marketers like Starbucks, Ogawa Coffee and Kyowa Foods. Also,
Aeon group, the retail super market chain and Tully’s coffee are offering the products. Ajinomoto General Foods
(AGF) introduced into the market new health-oriented products with increased polyphenol content which is said
to develop anti-oxidation effect or blends of oligosaccharide for intestine activation purpose.

 [Roasted Coffee (Regular Coffee)]
  The statistics of coffee consumption in 2004 by use (All Japan Coffee Association) indicates out of all regular
coffee consumption, 40.5% share for industrial use (canned coffee, bottled liquid, or liquid product for cake
industry, etc.), 37% for domestic consumption (retail sale) and 22.4% for food service field and outer home
consumption (commercial use at tea houses or restaurants, rest time services at offices or schools, and sales by
automatic vending machines).
  The main demand in industrial use is from canned coffee production which occupies 60% of total demands in
this business section. Although canned coffee sales have leveled off in recent years, total production of coffee
drinks is the biggest in the soft drink market.
  In home use demand, the most accepted type of product recently is so called soft pack or package of flexible
vacuum bags. The market of cassetted regular coffee (disposable for each cup of coffee) shows steady demand
increase owing to consumers’ personal use or selection as gift. The tea bag type of regular coffee is also marketed.
UCC Ueshima Coffee introduced the mixed product of regular and instant coffee in tea bag type packing in
September 2006.
  In commercial use market, sales continue stagnant due to the influence of recession or decrease of tea rooms.
However, the urban type coffee shops compensate the decrease by developing their operations to suburban areas.
The fast food restaurants are taking strategies to offer high quality products by introduction of drip machines or
alteration of beans to higher quality to satisfy consumers’ fondness.

 [Instant Coffee]
  The consumption for instant coffee is less than 30% of regular coffee but the demand continues strong. More
than 80% of the products goes to home consumption, whereas 10% to industry and about 6% to commercial use.
  In home use market of instant coffee, recently bag type wrappings are accepted widely. The package of this
type occupies up to 25% in total instant coffee market in 2005. This is because of endeavor by manufacturers to
meet the consumers continued consciousness to environmental protection or to resolve their complaints at the
time of purchase (container is heavy or likely heavy or likely to break) by employing flexible package containers.
Also, by renewal of existing products, the industry is working to obtain consumers acceptance.

 [Coffee Drinks]
  In soft drink market which expands year by year, coffee drinks are the most produced items.
  However, although the production in 2005 showed steady 106.6% over previous year, due to the remarkable
increase of tea drinks production these days, the tendency is narrowing of production gap of these two categories.
(see Fig. 3)
  In diversifying soft drink market, the move is felt in coffee drink industry to differentiate the existing products
by introducing new type materials. In Autumn 2005, Suntory introduced chilled type cup coffee under Starbucks
brand (the product is controlled in chilled condition from production to the point of sale and coffee is taken by

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straw sipper inserting through the lid of plastic container). The product of this type helped increase the chilled
coffee market remarkably to place the products to the second best selling among coffee related products.
  Canned coffee, the major products in this category, is supported by male consumers. Backed up by recent
increase of coffee taking opportunities, female consumers began to take pleasure of coffee break time. Chilled
cup coffee gained popularity among young girls of age group of 10s and 20s. Thus, the market is successful to
get support from female consumers.
                                    Fig. 1    Consumption of coffee by type in Japan

                   Regular Coffee (tons)         Instant Coffee (tons)      Coffee Drinks (thousand kl) Canned Coffee (thousand kl)

      Year        Volume          Index         Volume          Index         Vo lume         Index         Volume          Index
        1990       114,900            100         39,697            100           2,270           100           2,158           100
        2000       148,450            129         39,791            100           2,610           115           2,063             96
        2001       153,682            134         41,928            106           2,688           118           2,061             96
        2002       158,600            138         40,650            102           2,757           121           2,015             93
        2003       153,227            133         42,517            107           2,743           121           2,039             94
        2004       169,063            147         41,648            105           2,717           120           2,005             93
   Base year 1990
   Reference : Survey of Ministry of Agriculture, Forestry and Fisheries, All Japan Soft Drinks Producers Association
                                                              Source : All Japan Coffee Association (Statistics on Coffees, Oct. 2005)


 [Tea, Overall View]
  The market of major tea products in quantity consists of 70~75% by green tea, 10% by black tea and 15%
more by oolong tea. The percentage is rather stable. Consumption of mate is negligible small, the percentage
being nearly 0%. In actual quantity, green tea consumption is stable at around 100,000 tons, and black tea 15,000
to 16,000 tons annually. The consumption of oolong tea is in diminishing trend in these 5 years. The 2001 figure
was 27,000 tons and reduced to 20,000 tons in 2005. The consumption of mate in 2005 was as little as 21 tons.
(See Fig. 2)

 [Green Tea]
  In Japan, “Tea” means green tea and nearly 100% of domestic tea production is consisted by green tea. Green
tea is normally accepted and taken by Japanese people as traditional beverage, whose domestic consumption is
stable at 100,000 tons level annually. According to the Household Expenditure Survey by the Ministry of Internal
Affairs and Communications, annual purchase of a family is stable 1,100 gram annually in recent years, which is
equivalent of 350 gram per person. This quantity is 4 times level of annual purchase of black tea and oolong tea
together which is about 80 grams. Green tea is daily favorite drink of ordinary Japanese people.
The 80% consumption as leaf tea (including package type of tea bags) in 2003 level reduced to 74% while
commercial use rose to 26% in 2005 (survey by the Nikkan Keizai Tsushinsha). The tendency of recent years is
the increase in commercial use consumption.
   In total soft drink market, increase of green tea drinks is remarkable, 2005 production being 2,648 thousand
kiloliters which is nearly double of 2001. (see Fig. 3) No other soft drink product attained such increase. The
green tea drink market, which expanded remarkable as from 2003 onwards, seems to be rather in saturated
condition recently. In 2005, sales competitions among big soft drink manufactures were so severe that so-called
“Green Tea Sales War” happened. In 2004 to 2005 time, big soft drink manufactures developed new products
successively and their sales promotion was quite active. The negative reaction of this tendency is seen in the
business plan of such manufactures to limit their activities to the renewal of existing products. Itoen, the biggest
in the industry estimates 2006 market increase at as small as 5%, not reaching double-digit expansion attained in
last several years.

 [Black Tea]
  The black tea production in Japan is negligible only for consumption at cultivation area. The domestic market
depends on import for nearly total demand. The consumption of black tea is nearly 10% in total teas. The
percentage is same level for a long time. The per capita consumption of black tea is about 120 gram per year,
stable for recent several years. The peak figure of 157 gram per person consumption in 1997, continues to reduce
to the present. Annual consumption of total black tea is stable at more or less 15,000 tons in these 5 years in. (see
Fig. 2)
  Black tea can be roughly classified into leaf tea for industrial use and wrapped type for consumers (leaf tea, tea
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bag). In 2005, industrial leaf tea was consumed by 49.1%, wrapped tea bag type 36.3%, and wrapped leaf tea
type 14.7% (survey : Nikkan Keizai Tsushinsha). Up to 2002, the consumption of wrapped type black tea (both
leaf tea and tea bag) was upward tend, whereas, from 2003 on tendency is for decrease. The products for
industrial use, after registering the lowest consumption in 2002, is in steady recovering process.
  The demand in quantity in 2005 is nearly half for processing, 40% for volume sales, 8% for commercial use
and 2% for gift. (survey: Nikkan Keizai Tsushinsha) For processing use of the product, as used for the raw
material for instant black tea or black tea drinks, after the peak demand year of 1997, consumption continued
diminishing until 2001 to turn to gradual increase as from 2002.
  The volume sales market covers super markets or retail stores, which once occupied more than 50% share in
total black tea demand, lowered its share to 40% these days due to the increase of processing use market. Volume
sales market is supplied to maximum share by national brands like Lipton, Twinnings, Nittoh, or Brookbond,
which provide nation-wide supply channels.
  The commercial use market is food service, hotels, restaurants and tearooms. In this section, formerly the
products were supplied in bigger package (restaurant pack). These days, the supply is diversified to flavored teas
or independent packages by different origins.
  The gift pack is for sale at department stores and high grade specialized retail shops, which saw the 8% share in
1990, reduced its share to as low as 2% recently mainly due to lack of originality, to slow penetration into family
and diversification of gift items. The main gift brands are of English manufacturers, the most black tea
consuming country, to which other brands from different countries or porcelain brand like Wedgewood are
challenging for their share.

 [Partly Fermented Tea – Oolong tea etc.]
  Oolong tea, the typical partly fermented tea, is produced in limited quantity seen on a global scale. It is grown
only in a few places in Fujian Province, Guangzhou Province in China and in Taiwan. The Japanese demand is
totally met by import, of which 95% is supplied by China. Oolong tea production in China is also limited to 5%
in total tea supply.
  There were two consumption boom periods in the past years. After the second boom period beginning in 1984,
the product demand is in stable increase following the calm down as from 1986. The peak consumption was
registered in 2001 at 27,000 tons, or 18% share in total tea products. After this period, the share continued to
decline due to the strong challenge by green tea drinks to register in 2005, 20,000 tons consumption, lowering
the share to 14%. During the second booming period, demand of oolong tea increased remarkably as canned
drink thanks to its healthy image appreciated as non-sugar added drink. Although PET bottles were introduced as
soft drink packaging, the consumption is stagnant due to the challenge by green tea drinks. The competition
comes not only from green tea but also from drinks of different materials like brown rice, du-zhong, adlai or
“dokudami”, Houttuynia cordata leaves. The drinks of mixed materials are also in the market. The oolong tea is
losing its appreciation as health drinks due to the diversification of raw materials employed.
  In 2004, the market saw the recovery of consumption to some extent thanks to the introduction into market of
“Healthya Oolong-cha ” (brand name, healthy oolong tea) by Kao Co., Ltd. The figure dropped once again in
2005. In June, 2006, Suntory began marketing of “Kuro Oolong-Cha” (brand name, black oolong tea) to regain
the lost share supported by the registration as “foods for specified health uses” for its effect of blocking
absorption of neutral fats (triglyceride) in human body. The product met favorable acceptance of the consumers
resulting in upward revision of the original sales plan of the year. This fact is regarded by the industry as the
beginning of forthcoming oolong tea boom.
  As partly fermented tea, pauchong tea from Formosa and pu-erh tea from China are classified in addition to
oolong tea. Especially, tea from China are drawing attention of consumers such that specialized Chinese tea
shops are appearing.

 [Herb Tea – Mate etc.]
  “Herb” are medicinal or flagrant grasses of which lavender, chamomile, and mint are typical. Recently,
products prepared other than leaf parts draw attention as rosehip (fruits) and hibiscus (flower). Herbs are
accepted among young female generation as fashionable healthy drink or stress reliever. Mate is from leaves of
shrub of the name, prepared in process after roasting lightly and ground in powder form. Mate, grown in South
American Countries as Brazil, Argentine, and Paraguay, is rich in abundant minerals and vitamins and is
appreciated as the healthy tea drink. Although it is regarded as one of the three beverages worldwide, the
Japanese import is scarce, the share being nearly nothing.
  Other than mate, rooibos is drawing attention of consumers as a kind to tea recently. This is the fermented

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leaves of conifer natural in South Africa, rich in mineral said to provide improving effect of allergies. Recent
tendency is that tea with allergic alleviating ingredient like sweet tea (tian cha) are accepted widely.
                                                    Fig. 2        Consumption of tea in Japan
                            2001                           2002                         2003                          2004                       2005
                    Volume          Share          Volume          Share          Volume        Share            Volume       Share         Volume         Share
Green tea             106,940           71%             95,228         71%          101,382          73%          116,823        75%         114,091          76%
Black tea               16,500          11%             15,029         11%           15,500          11%           16,299        10%          15,445          10%
Oolong tea              27,136          18%             24,668         18%           21,389          15%           22,903        15%          20,730          14%
Mate                        58           0%                54           0%              21            0%              28          0%             21            0%
Total                 150,634          100%         134,979            100%         138,292         100%          156,053       100%         150,287         100%
 Unit: tons
  (Note) Green tea figures represent domestic supply volume (domestic production + import - export) Import volumes for other teas are
 regarded as consumption due to unknown export quantity
                                                                         Source: Statistics of Tea Products, Japan Tea Central Association
                                                                                                         Trade Statistics, Ministry of Finance


                                                 Fig. 3      Production of soft drinks by Items

                                        (thousand kl)
                                       3,500

                                       3,000
                                                                                                                                       Green tea drinks
                                       2,500
                                                                                                                                       Oolong tea drinks

                                       2,000                                                                                           Blended tea drinks
                                                                                                                                       Black tea drinks
                                       1,500                                                                                           Barley tea drinks
                                                                                                                                       Other tea drinks
                                       1,000
                                                                                                                                       Coffee drinks, etc.
                                        500

                                            0
                                                    2001           2002             2003            2004          2005       (year)


                                                                                                     Yearly        Per capita                 Sales
                             2001           2002           2003            2004        2005          Change Share consumption                 Value
Tea category Total            4,828             4,798       4,959           5,511          5,585           101        31               44     972,990
Green tea drinks              1,421             1,568       1,783           2,365          2,648           112       15                21     472,770
Oolong tea drinks             1,398             1,217       1,174           1,089          1,030           95         6                 8     147,188
Blended tea drinks               804             776             854          876             743           85        4                 6     148,593
Black tea drinks                 781             743             795          789             850          108        5                 7     164,241
Barley tea drinks                257             232             219          238             204           86        1                 2      23,689
Other tea drinks                 167             262             134          154             110           71        1                 1      16,509
Coffee drinks, etc.           2,688             2,757       2,743           2,717          2,896           107       16                23     924,101
Carbonated drinks             2,649             2,608       2,575           2,754          2,734           99        15                21     538,453
Fruit drinks etc.             2,025             2,090       1,562           1,765          1,828           104       10                14     376,439
Mineral waters                1,021             1,075       1,133           1,296          1,428           110        8                11     114,503
Sport drinks                  1,499             1,540       1,439           1,380          1,650           120        9                13     289,880
Other soft drinks             1,149             1,299       1,751           1,786          1,725           97        10                14     379,948
Total                        15,859         16,167         16,162          17,209       17,846                      100               140 3,596,314
Yearly change                    102             102             100          107             104          104                        104            100
Unit : production = thousand kl, yearly change over previous year = %, per capita consumption = liter, sales value = \ million,

Note: In some cases, total figures will not make right by treatment of count fraction
                                            Source: All Japan Soft Drinks Manufacturers Association (reference statistics of soft drinks etc.)

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C-3. Coffee & Tea



 (3) Distribution System and Business Practices in Japan
 1) Distribution Channels for Coffee
  Japan does not produce coffee beans at all and rely on imports for its entire quantity. Imported by importers or
processors, raw beans are distributed to respective processors (regular coffee, instant coffee) or to green coffee
dealers.
  In regular coffee market, the three major manufactures supply more than half of commercial and family use
demands. The manufacturers operate in producing countries their own cultivation farms and they import raw
beans. Numerous small-scale makers (roasters) purchase raw beans from green coffee dealers. In commercial use
market, roasters process raw beans to supply coffee shops, hotels and restaurants of the region. The family use
coffee is normally marketed at super markets, department stores, specialized retailers and coffee shops, to which
processed foods distributors offer their function for the manufacturers. In these days, purchases through internet
on-line shopping are in mode.
  The production of instant coffee requires big investments for processing machineries. Only three manufactures
(Nestle, AGF, Takasago Coffee) operate their own facilities to process raw beans to the products. Other makers
import either powdered bulk products and repack into small packages or final retail packs. The products are
distributed to mass sales stores and retail shops through their agents, sole distributors and regional distributors.
  Coffee essence and extracts are supplied to food makers by trading companies. Thence after processing, the
wholesalers handle the products to retailers.


                                     Fig. 4      Distribution channels for coffee products



                                                           Producer nation



                                        Import trading companies


                            Manufacturers                   Green coffee                    Manufacturers
                           (Instant coffee)                   vendors                     (Coffee roasters)



          Primary wholesaler               Food product                     Primary        Manufacturers’        Food product
                                           manufacturer,                   wholesaler          agents              makers
                                       vending machine
                                              operator
           Secondary                                               Secondary
          wholesaler                                               wholesaler



              Retailers                                                 Retailers           Restaurants
                                                                   (Mass merchandisers,   (Fast food outlets,
                                                                    convenience stores,   hotels, restaurants,
                                                                   department stores,      coffee shops)
                                                                    other food service
                                                                         outlets)
                                                                                                                    For food
             Home use                   Commercial use                     Home use       Commercial use         processing use

                          Instant Coffee                                                  Regular Coffee




 2) Distribution Channels for Tea
 [Green Tea of Domestic Production]
  Distribution channel of domestic green tea is variable depending on the producing regions. The following
explanation is the example of Shizuoka Prefecture.
  Green tea is traded normally in stage of raw leaves, semi-processed or final refined products. Raw leaf trade is
between cultivators (farmhouses) and processors to unrefined products. As big investment is required to prepare
processing machines, it is sometimes difficult for small-scale cultivators to establish their own facilities. We can
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observe the specialization in this stage. The semi-processed tea trade is between semi-processors and refiners, of
which trade channels are very complicated. The functions of refiners include not only collection and distribution
of products but also even finance, warehousing, supply control, or marketing. They are quite influential to
distribution system.
  Recently, the distribution channel has become diversified through mass sales stores, convenience stores, direct
sales at cultivation regions, mail orders, or by use of internet.


               Fig. 5    Distribution channels for domestic green tea (example of Shizuoka Pref.)


                                                                                   Cultivator (farmhouse)


                Production of other regions

                                                                       Semi-processing (own processing, purchase of semi-processed,
                                                                      processing association, agricultural co-operatives, enterprises etc.)


  Mediators, brokers, etc.        Tea transaction market


                                                                                         Agricultural co-operatives




                                                                          Mediators, brokers                     Tea transaction market




                  Final processors and wholesalers (tea dealers, agricultural co-operatives, cultivators etc.)




                Retail sale (tea retailers, super markets, convenience stores, department stores, own sales by
                                      cultivators, mail orders, direct sale to consumers, etc.)




                                                         Consumers



 [Imported Teas]
  The import and distribution channels of teas are somewhat different by product type. The following explanation
is generally accepted as normal channels.
  Regarding black tea, almost all black tea makers have sole agency contracts with major foreign tea
manufacturers and they are in co-operation in use of trademarks, and trade designs as well as repacking works
and distribution. There are three major black tea companies. (Mitsui-Norin, Unilever Japan, Kataoka Bussan).
They import tea in bulk packing and repack the products into small leaf tea packaging or tea bag. They also
process into drinks for distribution.
  China grants export license of oolong tea to four provinces such as Fujian, Guanzhou, Honan and etc. Japan
imports oolong tea from Guangzhou other than Fujian. A demand for Chinese tea such a oolong tea,is for
industrial use as raw materials of drinks of PET bottle or canned packing. Imported by specialized and general
trading companies, the tea is processed to drinks by brand owner called packer and delivered to respective
beverage manufacturers.
  More than 80% of tea products other than black tea drinks are marketed packed in PET bottles and the products
are put in sale at super markets, convenience stores, drug stores or discount sores, etc. (Statistics of Soft drinks
by All Japan Soft Drinks Manufacturers Association).




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                                    Fig. 6      Distribution channels for imported teas


                                                         Tea plantation


                                    Importers                                            Foreign brand makers


                       For processing, Instant tea                                   Processed leaves




                                                                                  Packer (brand owner)


                          Drink maker
                        Food processor                   Secondary                    Primary wholesaler
                                                         wholesaler

                            Food service,                                 Departmentstore,tea shop,food store
                      vending machine operator


                                                          Consumers




2. Trade Trends
 (1) Import Trends in Japan
 [Coffee]
  As Japan is not a producing country of coffee beans, all supply is met by import. More than 90% of coffee
import is as raw beans. As coffee products are supplied domestically after roasting, blended and mixed as per
respective usages, there are few rooms for import of regular coffee, instant coffee and coffee essence or extract.
  Import of raw beans increased both in volume and value. The import volume in 2005 marked 413 thousand
tons, which is the highest volume ever attained. This corresponds to 103.1% of the import the year before. As
import value, the figure grows to attain 146.6%. The unit price increase helped attain higher percentage of value
compared to the volume figure. The price of coffee beans is made following the future fixings at New York
Market as international index. Thus, when New York price sets higher, it influences prices of beans world over.
After autumn in 2004, New York future price continued higher fixing, which resulted in sudden rise of spring
2005 quotation. The prospect of worsening in cultivate conditions in Brazil, the biggest producer country helped
the trend.
  In March 2006, domestic big suppliers made it public respectively to revise their shipment prices of regular
coffee for home use. Following this movement, the retail prices at super markets began to reflect the influence
with higher price tags. This substantial increase of raw beans price occurred after 11 years continuation of low
quotations as from 1999.
  The import shares of regular coffee, instant coffee and essence or extract of coffee are in small percentages.
However, the import volume and value in 2005 increased over the year before. Import volume of the of regular
coffee recorded the highest of 4,776 tons in these 5 years time.




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                                             Fig. 7     Trends in Japan’s coffee imports
                       [Total import value]                                                      [Import value by category]

  (\ million)                                                               (\ million)
  140,000                                                                   120,000
  120,000                                                                   100,000
                                                                                                           Coffee green beans
  100,000                                                                    80,000
   80,000
                                                                             60,000
   60,000
                                                                             40,000
   40,000
                                                                             20,000                      Instant coffee
   20,000
          0                                                                         0
                2001     2002       2003     2004       2005                              2001     2002        2003         2004       2005
                                                         (year)                                                                            (year)
                                                    Value                                                                 Volume
                           2001        2002         2003           2004           2005        2001        2002             2003       2004           2005
Green coffee beans         66,028      66,125       62,593         68,952        101,052     381,745     400,771          377,647    400,977        413,264
Regular coffee              3,894       4,294        4,142          3,848          4,507       3,630       4,070            4,292      4,150          4,776
Instant coffee              7,531       7,773        7,629          5,964          7,227       8,387       8,465            9,057      7,633          7,778
Coffee extract and            5,794     5,144         4,101         4,290            5,214    16,034       14,379          11,566      12,137        13,398
essence
          Total              83,247    83,337       78,465         83,054        118,000     409,797     427,685          402,563    424,897        439,217
Unit: value = \ million, volume = tons                                                                 Source : Trade Statistics, Ministry of Finance

                                    Fig. 8    Trends in coffee imports by category in 2005

                                                Value                                            Volume                             Average unit price
                                                                  Yearly                                         Yearly
                                Value           Share                               Volume       Share                              2004            2005
                                                                  chang e                                        change
Green coffee beans                 101,052         85.6%        146.6      413,264         94.1%         103.1          172            245
Regular coffee                       4,507          3.8%        117.1        4,776          1.1%         115.1          927            944
Instant coffee                       7,227          6.1%        121.2        7,778          1.8%         101.9          781            929
Coffee extract and essence           5,214          4.4%        121.5       13,398          3.1%         110.4          353            389
            Total                  118,000        100.0%        142.1      439,217       100.0%          103.4          195            269
Unit : value = \ million, volume = tons, yearly change over previous year = %, average unit price = \ per kg  
                                                                                            Source : Trade Statistics, Ministry of Finance

 [Tea]
  Imported tea arrives in two types, i.e. in small containers of less than 3 kg net weight for direct sales to
consumers and bulk packs as raw materials for processing. Also the import of instant tea and essence or extract
type is observed. The major import consists of bulk pack for processing occupying 80 to 90% of respective items
of green tea, black tea and partly fermented tea.
  Total import value of teas, after peak year of 2001, continued diminishing trend with small recovery in 2004.
The 2005 import figure declined to 90.7% over the year before. Total import volume of teas continued to
decrease until 2003 with small recovery in 2004. The 2005 import volume declined to 90.7% compared with the
year before. By items, instead of partly fermented tea with 20 thousand tons level, occupying nearly 40% share,
followed by black tea and green tea in similar volume.
  Teas, other than green tea, rely almost all supply on imports. Import level is influenced by the demand created
in the market, especially drinks productions demand determine the required quantity for imports. 2003 onwards,
import of green tea increased following the substantial increase of green tea drinks. Oolong tea, the typical
product of partly fermented tea, lowered its share forced by increased demand of green tea drinks. The
production of oolong tea drinks in 2005 decreased to around 70% of that of 2001. As a result, imports volume of
partly fermented tea lowered its share to 76% of the 2001. However the imports of products packed in small
containers for direct sales to consumers are expanding to show 2005 import at 108.8% over previous year.
Whereas, import of bulk packs for industry reduced its import volume to 88.4% compared to the figure of the
year before. Import volume of black tea stays without much variation due to the fact that the production of black
tea drink is stable.

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C-3. Coffee & Tea

                                                     Fig. 9     Trends in Japan’s tea imports

                          [Total import value]                                                          [Import value by category]
  (\ million)                                                                   (\ million)
  30,000                                                                       12,000
  25,000                                                                       10,000                                                    Black tea

  20,000                                                                        8,000
  15,000                                                                        6,000                                           Partly fermented tea

  10,000                                                                        4,000
                                                                                                                                         Green tea
   5,000                                                                        2,000
         0                                                                             0
                2001         2002       2003         2004      2005                              2001      2002          2003       2004        2005
                                                                    (year)                                                                            (year)


                                                             Value                                                                 Volume
                                     2001       2002         2003            2004             2005        2001       2002            2003            2004       2005
Green tea (in containers)              160        216          226             295              342         215        257             373             754       1,062
Green tea (industrial                5,535       3,631         2,429          4,503            4,082      17,525     11,533           9,869          16,241    14,125
tea in bulk)
Black tea (in containers)            4,498       4,128         3,671          3,857            3,881       2,123         1,940        1,845           2,016     2,164
Black tea (industrial                4,951       4,928         4,707          4,794            4,786      13,058     13,089          13,655          14,283    13,281
tea in bulk)
Partly femented tea (in                923       1,054          849            798               857       1,857         2,287        2,160           2,372     2,581
containers)
Partly fermented tea                 9,333       8,486         6,736          6,702            6,063      25,279     22,381          19,229          20,531    18,149
(industrial tea in bulk)
Mate                             24        18                    12              13                9          58         54              21              28        21
Instant tea                     991       888                 1,800           2,986            2,024         782        590           1,059           1,821     1,420
Extract and essence           1,283     1,126                 1,333           1,296              854       1,179        735             907           1,024       758
          Total              27,698   24,475                 21,762          25,244           22,898      62,074     52,867          49,119          59,070    53,561
Unit : value = \ million, volume = tons                                                                      Source : Trade Statistics, Ministry of Finance


                                             Fig. 10     Trends in tea imports by category in 2005
                                                       Value                                               Volume                             Average unit price
                                                                         Yearly                                            Yearly             2004             2005
                                       Value           Share                                  Volume        Share
                                                                         change                                            change
Green tea (in containers)                      342          1.5%             116.1               1,062            2.0%           140.9                 391            322
Green tea (industrial tea in bulk)           4,082          17.8%             90.7              14,125        26.4%               87.0                277             289
Black tea (in containers)                    3,881          17.0%            100.6               2,164            4.0%           107.3               1,914       1,794
Black tea (industrial tea in bulk)           4,786          20.9%             99.8              13,281        24.8%               93.0                336             360
Partly fermented tea (in                857         3.7%        107.3         2,581                               4.8%           108.8                 336            332
containers)
Partly fermented tea                  6,063        26.5%         90.5        18,149                           33.9%               88.4                326             334
(industrial tea in bulk)
Mate                                      9         0.0%         66.5            21                               0.0%            74.8                 460            409
Instant tea                           2,024         8.8%         67.8         1,420                               2.7%            78.0               1,640       1,425
Extract and essence                     854         3.7%         65.9           758                               1.4%            74.1               1,266       1,126
             Total                   22,898       100.0%         90.7        53,561                          100.0%               90.7                427             428
Unit : value = \ million, volume = tons, yearly change over previous year = %                                 Source : Trade Stastistics, Ministry of Finance




 (2) Principal Exporters to Japan and ASEAN’s Position
 [Coffee, Overall View]
 Import share in 2005 by countries and areas (in money basis) is divided 27.8% to Brazil (¥32,700 million),
23.8% to Colombia (¥28,000 million), 10.8% to ASEAN (¥12,700 million), and 3.2% to EU (¥3,800 million). In
volume, import of 28.7% goes to Brazil, 22.0% to Columbia, 20.1% to ASEAN and 0.6% to EU. The share of
ASEAN is 20% in volume and 10% in value, which shows the arrivals of cheaper unit prices.
Marketing Guide for Exporters to Japan
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                                                                                                              C-3. Coffee & Tea

  As export countries of coffee to Japan, more than 40 countries are counted. The main exporters to Japan of all
kinds of coffee products together are Brazil, Colombia and Indonesia. These three countries supply more than
60% of imports by quantity. On value basis in 2005, Brazil, Columbia, Guatemala and Indonesia were the
principal exporting nations. The first two countries boast share of 50%. By comparison of import value,
Guatemala is listed to third place by their supply of highly appreciated prices, beating Indonesia to fourth, whose
supply is of rather lower unit prices.
  Imports from ASEAN, in volume of all kinds of coffee products, after peak year of 2001 with 100,000 tons,
continued diminishing until 2003. However, 2004 onwards, the level of 88,000 to 89,000 tons is maintained. In
money terms, total value was stable until 2004 with ¥10,000 million level.
  The 2005 import amount counted ¥12,700 million as abrupt increase. Considering the imported volume of
rather similar to the year before, increase of amount was brought by the upward revision of unit price. (see Fig.
13)
  Among ASEAN, total imports from Indonesia and Vietnam together show 19.5% in amount. This is the almost
all from total ASEAN countries. Imports from Malaysia and Philippines are observed but in limited volume to
show less than 1% share respectively. The volume of coffee production in Vietnam in 2004-2005 period was
ranked third after Brazil and Columbia expanding its coffee exports after the latter half of 1990’s. Main trade
counterparts of Vietnam are Germany, U.S.A. and Great Britain. The export to these 3 countries occupies 44.5%
of total export in money (2004). Import volume of Vietnamese is stable at 25,000 to 30,000 tons level annually
without remarkable fluctuations. Import from Vietnam is of Robusta species, which is of economical value and
used for processing to instant coffee or canned drink, different from high graded South American Arabica species,
for regular coffee consumption. Vietnamese coffee is not widely used in Japan due to its low distinction and
unstable quality resulted by poor technical applications.
  Coffee production of Indonesia in 2004/05 periods placed fourth next to Vietnam. In recent years, Vietnam is
successful in increasing coffee production, whereas Indonesia is stable and stagnant with its 400,000 tons level
yearly production. Import by Japan from Indonesia shows 13.1% in quantity placing the country as the main
trade counterpart of Japan. In money basis, the import share comes down to 7.3%. This lower share is reflected
in the main deal of cheaper Robusta species coffee. (see Fig. 11)


                        Fig. 11    Principal exporting countries and regions of coffee to Japan

                [Import value from major countries]                        [Share of import value in 2005]

  (\ million)
 35,000
                                          Brazil                                           ASEAN
 30,000                                                                                     10.8%      EU
                                                                                                       3.2%
 25,000                                         Columbia
                                                                  Others
                                                                  34.4%
 20,000
 15,000                                     Guatemala
 10,000
                                                                                                         Brazil
   5,000                                           Indonesia                                             27.8%
                                                                               Columbia
         0                                                                      23.8%
                2001    2002      2003   2004         2005
                                                         (year)




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C-3. Coffee & Tea

                       2001        2002        2003               2004                                     2005
                                                                                                                              Average
                      Value       Value       Value       Value      Volume            Value                   Volume
                                                                                                                              unit price
    Brazil             20,942      17,752      18,403      19,386     109,019      32,775       27.8%     125,855       28.7%       260
    Columbia           16,359      19,512      15,722      19,245        93,770    28,077       23.8%      96,827       22.0%         290
    Guatemala            6,355       6,827       5,694       6,083       27,561    10,172        8.6%      33,307        7.6%         305
    Indonesia            7,275       7,012       7,151       7,326       61,795     8,568        7.3%      57,490       13.1%         149
    Ethiopia             4,785       4,894       4,761       6,277       37,934     7,849        6.7%      30,476        6.9%         258
    Vietnam              1,943       2,000       1,913       2,183       25,803     2,918        2.5%      28,322        6.4%         103
    Tanzania             1,889       1,401       1,825       1,796        8,610     2,760        2.3%      10,011        2.3%         276
    U.S.A.               2,908       2,953       2,756       2,373        2,536     2,519        2.1%        2,559       0.6%         984
    Costa Rica          1,420       1,575        1,849       1,714        8,438     2,144        1.8%        7,305       1.7%         293
    Others             19,370      19,410      18,393      16,669        49,430    20,218       17.1%      47,064       10.7%         430
         Total         83,247      83,337      78,465      83,054     424,897     118,000      100.0%     439,217     100.0%          269
        (E U)            3,946       3,727       4,023       3,288        2,735     3,814        3.2%        2,841       0.6%       1,342
      ( ASEAN)         10,443      10,124      10,155      10,299        89,147    12,701       10.8%      88,477       20.1%         144
    Unit : value = \ million, volume = tons, average unit price = \ per kg                  Source : Trade Statistics, Ministry of Finance



 [Raw Coffee Beans, Regular Coffee]
  The import share of raw coffee beans in 2005 (in money basis) is 53% for major two countries, i.e. Brazil and
Columbia, followed by Guatemala, Indonesia and Ethiopia in their order with respective share less than 10%.
ASEAN countries in total occupy 11.0%, which is 121.0% over previous year but increase ratio is lower than
those major supply countries (Brazil 183.6%, Colombia 149.1%, Guatemala 167.9%). Recently, demand of
regular coffee is upward trend supported by consumers real item selection. The tendency leads to the import from
South American countries of beans of Arabica species suit for high graded regular coffee products.
  In total imports from ASEAN, Indonesia is the biggest supplier with share of 74% in money basis. The increase
ratio of import value from Indonesia is 117.2% over previous year. The ratio is lower in comparison of volume
increase. This is because the import from Indonesia is of cheaper Robusta species, which is suitable as materials
of instant coffee and canned coffee drinks.
  Regular coffee products (roasted) is imported mainly from U.S.A., Italy, Great Britain and Brazil, U.S.A. being
with the biggest share of 45.0% in 2005 (in money basis). The import value from all ASEAN countries counts
¥200 million, which corresponds to mere 4.5% share. Amount increased to 116.6% over previous year, as was
the case for other supplier countries. However, the figure is not big enough to be included among 5 major
countries of ratio increase. Among ASEAN countries, only Indonesia and Vietnam exported regular coffee to
Japan, whereas other countries have registered almost no sales at all.

 [Instant Coffee, Coffee Extract and Essence]
  Brazil, Germany and Colombia are the first top 3 from which instant coffee was imported in 2005 with share of
68.5% (on money basis). Other countries than the above three were with share of 10% less. The import amounts
of instant coffee exceeded 100% per previous year in all countries registered. The characteristic of import price is
that the average unit price ex European countries as Germany and Switzerland is twice to three holds higher than
the other supplying countries.
  ASEAN share in 2005 is no more than 7.6%. Only three countries, Philippines, Indonesia and Thailand appear
in the statistics.
  As for import of coffee extract and essence, the top share of 50% is held by Brazil followed by Netherlands,
Malaysia, Columbia and Indonesia. The top four countries hold share of 95.4%.
  The total share of ASEAN is 16.1%, which figure is the highest among 4 coffee items. In 2005, the increase
over previous year attained the double figure of 200.5%. As the remarkable point, we can see in the statistics,
two countries, Malaysia and Indonesia are included in top 5 trade counterparts. The share of these two countries
among ASEAN is 96% in money terms.




Marketing Guide for Exporters to Japan
220
                                                                                                                             C-3. Coffee & Tea

          Fig. 12      Principal exporting countries and regions of coffee by category(2005, in value basis)


                                    Coffee green beans                                                Regular coffee
                                                     Yearly Average                                                        Yearly Average
                 Country           Value    Share                                Country        Value           Share
                                                     change unit price                                                     change unit price
      1       Brazil               27,253      27.0%      183.6         242 U.S.A.                  2,028        45.0%       108.8         865
      2       Columbia             26,244      26.0%      149.1         278 Italy                    482         10.7%       112.0        1,168
      3       Guatemala            10,027       9.9%      167.9         302 U.K.                     445          9.9%       100.1        2,141
      4       Indonesia             8,221       8.1%      117.2         145 Brazil                   281          6.2%       152.9         544
      5       Ethiopia              7823        7.7%      125.0         257 Netherlands              248          5.5%      4251.0        1,096
       ( ASEAN Total)              11,105      11.0%      121.0         130                          203          4.5%       116.6         706

                                      Instant coffee                                         Coffee extract and essence
                                                        Yearly Average                                             Yearly Average
                 Country           Value      Share                              Country       Value     Share
                                                        change unit price                                          change unit price
      1       Brazil                2,655      36.7%      119.9         754 Brazil                  2,586        49.6%       120.6         282
      2       Germany               1,183      16.4%      127.0       1,656 Netherlands             1,123        21.5%       100.7        1,597
      3       Columbia              1,116      15.4%      117.4         899 Malaysia                 696         13.3%       234.4         380
      4       Ecuador                 611       8.5%      149.6         696 Columbia                 572         11.0%       106.2         503
      5       Sw itzerland            609       8.4%      136.8       2,867 Indonesia                112          2.2%       112.2         317
       ( ASEAN Total)                 551       7.6%      104.5         722                          841         16.1%       200.5         368
  Unit : value = \ million, quantity = tons, average unit price = \ per kg                   Source : Trade Statistics, Ministry of Finance




                                    Fig. 13    Coffee imports from ASEAN by country/category



                                    [Value]                                                                 [Volume]
                                                                       (tons)
(\ million)                                                          120,000
15,000
                                                                                 101,199
                                                         12,701      100,000               91,275                 89,147     88,477
              10,443                                                                                   82,833
                          10,124     10,155    10,299
                                                                      80,000
10,000
                                                                      60,000

 5,000                                                                40,000

                                                                      20,000

       0                                                                     0
              2001        2002       2003      2004      2005                     2001     2002        2003        2004      2005
                                                                                                                                (year)
                                                            (year)
                                                                                                                                      )




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C-3. Coffee & Tea

                                                                                                                                                       Average
                                                            Value                                                   Volume
                                                                                                                                                      unit price
                                      2001       2002       2003        2004       2005       2001       2002        2003       2004       2005         2005
                Coffee green beans     8,957      8,653      8,723       9,178     11,105     98,450     88,728     80,498      86,908     85,139           130
                Regular coffee            106       177       143          174       203         99        182         155        247        288            706
                Instant coffee            622       616       851          527       551        630        569       1,033        752        763            722
    ASEAN
     Total      Coffee extract            758       678       437          419       841       2,020      1,795      1,147       1,240      2,287           368
                and essence
                      Total           10,443     10,124     10,155      10,299     12,701 101,199        91,275     82,833      89,147     88,477           144
                  Share in total       12.5%     12.1%      12.9%       12.4%      10.8%      24.7%      21.3%       20.6%      21.0%      20.1%
                Coffee green beans     6,922      6,658      6,828       7,016      8,221     67,399     58,177     58,039      61,149     56,851           145
             Regular coffee                95       171       130          150       154         91        175         134        186        174            885
             Instant coffee               242       147       155          60         80        321        195         256         80        111            725
   Indonesia Coffee extract
                                           15        36        37          100       112         40        102         115        380        354            317
             and essence
                   Total               7,275      7,012      7,151       7,326      8,568     67,851     58,650     58,545      61,795     57,490           149
               Share in total           8.7%      8.4%       9.1%        8.8%       7.3%      16.6%      13.7%       14.5%      14.5%      13.1%
                Coffee green beans     1,938      1,991      1,890       2,160      2,870     29,727     30,533     22,446      25,743     28,210           102
                Regular coffee               3          4      13          23         48             5          6       21         60        113            423
   Vietnam      Instant coffee               3          5          9           -          -          6      11          23             -          -            -
                      Total            1,943      2,000      1,913       2,183      2,918     29,738     30,551     22,489      25,803     28,322           103
                 Share in total         2.3%      2.4%       2.4%        2.6%       2.5%       7.3%       7.1%        5.6%       6.1%       6.4%
                Regular coffee               1          1          0           1          0          0          1           0          0          0       2,919
            Instant coffee                 38        21        16          12             7      66         37          30         24         12            562
            Coffee extract                739       623       377          297       696       1,974      1,626        994        827       1,830           380
   Malaysia
            and essence
                  Total                   778       645       394          309       703       2,040      1,664      1,024        851       1,842           382
              Share in total            0.9%      0.8%       0.5%        0.4%       0.6%       0.5%       0.4%        0.3%       0.2%       0.4%
                Coffee green beans           -          -           -          -          3          -          -           -          -          1       1,831
              Regular coffee                 -          -           -          -          0          -          -           -          -          0       1,990
  Philippines Instant coffee              338       443       622          405       419        237        326         676        579        596            704
                     Total                338       443       622          405       422        237        326         676        579        597            707
                  Share in total        0.4%      0.5%       0.8%        0.5%       0.4%       0.1%       0.1%        0.2%       0.1%       0.1%
                Coffee green beans         96           -          3           1          7    1,308            -       10             6      29            258
                Regular coffee               1          -           -          -          -          1          -           -          -          -            -
   Thailand     Instant coffee               -          -      45          33         31             -          -       41         53         30          1,030
                      Total                97           -      48          34         38       1,309            -       51         58         59            649
                  Share in total        0.1%            -    0.1%        0.0%       0.0%       0.3%             -     0.0%       0.0%       0.0%
              Singapore                     9       24         26          40         47             8      85          46         49        118            402
              Myanmar                        2          -           -          -          -      17             -           -          -          -            -
                Laos                         -          -           -          -          -          -          -           -          -          -            -
              Cambodia                       -          -           -          -          -          -          -           -          -          -            -
               Brunei                        -          -           -          -          -          -          -           -          -          -            -
  Unit : value = \ million, volume = tons, average unit price = \ per kg                                   Source : Trade Statistics, Ministry of Finance


 [Teas, Overall View]
  The top three countries from which Japan imports tea are China, Sri Lanka and India. The share of 79.3%
(value) is registered by these three countries. Especially China is by far the bigger supplier in this category,
registering in 2005, 36,000 tons shipments (67.2%) value to ¥11,760 million (51.4%). The figures are mostly for
green tea and partly fermented teas. On the other hand, main arrivals from Sri Lanka and India are black tea. The
import value from these two countries for last 5 years remained steady without remarkable fluctuation. (see Fig.
14)
  Among ASEAN countries, Indonesia gained ¥410 million (1.8% share) and ranked in eighth position. In terms
of volume, with the shipment of 1,200 tons, leveling up the share to 2.3% and placed fifth rank. The main import
category is black tea (industrial tea in bulk).
  Imports of tea from ASEAN total value in 2005 to ¥520 million (share 2.3%), and in volume wise 1,600 tons
Marketing Guide for Exporters to Japan
222
                                                                                                 C-3. Coffee & Tea

with 3.1% share. As from 2001 onward, ASEAN share in money were stable at 2 to 3% level without big
fluctuations. (see Fig. 14, 16)

 [Green Tea]
  Green tea arrives packed in two types of packaging, i.e. in small containers for retailing and industrial bulk
packs. Both types of packaging are supplied overwhelmingly by China in money basis. The supply share of
industrial bulk pack is 93.3%. Vietnam also supply packing of this type whose share is only 1.4%. For the supply
of green tea, China can be called as the monopolistic supplier. (see Fig. 15)

 [Black Tea]
  The top runner in black tea import is Sri Lanka in money basis both for small container packs and industrial
bulk packs. Especially, the import amount of industrial bulk pack represents half of the figure by ¥2,300 million.
The following runners up are India and China. However, the import amount from Sri Lanka and India shows
78.7% share, which are by far bigger than the third ranked China and other countries. Sri Lanka is the most
popular producing country of black tea, widely known as “CEYLON TEA” among Japanese consumers. India is
also known for its supply of “DARJEELING TEA”, one of the three most accepted teas in the world.
  Among ASEAN countries, Indonesia gained fifth position by shipment of industrial bulk pack value to ¥150
million (3.2% share). Import value of industrial bulk packs from ASEAN in all is ¥160 million (3.3% share),
contributed by Indonesia.
  The transition in money of arrivals in industrial bulk packs in the past 5 years shows the import level of 1,000
tons until 2004. 2005 registered 828 tons import, the figure less than thousand for the first time. 2005 import
from Vietnam doubled to 47 tons compared to the year before. On the other hand, Indonesia reduced its supply
volume considerably to 781 tons. As ASEAN total, the figure resulted in reduced 828 tons arrivals against 1,151
tons of previous year (71.9%). (see Fig. 16)
  Black tea of small container packs, is supplied in 2005 by the strongest three (Sri Lanka, Great Britain and
India) up to 75.6% share, comparison in money. China and France continued the ranks. The yearly change over
previous year in money shows the remarkable increase in China and India. In this category, no ASEAN country
is ranked within fifth position, total import amount registered being ¥220 million (5.8% share). Although total
import share of ASEAN is small, the import volume from the group is in favorably increasing trend to attain in
2005 arrival of 327 tons, which figure is the biggest in the past 5 years time. This is 165% figure over previous
year, reaching ¥220 million in value 159.9% over previous year. (see Fig. 15, 16)

 [Partly Fermented Tea]
  The import value of 2005 for this category, China overwhelmingly leads the supply both in small containers
packs and industrial bulk packs. The share of 85% for small containers packs and 91.6% for industrial bulk packs
gained primary position leaving other suppliers far behind. Taiwan and Hong Kong follow for small containers
packs, and industrial bulk packs are followed by Taiwan and Vietnam. Import figures show almost all arrivals
were from Asian countries. Summing up figures from China and Taiwan, the shares of two areas reach 98 to 99%
or total quantity, in both package types. The production of oolong tea is limited to certain areas.
  Even in China, the oolong tea is only 5% of total tea production. Another type of partly fermented tea is
pauchong tea, which is produced in Taiwan.
  The import of partly fermented tea from ASEAN is negligible both in small container packs and industrial bulk
packs with less than 1% share. Import of Vietnamese industrial bulk packs value to ¥30 million (0.5% share) is
recorded in the year.

 [Mate]
  The suppliers of mate are limited to three South American countries, Brazil, Argentina and Paraguay as the
product comes from shrubs of the mate in the region. Import volume of mate is decreasing. (see Fig. 15)

 [Instant Tea]
  2005 import value from major three countries, Kenya, India and China shared 89.7%. The import volume
fluctuate considerable year by year. No ASEAN country ranked within fifth position. The total import value from
ASEAN in 2005 registered ¥40 million (2.1% share). These several years registered the arrival of 100 tons yearly
level. Indonesia and Singapore are the suppliers of instant tea to Japan. (see Fig.15, 16)


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                                                                                                                223
C-3. Coffee & Tea

 [Coffee Extract and Essence]
  The import value in 2005 of this category is ¥480 million from China (top share of 56.9%) followed by ¥300
million from U.S. (35.6% share). The two countries are the monopolistic suppliers with total share of 92.5%. The
third supplier country is France but its share is small as 4.1%.
  Imports from ASEAN are negligible, occupying only 0.4% share. Most of the import was from Indonesia. (see
Fig. 15, 16)


                          Fig. 14     Principal exporting countries and regions of tea to Japan


                 [Import value from major countries]                                   [Share of import value in 2005]
  (\ million)
  20,000
                                                                                          Others         ASEAN EU
                                                        China                              11.1%          2.3% 7.3%
  15,000                                                                       India
                                                                               12.1%
  10,000

                                                      Sri Lanka
   5,000
                                                                             Sri Lanka                                       China
                                                       India                   15.8%                                         51.4%
         0
                2001   2002       2003       2004         2005
                                                             (year)

                       2001       2002        2003                    2004                                       2005
                                                                                                                                       Average
                       Value      Value       Value         Value         Volume             Value                   Volume
                                                                                                                                      unit price
    China              15,940      13,489      10,682          13,296        40,059       11,767       51.4%      36,007      67.2%          327
    Sri Lanka            3,377       3,279      3,364             3,861       9,442        3,607       15.8%       8,932      16.7%          404
    India                2,686       2,432      2,483             2,878       3,599        2,771       12.1%       3,229       6.0%          858
    Kenya                  460         321          848           1,316       1,671        1,260        5.5%       1,653       3.1%          762
    U.K.                 1,523       1,576      1,257             1,265         509        1,119        4.9%         476       0.9%        2,349
    Taiwan                 741         865          950            636          829         601         2.6%         782       1.5%          768
    U.S.A.               1,137       1,104          665            423          202         457         2.0%         174       0.3%        2,629
    Indonesia              387         287          391            370        1,442         410         1.8%       1,243       2.3%          330
    France                680         615           631            662          182         341         1.5%         111       0.2%        3,074
    Others                 766         507          491            537        1,135         567         2.5%         954       1.8%          594
         Total         27,698      24,475      21,762          25,244        59,070       22,898     100.0%       53,561     100.0%          428
         (EU)            2,364       2,381      2,047             2,119         907        1,679        7.3%         841       1.6%        1,997
      (ASEAN)              752         392          454            476        1,917         522         2.3%       1,644       3.1%          318
    Unit : value = \ million, volume= tons, average unit price = \ per kg                          Source : Trade Statistics, Ministry of Finance




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224
                                                                                                                   C-3. Coffee & Tea

       Fig. 15    Principal exporting countries and regions of tea by category (2005, in value basis)


                          Green tea (in containers)                                 Green tea (industrial tea in bulk)
                                                Yearly        Average                                          Yearly       Average
            Country       Value      Share      change        unit price    Country    Value      Share        change       unit price
   1     China                 269       78.7%        114.7         257 China                   3,808    93.3%       89.4         281
   2     U.K.                    48      14.1%        112.2       5,779 Brazil                   102      2.5%      101.1         744
   3     France                  16       4.8%        144.5       3,557 Vietnam                   57      1.4%       65.6         212
   4     India                     3      0.9%            -       1,953 Australia                 46      1.1%      290.8       5,431
   5     U.S.A.                    1      0.4%         80.7       4,613 Kanya                     33      0.8%      176.0         392
   ( ASEAN Total)                  1      0.3%            -     11,440                            57      1.4%       61.7         212

                         Black tea (in containers)                                 Black tea (industrial tea in bulk)
                                               Yearly Average                                                 Yearly Average
          Country         Value     Share     change unit price            Country     Value      Share      change unit price
   1   Sri Lanka             1,171       30.2%        107.8       1,214 Sri Lanka               2,345    49.0%      101.0         297
  2    U. K.                   928       23.9%         87.1       2,893 India                   1,423    29.7%      103.2         551
  3    India                   833       21.5%        138.3       3,471 China                    303      6.3%      102.7         572
  4    China                   268        6.9%        164.7       2,368 Kenya                    227      4.7%       95.2         223
  5    France                  260        6.7%         43.5       4,293 Indonesia                152      3.2%       75.2         195
  ( ASEAN Total)               225        5.8%        159.9         689                          160      3.3%       77.9         193

              Partly fermented tea (industrial tea in bulk)                   Partly fermented tea (industrial tea in bulk)
           Country/                          Yearly Average                Country/                          Yearly Average
            Region      Value     Share      change unit price              Region       Value    Share      change unit price
   1  China                    728       85.0%        110.7         291 China                   5,554    91.6%       89.7         319
   2  Taiwan                   113       13.2%         92.2       1,486 Taiw an                  468      7.7%       94.5         704
  3   Hong Kong                    8      1.0%         95.6       2,816 Vietnam                   33      0.5%      468.5         490
  (ASEAN Total)                    1      0.1%         76.6         853                           33      0.5%      468.5         490

                                       Mate                                                        Instant tea
                                                    Yearly Average                                               Yearly Average
        Country            Value        Share       change unit price      Country        Value         Share    change unit price
  1   Brazil                       6     63.3%         50.2         903 Kenya                    970     47.9%       94.0       1,867
  2   Argentina                    3     34.0%        400.8         209 India                    495     24.5%       55.8       1,292
  3   Paraguay                     0      2.7%         26.6         224 China                    351     17.3%       67.9       1,940
  (ASEAN Total)                    -            -         -            -                          42      2.1%      166.4         287

                            Extract and essence
                                              Yearly Average
          Country          Value     Share    change unit price
   1   China                   486       56.9%         49.5         734
  2    U.S.A.                  304       35.6%        125.2       6,753
  3    France                    35       4.1%        122.4       1,079
  ( ASEAN Total)                   3      0.4%         85.1         582
Unit : value = \ million, yearly change over previous year = %, average unit price = \ per kg
                                                                                        Source : Trade Statistics, Ministry of Finance




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C-3. Coffee & Tea

                                      Fig.16        Tea Imports from ASEAN by country / category


                                       [Value]                                                                  [Volume]
(\ million)                                                                    (tons)
  800         752                                                             3,000
                                                                                         2,477
                                                                              2,500
  600                                                            522
                                                                              2,000                                              1,917
                                      454           476
                                                                                                     1,615       1,668                           1,644
                           392
  400                                                                         1,500

                                                                              1,000
  200
                                                                               500

    0                                                                               0
              2001        2002        2003          2004         2005                    2001        2002        2003            2004        2005
                                                                    (year)                                                                        (year)



                                                                                                                                                                Average
                                                                 Value                                                   Volume                                 unit price
                                         2001        2002        2003        2004       2005       2001       2002        2003       2004          2005           2005
               Green tea (in
               containers)                      -           2           2           -          1          -          1           1           -             0       11,440
               Green tea
               (industrial tea in
               bulk)                          221          90           37      93         57        863        300         150           446            270          212
               Black tea (in
               containers)                    255          25       126        141        225        282         16         148           198            327          689
               Black tea
               (industrial tea in
               bulk)                          207          240      242        205        160      1,046      1,156       1,214          1,151           828          193
 ASEAN
  Total        Partly fermented
               tea (in containers)              4           1            -          1          1          2          0           -          0              1          853
               tea (industrial tea
               in bulk)                        11           2           9           7      33         34         13              8         11              67         490
               Mate                             -            -           -          -          -          -          -           -           -              -            -
               Instant tea                     46          30           39      25         42        239        125         147           105            146          287
               Extract and
               essence                          9           2            -          4          3      11             4           -          7              6          582
                         Total                752          392      454        476        522      2,477      1,615       1,668          1,917      1,644             318
                     Share in total          2.7%      1.6%       2.1%        1.9%       2.3%       4.0%       3.1%        3.4%          3.2%        3.1%
          Green tea (in
          containers)                           -            -           -          -          -          -          -           -           -              -            -
          Green tea (industrial
          tea in bulk)                         19          14           4           6          -      50         37          13            17               -            -
          Black tea (in
          containers)                         119           9       124        135        219        143             7      147           193            324          675
          Black tea (industrial
          tea in bulk)                        192          236      230        203        152        988      1,137       1,173          1,127           781          195
Indonesia Partly fermented tea
          (in containers)                       3           1            -          1          -          1          0           -          0               -            -

               Instant tea                     45          26           33      22         35        237        118         135            98            132          265
               Extract and
               essence                          9           2            -          4          3      11             4           -          7              6          582
                         Total                387          287      391        370        410      1,430      1,303       1,469          1,442      1,243             330
                     Share in total          1.4%      1.2%       1.8%        1.5%       1.8%       2.3%       2.5%        3.0%          2.4%        2.3%
                                                                                                                                                  (To be continued)




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226
                                                                                                                                   C-3. Coffee & Tea

                                                                                                                                                      Average
                                                          Value                                                     Volume                            unit price
                                    2001       2002       2003        2004       2005       2001         2002        2003       2004       2005         2005
           Green tea (in
           containers)                     -          1          2           -          1          -            1           1          -          0      11,440
           Green tea
           (industrial tea in
           bulk)                      202         76         33          87         57        813           263        137        429        270            212
           Black tea (in
           containers)                     2     202             1           -          -          2            -           0          -          -             -
   Vietnam Black tea
           (industrial tea in              3          5          7           2          7      12            19         32         24         47            157
           Partly fermented
           tea (in containers)             1          -           -          -          1          0            -           -          -          1         853
           Partly fermented
           tea (industrial tea             8          2          9           7      33         17            13             8      11         67            490
                     Total            216        286         51          96         99        846           295        179        464        385            258
               Share in total        0.8%       1.2%       0.2%        0.4%       0.4%       1.4%         0.6%        0.4%       0.8%       0.7%
            Green tea (in
            containers)                    -          1           -          -          -          -            1           -          -          -             -
            Black tea (in
            containers)               121             8           -          -          1     133               7           -          -          0       3,985
            Black tea
  Singapore (industrial tea in
            bulk)                       12            -          5           -          -      46               -           9          -          -             -
             Instant tea                   1          4          6           3          7          2            6       11             6      13            507
                     Total            135         12         11              3          8     181            13         19             6      14            557
                Share in total       0.5%       0.1%       0.1%        0.0%       0.0%       0.3%         0.0%        0.0%       0.0%       0.0%
             Black tea (in
             containers)                12            9          1           6          6          4            2           0          5          3       2,245

  Malaysia Instant tea                     -          0          0           0          -          -            1           1          0          -             -
                  Total                 12            9          1           6          6          4            3           1          5          3       2,245
              Share in total         0.0%       0.0%       0.0%        0.0%       0.0%       0.0%         0.0%        0.0%       0.0%       0.0%
           Partly fermented
           tea (industrial tea
  Thailand in bulk)                        3          -           -          -          -      16               -           -          -          -             -
                   Total                   3          -           -          -          -      16               -           -          -          -             -
                 Share in total      0.0%             -           -          -          -    0.0%               -           -          -          -
            Philippines                    -          -           -          -          -          -            -           -          -          -             -
             Myanmar                       -          -           -          -          -          -            -           -          -          -             -
              Laos                         -          -           -          -          -          -            -           -          -          -             -
            Cambodia                       -          -           -          -          -          -            -           -          -          -             -
             Brunei                        -          -           -          -          -          -            -           -          -          -             -
  Unit : value = \ million, volume = tons, average unit price = \ per kg                               Source : Trade Statistics, Ministry of Finance


 (3) Imports’ Market Share in Japan
 [Coffee]
  Raw coffee beans are not produced in Japan, depending nearly entirely on imports for its supply. The import
quantity of regular coffee, instant coffee and extract/essence altogether does not surpass 10% of all arrivals. Thus,
raw coffee beans occupy the important factor in import of coffee products.
  Yearly domestic consumption level of instant coffee is stable at around 40,000 tons as from 2000. Import share
of this product is around 20%. Imports continued increase trend until peak year of 2003, but in 2004 the trend
turned to downwards to some 18%. Import level of 2005 is nearly same as 2004 in volume, of which share was
18.6%, not attaining 20%.
  Regular coffee (roasted) is produced domestically using imported raw coffee beans. Thus the import of this
product shows some 2% each year. (see Fig. 17)


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                                                                                                                                                          227
C-3. Coffee & Tea

                         Fig. 17   Share of imported coffee products in the Japanese market
                                                           2000         2001       2002        2003        2004       2005
                          Domestic Production    33,764  37,012  37,060  36,593  35,794                               35,189
                          Imports                 7,177   8,387   8,465   9,057   7,633                                7,778
           Instant Coffee Exports                 1,898   4,363   5,094   3,133   1,779                                1,193
                          Domestic Market Total  39,043  41,036  40,431  42,517  41,648                               41,774
                          Import Share            18.4%   20.4%   20.9%   21.3%   18.3%                                18.6%
                          Domestic Production   145,701 150,052 154,813 149,055 165,153                                 -
           Regular Coffee Imports                 2,749   3,630   4,070   4,292   4,150                                4,776
                          Domestic Market Total 148,450 153,682 158,883 153,347 169,303                                 -
                          Import Share             1.9%    2.4%    2.6%    2.8%    2.5%                                 -
           Unit : tons
                             Source: Domestic Production of Instant Coffee, Ministry of Agriculture, Forestry and Fisheries
                                                      Domestic Production of Regular Coffee, All Japan Coffee Association
                  (Statistics of Coffee Products, Oct. 2005, Figures not including use for canned coffee, cakes and others)
                                                                     Import and Export - Trade Statisitcs, Ministry of Finance
                                                                  Domestic Market = Domestic Production + Import - Export
 [Tea]
  As the domestic production is not observed on black tea, oolong tea and mate, all demands of these items
depend on import. For herb tea, import share is not known as official statistics do not exist on domestic
production as well as import quantity. However, the presumption is that major portion of marketed herb teas is
the imported product.
  Domestic production of green tea is stable at 90,000 to 100,000 tons annually. Import volume continues the
level of annual 10,000 tons. Thus, share of imported green tea in domestic market is presumed at low 10 to 16%,
95 % of imports comes from China. (see Fig. 18)

                            Fig. 18      Share of imported green tea in the Japanese market
                                                   2001            2002            2003           2004            2005
              Domestic Production                   89,800          84,200          91,900        100,700         100,000
              Imports                                17,739          11,790         10,242          16,995         15,187
              Exports                                   599              762            760            872          1,096
              Domestic Market Total                 106,940          95,228        101,382        116,823         114,091
              Import Share                            16.6%           12.4%           10.1%           14.5%         13.3%
              Unit : tons
                                          Source : Domestic Production - Ministry of Agriculture, Forestry and Fisheries
                                                                                               (Annual Statistics on Teas)
                                                                  Import and Export - Trade Statistics, Ministry of Finance
                                                        Domestic Market Total - Domestic Production + Imoprt - Export



3. Key Considerations related on Exporting to Japan
(1) Regulations and Procedural Requirements at the time of Importing in Japan
  Import of coffee and tea products is subject to provisions of the Food Sanitation Law. Raw coffee beans and tea
merely dehydrated are in many cases regulated under the Plant Protection Law for import. The processed teas are
not subject to the inspection of this law.
  Among tea products (herb tea for example), in some cases ingredients only permitted for medicinal use are
employed. In this case, as the Pharmaceutical Affairs Law is applicable, importers must well check to this point.
In some violation cases, imports from China or U.S.A. of so called “diet teas” includes as medicinal material.
The authorities ordered the collection of these products from markets. In 2002, the revision of the Law stipulates
the introduction of new provisions in approval and licensing system, including the institution of a primary
distribution license system (enforced as from April 1, 2005). For more information, contact is recommended with
the Ministry of Health, Labor and Welfare or prefectural pharmaceutical affairs division.
  For transaction of famous branded products, attention must be given if the product is fake or imitation. Fake or
imitated products are prohibited for import by the Customs Tariff Law as to infringe the intellectual right as trade
marks or commercial designs.
Marketing Guide for Exporters to Japan
228
                                                                                                                            C-3. Coffee & Tea

1) Plant Protection Law
  Imports of raw coffee beans and teas without heat treatment process are subject to provisions of the Plant
Protection Law in order to prevent the entry and spread of harmful insect pests. The importers must submit to
the Plant Protection Station an “Application for Import Inspection of Plants and Import-prohibited Articles”
along with a “Phytosanitary Certificate” issued by the competent government agency of the exporting country.
(Applications can be filed in 7 days in advance of arrival of cargoes) Importers should note that only certain
ports of entry equipped with plant quarantine facilities are designated for plant imports. Upon inspection, when
no harmful insects are found, the certificate of approval is issued for customs clearance.


                                     Fig. 19      Plant Protection Law Procedure


                                     Application for import inspection to the Plant Protection Station
                        (“Phytosanitary Certificate” issued by competent government agency of exporting country)



                                                             Import inspection




                              If quarantine pests detected                            If quarantine pests not detected



                                                Sterilization                     Issue of ”Plant Quarantine Certificate”



                               Discarded or returned                               Food Sanitation Law procedures



2) Food Sanitation Law
 All food products, imported for the purpose of sale or for other commercial purpose, importer must submit the
completed “Notification Form for Importation of Foods, etc.” along with other required documents (when
processed food is concerned, ingredients list and manufacturing process sheet etc.) to the quarantine office at the
port of entry. A determination is made based on the document examination whether or not the inspection at
bonded area is required. The flow of process is as per following chart.


                       Fig. 20      Procedures required under the Food Sanitation Law


                                                  Advance consultation service
                      Advance information acquisition (regarding production methods, content of ingredients, etc.)
                         Advance inspection (by the competent government agency of the exporting country,
                          or the official laboratory registered with the Minister of Health, Labor and Welfare)



                                             Submission to the Quarantine Station
                            (“Notification Form for Importation of Foods, etc.” and other related documents)


                                                       Examination of documents



                           Cargo required inspection                             Cargo not required inspection



                          Failure               Pass                         Certificate of notification processing, or
                                                                                certificate of passing inspection

                            Reshipment, destruction,
                          conversion to other purposes                               Customs declaration




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                                                                                                                                         229
C-3. Coffee & Tea

  As the residual standards of agricultural chemicals, feed additives, and veterinary drugs, the positive list
 system was introduced on May 29, 2006, for tighter enforcement to prohibit the import and sale of food
 products exceeding certain residual level. Under this new system, all admitted agricultural chemicals designated
 for use or remain are listed with the maximum residual levels. Other chemicals in the list with no MRL
 (maximum residual levels) indication are allowed to remain at certain standard (0.01ppm, acknowledged level
 as to harmless to human health). The system is applicable to all food products including processed foods.
 Reference to website of the Ministry of Health, Labor and Welfare.
   (⇒http://www.mhlw.go.jp/english/topics/foodsafety/positivelist060228/index.html)
   It is required for the importers to gather abundant and enough information on the projected import foods to
 study whether the products meets the requirement of the Food Sanitation Law in their specifications and
 standards by obtaining in advance of ingredients lists and production process charts or by making consultation
 with the quarantine office.
   Prior to importers who wish to submit their notification by computer may make use of the computerized
 FAINS (Food Automated Import Notification and Inspection Network System) and software may apply for a
 security code from the Minister of Health, Labor and Welfare to access the system.
 3) Other Considerations
   Under the International Coffee Agreement (ICA), an export allocation system had been established to restrict
 the exports of the member producing countries so as to try to stabilize international coffee prices. But since
 October 1989, this export allocation system has been suspended. At the present time, the coffee market is
 liberalized. Certain procedures might be required once again, however, as a result of study of a new agreement
 by the International Coffee Board.

(2) Regulations and Procedural Requirements at the Time of Sale
  The sale of coffee and tea is subject to the Food Sanitation Law, the JAS Law, the Measurement Law, the
Health Promotion Law, and the Act Against Unjustifiable Premiums and Misleading Representations. In some
cases, depending on the ingredients employed, kinds of tea are subject to the Pharmaceutical Affairs Law.
  Containers and packaging may also be subject to identifier labeling provisions of the Law for Promotion of
Effective Utilization of Resources, and recycling provisions of the Containers and Packaging Recycling Law. For
more complete information about affected packages, the definition of specific providers and labeling methods,
contact with the competent agency is recommended.

 1) Food Sanitation Law
  The Food Sanitation Law prohibits the sale of foods containing toxic or harmful substances and foods that are
 unsafe for human health. When selling packaged coffee and tea products, they must be labeled in accordance
 with provisions of the Food Sanitation Law (use of food additives etc.) (see (3) Labeling).
 2) JAS Law
  (Law Concerning Standardization and Proper Labeling of Agricultural and Forestry Products)
  The JAS Law establishes quality labeling standard for all food and beverage products sold to ordinary
 consumers. For coffee and tea products, labeling in accordance with the provisions of Labeling Standards for
 Processed Foods is required.
 3) Measurement Law
  Coffee and tea products sealed in wrapping or containers are required the labeling of the net content to certain
 accuracy as per the specifications of the Law. (see (3) Labeling)
 4) Health Promotion Law
  When labeling the nutritional data on wrappings or containers or include promotion documents of processed
 foods aimed at the sale to consumers, the Standard of Labeling Nutritional Data must be obeyed stating in order
 of calories, protein, fat, carbohydrates, sodium and nutritional ingredients.
 5) Act Against Unjustifiable Premiums and Misleading Representations
  The Act prohibits a form of improper labeling exaggerated or false labeling that misleads consumers about the
 nature or quality of products. Also, vague or confusing labeling that makes it difficult to discern the actual
 country of origin is also prohibited as a form of improper labeling.
  The origin country is the country where the action of processing is carried out so as to substantially change the
 nature of products. In case of green tea and black tea, the origin country is determined as where the

Marketing Guide for Exporters to Japan
230
                                                                                                        C-3. Coffee & Tea

 semi-processing is effected The Fair Competition Code of the industry stipulates the labeling of origin country
 of raw coffee beans.
<Fair Competition Code Concerning Representations of Regular Coffee and Instant Coffee>
  The industry has voluntarily adopted these guidelines in order to assure consumer product choice availability
 and preserve fair competition, based on the Act Against Unjustifiable Premiums and Misleading
 Representations.
6) Law for Promotion of Effective Utilization of Resources
  Among wrappings and containers of coffee and tea products, identifier labeling is required for steel and
 aluminum cans, PET bottles, paper (cardboard boxes and paper containers not containing aluminum and
 cardboard containers) and plastic container materials (see (3) Labeling).
7) Containers and Packaging Recycling Law
(Law for Promotion of Sorted Collection and Recycling of Containers and Packaging)
   The Law was enacted to promote recycling of containers and packaging waste materials. It provides for sorting
 by consumers, sorted collection by municipalities, and product reuse (recycling) by product makers and
 distributors for glass bottles, PET bottles, paper and plastic containers and packaging. Consequently, coffee and
 tea product importers and vendors incur the obligation for recycling of containers and packaging. The
 small-scale importers are exempt from the recycling duty, however, the containers and packaging must carry the
 identifier labels. (see (3) Labeling)


(3) Labeling Regulations at the Time of Sale in Japan
1) Legally Required Labeling
[1] Food Sanitation Law, JAS Law and Measurement Law
   When selling coffee or tea products in wrapping or containers, following items must be listed all together on
 the label, under provisions of the Food Sanitation Law, the JAS Law, and the Measurement Law.
      <Labeling items to be listed all together>
      ① Product name
      ② List of ingredients, name of food additives (if used)
      ③ Net content
      ④ Best-before date
      ⑤ Preservation method
      ⑥ Country of origin
      ⑦ Importer’s name and address
[2] Law for Promotion of Effective Utilization of Resources
  The Law requires that all canned or PET-bottled beverages carry identifier mark affixed or printed on at least
 one spot on the side of the container. In addition, when paper (excluding cardboard box and paper pack not
 using aluminum) or plastic is used as packaging material for caps, labels, external packaging or elsewhere,
 material identifier label must be displayed with information where the material is used.
                                  <Container>                                   <External packaging, cap, etc.>




       Equilateral triangle       Circle with       Equilateral triangle       Circle with         Rectangular with
   with Japanese characters Japanese characters for    with “PET”          Japanese characters   Japanese characters
         for “aluminum”             “steel”                                    for “paper”           for “plastic”



[3] Ordinances
  Some cities stipulate legally required labeling based on their own regulations and ordinances.
  (Examples: Instructions for use for instant coffee set by Kyoto and Osaka municipals.)



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                                                                                                                       231
C-3. Coffee & Tea

 2) Voluntary Labeling based on Provisions of Law
 [1] JAS Law
  <Inspection and Certification of Organic Processed Food Products>
   The JAS Law establishes a “special JAS standard” for organic processed food Prpducts. Only those products
 that comply with this standard are allowed to include in their labeling the phrase “organic” and to display the
 Organic JAS Mark. Organic processed food products produced abroad (in countries recognized as having a
 certification program equivalent to the JAS system) must be qualified according to one of the following
 methods in order to use the phrase “organic” and to display the Organic JAS Mark. (see Fig.21)
        ① Foreign manufacturers authorized by a registered foreign certification organization, export the product
         with the JAS Mark self-attached to sell in Japan.
        ② Importers who obtained approval to qualify from a registered certifying organization in Japan, may
         self-qualify the product by accompanied certificate (or copy) issued by a public agency abroad.
        ③ Organic products made by foreign manufacturers who are authorized by a registered certifying
         organization in Japan may be imported and sold with the JAS Mark attached.


                    Fig. 21      Inspection and certification system of an organic processed food
                                                                                                                     Organic JAS Mark




                           Minister of Agriculture, Forestry and Fisheries
                                                                                                                    [ Name of Certifying
                                                                                                                    Organization]
         Registered     Registration application    Registered               Registration application
                                                                                                         Foreign
                                                            Registered foreign                          Countries
       Certifying organization                             Certifying organization
        Certified                Certified                          Certified


                                                             Certified foreign                    Not-certified
                                                              manufacturers,                 foreign manufacturers
                                                          Certified foreign sorters
                                                                   Self-qualify for JAS Mark


                                                           Not-certified importers


                                                                                         (Certificate from Public Agency)
                                                           Certified importers
                                                                        Self-qualify for JAS Mark

      Contact: Center for Food Quality, Labeling and Consumer Services Headquarters
                Technical Exchange Department         TEL: 048-600-2366           http://www.cfqlcs.go.jp

 [2] Health Promotion Law
  When labeling the nutritional data on wrappings or container or include promotion documents of processed
 foods aimed at the sale to consumers, the Standard of Labeling Nutritional Data must be obeyed stating in order
 of calories, protein, fat, carbohydrates, sodium and nutritional ingredients. When such working as “calcium
 added “ or “low calories” are used to stress the ingredients or calories, also the Standard of Labeling Nutritional
 Data must be obeyed.


 [3] Labeling for the foods for specified health uses – functional foods for health purpose –
     (The Food Sanitation Law, the Health Promotion Law)
  The system of functional foods for health purpose aims at offering the consumers adequate information on
 foods and so to help select appropriate foods for consumption. There are two categories in functional foods for
 health purpose, i.e. foods for specified health uses and nutritional functional foods.
  The foods for specified health uses must be applied to and permitted by the Ministry of Health, Labor and
Marketing Guide for Exporters to Japan
232
                                                                                                   C-3. Coffee & Tea

Welfare. The permitted teas must be attached with the certificate and displayed with the wordings such as “help
relief the increase of blood glucose level” or “good for ones concerned with body fat”. Among coffee products,
instant coffee fortified with oligosaccharose is permitted for its intestine regulating effects.
  The nutritional functional foods are supplementary nutritional ingredients with indications as such. Different
from the foods for specified health use, the products require no permission with the Ministry of Health, Labor
and Welfare nor designated marks. When, among ingredients, any of them conform to the specifications of
nutritional ingredients specified by the governmental agencies, the manufacturers can upon their own
responsibilities, mark the products as nutritional functional foods showing the functions of ingredients.
  The labels of functional foods for health purpose must include the following descriptions and display the
designated marks.

 (Nutritional Function Foods)
 1) Statement of nutritional functional food
 2) Name and function of nutritional ingredient
 3) Suggested quantity of daily intake
 4) Method of intake
 5) Caution for use
 6) Statement of purpose if for enlightenment of balanced food life
 7) Statement that the product is not independently examined by the Ministry of Health, Labor and Welfare
 8) Percentage of nutritional ingredients contained in suggested quantity of daily intake
 9) Caution for processing or preservation

 (Foods for Specified Health Uses)
 1) Statement of foods specified health purpose (in case of restriction of usage, description to that effect)
 2) Permitted or approved labeling details (printing in attached documents also acceptable)
 3) Nutritional ingredient and calories
 4) Names of raw materials                                                     Mark of foods for specialized health uses
 5) Net content
 6) Suggested quantity of daily intake
 7) Method of intake and caution upon consumption
 8) Percentage in the labeling standard of nutrition of functional
 ingredient contained in daily intake
 9) Caution for permission or approval
 10) Certificate of permission or approval


3) Voluntary Industry Labeling
[1] Fair Competition Code Concerning Representation of Regular Coffee and Instant Coffee
 The Fair Competition Code requires the manufacturers to include the following items in labeling.
 ① Product name
 ② Ingredients (production place or country of green beans)
 ③ Net content
 ④ Best before date
 ⑤ Preservation method
 ⑥ Usage instructions
 ⑦ Grinding method (regular coffee only)
 ⑧ Importer and seller’s name and address
                                                                          Marketing Guide for ASEAN Exporters to Japan
                                                                                                                 233
C-3. Coffee & Tea

   ⑨ Country of origin (for imported product)
      Contact: Japan Coffee Fair Trade Council       TEL: 03-5649-8366

 [2] Voluntary Green Tea Labeling Standards
   The Japan Tea Central Association establishes their own “Green Tea Labeling Standards”. The Standards
 requires, in addition to lawful labeling items enforced (the Food Sanitation Law, the JAS Law, the Measurement
 Law, etc.) to include product type, place of origin and usage instructions, as voluntary labeling items. Also, it
 prohibits improper labeling, thus to provide consumers with correct information on origin country, place, type or
 brand of tea or with misleading labeling on contents and quality as to give impression the product is better
 compared with the competition.

   - Example of Legally Mandated Labeling on Imported Green Tea (blanket labeling)
     Imported as refined green tea in containers for direct sale for consumers
   ① Product name :               Green tea
   ② Ingredients:                 Tea leaves
   ③ Net content:                 100 grams
   ④ Best before date             September, 2007
   ⑤ Preservation method: Avoid high temperature and high humidity, be aware of lingering scent
   ⑥ Country of origin:           Country name
   ⑦ Importer:                    Company’s name and address


 <Voluntary Labeling Items>
  These categories should appear outside the border of legally required blanket labeling categories. Detailed
 description of labeling categories are stipulated in by-rule.
   ① Type of tea (other name)
   ② Variety brand
   ③ Origin place brand
   ④ Manufacturer’s brand
   ⑤ Packaging
   ⑥ Handling precautions


 <Items prohibited as improper labeling>
      The Japan Tea Central Association prohibits following improper labeling.
   ① Misleading labeling that may lead consumers to believe the product is tea for the product of other material
   ② Misleading labeling that may lead consumers to believe the origin country, place, type or brand as genuine
   ③ Labeling to imply the abuse of slander of competitors or their products
   ④ Usage of wrappings or containers of unnecessary size for the protection contents or preservation of quality,
    thus to mislead on the net quantity
   ⑤ Misleading expression on awards or recommendation of the products or business conducts despite the
    merits belongs to the other brands
   ⑥ Usage of phases, drawings or pictures that will lead consumers to believe the product is of better quality,
    better trading terms compared to the competitions or the actual conditions of the product.
    Contact: Japan Tea Central Association   Tel: 03-3434-2001                  http://www.nihon-cha.or.jp




Marketing Guide for Exporters to Japan
234
                                                                                                  C-3. Coffee & Tea

[3] Recycling Mark for Paper Beverage Containers
                                                                                                     Paper pack
   Although paper beverage containers without aluminum lining are not required by
  Law to include identifier labeling; the industry has voluntarily introduced an identifier
  Mark ordinance.
      Contact: Paper Beverage Containers Recycling Association Tel: 03-3264-3903

 (4) Key Considerations for Entering the Japanese Market
  [Coffee]
  Green coffee beans generally are imported in minimum lots of 250 bags, each of which contains 60 kilograms.
The importers must pay for storage charges at the bonded warehouse while the merchandise is awaiting
quarantine clearance. It is important to carefully calculate transportation and other costs. Japan has no national
standards as those in Europe and the United States. Nevertheless, leading coffee makers have developed their
own in-house standards. Even if beans clear the product quality standards at the sample stage and pass up
cup-tests (taste testing by a specialized quality assessment specialists), if the beans do not conform to standards
at the actual time of import, they may be rejected. Prospective importers must choose an exporter who knows
about green coffee beans and who will undertake rigorous quality control measures.
  Regular coffee becomes volatile as soon as it is processed. Coffee oxidizes on contact with air, causing its
quality to deteriorate. Experts agree that coffee can remain fresh up to a year and a half sealed in an airtight
container, but prospective importers still need to take care that proper quality controls are followed during and
after import.

  [Tea]
  The exporter of teas (same as coffee) must be aware of and confirm whether the products intended for Japan
can meet the standards and specifications set under the Food Sanitation Law. The law provides standards of
residual agricultural chemicals, food additives and polluting materials. If the products do not conform to the
standards, it is not permitted for import into Japan.
  Recently, as the consumers’ consciousness on health increases, agricultural products of no chemicals use or low
level use is sought for, thus, the demands on wild or natural foods are increasing. In order to comply with these
requirements, adequate quality and sanitary control at the place of production is essential. Especially for the
residual agricultural chemicals, new law enforcement (positive list system) was introduced on May 29, 2006, to
which careful attention should be observed. After the enforcement, there are cases in which agricultural
chemicals exceeding the maximum residual levels found in oolong teas from China.
  Also, there may happen incidents that will threaten the safety of foods. It is important to make public at the
point of sale or through websites, the information on traceability of food products, the production place, person
who employed for the preparations or how the products are processed. Such is the recent tendency and the
introduction of the traceability system may lead to obtain higher added value of the products.

 (5) Considerations for Related Products
  1) Coffee drinks, green coffee beans, and cacao beans
     The following laws and regulations apply to coffee drinks, green coffee beans, and cacao beans.
       • Coffee drinks are subject to provisions of the Food Sanitation Law. The industry has adopted voluntarily
         the Fair Competition Code Concerning Representation of Coffee Drinks based on applicable laws and
         regulations.
       • Green coffee beans are sometimes brought into Japan as a novelty item, and when it is, such imports are
         subject to quarantine requirements of the Plant Protection Law. Please note that the Law prohibits
         imports from certain specified countries and regions (areas with Mediterranean fruit fly infestations,
         including Africa, Central and South America, and the Hawaiian Islands).
      • Cacao beans are subject to the same Plant Protection Law and Food Sanitation Law provisions as green
         coffee beans. Japan is a signatory to the International Cocoa Agreement, but the abolition of export
         quotas previously in force has freed Japan from the need to follow administrative procedures mandated
         by the Agreement.
  2)Green tea drinks
      • The provision of the Food Sanitation Law are applicable for the import of green tea drinks. Labeling
         requirements are stipulated in the Food Sanitation Law.

                                                                          Marketing Guide for ASEAN Exporters to Japan
                                                                                                                  235
C-3. Coffee & Tea

  3)Black tea drinks
      • For the import of black tea drinks, the provisions of the Food Sanitation Law are applied. The labeling
        is regulated by the Food Sanitation Law and the JAS Law. Also, the guideline on quality standards of
        black tea drinks (voluntary measures) is established by the Ministry of Agriculture, Forestry and
        Fisheries for the adequate representation.
  4)Oolong tea drinks
     • For the import of oolong tea drinks, the provisions of the Food Sanitation Law is applied. The labeling is
        regulated by the Food Sanitation Law. Also the guideline on quality standards of oolong tea drinks
        (voluntary measures) is established by the Ministry of Agriculture, Forestry and Fisheries. The
        guideline on quality standards of partly fermented tea exists for the partly fermented tea leaves.

(6) Regulatory Agency Contact
・Food Sanitation Law
      Office of Imported Food Safety, Inspection and Safety Division, Department of Food Safety,
      Pharmaceutical and Food Safety Bureau, Ministry of Health, Labor and Welfare
             TEL: 03-5253-1111                FAX: 03-3503-7964 (Direct)                  http://www.mhlw.go.jp
・Plant Protection Law
      Plant Protection Division, Food Safety and Consumers Affairs Bureau, Ministry of Agriculture, Forestry and Fisheries
             TEL: 03-3502-8111                FAX: 03-3502-3386                          http://www.maff.go.jp
・JAS Law
      Labeling and Standards Division, Food Safety and Consumer Affairs Bureau,
      Ministry of Agriculture, Forestry and Fisheries
             TEL: 03-3502-8111                 FAX: 03-3502-0594 (Direct)                 http://www.maff.go.jp
・Measurement Law
      Measurement and Intellectual Infrastructure Division, Industrial Science and Technology Policy and Environment Bureau,
      Ministry of Economy, Trade and Industry
             TEL: 03-3501-1511                                                          http://www.meti.go.jp
・Health Promotion Law
      Office of Health Policy on New Developed Foods, Standards and Evaluation Division, Department of Food Safety,
      Pharmaceutical and Food Safety Bureau,, Ministry of Health, Labor and Welfare
             TEL: 03-5253-1111              FAX: 03-3501-4867 (Direct)              http://www.mhlw.go.jp
・Act Against Unjustifiable Premiums and Misleading Representations
      Consumer Related Trade Division, Trade Practices Department, Fair Trade Commission of Japan
            TEL: 03-3581-5471               FAX: 03-3581-1754 (Direct)                 http://www.jftc.go.jp
・International Coffee Agreement
      International Economic Section, Trade Policy Bureau, Ministry of Economy, Trade and Industry
              TEL: 03-3501-1511                                                          http://www.meti.go.jp
・Law for Promotion of Effective Utilization of Resources / Containers and Packaging Recycling Law
      Recycling Promotion Division, Industrial Science and Technology Policy and Environment Bureau,
      Ministry of Economy, Trade and Industry
             TEL: 03-3501-1511                                                           http://www.meti.go.jp
      Office of Recycling Promotion, Policy Planning Division, Waste Management and Recycling Department,
      Ministry of the Environment
             TEL: 03-3581-3351                 FAX: 03-3593-8262 (Direct)                http://www.env.go.jp
      Food Industry Environment Policy Office, Food Industry Policy Division, General Food Policy Bureau,
      Ministry of Agriculture, Forestry and Fisheries
             TEL: 03-3502-8111                 FAX: 03-3508-2417 (Direct)                http://www.maff.go.jp


4. Tariff Duties and Consumption Tax in Japan
 (1) Tariff Duties
  Import tariff rates of coffee and teas are presented in Fig. 22. Prospective exporters can confirm the applicable
tariff rate in advance with Customs Counselors Offices (advance counseling program)
      Contact : Customs website                             http://www.customs.go.jp/index_e.htm

 [Preferential Tariff System]
   In order to apply for preferential tariff rates on coffee and teas, imported from preferential treatment countries,
 the importer should submit a certificate of preferential country of origin (Form A) issued by the Customs or
Marketing Guide for Exporters to Japan
236
                                                                                                                            C-3. Coffee & Tea

 other issuing agency in the exporting country (not required if the total taxable value of shipment is no greater
 than ¥200,000). For some type of spice, it is not required to present a certificate of preferential country of origin.
 For more details, please contact the Customs and Tariff Bureau, Ministry of Finance.
[EPA] (Economic Partnership Agreement)
   Between Japan and ASEAN countries, EPA (Economic Partnership Agreement) negotiation is being promoted.
 In the areas of Agriculture, Forestry and Fisheries, also, abolition and reduction of tariff rates are being reached
 for consent. By Japan-Singapore EPA for New Era (effective on Nov. 30, 2002) and Japan-Malaysia EPA
 (effective on July 13, 2006), the EPA tariff rates are applicable for the import of certain consented items of
 Singapore and Malaysian origin.
   Application of tariff rates on ASEAN countries are as follows :
                           Applicable Rates                                    ASEAN Countries
                    LDC Preferential Rate                 Myanmar, Cambodia, Laos
                    Preferential Rate                     Thailand, Indonesia, Philippines, Vietnam
                    Japan-Singapore EPA Rates             Singapore(note)
                    Japan-Malaysia EPA Rates              Malaysia (note)
                    WTO Rate                              Brunei
        Note: In case the imported item is not included in the consented items list, WTO tariff rates will apply to the import
              of Singapore origin and Preferential rates is valid for the import of Malaysian origin.


(2) Consumption Tax
  (CIF + Tariff duty) x 5%

5. Related Organizations
  ・ All Japan Coffee Association
                   TEL: 03-5649-8377                 FAX: 03-5649-8388            http://coffee.ajca.or.jp
  ・ Japan Coffee Import Association (c/o C. Itoh Co., Ltd, Provisions Department, Foods Company)
                   TEL: 03-3497-6271
  ・ Japan Green Coffee Association (c/o Wataru Co, Ltd.)
                   TEL: 03-3503-8351
  ・ National Coffee Roaster Association of Japan
                   TEL: 03-3431-3446
  ・ Japan Retail Regular Coffee Industry Association (c/o UCC Ueshima Coffee Co., Ltd.)
                   TEL: 03-5400-5523
  ・ Japan Instant Coffee Association (c/o Nestle Japan)
                   TEL: 03-5437-3519                 FAX: 03-5437-3514            http://coffee.ajca.or.jp/instant
  ・ Japan Coffee Fair Trade Council
                   TEL: 03-5649-8366
  ・ Japan Coffee Beverage Fair Trade Council
                   TEL: 03-3435-0731
  ・ Japan Tea Central Association
                   TEL: 03-3434-2001                 FAX: 03-3459-9518            http://www.hinon-cha.or.jp
  ・ Japan Tea Association
                   TEL: 03-3431-6509                 FAX: 03-3431-6711            http://www.tea-a.gr.jp
  ・ Japan Mate Tea Association, Japan Herb Association (c/o Japan Green Tea Co., Ltd)
                   TEL : 03-5766-8201                FAX: 03-5464-1116            http://www.matecha-kyokai.gr.jp
  ・ The Japan Soft Drink Association
                   TEL: 03-3270-7300                 FAX : 03-3270-7306           http://www.j-sda.or.jp




                                                                                             Marketing Guide for ASEAN Exporters to Japan
                                                                                                                                         237
C-3. Coffee & Tea

                                             Fig. 22      Tariff duties on coffee and tea

                                                                                                       Rate of Duty
      HS No.                            Description                                                               Tempo
                                                                             General       WTO       Preferential        JSEPA JMEPA
                                                                                                                    rary
0901.11,12       Coffee (not roasted)                                          Free       (Free)                              Free      Free
                                                                                                         10%
      .21,22     Coffee (roasted)                                              20%         12%
                                                                                                        *Free
2101.11          1. Extract, essences, and concentrates of coffee
                                                                                                         15%
           -100 (1) containing added sugar                                     24%        (24%)
                                                                                                        *Free
           -210 (2) instant coffee, not containing added sugar                12.3%        8.8%                                        7.7%

           -290 (3) other, not containing added sugar                         16.0%        15%           Free                           Free
                 2. Preparations w ith a basis of extracts, essences
2101.12
                 and concentrates of coffee
                                                                                                         15%
           -110 (1) containing added sugar                                     24%        (24%)
                                                                                                        *Free
           -121 (2) instant coffee, not containing added sugar                12.3%        8.8%                                        7.7%

           -122 (3) other, not containing added sugar                          16%         15%           Free                           Free
                 Green Tea (not fermented), in immidiate packing of a
0902.10                                                                        20%         17%                                         15.9%
                 content not exceeding 3kgs
0902.20          Other Green tea (in bulk)                                     20%         17%                                         15.9%
              Black Tea, in immediate packing of a content not
0902.30 -010                                                                   20%         12%          *Free                          10.9%
              exceeing 3kgs
              Others (partly fermented tea, in immediate packing
         -090 of a content not exceeding 3kgs, such as oolong                  20%         17%                                         15.9%
              tea, pauchon tea, etc.)
                                                                                                        2.5%
0902.40 -210 Other Black Tea (in bulk)                                          5%          3%                                          Free
                                                                                                        *Free
           -220 Others (oolong tea, pauchon tea, etc. in bulk)                 20%         17%                                         15.9%
                                                                                                         6%
0903.00          Mate                                                          20%         12%                                         5.5%
                                                                                                        *Free
                 Extracts, essence and concentrates, of tea or mate,
                 and preparations w ith a basis of these extracts,
2101.20
                 essences, or concentrates or w ith a basis of tea or
                 mate
                                                                                                         5%
          -110     (1) Instant Tea                                             16%         10%                                          Free
                                                                                                        *Free
          -120     (2) Others                                                  13%          8%          *Free                           7%

  Note 1: “*Free” in Preferential Rate is applicable only for the Least Developed Countries.
  Note 2: Normally the order of precedence for application of tariff rates is Preferential, WTO, Temporary, and General, in that order.
           However, Preferential rates are only eligible when conditions stipulated by law or regulations are met. Also, WTO rates apply when
           those rates are lower than Temporary or General rates.




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