Food-related exports have reached record numbers for 11 consecutive years, reaching 1.45 trillion yen in 2023. This trend is also reflected on a global scale, with the number of Japanese restaurants abroad more than tripling over the past decade, from 55,000 in 2013 to approximately 200,000 today.
What do you think has contributed to the continued increase in Japanese food exports and the popularity of Japanese food, which has reached record levels over the past few years?
The general characteristics of Japan’s food are that it has a rich food culture in every region and season from north to south due to the shape of the country, and also has the flexibility to interpret and evolve non-Japanese food in its own unique way. I guess that as a result of this fusion, the country is recognized as having a food culture unparalleled in the world. I believe that the foundation of this reputation is Japan’s attention to detail in terms of taste, quality, and other aspects of food. The common denominator for both restaurants and food products is how to continue to provide high standards of taste and quality without compromise. In this regard, Japanese food service industry and food manufacturers have always demanded high standards from themselves and have thoroughly pursued details of taste and quality, and as a result, they have received very high acclaim from overseas, which I believe has led to an increase in the overseas expansion of Japanese food products.
As I mentioned at the beginning, the four seasons are also a very important element of Japanese cuisine, and it is a characteristic of Japanese food to be able to approach each season with different ingredients, rather than always serving the same thing.
For example, we have a Cheese Dessert product that is popular overseas, and we believe that the secret of its popularity is not only its creamy texture, taste, and texture, but also its seasonal variations, such as mango and melon flavors, that offer not only high quality Japanese taste, but also the pleasure of choosing seasonal products. We believe that the secret to our popularity is that we are able to offer not only high quality Japanese delicacies, but also the pleasure of being able to choose what is in season.
The fact that various Japanese food service and food product manufacturers are constantly aware of this approach in all categories and continue to develop it is one of the reasons for the continued popularity overseas, not just temporary.
Against the backdrop of this growth, the government has set a goal to push these numbers even higher. It is shifting to a more globally oriented and aggressive policy, including the establishment of the Japan Food Overseas Promotion Center, initiatives such as the Global Food Staff, and investing more resources in infrastructure, overseas marketing, and human resource development. The government aims to increase food exports to 5 trillion yen over the next 10 years. Do you think this goal is achievable? If so, what steps do you think are necessary to achieve it?
We believe it is possible. Japan is said to have a declining birthrate, an aging population, and a shrinking population on a macro scale, so we believe that it is essential for Japanese companies to capture demand overseas in order to grow their companies. We acknowledge that other Japanese companies are also expanding their market to overseas and globalizing in the recent years and the globalization of Japanese companies is expected to continue at an accelerating pace in the future.
The most important thing is the development of “human resources” to promote these activities, without which we do not believe we will be able to achieve 5 trillion yen in overseas exports.
We also started exporting in 2017 in order to capture overseas demand in earnest, and currently export to 9 countries mainly in Asia. We have been developing human resources who are capable of promoting overseas exports through training and receiving personnel from outside the company since we had limited personnel who has trading knowledge and experience as well as language ability in the beginning. A very difficult point in this context is that the programs required for training personnel for ordinary domestic and overseas markets are different. For example, when we start doing business with country A, one person in charge of the project handles everything from negotiating with local partners in English, signing an English-language contract, developing a sales plan including marketing, sales promotion, and advertising, to the actual export process. Therefore, in order to perform these tasks, it is essential not only to have knowledge of the company’s products, quality, and factories, but also to learn languages, negotiation skills with overseas companies, knowledge of understanding contracts in English, knowledge of marketing, knowledge of trade practices, and all other types of knowledge.
In order to acquire these abilities, it is necessary to formulate a detailed training program for each of the required abilities.
However, such a training process requires a considerable amount of knowledge, time, and cost, and it is certainly very difficult to sustain its implementation unless the company is very large. In fact, we have had considerable difficulty in building these training programs from scratch and maintaining a certain level of human resource development.
The Japanese government’s goal of increasing exports to 5 trillion yen cannot be achieved by large companies alone. Therefore, the development of human resources to promote overseas exports, especially for small and medium-sized companies, should not be left to the individual companies alone, but should be supported by the government and administration. We are still mainly in Asia, but if we continue to develop human resources like this, and if we can develop more and more people who can promote our overseas business, we will be able to expand into North America, Europe, and eventually South America and Africa, and develop our cheese products around the world and establish our cheese products as part of the food culture around the world.
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The challenges facing the Japanese food sector are manifold. Japan has the oldest population in the world, and this affects Japanese farmers as well, with the average age of this sector being over 65. This fact creates barriers to expansion and bottlenecks in production. Furthermore, this situation is exacerbated by the ‘logistics problem of 2024.
How is your company addressing this challenge? And do you already have a plan in place for the possibility of sourcing ingredients that are readily available from Japanese producers from overseas in the future?
Our company’s main raw material is natural cheese, most of which is imported from global dairy industrial regions such as Oceania, Europe, and the U.S. Therefore, we do not have any particular plans for overseas procurement of ingredients. Of course, there are many other ingredients other than natural cheese ingredients that are procured domestically, such as for some of bitesize Baby Cheese and Cheese Dessert products, which are standardized using domestic ingredients and sub-ingredients. However, in case we can’t use ingredients that are procured domestically for those items, we have a flexibility to change to the standard using overseas ingredients. Also, although the current standards are based on those originating in Japan, it may be interesting to see products that use overseas ingredients as the volume of overseas sales increases.
The current economic situation requires Japanese producers to look to foreign markets for long-term growth. However, China, traditionally Japan’s largest food trade destination, accounted for about 20% of exports in 2022, but with the Chinese legislator’s decision last August to ban all imports of Japanese seafood, exports have plummeted and it is unclear when this ban will be lifted. Your company has already expanded into Indonesia and has plans for the U.S. and Europe. Excluding the U.S. and Europe, where do you see the greatest untapped market growth potential for Japanese food products in the next decade?
We believe that the market with the greatest potential for growth is Vietnam, where we established a sales company last year. The average age of the Vietnamese people is approximately 31 years old, and approximately 86% of the population is said to be under 60 years old, with a very high percentage of young people in their late 20s.
In addition to economic growth and the size of the population, we believe that our products will be accepted and take root in the market due to the reputation of the Japanese brand and the high affinity in terms of taste and quality.
Therefore, we believe that Vietnam is the market with the greatest potential for growth aside from Europe and U.S.
On the other hand, there are still a number of countries in Asia that we have not yet entered, including China, Mongolia, Cambodia, Bangla, Laos, and Malaysia.
We have also realized through exports to nine countries that economic growth and population size do not necessarily equate to growth potential for our cheese products.
The speed of product penetration and establishment, as well as the scale of sales potential, varies considerably depending on various factors such as the country’s food, lifestyle, infrastructure, and age structure. Therefore, even in countries with small populations, if penetration and establishment are rapid, sales volume will increase significantly, and even in large countries, if penetration and establishment are slow, a large increase in sales volume cannot be expected.
From the perspective of population size and economic growth alone, we see Africa and South America as markets with great potential for growth, in the areas which we haven’t entered yet. However, it is difficult to enter these markets using only our existing chilled products, which are our mainstay products, due to distance and infrastructure. Therefore, we acknowledge that we need another challenge such as extending our product shelf-life and developing ambient cheese products. Of course, we would like to take on the challenge of developing unprecedented products with the aim of becoming the world’s number one processed cheese maker.
The Ministry of the Environment estimates food loss in FY2021 to be approximately 5.23 million tons. No data is provided beyond that date. This is also the time of year when consumers are demanding action from companies: 53% want a reduction in plastic packaging, followed by 46% who appreciate the use of sustainable materials. Companies are beginning to respond. For example, in Fukuoka, Lawson and the Environmental Agency have partnered to recycle unsold store food into animal feed that is sold to local pig farms and reintroduced into the food supply chain. What initiatives is your company undertaking to reduce food loss and improve environmental performance? How is your company responding to consumer demand for more sustainable packaging? How does your company extend shelf life and reduce waste?
We are striving to reduce losses generated in the production of processed cheese as much as possible, but for those losses that still inevitably occur, we are working to reduce the burden on the environment as much as possible by recycling through feed conversion and gasification.
Some of our products use biomass film and FSC-certified paper for packaging materials, and we are gradually expanding the use of packaging materials that use biomass ink and botanical ink for printing on packaging materials, aiming for environmentally friendly and sustainable packaging. Processed cheese is a product with a long shelf life by nature, and we recognize that the amount of cheese that is disposed of due to expiration is not very large. From this perspective, we are not extending the storage period beyond the current one.
Digital technology and automation are being applied to various steps in the food supply chain, from planning to production to delivery. These can help food companies streamline automated fulfillment orders to address the “logistics problem of 2024.” Others include producers using AI tools to identify proteins and improve food health, and retailer-specific algorithms to monitor product shelf life. How can digital technology improve the efficiency of food companies? How do you incorporate AI and automation into your processes?
We introduced MES at our Kobe Plant, which began operations in 2019. The workers follow the work instructions displayed on the handy terminal instead of the conventional paper instructions, which prevents work errors and leads to improved quality. The system also contributes to improved production efficiency including making it easier to manage inventory. The Kobe Plant has also introduced an AI-based inspection system. This AI inspection system uses algorithmic analysis of camera images to automatically identify and eliminate defective packaging. The introduction of this equipment has made it possible to automate the long hours of visual checks, thereby reducing both the workload of employees and costs. The company plans to further increase the number of lines introduced this system in the future.
Rokko Butter offers a wide variety of products under the QBB brand, such as cheese, nuts and dessert products. But when it comes to cheese, Rokko Butter is king.
Rokko Butter introduced the world’s first stick type cheese in 1960 and Japan’s first individually-wrapped sliced cheese in 1971. QBB leads the domestic market in bitesize baby cheese, selling more than 200 million units annually. QBB cream cheese desserts have become a staple in Japanese households with their seasonal variations. What is behind the success of this “QBB cheese”, and how do you plan to replicate this success in overseas markets?
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Although we have not been as successful as we would like to be, we believe that the important thing is to actively take on new challenges. Although our company name is Rokko Butter, we have not actually been producing and selling butter or cheese since our establishment, but started out by producing and selling margarine.
Margarine was selling well at the time of the company’s founding, and the production and sale of processed cheese as a new product was the first major challenge that marked a turning point for the company. Since then, we have continued to take on new challenges, such as the world’s first stick type cheese and Japan’s first individually packaged sliced cheese, without resting on our laurels. Bitesize Baby Cheese, which is our flagship product, was also developed through those continuous challenges.
Our best-selling bitesize Baby Cheeses also continue to challenge new concepts, such as the premium line and the Japanese specialty series, although they are still within the framework of bitesize Baby Cheeses. Cheese Desserts, our main product for the overseas market, are a new category born from our challenge. This category was new and unique category that we couldn’t find in the market which led us the difficulty in expansion and sales in the beginning. However, we believe that we now have great feedback both from domestic and overseas market.
In overseas markets, we will continue to take on new challenges, not only in products themselves, but also in promotion and marketing, with the spirit of “taking on new challenges” that we have cultivated in Japan.
We wanted to create a product that would actually meet the needs of the local market, so we conducted numerous tasting surveys in Vietnam and took on the challenge of creating our first overseas exclusive product, “Q-Chan Cheese,” which we successfully launched last year. In addition, based on the needs of local consumers in Southeast Asia and other regions for a compact size candy shaped cheese at an affordable price, we are challenging to launch a small volume type of candy shaped cheese and Cheese Dessert this fiscal year. Furthermore, in marketing and PR activities, we are taking on various challenges such as elevator advertising, which has never been done in Japan, and TikTok distribution utilizing KOL (*1) and KOC (*2). We believe that by steadily repeating these challenges and trial and error, we will be able to become the No. 1 processed cheese manufacturer in the market just like we are in Japan.
(*1) Abbreviation for Key Opinion Leader. So-called influencers with many followers.
(*2) Abbreviation for Key Opinion Consumer. A general user who is like an influencer’s egg.
Are there any new food products or beverage markets that you are actively considering?
In fact, besides cheese, we have also started a new ice cream business and an oats milk business in 2022. In the ice cream business, we offer ice cream made with 44% Brie cheese and 25% Gorgonzola cheese, which are truly unique and could only be made by a cheese maker like us. As an authorized distributor of Oatside which is from Singapore for Japanese market, Oatsmilk is expanding its sales for supermarkets and commercial use which is mainly cafes. Both are truly new challenges for our company, and although the scale of our business is still small, we are determined to make them bloom like bitesize Baby Cheese and Cheese Dessert.
Tofu and soy have long been a part of Japanese cuisine, but have recently gained popularity in Western markets as a “meatless” protein alternative. Your company has introduced QBB Plant Made, a plant-based alternative cheese made with almonds, in line with your commitment to sustainability and food diversity. They have a rich cheese-like flavor, melty texture, and mild aftertaste, making them suitable for a variety of culinary applications. Can you elaborate on how a product like “QBB Plant Made” can contribute to the SDGs?
Since PLANT MADE is made from plant-based ingredients without using cow’s milk, we believe it will help reduce the environmental impact of cow rearing, which has become an issue in recent years, and indirectly contribute to the reduction of greenhouse gas emissions, effective use of land and water, and ultimately the elimination of hunger and poverty issues, which are the goals of the SDGs.
How do you plan to overcome persistent consumer resistance to plant-based food alternatives abroad?
We believe that the only way to overcome deep-seated resistance is to experience “Delicious!” experience.
This is because what people seek most in food is the simple happiness of “deliciousness,” and this will never change. In order to make this new food option, a plant-based cheese substitute, a commonplace food, we will launch products that are thoroughly focused on “deliciousness. ” In order to make this “delicious experience” even more impactful, we will open a food court restaurant at Expo 2025 Osaka-Kansai that will feature all plant-based ingredients, including our PLANT MADE products. The menu is supervised by a Michelin three-star chef. We are sure you will be surprised at the deliciousness of our products. Incidentally, our P-shredded Cheese recently won “Superior Taste Award”, the ITI (International Taste Institute) Award for Excellence in Taste. We are delighted that its deliciousness has been recognized on a global level.
Rokko Butter’s joint venture with Mitsubishi Corporation to enter the Indonesian market has been a success. In a country where cheese is not traditionally popular, “Emina Cheese” has done three important things: 1) Utilizes strict quality control and advanced Japanese cheese-making techniques. 2) Focus on consumer education to make cheese easily accepted as a convenient snack and ingredient. 3) Halal certification was obtained and consumer acceptance was gained.
This successful venture opens doors to other Muslim countries in the Middle East and further south to Australia and New Zealand. Cheese is more widely accepted in these regions. Please tell us about the process that Rocko Butter went through to make Emina Cheese a success in Indonesia. Are there any plans to expand to the Middle East, Australia, and New Zealand?
Since there was no culture of eating cheese directly in Indonesia, we adopted a strategy of manufacturing and selling cheese for direct consumption to popularize the product when we first entered the country, but the bottleneck was that it would take a considerable amount of time to establish a new food culture. Therefore, for the time being, we have decided to shift our focus to products that respond to the Indonesian culture of cheese as a seasoning (culture in which cheese blocks are shaved and used in cooking), which is the mainstay of the Indonesian market, and products for commercial use. By maintaining Japan’s high quality manufacturing technology while keeping prices and flavors in line with the local market, EMINA is now in a position to secure a certain share of the Indonesian market. Currently, EMINA is targeting the halal community, so we are expanding to neighboring halal community Malaysia, but there are no plans to expand to the Middle East, Australia, or New Zealand.
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