Interview Date: June 9, 2015 Mr. Ryoichi Kuratani - General Manager Planning Dept. Imported Foods Dept., International & MEIDI-YA Brands Division Mr. Tatsuo Kawahara - Manager New Product Development Team, Imported Foods Dept. / Production Control Dept., International & MEIDI-YA Brands Division Mr. Ryuichi Takehiro - Manager Brands Team 1, Imported Foods Dept., International & MEIDI-YA Brands Division Mr. Yoshiaki Kondo - Manager Brands Team 2, Imported Foods Dept., International & MEIDI-YA Brands Division Q: Please give us a brief introduction of your company. MEIDI-YA, founded in 1885, has marked its 130th anniversary. Since its establishment, MEIDI-YA has been leading the industry by introducing overseas food culture to Japan. We have been working with pride in our company tradition and history. As for our import goods, we mainly handle food and alcoholic beverages. We import about 20 food brands and 50 alcoholic beverage brands from abroad. MEIDI-YA is also a manufacturer. Many of our original brands sold at our stores are either manufactured in our own factory or outsourced. In addition to manufacturing and importing, we also have our own distribution base. Mainly located in Tokyo, our 25 stores spread across Japan from Sendai in the north to Matsuyama in the south and even Yonago. We have 3 business sectors: merchandise division, store management division, and ship chandler division. Our ship chandler division delivers food and alcoholic beverages to cruise ships. Q: How do you discover new products and categories? FOODEX is a place that connects us with manufacturers. Often times, we first contact companies and discuss details online. Then, we would have a meeting with those companies at FOODEX. Recently, we haven't been participating in FOODEX as an exhibitor, but we 1
sometimes support our foreign clients if they are exhibiting in the overseas exhibition zone. In other cases, foreign manufactures directly sell their products to us. Foreign governments and related organizations also introduce us to manufacturers and we are able to expand our products and producers. MEIDI-YA has a special importing system for food items. As for domestic distribution, we partner with Mitsubishi Shokuhin, the biggest food distribution company in Japan, and distribute all of our products from there. One of the advantages for foreign companies of having MEIDI-YA as an importer is that we can ensure a distribution channel that reaches all over Japan. We also gain new product information from different countries' chamber of commerce, commercial department of embassies, and related organizations of the industry. Of course, we also contact these organizations for information. Q: Do you participate in tradeshows abroad? We participate in shows such as CIBUS in Italy, SIAL in France, Anuga in Germany, Alimentaria in Spain, Fancy Food Show in the US, and others. In the past, most of our products were from Europe and the US, but we also started to handle products and ingredients from Asia, South Africa, and South America. Currently, most of our final products are from Europe and the US. We are planning to expand the area to have a wider variety of products. Q: What are your product selection standards or criteria? The product must suit the Japanese consumers' taste and be in a reasonable price range. Most importantly, it must fulfill legal standards of Japan. And, of course, safety comes first. Unlike domestic products, it's difficult for us to find a product that we exactly want since they are often times not in the right price range, too large in size, or do not meet the market needs of Japan. In addition, certifications such as HACCP or ISO are important, but what is even more important is how the factory is managed. If the factory meets Japanese hygiene standards and Japanese product management standards, there is no problem. Once in a while, we go on an inspection tour to some of the manufacturers that we are already importing from. We believe that checking the factory with our own eyes is the most important. 2
Q: When you work with foreign companies, what factors do you value the most? The product must suit the Japanese consumers' taste and be in a reasonable price range. Most importantly, it must fulfill legal standards of Japan. And, of course, safety comes first. Unlike domestic products, it's difficult for us to find a product that we exactly want since they are often times not in the right price range, too large in size, or do not meet the market needs of Japan. In addition, certifications such as HACCP or ISO are important, but what is even more important is how the factory is managed. If the factory meets Japanese hygiene standards and Japanese product management standards, there is no problem. Once in a while, we go on an inspection tour to some of the manufacturers that we are already importing from. We believe that checking the factory with our own eyes is the most important. Q: Do you have a certain standard for the company's financial ability? We don't set such standards. If the product is recalled and someone has to pay for it, the ideal scenario is to have no one pay, but that is not easy. In order to prevent product recall, we check for the product s compatibility with the Japanese food system and how the factory is managed, but problems still occur out of our control. Sometimes, a problem occurs when a system is in transition. In rare cases, we don't realize at the time and we find out the problem later. When a problem still occurs despite the efforts of both parties, we expect the other company to handle it sincerely. It is important for the company to be responsible for their own products as a manufacturer. We had cases where the company's responses slowed down after they received complaints and other cases where they tried to escape from the problem. Some companies are very active when they are selling their products, but their responses suddenly become dull when we start discussing problems of distribution or quality. Q: Do you conduct a credit investigation of the company? We do when we sign an agency contract, but it really depends on the situation. Rather than paying a third party for an investigation, we look at the company with our own eyes and make a decision. Q: What factors do you require most in your partner company? 3
When the food laws and standards are different between Japan and other countries, we want the company to understand the Japanese standards well and handle those matters. It often happens that products are fine overseas, but not in Japan. Foreign companies fall at the first hurdle, if they don't know about it in advance. The Japanese market is very unique. Even though our sales volume is small, we are strict and particular about different things. In addition to that, it takes time for the product to become widely accepted. The company needs to have confidence in their products and be serious about selling their products in Japan if they really want to enter the Japanese market. In other words, if they are successful in the Japanese market, they can be confident about their product quality wherever they go. Australian companies make an approach to the Japanese market in that way. The idea is that once their product becomes established in Japan, the quality is assured worldwide. Q: What are your leading products? We handle many products but most are from Europe and the US. We have our own brand of jam that has a history of over 100 years. Imported food items and imported brands have altered over the past 100 years along with the changes of food culture and lifestyle. We mainly handle alcoholic beverages from Europe such as wine and whiskey. We deal with products from the US, South America, and Oceania, but the largest volume is imported from Europe. We also import German beer. Q: What are your ideas on the future of food distribution? The keyword is "handiness." For example, canned products were mainly used as ingredients and supposed to be cooked. Nowadays, thanks to high level cooking and processing, canned items that could be eaten right after opening is starting to become the mainstream. People spend less time on cooking due to the rise of the aging population, double income families, and single person households. In addition to that, the number of multigenerational households has decreased and the content volume of each product is going down. In other words, products are downsizing. As the population ages, I think that the importance of taking protein will be reconsidered. People will start valuing high-quality protein from fish or chicken that has less fat. On the other hand, consumption of carbohydrates such as rice, pasta, and noodles will unfortunately decrease in the future for the same reasons. I think it will be widely known that protein turns into your flesh and blood in addition to providing you energy. On the other hand, carbohydrates are unhealthy since they are made of sugar and fiber that later turn into saccharified sugar and remain in the bodies of the elderly. 4
Q: What are some problems or challenges in bilateral trade? Foreign exchange is the biggest challenge in the trade industry. Another challenge is dealing with different food management standards and food hygiene systems. Some additives certified overseas may not meet the Japanese standard level. The most difficult part is that we cannot bring items in their original form. It is very helpful for us when items are standardized in Japan and Europe, US, or other countries. We strongly suggest foreign manufactures to thoroughly gather information on the Japanese food system before they export to Japan. In some cases, companies ship out their products to Japan without understanding the Japanese standards and the product is prohibited of import at the quarantine station. Information on food management standards can be read in English on the Japanese Ministry of Health, Labour and Welfare website, but the number of items make it difficult to search. One problem is that the database is not structured enough to search by keywords in English. Currently, many documents are located in different places and cannot be searched easily. These issues must be tackled by cooperating with Japanese importers. Q: What are your payment conditions? It depends on the size of the business and reliability of the company. Many Japanese companies directly send documents and use bank transfer. Q: What are hints to entering the Japanese market? One of the keywords is content volume. Foreign companies must realize that their large-sized packages do not suit the Japanese market. The second point is matching with the Japanese taste and distribution conditions such as flavor, size, and safety. The final point is retail price. Products that relatively sell in large volumes are sold at 300-400 yen level. Even if the content volume is big and the price per gram is low, it is difficult to sell the product at 700 yen. If you take a look inside Japanese stores, you will realize how small the shelves are. We cannot line up so many products with large packages. Japanese store shelves are rich in variety and small in size. We want the companies to understand that products cannot always be brought over to the Japanese market in its original size. Product can't be sold in Japan even if the content is good. In the past, we have imported large sizes since they were not common in Japan. But these products do not sell if they don't meet the diversified needs of the consumers. 5
The quality of Japanese products is generally high and consumers think that the security of imported products cannot exceed that of a domestic product even if they are imported from Europe or the US. Most consumers choose domestic products for its high quality. I don't think so many people feel that imported products are high quality. In the past, UACP (HERSHEY'S) was stylish, foreign, high-end, and better than made-in-japan products. Currently, consumers generally have the image that imported sweets are less in quality, care, and price than domestic items. There is another difference between the Japanese and people of other countries. For example, if a product label is peeling off or dented, the European market would not care too much as long as the product itself is fine. However, Japanese people basically would not buy these products. Some services that seem excessive are seen as normal to the Japanese. These are the differences. When in Rome, do as the Romans do. Q: What kind of items are you interested in? I'm interested in healthy products that are regularly consumed. I'm not looking for drugs or supplements, but food items that you eat on a regular basis that tastes good and keep you healthy. If there is anything good, I will consider importing it. As you get older, your health becomes you first priority. Healthy foods have been the keyword for a long time. We want something that will add color to the dining table and not something sold in a drugstore. We want to handle products that are particular to MEIDI-YA and something that have been proved to be healthy in the long cultural history of that item. On top of that, it has to taste good. Q: What do you think of gluten-free items? There aren't many food items in the Japanese culture that contains gluten so concern for coeliac disease is not as high as it is in the US. However, if more people start to base their diet on wheat instead of rice, people will have higher chances of suffering from coeliac disease. If that happens, there will be greater needs for gluten-free products. Products are sold at special events for the first few times and it takes time for that product to become a standard item. I think we can place our hopes on fermented food items too. Thank you very much. 6