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1
Japan Market Update

• New Orleans - May 2001

2
Japan Economic Growth
Source Cabinet Office
3
Unemployment Rate in Japan
4.8
As of Nov. 00
Source Ministry of Public Management, Home
Affairs, Posts and Telecommunications
4
Banking Reform in Japan
Apr. 96
Tokyo Bank
Bank of Tokyo-Mitsubishi
Mitsubishi Bank
Industrial Bank of Japan
Sep. 99
Daiichi Kangyo Bank
Mizuho Holdings
Fuji Bank
Apr. 00
Sanwa Bank
UFJ
Tokai Bank
Apr. 01
Toyo Trust Bank
Sumitomo Mitsui Banking
Sumitomo Bank
Sakura Bank
5
Yen/Dollar Exchange Rate
1 \123
Source Nikkei Shimbun
6
Japan Trade Balance
(Y. billion)
(Y. billion)
estimated
Source Nikkei Shimbun
7
Japan US Pork Imports(metric tons)
April-March
Source MAFF
8
2000 Pork Import Market Share
Total FY2000 Imports 650,711 MT 30 chilled
Source MAFF
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Japan Imported Pork Utilization (1999)
Estimated By MEF (Based on MAFF Data)
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Japan US Beef Imports(metric tons)
Source MAFF
April-March
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2000 Import Beef Market Shares
Total FY2000 738,239 MT ?8
Source MAFF
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US vs. Aussie Shares of Chilled Beef (FY00)
Imports
Other 2.6
(Figures for FY99)
US 40.9
Chilled 49 of Total Imports
Aust. 56.4
Source Ministry of Finance
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Japan Beef Imports By Cuts
Source ALIC
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Japan Pork Supply Demand
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Japan Beef Supply Demand
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Tokyo Retail Beef Prices(Yen/100 Grams)
Source Management Coordination Agency,
Retail Price Survey
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Asian Food Price Comparisons
Chuck Roll
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Japan Market Distortions of the Pork V.L.

• Over importation/consumption of loins
• Under utilization of shoulder/ham meat in
  processing
• Narrow price spread between shoulder/ham meat
  loin cuts
• Low imports of full sets
• Inability of low cost producers to exercise
  comparative advantage

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Comparison of US Japanese Food Retailing
Industries

• USA
• Population - 275,562,673
• Wholesale Club Stores - 800
• No. of Supermarkets - 31,500
• No. of Grocery Stores - 127,000
• No. of Convenience Stores - 57,000
• Total Retail Food Sales - US838.1 billion
• Average Annual Sales Per Supermarket - US17.39
  million
• Meat Sales as a of Total Food Sales - 14.04

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Comparison of US Japanese Food Retailing
Industries

• Japan
• Population - 126,549,976
• Department Stores - 395
• Wholesale Club Stores - 6
• Supermarkets
• National Chains - 1,669
• Regional Chains - 18,708
• Convenience Stores - 39,627
• Mom Pop Stores - 380,547
• Sales Per Store National Chains - US17.67
  million/yr.
• Meat Sales as a of Total Food Sales - 15.7

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Japan Number of Meat Retail Outlets
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Japan Retail Trends

• 1. Drop in No. of all Retail Stores
• 2. Drop in Mom Pop Shops
• 3. Entry of Foreign Owned Hypermarkets
• 4. Restructuring of Large Scale Retailers
• Amidst Falling Sales (e.g. Sogo, Family
• Mart, Daiei)
• 5. Discounters Growing, e.g. Fast Retailing
• Co.
• 6. Factory Outlet Malls

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Recent Japanese Retail Developments

• Bankruptcies Nagasakiya, SOGO
• Restructurings Daiei, Mycal, Izumiya,
• Family Mart
• Strategic Alliances Takashimaya - Mitsukoshi
• Metro - Marubeni

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Japan Large Scale Retail Store Law

• 1974-1991 Required Local Business Regulation
  Council,
• Local Chamber of Commerce
  MITI Approval
• of Stores sized over 1,500
  square meters
• 1991-1994 Simplified application process,
  lengthened
• operation hours, shortened
  application time
• 1994-2000 Deregulated mid-size store openings
  (1,000 square meters)
• June 2000 Large Scale Retail Store Law ?Large
  Store Location Law

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Entry of Foreign Retailers
3 Carrefours
Carrefour Tokyo Opened Jan. 2001
Carrefour Chiba Opened Dec. 2000
2 Costcos
Carrefour Osaka Opened Feb. 2001
Costco Chiba Opened Dec. 2000
Costco Fukuoka Opened Apr. 1999
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Decline of Butcher Shops
36,136 outlets
21,017
17,859
15,000 or less?
Source MITI
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Japan Meat Sales by Retail Category Average
Per Store Sales
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Japan Retail Meat Sales by Store Category(
Value/yr.)
Source MITI USMEF estimates
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Japan Beef Retail Sales Channels(Metric Tons)
Source USMEF estimates
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Japan Pork Retail Sales Channels(Metric Tons)
Source USMEF estimates
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Annual Meat Purchases by Region (FY00)
674
599
685
US
Source Meat Journal
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Japan Pork Retail Strategy

• Develop new accounts (regional) build sales
  (national regional)
• Customized trade-lead approach
  Importer?Distributor?Retail Level
• Integrated tactics education, merchandising,
  in-store promo, events, PR, advertising
• Ongoing store presence accentuated by periodic
  multi-chain campaigns
• Technical support for CVS
• Forge Strategic Supply Alliances (Fresh
  Processed)

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Pork Retail Seminar
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Japan Integrated Pork Marketing2001 Nagano
Winter Festival
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Pork Micro-Brand (Store Brand)
Heart Land Pork (Mycal)
Amish Natural Farm (Fressey)
Juicy Pork (Beishia)
Oklahoma Natural Pork (Seiyu)
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Pork Micro-Brand (Store Brand)
Healthy Pork (Keio Store)
Healthy Pork Presentation (Keio Store)
Health natural Pork (Tobu Store)
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Pork Micro-Brand (Distributor Brand)
All Natural Pork (Sumitomo)
Delphi Pork (Ito Ham)
Super US Pork (Nippon)
Special Quality Pork (Marubeni)
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Domestic Pork Micro-Brand
JA Gunma
Tokyo X
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Japan Consumers Wary of Imported Pork

• Over one-half of household shoppers will not
  consider purchasing imported pork (Gallup, 1999)
• US pork ranks low in all attributes against
  domestic Canadian product including taste,
  tenderness, safety, freshness, and ease of
  preparation (Gallup, 1999)

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Japan The Challenge of Imaging US Pork
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Japan Representative Retail Pork Prices

• Domestic Pork Tenderloin
• (Department Store) US13.54/lb
• Domestic Pork Tenderloin
• (National Chain, discounted) US10.51/lb
• US Pork Tenderloin
• (National Chain) US7.49/lb
• US Pork Tenderloin
• (National Chain, discounted) US4.84/lb
• US Pork Tenderloin
• (COSTCO, discounted) US3.71/lb

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Japan Representative Retail Beef Prices

• Domestic Wagyu Striploin Steak
• (Department Store) US37.81/lb
• Domestic Wagyu
• (National Chain discounted) US26.47/lb
• US Striploin Steak
• (National Chain) US12.40/lb
• US Striploin Steak
• (National Chain discounted) US9.75/lb
• US Striploin Steak
• (COSTCO discounted) US6.73/lb

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Japan Carrefour Promotion
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US Pork Promotion Results Return

• Chain Ito Yokado
• Dates July - December 2000 (monthly)
• Items Loin, Belly, Butt (13 different
  specifications)
• Total Promotion Cost US285,880
• US Contribution US123,267
• Incremental Sales US486,667
• Incremental Volume 385 tons
• Return to Packer/Producer US1.84 million
  (_at_US2.16/lb.)

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Japan US Packed Processed Meat
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Japan Processed Pork Imports
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Popular Meals at Convenience Store
Karubi (short plate) BBQ lunchbox
Tonkatsu (deep fried pork) lunchbox
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Japan Carrefour Promotion
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Japan Beef Spring Campaign Regional Chain Spark
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Japan Beef Spring Campaign Regional Chain
Fukuhara