Functional food firms look east for growth

FOOD is big business, bigger in some places more than others.

Those on the trade mission to Japan last week learned that Japanese consumers spend €600 billion on food against €700bn by US citizens, which has double the population.

However, the Japanese eat only half what Americans do, which means they spend four times more per gram on food than their US counterparts.

Japanese people are into quality and are leading research into functional foods, an area of growing importance to Irish companies.

At this time, Irish firms from Diageo to Glanbia are supplying the €600bn Japanese food market, of which 60% is imported.

High value-added foods such as organic and processed foods are in demand, more so than the traditional commodities area.

Those targeting that market have a variety of opportunities open to them, with demand for meat, seafood, dairy and niche categories including health foods and ready-made meals offering opportunities to those willing to do the ground work.

Though far away and a totally different culture to our own, the Japanese, because of their demand for quality, offer a serious challenge to any company wishing to sell to them.

Part of the Enterprise Ireland trade mission’s objective was to raise awareness of Ireland as a source of top class goods and services and to help foster greater collaboration between both nations in the key area of research and development&.

To that end one of the workshops held during last week’s trade mission in Tokyo dealt with functional foods. It included contributions for Enterprise Ireland, Bord Bia, Glanbia and Teagasc.

Japan has been a big promoter of the functional foods sector for many decades with Yakult one of its best-known names that has been sold internationally since the 1960s.

That group has developed a range of health-enhancing products that have enhanced its reputation as a functional foods producer.

Developed by Minoru Shirota, who graduated from Kyoto University in 1930, the probiotic drink has been available in Japan since 1935. Its claim is that it replaces billions of bacteria that help the digestive system function at optimum level.

Its evolution into an international brand was a feature of the workshop and which highlighted just how far-seeing the Japanese not just in the hi-tech are, but in the area of food as well.

The Yakult story highlights Japan’s long-term engagement with the functional foods sector and Enterprise Ireland has been exploiting that area of expertise on behalf of Irish firms since 2003.

Back then, five Irish companies visited and the outcome was a joint venture between Meiji Dairies and Dairygold.

The research was into the area of bacteria free infant milk formula. The work was carried out at Teagasc’s centre in Mallow when a researcher from Meiji worked with Teagasc scientists to move the project on.

That work was finalised in 2008 and work is currently under way in an effort to commercialise the findings.

Meiji has also collaborated with Barry’s Tea where a bottled Irish milk tea is in the process of being brought to the market.

The Japanese diary group is also keen to develop new cheese products which could also lead to some interesting joint ventures down the line, given this country’s strength in the cheese area.

Last week’s trade mission followed a visit by the then tánaiste in February 2008 to discuss the possibility of Irish and Japanese functional food groups collaborating with a view to finding a new generation of products to meet the demands in this food category, which continues to deliver steady growth.

Talks were held with other functional food players including Calpis, Suntory, Morinaga and Yakult.

While the amount of milk absorbed in the end product may not be very big, this is an area offering massive returns.

As people increasingly come to accept they are what they eat, this end of food market looks like it will offer huge opportunities to Irish dairy companies in the period ahead.