Consumer Profile – Japan

Key demographic indicators

Japan's gross domestic product (GDP) is expected to reach US$4.5 trillion by the end of 2022, according to Trading Economics global macro models and analysts' expectations, making Japan the third largest economy in the world, behind the United States (U.S.) and China.

The current population of Japan is 125.5 million as of Thursday, December 8, 2022, based on Worldometer elaboration of the latest United Nations data, from 2020 at 126.1 million people. It is expected that by 2025, the total population will be 123.3 million, by 2030, it will be 120.0 million, by 2035, it will be 116.4 million and by 2040, it will be 112.5 million.

The 90+ age group is recording the fastest growth (compound annual growth rate (CAGR) 4.4% from 2015 to 2040) among all age groups in Japan and will represent 4.6% of the total population in 2040. The 40 to 44 age group records a lowest growth (−1.7% from 2015 to 2040). Population growth in 2020-2040 will be driven by 70 to 74 group at a CAGR of 0.1%, 75 to 79 group at same CAGR of 0.2%, 80 to 84 group at a CAGR of 0.5%, 85 to 89 group at a CAGR of 1.8% and 90+ age group at a CAGR of 4.4% from 2015 to 2040.

From 2015 to 2040, population decline in senior age and younger: 65 to 69 at a CAGR of −0.2%, 60 to 64 at a CAGR of −0.2%, 55 to 59 at −0.1%, 50 to 54 at a CAGR of −0.8%, 45 to 49 at a CAGR of −1.3%, 40 to 44 at a CAGR of −1.7%, 35 to 39 at a CAGR of −1.4% and 30 to 34 at a CAGR of −1.0%, 25 to 29 at CAGR of −0.7%, 20 to 24 at a CAGR of −1.0%, 15 to 19 at a CAGR of −1.6%, 10 to 14 at a CAGR of −1.4%, 5 to 9 at a CAGR of −1.2% and 0 to 4 at a CAGR of −1.0%.

Japan's vital statistics

In Japan, the fertility rate was 1.3 children per female in 2020, lower than the replacement rate of 2.1. It will continue to remain low at 1.3 children per female up to 2040. Women giving birth to children later in life, from age 32.1 in 2020, and is forecast to increase at age 33.4 in 2040. Infant death declines from 1,916.0 in 2015 to 927.0 in 2040. Birth rate per '000 population also decreases from 7.9 per '000 population in 2015 to 7.0 per '000 population in 2040. Live birth decreases too from 1,005.7 thousand in 2015 to 783.6 thousand in 2040. However both death rates per '000 population and deaths (000) increase from 2015 to 2040.

Household structure in Japan

The average Japan household in 2022 is home to 2.2 people. The biggest households contain 1 child, followed by 2 children households, 3 children households, 4 children households, 5 children households and 6 children households.

Number of households by type

The primary household type was couples with children, with a CAGR growth of 0.0% from 2017 to 2022, reaching 14.4 million in 2022. Single person, couples without children and single-parent family are the three fast growing house types, 2.5%, 0.8% and 0.8% CAGR respectively from 2017-2022. "Other" decreases at a CAGR of −5.7%, from 4.6 million in 2017 to 3.4 million in 2022.

Population in urban and rural area

There were 115.8 million Japanese living in urban area while there were 10.4 million living in rural area in 2020. The population in both urban and rural will gradually reduce from 2015 to 2040. In 2040, the urban population will drop down to 105.4 million while rural population will reduce to 7.1 million.

Population by religion

In 2020, 46.2% of the population believed in Buddhism, 48.8% of the population believed in Shinto, 1.0% of the population believed in Christianity and 3.9% of the population believed in other religions. By 2030, 2035 and 2040, people who believe in Shinto will increase to the same 49.7% at a CAGR of 0.2% from 2015 to 2040 while people who believe in Buddhism will decrease to the same 45.7% at a CAGR of −0.1% from 2015 to 2040.

Population by citizenship

In 2020, 97.7% of the population were Japan citizens while one 0.3% of the population were South Koreans and another 0.3% were Vietnamese. Vietnamese are expected to grow fastest at a CAGR of 6.6% from 2015 to 2040, reaching the same 0.5% in 2030, 2035 and 2040.

Population by language

In 2020, 98.5% of the population spoke Japanese while 1.5% of the population spoke other languages. People who speak Japanese will slightly decrease at a CAGR of −0.01% and people who speak other language will slightly increase at a CAGR of 0.54% from 2015 to 2040.

Business environment and dynamics

Age 45 to 49 is the group that earned the most, US$47,882.5 in 2022 while age 15 to 19 was the group that earned the least, US$20,052.3 but grow the fastest at a CAGR of 2.2% from 2017 to 2022. Age 60 to 64 still worked and earned more than age 20 to 24 group. All the age group earnings increased at a CAGR from 1.8% to 2.2% between 2017 and 2022 and is expected to grow at a CAGR of 1.3% between 2022 and 2027.

It is interesting to note that starting from the smallest disposable income at US$500 to the households with a disposable income over US$15,000, the CAGR growth gradually decreased from CARG 0.8% to CAGR 0.1% between 2017 and 2022. From households with a disposable income over US$25.000 to households with a disposable income over US$125,000, the CAGR decreased negatively from −0.5% to −2.4% between 2017 and 2022.

However, between 2022 and 2027, starting from the smallest disposable income at US$500 to the biggest disposable income US$125,000, the CAGR growth gradually increase from 0.4% to 7.5%.

Food and beverage preferences and expenditures

In 2022, Japan's total consumer expenditure on food and non-alcoholic was US$443.1 billion, of which US$405.9 billion was spent on food. Expenditure on meat was the largest category, with expenditure of US$97.9 billion in 2022, followed by bread and cereals at US$81.4 billion in 2021 and vegetables at US$59.1 billion in 2021.

 

Consumer expenditure is expected to grow by a CAGR of 1.5% from 2022 to 2027. Sugar and confectionary, coffee, tea and cocoa, all two are forecast to grow the fastest at a CAGR of same 1.8%, reaching US$56.0 billion, and US$17.9 billion respectively between 2022 and 2027. All subcategories are expected to grow steadily at a CAGR of above 0.1% to 1.8% except expenditure on beer and on tobacco with a negative growth between 2022 and 2027.

Per capita consumer expenditure on food increase at a CAGR of 1.6% from 2017-2022. All subcategories increased at CAGR from 0.3% to 3.8% except fish and seafood, and beer with a negative CAGR from 2017 to 2022.

From 2022-2027, growth in per capita expenditure on food is expected to rise to a CAGR of 1.9%, with all subcategories seeing similar positive growth rates varying from 0.3% to 2.2%, along with alcoholic and non-alcoholic beverages.

In 2022, total consumer expenditure per capita was US$3,570.9, out of which US$3,270.5 was spent on food, US$431.5 was spent on alcoholic drinks, and US$300.4 on non-alcoholic beverages.

Consumer trends

Increased interest in health and wellness

The pandemic has significantly increased consumer interest in health and wellbeing, and consumers are becoming more likely to choose foods perceived as having health benefits.

Health and Wellness had a CAGR of 0.0% between 2016 and 2021, reaching US$55,120.5 million in 2021. Naturally healthy foods are currently the largest category of Japan health and wellness food. It grew at CAGR of −0.2% between 2016 and 2021, reaching US$26,274.4 million. It is also expected to be growing at a CAGR of 1.7% from 2021-2026, reaching US$28,537.7 million in 2026.

Fortified/Functional (FF) products were valued at US$18,793.3 million in 2021, growing at 0.2% between 2016 and 2021 and are expected to reach US$20,370.6 million by 2026. Sales of free from products grew at a CAGR of 0.5% between 2016 and 2021, reaching US$5,421.0 million in 2021 and is expected to grow at a CAGR of 2.1%, the biggest growth among all categories, between 2021 and 2026, reaching US$6,020.6 million in 2026.

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Resources

• Euromonitor, 2022
• Trading Economics, 2022
• United Nation data 2022

Consumer Profile – Japan
Global Analysis Report

Prepared by: Hongli Wang, Market Analyst

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