Sector Trends Analysis – Confectionary trends in Japan

Market overview

Confectionary sales fell by 5.5% annually over 2018 to 2022 with all sub categories falling. Sales of sugar confectionary is expected to rebound fastest over 2023 to 2027 by 5.8% annually with sales of pastilles, gummies, jellies, and chews expected to rebound the fastest by 5.8% over the next five years.

According to Euromonitor, the pandemic period was challenging for confectionery sales in Japan. Not all snacks benefited from larger shopping trips to supermarkets and discounters, while less mobility and children staying home from school dampened overall retail demand. Although unit prices increased, sales volume was down as price increases drove value sales increases. Increased costs will not necessarily deter consumers from seeking out these novelties. Premium offerings will be entirely justifiable as buying power increases for those who still seek out sugary treats.

At the channel level, the push by e-commerce towards convenience and instant fulfilment has placed confectionery in more virtual carts, with many delivery services translating the lessons of an impulse purchase strategy in traditional retail to their services' checkout experience, offering an opportunity to increase the number of Japanese to use e-commerce platforms of leading supermarkets and spend less time at offline checkouts.

Chocolate confectionary

Chocolate confectionary sales in Japan have fallen steadily over the past five years by 5.5% annually over 2018 to 2022 with sales in all subcategories falling. Chocolate confectionery sales in Japan heavily rely on Valentines day, however, this is being challenged by rising discussion on gender roles in Japan. This is expected to pose a threat to sales of chocolate confectionery over 2023 to 2027.

Chocolate confectionery sales are forecast to grow by 4.9% annually over 2023 to 2027. The main driver is expected to be higher unit prices due to inflation and the rising costs of raw materials and energy. To control prices of products and avoid a significant increase in prices, many manufacturers are resorting to shrinkflation.

To sustain long term chocolate sales and give a boost to the Valentine's Day gifting tradition, manufacturers are making efforts both to promote diversification of the recipients of chocolate confectionery, and the way in which people celebrate. These kind of initiatives to diversify the ways of celebrating, and promoting towards younger generations, is likely to continue in the forecast period as a strategy to sustain sales of chocolate confectionery in the long term amidst declining interest in the chocolate gifting tradition.

Players are also launching new flavours and collaborating with famous content, such as anime, games, celebrities and cartoon characters, to keep consumers interested and maintain sales. Chocolate confectionery often welcomes new flavours in the form of seasonal offerings with Japanese consumers being very open to trying new flavours given the fast pace of innovation in the market.

Although most new flavours do not last long in the market, successful ones stay, or come back the following year. For instance, in 2023 Meiji added hojicha (Japanese green tea) latte flavour to its well-known Meiji Macadamia Nut Chocolate brand in April. In addition, cross-brand collaborations, sometimes with brands from other categories, are also being tested. A recent example, in 2023, was the Kit Kat brand's collaboration with Baskin-Robbins to launch chocolate mint ice cream flavour.

Sugar confectionary

Sugar confectionary sales fell by 4.6% annually over 2018-2022 with all sub categories decreasing. Sales are expected to grow by 5.8% over 2023-2027 by rising prices due to higher input costs, in particular, sugar.

According to Euromonitor, consumers in Japan are tightening their belts with spending on snacks, amidst inflation and the rising cost of living, while manufacturers are finding it difficult to maintain profits, as the costs of raw materials and energy have continuously increased in recent years.

Given this background, players in sugar confectionery are likely to look to maintain sales through selling value-added products. Products with health and beauty claims are seen as promising, as the pandemic accelerated health consciousness amongst consumers and more consumers in Japan are willing to pay extra when it comes to beauty and health. The launch of value-added products, especially those with health and beauty claims, is expected to accelerate as well as the concept of everyday consumption of recommended dosage in order to build brand loyalty and maintain sales in the long term.

Product innovations are expected to remain frequent in sugar confectionery. In Japan, the product life cycle of packaged food and drink is relatively short compared to other countries. Products with new flavours, textures, and claims are frequently launched in the market, often as seasonal or time-limited offerings. Those that are popular remain in the market, or return the following year, while many disappear from the market over a short period of time. For example, given the boom of gummies in recent years, pastilles, gummies, jellies and chews is likely to see the most product innovation within sugar confectionery.

For example, in 2023 Kanro collaborated with Amos to launch a new gummies product, 4D Gummy Block Vehicle Pack, which has 4D block shapes, like its name. Consumers can assemble the gummies blocks to create vehicles. With the growth potential of pastilles, gummies, jellies and chews, players are likely to continue investing in creating new products to compete for consumer demand.

In 2023 Asahi launched sugar-free compressed powder candy, also known as Ramune, under the name Vinegar Ramune, claiming to be sugar-free and contain vitamin C and polyphenols as nutrients.

In late 2022, Meiji launched a new brand called Meiji Femni Care Food, targeting women. The company offers several products under this new brand, such as gummies, chocolate, and drinks, which claim to contain a-LA (a-lactalbumin) which is one of the proteins contained in raw milk, as well as nutrients such as vitamins and collagen, depending on the product.

Kracie Foods added a new product to its Fuwarinka soft sugar confectionery brand, which is known to give consumers' breath and body a gentle rose scent. The new product claims to have increased the fragrance component by 10% to offer a longer-lasting scent and contains ingredients such as damask rose oil, vitamin C, collagen, and hyaluronic acid, which are a known to contribute to beautiful skin.

Gum

Gum sales fell over 2018 to 2022 by 11.0% annually with the mask mandate and restrictions on outdoor activities during the COVID-19 outbreak being the main factors. Home seclusion during the pandemic led to lower uptake of gum in Japan, as gum is usually purchased spontaneously for freshening breath for social interactions. In addition, gum sales in Japan have been suffering a long-term decline due to the falling number of smokers, who are a key consumer group for the category. Furthermore, despite no longer being under pandemic restrictions, many Japanese continue wearing masks in public, especially in confined spaces such as public transport. This is expected to continue to negatively impact sales of products such as power mints and medicated confectionery in 2023.

To maintain sales, product innovations are expected to remain frequent. For example, Meiji shifted its long-selling gum brand Xylish to a gummies brand, launching a gummies product shaped like gum tablets, which has a hard texture, suitable for consumers who want refreshment.

With mask-wearing, hybrid working, the continuous decline in the smoking population, and competition from other snacks, gum is expected to continue suffer a volume decline in 2023. Meanwhile, retail current value sales of gum are expected to see a slight increase in 2023, driven by higher unit prices as manufacturers are increasing the prices of their products. Retail gum sales are expected to rebound over 2023-2027, however, demand remains below 2019 levels, and is likely to take longer to recover.

Retail channels

Over 2018-2022, e-commerce was the only channel with annual sales growth at 5.7%. Offline channels, which accounted for almost 100% of total sales in 2022, all fell with convenience and general merchandise stores suffering above average losses.

New product launches

A total of 5,297 new confectionary products were introduced over 2018 to 2022. Top claims were ethically based and nutritionally focused, such as "sustainable", environmentally fortified", and "-free" claims, which suggests that consumers prefer ethical and healthy confectionary. Top flavours included plain, strawberry, and grape.

New product examples

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Resources

• Euromonitor International:
  • Chocolate confectionary in Japan (June 2023)
  • Gum in Japan (June 2023)
  • Sugar confectionary in Japan (June 2023)
• Mintel GNPD, 2023

Sector Trends Analysis – Confectionary trends in Japan
Global Analysis Report

Prepared by: Kris Clipsham, Market Analyst

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