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Japanese chocolate market

CHOCOLATE MARKET OVERVIEW As of April 1, 2009 Japan Prepared by Akira Honda Japan Niche Biz Executive Summary of Chocolate market in Japan Japanese chocolate output remained relatively constant throughout 2005 and 2006, according to the latest figures from the chart below prepared by the Chocolate and Cocoa Association of Japan. Annual production amounted to nearly 222, 020 tons, and annual sales reached US$4, 066 Million nearly the same figure as recorded the previous year, which shows approximately 13% among the entire confectionary market in Japan. European manufacturers will be looking closely at the implications of the figures.

According to a report from Datamonitor, Asia offers strong potential for the chocolate industry. Indeed, the fact that Japanese market still accounts for only a small portion of the global chocolate market reflects relatively low consumption levels. If per capita consumption levels can be increased, the size of this market has the potential to increase considerably. The fact that chocolate is not a traditional food, high prices and domestic production problems will provide the main problems to market growth. As these markets develop, prices will fall making these products more accessible to the wider population.

Chocolate market size of Japan -1- Market share for imported chocolate in Japan The issue is the foreign (imported) chocolate market in Japan for our project with Patchi. Because the custom duty tariff for chocolate has been lowered from 20% to 10% in April 1988, the volume of imported chocolate has been increased. The major importing countries are those from Europe and North America such as USA, Italy and Belgium. Now the market share of the imported chocolate is approximately 10% (US$400 Million) among the annual retail sales amount of US$4, 138 Million in the Japanese chocolate market.

Trend of major eight countries of importing chocolate to Japan 2001 3, 715, 427 2, 970, 861 2, 163, 576 499, 607 670, 866 1, 276, 061 1, 519, 943 1, 183, 248 13, 999, 589 80. 78% 2002 3, 575, 921 3, 436, 665 2, 432, 120 1, 212, 541 1, 487, 258 1, 447, 058 1, 460, 698 992, 040 16, 044, 301 84. 04% 2003 3, 377, 030 2, 470, 531 2, 517, 802 2, 114, 787 1, 688, 207 1, 575, 472 1, 085, 857 1, 035, 424 15, 865, 110 81. 15% 2004 3, 456, 887 2, 441, 283 2, 747, 201 2, 576, 467 2, 017, 044 1, 857, 892 953, 503 1, 066, 297 17, 116, 574 84. 22% (Unit: Kg) 2005 2, 990, 106 2, 466, 088 2, 779, 421 2, 545, 630 1, 590, 839 2, 067, 149 860, 723 1, 043, 987 16, 343, 943 82. 18%

USA Australia Belgium China Korea France Italy Swiss Total Ratio against total imported volume -2- MARKET ANALYSIS – JAPAN Foreign Chocolate Brand – Competition The following chart shows the major imported (foreign) brand chocolate in Japan that each major distributor is expanding its presence nationwide. Among those competitors, Godiva is the only brand that has the same concept with Patch. Other brands are almost distributed by the traditional retail supply chain throughout Japan. Therefore, it is highly proposed that we should focus on how and why Godiva is expanding in Japan.

Major imported (foreign) chocolate brand – competitors in Japan Country Godiva Cote D’Or Belgium Guylian Trefin Leonidas Poulain France Marquise de Sevigne Valrhna Maxim’s de Paris Hershey USA Hawaian Host Almond Roca Andes Swiss Lindt Toblerone Snickers, m&m’s, Milky Way Australia Time Out Tim Tam Italy Germany Netherlands Rocher, Mon Cheri Loacher Ritter Milka Droste Name of Brand Major Distributor in Japan Godiva Japan Craft Japan (Meiji Seika) Meijiya Cadbury Japan Strode Trading International Cadbury Japan Takara Shoji Sun-Eight Trading Ryoka Japan Suzusho Hawaian Host Japan Meijiya Suzusho Rokko Butter Craft Japan (Meiji Seika) Master Foods Limited Cadbury Japan Campbel Japan (Sun-Esu Inc. ) Nihon Ferrero Kitanoya Sun-Esu Inc. Craft Japan (Meiji Seika) Takara Shoji -3-

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