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THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARIL... - page 15 / 38

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Japan has a large and competitive fast food segment made up of both domestic and overseas operators. Generally, fast food restaurant operators are volume buyers of specific raw materials. In addition to low cost, suppliers must provide a stable supply of products at a specific quality to compete effectively in this segment.

Exporters can approach most large restaurant chains directly but for the smaller chains, exporters must build relationships with trading companies or major food service wholesalers.

Hotels and Other Travel-Related Facilities Major hotels are attractive markets for U.S. exporters. They are more oriented toward Western food and frequently have ―food fair‖ promotions featuring a variety of countries‘ cuisines. Exporter‘s challenge lies in developing effective distribution channels to reach them. Hotels offer high consumer visibility and thus promotional value for exporters. Highlighting the fact that a particular exporter‘s product is used by a major upscale hotel chain, for example, is a good way to promote the product to retailers and other prospective buyers.

Railway companies and domestic airlines operate kitchens in Tokyo and Osaka, while the overseas airlines tend to use contract caterers. These Japanese companies tend to emphasize Japanese cuisine and thus are less receptive to imported Western products.

Theme parks are also an important part of the sector. Restaurants and snack outlets at both Tokyo Disneyland and Universal Studio Theme Park, for example, draw millions of visitors every year. Other theme parks around the country also attract thousands of visitors a day and offer opportunities to U.S. food exporters.

Bars and Coffee Shops These establishments account for 20.1% of the total food service sales. The sales from the segment showed 3.7% decrease in 2009 following 1.9% decrease in the previous year. While foreign chains such as Starbucks have made significant inroads in Japan over the last few years, coffee shops in general were hit by a major blow showing a decrease of 3.0% due to the bad economy in Japan. Still the segment is a major market for foreign beverages and snack foods.

Institutional Food Markets The institutional market, comprised of cafeterias at factories, offices, hospitals and schools, generated $35.1 billion in 2009, accounting for 13.7% of the total food service sales. The cafeteria operations of the institutions are typically served by contract caterers. Building relationships with caterers is, therefore, essential to crack this market. Both contract caterers and institutions with their own kitchens are typically serviced by large food service wholesalers. Because the most important criterion for institutional suppliers is cost competitiveness, the sector offers huge market potential to U.S. exporters.

The institutional catering market shrank in 2009 mainly due to the sluggish economy, characterized by corporate

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