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Japan "Hot" Energy Sector

The Japanese food and beverage industry is complex and evolving. The combined food retail and food service market is quite sizeable, with its value approaching $600 billion. While the country's older generation tends to maintain a traditional diet, younger consumers are beginning to favor Western cuisine and habits, leading to a change in the types and amounts of food consumed. However Japan's population is beginning to shrink and age, with a lower birth rate and higher life expectancy.


This means that demand for food and beverages could decrease in the future. Japanese consumer spending on food (http://www.bizvibe.com/blog/japanese-snacks-market-grows/) fell by 32.6% from 2012 to 2015, which is in line with the decrease in total consumer spending.


This does not undermine the potential for US companies in the Japanese market. Japan is highly dependent on imports for its food supply and the different drivers for the food and beverage market - such as a more Westernized diet, increasing popularity of health foods and rising incomes - can provide the opportunities for US companies. The country's food imports far exceed its exports, being more than 10 times greater in 2014. Over the past few years, imports have risen and exports have fallen, with the top three imports being fish, meat and cereals. The country's self-sufficiency in food was 39% in 2015 and the government has made a goal of rising this number to 45% by 2025.


In general, the Japanese consumer base is highly-educated with a significant disposable income. The main elements of the consumer mindset are: novelty-seeking, high-quality expectations, relative price sensitivity and an interest in foreign goods.


Firstly, Japanese consumers seek novelty and highly value new experiences and products. They have a preference for originality, new products, new functions and a large variety of assortments and food.


Secondly, Japanese consumers tend to have very high quality expectations and are willing to pay a premium price for this, providing that the products exceed their expectations. Product freshness and the origin of the product is very important.


Thirdly, Japanese consumers are relatively price-conscious. This element has become especially visible over the past decades. There are bigger demand for ready-made meals, processed and frozen foods and reasonably priced private-label products.


Lastly, the Japanese have an interested in foreign goods, which has been strengthened to increase exposure to global culture and media.


Over the past several years, the Japanese government has increased its focus on health. In order to reduce the burden on the country's health system and decrease stress-related health issues, the Ministry of Health, Labor and Welfare introduced mandatory health checks in 2008. The government hopes to reduce lifestyle disease such as obesity and heart diseases and these health checks are meant to encourage healthier lifestyles. This focus on health has led to greater demand for food that is perceived to be healthy, such as products with low fat and sugar content, organic produce and nutritional supplements. These consumers also tend to consume more fruits and vegetables so demand for them will likely rise in the future.


1.Background:

Japan’s rapid industrial growth since the end of World War II doubled the nation’s energy consumption every 5 years into the 1990s. During the 1960-72 period of accelerated growth, energy consumption grew much faster than GNP, doubling Japan’s consumption of world energy. By 1976, with only 3% of the world’s population, Japan was consuming 6% of global energy supplies.


Compared with other nations, electricity in Japan is relatively expensive and since the loss of nuclear power after the earthquake and Tsunami disaster at Fukushima, the cost of electricity has risen significantly.


2. Energy Sources:

In 1950 coal supplied half of Japan’s energy needs, hydroelectricity one-third and oil the rest. By 2001 the contribution of oil had increased to 50.2% of the total, with rises also in the use of nuclear power and natural gas. Japan now depends heavily on imported fossil fuels to meet its energy demand.


Japan currently produces about 10% of its electricity from renewable sources. The Fourth Strategic Energy Plan set the renewable share goal to be 24% by 2030. In the next 15 years, Japan intends on investing $700 billion into renewable energy.


One initiative the Japanese government has implemented in order to boost the amount of renewable energy produced and purchased in Japan is the feed-in-tariff scheme.


3. Electricity:

In 2014, Japan ranked fifth in the world by electricity production after USA, China, Russia and India with 934TWh produced during that year.

Almost one quarter (24.93%) of its electricity production was from nuclear plants compared with 76.18% for France and 19.66% for USA.

However after the 2011 Tohoku earthquake and tsunami and subsequent Fukushima Daiichi nuclear disaster, all plants eventually shut down in May,2012.

Since the generation disruption caused by the Fukushima disaster, rapid steps have been made to liberalize the electricity supply market. One way was done in Japan is through the feed-in-tariff scheme. This was announced in 2012 as a direct consequences of the Fukushima disaster. The Ministry of Economy,Trade and Industry set prices for various renewable energy sources.


Japan’s renewable energy generation is overwhelming water power. The ratio of renewable power generation has decreased from 25% to total electricity generation in 1970 to 10% today. Extremely aggressive feed-in-tariff for renewable energy introduced in July 2012 are showing first modest results to reverse this trend- initially solar energy projects dominate feed-in-tariff projects since the solar projects are fastest to build. Larger projects such as off-shore wind power or geo^thermal projects take a very much longer time to plan and build – on the order of 10 years or longer.


4. Solar Power:

The government set solar PV targets in 2004 and revised them in 2009:

* 29GW of solar PV capacity by 2020

* 53GW of solar PV capacity by 2030

* 10% of total domestic primary energy demand met with solar PV by 2050


Japan is a leading manufacturers of photovoltaics. Photovoltaic device use semiconductors in order to generate electricity from the sunlight. Solar companies of Japan include, Kyocera, Mitsubishi Electric, Mitsubishi Heavy Industries, Sanyo , Sharp Solar, Solar Frontier and Toshiba.


5. Wind Power:

In Japan’s electricity sector wind power generates a small proportion of the country’s electricity. As of 2015, the country had a total installed capacity of 3,167MW. The government targets for wind power deployment are relatively low when compared with other countries, at 1.7% of electricity production by 2030. It has been estimated that Japan has the potential for 144GW for onshore wind and 608GW of offshore wind capacity.


Opportunities for Exporters:

There are many opportunities for foreign suppliers of semiconductors, power generation, transmission and distribution, and renewable energy equipment and systems.

© 2018 by Global Strategy, Inc.

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