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Grim tidings for Japan functional drinks market

By staff reporter , 21-Dec-2006

Functional and energy drinks in Japan are coming under pressure from perceived healthy options such as ready-to-drink teas, mineral water and tonic drinks, according to a recent report from Euromonitor International.

While the scorching summer of 2004 boosted consumption of sports and energy drinks by nine percent over the previous year, this proved to be a spike when consumption fell from 1.83bn litres to 1.79bn in 2005 (off-trade sales).

Japan is widely regarded as the world's leading market for functional foods and nutraceuticals. It was the first to introduce government-approved health claims, and is often seen as the source of health trends that impact on the US and European markets three to five years later.

As in other markets, sports drink manufacturers have been seeking consumers outside of the truly sporty consumer bracket - for instance, the Pocari Sweat drink is now marketed as a post-bath drink, or to help perk people up when they are feeling unwell. Accordingly, such drinks are now offered in a broader range of pack sizes.

But according to Euromonitor, in Japan this has put them into direct competition with other home-use drinks, like ready-to-drink tea and mineral water.

What is more, energy drinks have met with competition from a new category of over-the-counter tonics, since the latter were deregulated in 1999. With their new status as 'newly designated quasi-drugs', the can now be sold alongside traditional energy drinks in retail stores and vending machines.

When faced with a direct choice, the consumer may opt for the tonic since they tend to contain stronger ingredients.

Moreover, the move towards healthier eating is encouraging manufacturers to reformulate sweet energy drinks, developing no-sugar or reduced-sweetener varieties.

Euromonitor predicts that the Japanese functional drinks market will be worth Y532.7bn in 2010, compared to Y544.7 in 2006.

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