Archive for the ‘Retail’ Category

Where’s the beef? Japanese taste buds dictate processing methods

Wednesday, November 13th, 2013

Something to chew on: Packages of fat-injected processed beef in a supermarket

Something to chew on: Packages of fat-injected processed beef in a supermarket

Thanks to the hotel restaurant menu scandal, even food retailers’ product descriptions have come under scrutiny. Internet mall Rakuten received the biggest black eye, though it appears to have been for a genuine mistake and not because of a planned deception. To celebrate its baseball team’s Japan Series victory, Rakuten held a bargain sale that marked some prices down as much as 77 percent, but in several cases the markdowns were carried out so sloppily that a whole digit was lost. For instance, an A5-grade, 550-gram “steak set” that normally sells for ¥18,400 was marked down to ¥1,000, which is a lot more than 77 percent.

The sale price was supposed to be ¥10,000, but somehow one of the zeroes didn’t make the transition. Rakuten received lots of complaints and had to apologize again (having already suffered the same mistake over boxes of cream puffs) and fork out refunds, but anyone who knows anything about Japanese beef prices should have realized that ¥1,000 for Tosa-bred wagyu (Japanese beef) had to be an error.

Increased scrutiny, in fact, has revealed that many indications for beef, whether sold in restaurants or in stores, while not being technically deceptive are less then forthcoming. Aera reports that one Hokkaido beef wholesaler has been cited for misrepresenting its wares, calling some of its items “beef” when it should be labeled “processed beef” (kako-niku).

The closer attention to wording was probably fallout from the menu scandal, in which Osaka’s Shin-Hankyu Hotel was found to be at fault for listing processed beef as “beef steak,” which it is not. The Kintetsu Hotel restaurant, awarded a star by Michelin, sells processed beef as wagyu steak for a whopping ¥6,300. Even Takashimaya department store’s “beef filets” were found to be processed. A steak or filet is a cut of meat that has not been changed in any way, but many meat sellers take cheaper cuts of beef and inject them with fat to give them the marbled effect that Japanese people prefer.

In the West, the adjective “lean,” which implies less fat, is considered a positive attribute for beef, but wagyu is characteristically streaked with fat, which means it has a richer flavor and is more tender. Generally speaking, the beef that Americans, Australians and Europeans eat is considered by Japanese to be tough and difficult to chew. Thanks to improvements in feed grains in the early 90s, American producers developed softer beef for the Japanese market, which is why so many fast food chains prefer using cheaper USA beef.

Most Australia beef sold in Japan has been processed, meaning that fat has been added. Some store cuts that look like steak may even have been “molded” (seikei). Different pieces of meat are “glued” together to make what looks like a steak and then injected with fat. A friend of ours who once had a job promoting “Aussie Beef” in Japan said the joke among his Australian colleagues was that “Japanese really don’t like the taste of beef,” since to Australians real beef is chewy and has no fat.

It should be noted that the reason beef is chewy is because the cattle is more muscular, in other words healthier than cattle that has more fat. Australian cattle are typically raised on the range where they eat grass, while in Japan and America the cows are penned up and fed grain (and lots of antibiotics to fight the infections that such a diet gives rise to). Also, range-raised beef is not as susceptible to BSE (mad cow disease).

Restaurants and retailers are required by law to indicate that their meat is processed, but the print tends to be tiny and obscure. This could cause problems, however, since ingredients used to process the fat can include dairy and soy products, which many people are allergic to. Parents of at-risk children know to look for the fine print, but restaurants are supposed to ask customers if they have any food allergies when people call on the phone for takeout. If the person says yes, then “real” beef will be substituted for the usual processed kind.

In stores, however, it’s quite easy to determine which meat is real and which is processed without having to squint. Just look at the price. According to Asahi Shimbun, one kilogram of unprocessed grade A3 (highest: A5) Japanese sirloin is at least ¥5,000 per kilogram, whereas one kilogram of processed sirloin is between ¥1,400 and ¥2,000. Seikei cuts of meat are only ¥700-¥800 per kg. What’s interesting is that while fat-injection has been a common practice since the early 1980s, it was always thought of mainly as an economic measure. The purpose was to make beef affordable on an everyday level, but the Asahi reports that many restaurants now say that their customers prefer the taste of cheaper processed beef to more expensive genuine cuts of beef, even when that genuine beef is sufficiently marbled.

Government wondering how to tap burgeoning ebook market

Saturday, October 12th, 2013

No waiting

No waiting

It’s official. The consumption tax goes up to 8 percent in April, and the government is anxious to plug any loopholes. The most bothersome one is for ebooks. Though domestically sold ebooks, meaning those distributed by Japanese vendors from physical addresses in Japan, are already taxed, those sold from overseas are not, and the tax bureau is wondering how to correct this problem, especially now that the price gap between an ebook purchased from a foreign-based agent and one purchased from a Japan-based seller will widen, thus setting up a disadvantage for the latter. Market research company Daiwa Soken reports that in 2012 the government missed out on ¥24.7 billion worth of tax revenues from the purchase of ebooks from abroad.

Legally, sales transactions that occur outside of Japan are not subject to consumption tax, and the place of the transaction is determined by the address of the seller. So if you go to Amazon.co.jp and look at various books, you’ll notice that those which are sold by Amazon Japan have consumption tax included in the price, while ebooks sold by Amazon Services International do not. What the government wants to do is change the law so that the place of the sales transaction is not the place of sale but rather the place of usage, a tactic that some American local governments have tried with regard to sales tax. But sales taxes are paid at the retail stage, while consumption taxes are incurred at every step of distribution, so a Japanese importer adds the tax after the item arrives in Japan.

If a customer in Japan buys the book directly from overseas, no tax is imposed, but when the law is changed customs could add it because the imposition location is the user’s address, not the seller’s. However, since ebooks, as well as music tracks and software, tend to be purchased over the net it’s more difficult to monitor, if not downright impossible.

According to Tokyo Shimbun, the Finance Ministry’s plan is to strike deals with tax agencies abroad so that the consumption tax is added on when sales are made. Overseas sales companies who do business in Japan would have to register with the Japanese tax bureau. For large-scale companies with widespread presence in Japan and sales units overseas, like Amazon and Rakuten, which in 2011 bought the Canadian ebook seller Kobo, that shouldn’t be a problem, but there are dozens if not hundreds of smaller content vendors who will fall through the cracks.

Already, some Japanese language ebook sellers and other net vendors have set up operations overseas to exploit this loophole, thus causing concern for domestic companies like Yahoo Japan, whose president compared such competition to a boxing match in which Japanese companies “have to fight opponents who are three weight classes above them.” Eight percent can make a big difference, especially since Japanese ebooks tend to be priced high anyway compared to ebooks in other countries.

In that regard, buyers of non-Japanese language books have an even greater advantage in Japan, since Japanese publishers still enjoy government-sanctioned fixed prices for all first-sale books and magazines, regardless of when they were printed. Japanese bookstores cannot set their own prices and industry distribution rules discourage remainders. With the rising popularity of ebooks in the West — 20 percent of all books now sold in the U.S. are electronic as opposed to 8 percent in Japan — print books have actually benefited since people can seek out remainders and used books through Internet sales agents, and usually they purchase them for less money than an ebook, even with shipping included. That’s not the case in Japan, except for used books. But if Japanese ebook sellers set up agencies abroad they can corner the market.

Lower egg prices bad for producers, worse for chickens

Monday, October 7th, 2013

Which came first?

Which came first?

Over the summer the retail price of eggs has increased anywhere from 20 to 50 percent, which is a significant change for consumers but also for people who are pushing Abenomics and its focus on reigniting inflation, since eggs have for years been seemingly been impervious to price changes. At the beginning of May, it cost about the same to buy a package of 10 eggs as it cost to buy a package of ten eggs thirty years ago. As the prime buka no yutosei (best “student” among product prices), it’s one of those constants people took for granted.

However, the sudden increase was not entirely due to serendipity or natural market forces. In fact, the price hike was engineered in a bid to maintain market stability. In 2011 the agriculture ministry implemented a subsidy to control the price of eggs. Because a sudden drop in price can have an immediate harmful effect on egg producers’ bottom lines and potentially damage the industry as a whole, the ministry automatically provides funds when the wholesale price goes below ¥159 per kilogram. These funds are used to cull egg-laying chickens in order to reduce supply and put pressure on demand, thus pushing the price back up.

According to Tokyo Shimbun, in May the price dropped below the designated line and the subsidy kicked in. Producers receive ¥150-¥200 for every chicken they kill, and the ministry estimates that from mid-May until mid-July, when the subsidy was available, about 5 million birds were culled. Not all were thrown away. Many were processed and sold as meat, for which the producers can earn an additional ¥20-¥50 per bird, an aspect that makes the system even more popular among producers since it rationalizes the process of replacing chickens.

Usually, a hen becomes productive — meaning it starts laying eggs — 150 days after birth, and remains productive for about 500 days. The dropping off point for production can vary greatly from one bird to the next, so whenever the subsidy is in effect egg producers get rid of those older chickens that are borderline productive since it is monetarily advantageous to do so under the system. Egg production is a relatively easy farming method since it is all about volume. In the past ten years the average number of chickens kept by each producer has increased from about 33,000 to more than 50,000, thus indicating the loss of small-scale farmers and the dominance of corporate egg producers.

Of course, when it’s all about volume it’s also all about controlling inventory, which is bad for chickens. Besides the horrendous factory conditions that egg-laying hens have to endure, their fate is also subject to capricious market forces, not to mention natural ones.

This summer was one of the hottest on record, and a lot of chickens died from heat stroke, so even after the subsidy system was lifted in July, the number of producing hens continued to decrease, sending the price of eggs to its highest levels ever. Moreover, one condition for receiving subsidies is that the producer not replace culled chickens for at least 60 days. According to JA, its Zenno Tamago brand, often used as the index for egg prices, was up by as much as ¥55 per kg on Sept. 27 compared to the same date in 2012. (For reference one LL-size egg is 70-76 grams, and one kg now costs about ¥225.) But chickens grow fast, so the price is expected to drop to its normal level by December’s Christmas cake season.

Hot biz: stocks that climb with the temperature

Tuesday, August 20th, 2013

You can never have too few air conditioners

You can never have too few air conditioners.

The extremely hot weather that has covered Japan since late July has had a multiplying effect on the country’s economy. Though it isn’t going to solve all the government’s fiscal problems, the heat has temporarily revitalized some retail and service sectors and, in turn, driven up related stock prices.

Some are obvious. Makers of air conditioners, particularly Fujitsu General and Daikin, have seen their share prices rise markedly in recent weeks. Meiji Holdings’ stock has increased by 20 percent since the middle of June thanks mainly to their ice cream division. Other makers of cold treats, like Ezaki Glico and Morinaga, are also enjoying high stock prices. Beverage makers can always look forward to good sales in summer, but this year in particular breweries are having their best season in 2 years. Shares for convenience stores have also risen steadily since the middle of July, based on strong retail sales as a result of the hot weather.

Another sector that’s benefited is Internet retailers. Yumenomachi Sozo Iinkai, a web supermarket, posted record high stock prices on Aug. 8 because of its special delivery system. People just don’t want to go outside in this heat, so they even order their groceries online and have them delivered. The nation’s biggest supermarket chain, Aeon, has said in terms of volume, deliveries have increased by 50 percent since the hot weather started. Even Tsutaya, Japan’s main rental video service, has seen its deliveries of DVDs double over last year’s.

Tokyo Shimbun reports that department stores, which deliver goods but count more on customers actually showing up at their stores, have initiated special events to get bodies out of the house and into their air-conditioned spaces. Shinjuku’s Takashimaya, for instance, has an unusual policy. The first 40 patrons who visit the food fair in the store’s basement between 2 and 5 p.m. on days where the temperature hits 35 degrees get free watermelon or a free extra scoop of gelato if they buy a single scoop.

A representative of a securities company told Asahi Shimbun that another reason for the sudden jump in stock prices was the Upper House election, which essentially pushed economic news aside. Investors had little information with which to make decisions, so when the hot weather became a topic they immediately went to companies that they thought would benefit.

Build a multifunction restroom and they will come

Wednesday, August 14th, 2013

Room to move

Room to move

The big question for retailers and restaurants in Japan is how to attract seniors, regardless of what it is you sell or serve. One nonprofit Tokyo organization called Check is advising businesses to install so-called multifunction restrooms on their premises and then advertise the fact. Multifunction restrooms are larger than standard public restrooms and can accommodate wheelchairs, and the NPO’s research has found that older people are more likely to patronize a business that has one.

According to a study reported in Tokyo Shimbun, the average family with at least one senior spends four hours and ¥10,000 when they go out shopping, but 20 percent also say they will likely stay out longer and spend more money if they know beforehand the location of multifunction restrooms. The study group extrapolated on its findings and speculated that in terms of time the family would stay out 30 to 120 minutes longer, and spend ¥606 more.

Check, which was founded in 2008, has made a list of some 50,000 multi-function rest rooms throughout Japan, which it provides on its website. The NPO thinks there are about 100,000, and it is providing this information to local governments so that they can use it to promote their areas to local seniors and older tourists.

However, it should be noted that toilets in general are becoming something of a sales promotional tool. The Tokyo Metro subway system actually has TV commercials aimed at women showing how modern and clean their public rest rooms are. Lawson was the first convenience store to declare that its restrooms could be used by the public without the obligation of buying something, since people were so grateful for the service they usually bought something anyway. Most convenience stores have followed suit. And many restaurants explain their rest room facilities on their home pages and Tabelog sites, since many women won’t patronize restaurants that don’t provide separate facilities for men and women.

Retailers and restaurants get slippery with unagi prices

Tuesday, July 16th, 2013

July 22 is doyo no ushi no hi — day of the ox.” It is not a holiday to mark the cultural contributions of bovine, but rather a reminder that there are 18 more days until a seasonal change, during which falls the day of the ox — one of the signs of the Chinese zodiac. Traditionally in Japan people eat grilled eel (unagi), on this day, because it is believed that eel strengthens physical stamina during the hottest days of summer. But this year foodies and purveyors of unagi are faced with a problem, since eel in the wild is becoming increasingly scarce and may soon end up on a list of endangered species. The fisheries agency reports that the amount of eel fry bought by wholesalers in Japan this year has averaged 25 percent less than last year.

Yield to eel: Banners promoting unadon outside Sukiya

Yield to eel: Banners promoting unadon outside Sukiya

So it was definitely surprising when Daiei, one of Japan’s major supermarket chains, announced on July 11 that it would be selling packaged unagi kabayaki (grilled eel) in its stores for 20 percent less than last summer’s price on July 13-15 and July 20-22. According to Asahi Shimbun the price of unagi fry is now as much as 6.5 times what it was in 2009.

In most retail outlets, the price of prepared grilled eel is 26 percent higher than it was last summer. Usually, unagi that goes on sale in July is bought by Daiei in bulk sometime after January of the same year. It is then processed and frozen by a contractor. However, anticipating the rise in prices Daiei bought its unagi last fall and asked its contractor to carry out processing and freezing “when it had the time to do so,” thus saving money. Also, Daiei usually buys unagi for lunch boxes and unagi for packaged sushi separately, but this year they bought unagi for both at the same time in bulk, saving even more money.

But the real reason they can charge less is because they want to. Daiei admits that it will lose money during these two three-day periods by selling unagi kabayaki for 20 percent less. The supermarket is using unagi as a loss leader, a means of getting customers into its stores, where they will buy other things. And it seems to be working. Daiei started accepting pre-orders last month. Another market chain, Seiyu, announced that despite increases in wholesale prices, it will sell domestic unagi kabayaki at the same price as last summer: ¥1,470 for 140 grams. Seiyu expects sales to be 10 percent higher than last year.

Restaurants, on the other hand, seem to have no choice but to raise prices, but the amount of increase depends on the type of eatery. Asahi says that Tokyo ryotei — upscale, reservation-only restaurants — have increased unagi dishes by about ¥400 since last year, and famous restaurants that specialize in unagi have raised prices by as much as ¥1,000 per dish.

However, chain restaurants are trying to keep the increase to a minimum. Many sushi chains that usually charge ¥100 per plate serve unaju (grilled eel over rice) in the summertime, though usually only for takeout. One of these chains, Kura Sushi, is advertising unadon (eel over rice in a bowl) for only ¥598. That’s pretty cheap compared to gyudon (beef bowl) chains, which also do good business with unadon in the summer. Sukiya, the biggest gyudon chain, is selling unadon for ¥780, while Yoshinoya has increased its eel bowl ¥30 since last summer to ¥680. In 2010 it was only ¥500. Both Sukiya and Yoshinoya buy their unagi from China, but insist that they supervise the raising and harvest themselves, without relying on middlemen, to ensure quality.

Deflation watch: Kabocha

Monday, July 1st, 2013

Japanese pumpkin, raw and prepared

Japanese pumpkin, raw and prepared

The main story at the heart of Abenomics as far as the Japanese media is concerned is that Japanese exporters are making more money since the Liberal Democratic Party regained power. Secondarily, energy costs are rising thanks to a related increase in the dollar against the yen, not to mention imported wheat prices, which affect all sorts of processed foods in Japan. Many food-related manufacturers started raising prices on July 1 as a result.

So far, the price of imported fresh produce hasn’t been affected that much. Last year we reported on the very low price of bananas due to specific circumstances, and since then the price has gone up quite a bit owing to a typhoon that destroyed much of the Philippines’ crop. However, the prices of other fruits and vegetables that tend to be imported in large amounts haven’t changed significantly. If anything, some local produce may have come down in price and thus become more competitive, notably kabocha, the Japanese style of pumpkin, often called buttercup squash in English.

Kabocha is grown in Japan but is mainly available in the fall and early winter. During the rest of the year it is imported mainly Mexico and New Zealand, but also from New Caledonia and South Korea. Demand is so strong that Japanese companies have been running farms in these countries for almost 20 years to grow kabocha exclusively. New Zealand first started exporting the vegetable to Japan in 1988. Actually, China, India and Russia produce much more pumpkin and other types of squash but the kind they grow is not necessarily popular here. (Also, there seems to be some issue with China’s use of agrichemicals.) Japanese prefer a strain referred to as kuri-kabocha, which is drier.

Normally, the price of Japanese kabocha is two to three times that of the imported kind. In April at the Tokyo Central Produce Market, domestic kabocha was going for ¥356 per kg, while foreign kabocha was only about ¥97. However, lately the price of Japanese kabocha has come down to almost even with foreign kabocha, which is a remarkable drop. Last week at our local supermarket kabocha from Mexico was only a little less expensive than kabocha grown in Ibaraki Prefecture. It’s not clear if this is due to higher import prices because of the rising dollar or just that the domestic product is suddenly cheaper. It’s probably both, since Japanese farmers have to contend with Mexican kabocha almost year-round now that there are two growing seasons for kabocha in Mexico.

Also, kabocha, once a standard item in the Japanese diet, lost popularity some years ago and seems to be making a big comeback now among health-conscious families — kabocha contains more calcium than milk does — so farmers are producing as much as they can, thus bringing the price down.

RSS

Recent posts