薬食同源　Japan’s Nutraceuticals Today

By Paul Yamaguchi  

The State of Nutraceuticals in Japan

Good News and Bad News
In the survey of winter bonuses by Nikkei, the Japanese newspaper showed that bonuses rose by 3.54 percent to an average 804,458 yen or $6,688. The Financial Times reported bonuses at manufacturers rose 4.31 percent. The same paper said that workers at Toyota, which has been making record profits and is on target to overtake General Motors as the world's biggest carmaker, were asking for a basic pay rise for the first time in four years.

The New York Times reported that most economists and analysts believe the economic recovery seems to be real, with its roots extending throughout the Japanese economy.

The Japanese economy is projected to be growing at a faster rate for this year than that of Europe. Japan, Asia's biggest economy and the world's second largest, is finally rebounding after years of spiraling price declines. The government has set its long-term goal of ending deflation and achieving nominal GDP growth of around 2 percent next fiscal year according to an Associated Press news story.

Based on these reports, it appears that the Japanese economy is finally recovering and setting the stage for solid growth in 2006. Winter bonuses are most likely going to be put into savings accounts, but sales for big-ticket items such as high-end consumer electronics are up; spending for leisure and travel is also up. As the Japanese economy improves, consumer confidence is also increasing and people are spending more money.

Among income and spending increases, the Japanese nutraceutical industry also grew in 2005; it may top the $30 billion mark by the end of this year. The bad news is that the rate of annual growth is only about 6 percent, much slower than the 12 percent of last year and 15 percent from 2 years ago. The growth of the dietary supplement sector is expected to be about 4 percent this year, the smallest growth in 7 years. Has the booming health industry already reached its peak? Or is this just a temporary slow-down? It is still too early to judge but we should keep a close eye on future sales trends. As 2005 comes to a close, let’s take a look at the state of the Japanese nutraceutical industry:

The Ill-Fated FOSHU Overhaul

The regulatory environment surrounding the industry is more confusing than a year ago. The government‘s inability to adopt a new dietary supplement law resulted in impractical new FOSHU regulations. Earlier this year, the MHLW announced a new FOSHU regulation for three new FOSHU categories: qualified, standardized, and disease risk-reduction claim FOSHUs. They were designed to ease the approval process and expand FOSHU’s regulatory umbrella. After 12 months of implementation, there have been no new health claims granted under the new FOSHU categories because of the stringent requirements surrounding clinical and human test results: “the government created new doors for easier entry, but when opened, there is a new wall standing in front of you” said The Health Industry News. Last August, several economic organizations proposed that MHLW review the new FOSHU rules, but the government turned down the request. Therefore, the standoff continues between MHLW and the industry.

Two GMPs

Good Manufacturing Practices (GMPs) is a manufacturing practice which requires a quality approach to manufacturing, forcing companies to minimize or eliminate instances of contamination, mix-ups, and errors. Since the announcement of MHLW’s GMP guidelines last February, two non-governmental organizations have started GMP certification programs. So far, a dozen manufacturers have been granted GMP certifications. As the government is not involved with GMP certification programs, JHNFA ( Japan Health Food & Nutrition Food Association) and a newly formed Japanese Institute for Health Food Standards (JIHFS), continue to certify manufacturers with different standards and programs. This will certainly create some confusion among manufacturers as to which program to choose from as they try to decide which program is right for their practices. MHLW specifies dietary supplements and functional foods as “foods” including FOSHU products and ingredients widely used in conventional foods. Implementing dietary supplement GMP, without recognizing dietary supplements by law is like posting a speed limit where there is no highway.

On The Ingredient Front

In the last couple of weeks, several online shops announced their top selling nutraceutical products in 2005. Among the top items are: alpha lipoic acid ( ALA), CoQ10, aojiru, (green juice) and kanten, an agar gel food made from a reddish seaweed called tengusa. Kanten is a popular food for weight control and diet. Japanese people have been eating Kanten for over 150 years - often in the summer to help escape the heat. Only recently has it become a popular diet food as it has almost no calories and it fills the stomach to suppress the appetite. Kanten has no taste, but by adding fruits or other flavors it can resemble Jell-O®. Its portion control packaging also helps consumers control their weight. It is not only the number one diet food but also the most popular nutraceutical product in Japan according to Kenkocom (www.kenko.com), an Internet nutraceutical merchant. The estimated diet-oriented kanten market was $200 million in 2005.

I was surprised to see ALA as Kenkocom’s most popular ingredient in 2005. It is the number one dietary supplement ingredient but didn’t start out that way. In the beginning of this year, CoQ10 was the most active and popular ingredient. After TV programs focused on ALA, sales dramatically accelerated in the last 8 months of this year. ALA is known for preventing or treating age-related diseases from heart disease and stroke to diabetes and cataracts but in Japan, it is mostly used for sports, diet and cosmeceuticals. The ALA market jumped from $35 million in 2004 to $96 million at the end of 2005. Popularity may continue into the middle of 2006.

Sales of CoQ10 stopped just short of $130 million. In the beginning of this year CoQ10 was the only ingredient in the industry whose sales were growing. The high demand for the ingredient created high prices and a worldwide shortage in the beginning of this year. The situation has since been eased, and now production and demand levels are at a balanced, healthy level. Kenkocom lists CoQ10 as its number two most popular product in 2005 even though it certainly lost the momentum it had in 2004.

Aojiru, a green leaf juice, often made using kale and most recently, ashitaba, is Kencocom’s third most popular product in 2005. Antioxidants, allergy, diabetes and digestive health are some of the well-established health benefits from taking aojiru. According to Health Industry News, the aojiru market is well over $500 million in 2005 and has grown 20 percent from a year ago. Most aojiru products are distributed through MLM and catalog sales. Toyo Shinyaku (www.toyoshinyaku.co.jp) has over 20 aojiru FOSHU products.

MSM (Methyl-Sulfonyl-Methane) sales were disappointing. We thought it would be accepted more widely but it didn’t crack the top 20.

Just as with any other consumer product, popularity changes and supplements are no exception. Japan’s notoriously finicky shoppers are always looking for something new. To satisfy this consumer, the Japanese manufactures are always looking for what’s next.

What will be the hot ingredients in 2006? Again, here are some of kenkocom’s predictions for ingredient trends in 2006:

Amino acids like, ornithine, creatine and glutathione are effective for diet, energy and cosmeceuticals and they are one of the more promising ingredients for 2006. Biotin, enzyme and astaxanthin are also among the expected popular products in 2006. See more detail at: (www.e-expo.net/news/2005/1212_04.html)

The Year of The Dog

2006 is the year of the dog by the Chinese zodiac, and a Chinese horoscope may predict that people born in the Year of the Dog possess the best traits of human nature. They have a deep sense of loyalty, are honest, and inspire other people’s confidence. It also said, dog year’s people make good leaders (According to The Chinese Culture Center of San Francisco- www.c-c-c.org). The years of the dog are 1934, 1946, 1958, 1970, 1982, 1994 and 2006.

I would like to take this opportunity to thank you for your support, and to wish you a happy and healthy new year.