Tomato for Food Service Industry

An Expert's View about Vegetables and Melons, Roots and Tubers in Japan

Last updated: 17 Jul 2011

U.S. fresh tomato export shows great potential to expand in the food service market in Japan. Demand for fresh and cooking tomatoes are increasing, especially among the fast food industry and convenience stores.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 6/30/2011 GAIN Report Number: JA1507 Japan Post: Tokyo ATO Fresh Tomato for Food Service Industry 2011 Report Categories: Market Development Reports Tomatoes and Products Approved By: Steve Shnitzler, Director, ATO Japan Prepared By: Masayuki (Alex) Otsuka, Specialist, ATO Tokyo Report Highlights: U.S. fresh tomato export shows great potential to expand in the food service market in Japan. Demand for fresh and cooking tomatoes are increasing, especially among the fast food industry and convenience stores. Most Japanese tomatoes are produced for table consumption and have high gel content, making them unsuitable for use in burgers and sandwiches. The California Tomato Farmers (CTF) recently opened an office in Japan to take advantage of these opportunities. Additionally, the recent Great Earthquake in Eastern Japan impacted local production of processing tomatoes and may impact imports of these products for the foreseeable future. Executive Summary: 1. Executive Summary Japanese fast food outlets, hamburger shops, and convenience store sandwiches demand a year round stable supply of fresh tomatoes. However, the market often faces shortages of imported tomatoes during winter season. If the U.S. suppliers can fulfill the demands of the market through a whole year, there is the great potential for increasing in tomato export from the U.S. to Japan. The California Tomato Farmers (CTF) opened a representative office in Japan in April 2011. The timing of the establishment in the market couldn?t have been better. New establishments are opening all the time and Wendy?s will be returning to Japan this fall. General Information: Table of Contents 1. Executive Summary: 2. Current Market Conditions: Chart 1 - Japan Tomato Production: Snap Shots 1: Major Hamburgers Chain Menu 3. Tomato Characteristics 4. Potential for U.S. Tomatoes Chart 2 - U.S. Tomato Export Chart 3 - Japan Tomato Import 5. Required Specifications: 6. Impact by the Great Earthquake Chart 4 ? Regional Tomato Production 2010 7. Prospects 8. Tariff Table Tariff Schedule: Fresh Tomato and Processed Tomato 9. ATO Contact Information 10. Appendix Chart 5 - Japan Import Processed Tomato Products 1: HS 2002.00 i) Quick Estimation: January ? April ii) Confirmed: January ? March Chart 6 - Japan Import Processed Tomato Products 2: HS 2002.00 iii) Year to Date: January ? December, 2008 - 2010 2. Current Market Conditions: Japan?s annual tomato production in 2010 totaled 690,700 metric tons, a decrease of 3.65 % from 2009 and a drop of about 15 % from 2000. A 94.5 % of the total tomato harvest in 2010 was for table consumption. Domestic cooking tomatoes are also included in this category. Only 5.5 % out of the total harvest were destined for processing, mainly for juice production. Chart 1 - Japan Tomato Production: Year Growing area Harvest Y-T-Y * Distributed Y-T-Y* Jan-Dec ha Ton % Ton % 2000 13,600 806,300 708,500 2001 13,600 797,800 -1.05 699,800 -1.23 2002 13,300 784,900 -1.62 688,600 -1.60 2003 13,200 759,900 -3.19 669,000 -2.85 2004 13,100 754,900 -0.66 666,000 -0.45 2005 13,000 759,200 0.57 668,100 0.32 2006 12,900 728,300 -4.07 642,200 -3.88 2007 12,700 749,200 2.87 663,800 3.36 2008 12,500 732,800 -2.19 648,300 -2.34 2009 12,400 716,900 -2.17 634,100 -2.19 2010 12,300 690,700 -3.65 612,600 -3.39 * Y-T-Y: year-to-year comparison from previous year Source: Ministry of Agriculture, Forestry and Fisheries (MAFF) Most tomatoes in Japan are grown in green houses, while some are field grown only during summer time. Japanese tomato varieties are bred for well-formed appearance and higher sugar content (brix) with high gel content. As such, these tomatoes are not used by the quick service restaurant (QSR) industry as they too sweet for sandwich topping, crush easily under a knife, and are simply too expensive, eating into profit margins. For example, with 3,302 outlets, McDonald?s Japan is the second largest company group in the world as measured by sales and is the biggest in the Japan?s HRI industry. However, the company stopped adding tomatoes to its regular burgers and sandwiches due to cost and supply ability. On the other hand, the second biggest hamburger chain, MOS Food Service Inc., promotes their use of 100 % domestic tomato and advertises it as value added food. The company makes contract with domestic famers to grow specific tomatoes throughout the country, and supply those tomatoes to their 1,391 outlets all year around. Regular domestic tomatoes are sold at Japanese Yen 90 ? 160 (US$1.10 ? $2.00) per piece (120 ? 200 grams) at the retail. Snap Shots 1: Major Hamburgers Chain Menu McDonald Burger Regular Menu MOS Burger Regular Menu Use no tomato for regular menu Featuring domestic tomato on top 3. Tomato Characteristics Table tomato production in Japan generates higher profits than other fresh produce. GOJ and regional governments assist famers to develop and promote new varieties of tomatoes that exhibit higher brix levels. In many ways, the Japanese media has portrayed tomatoes as a gourmet product and consumers tend to seek tomatoes with sweeter taste. These factors encourage domestic famers to produce juicy sweet tomatoes. If you slice a typical Japanese table tomato into slices, the fruit is heavy with gel and low in solids. Bread soaks up the excess moisture, creating a soggy sandwich. This is why domestic table tomatoes are not used in QSR?s and convenience store sandwiches. In addition, the high price cuts too deeply into store margins, making it unprofitable to use for the food service and prepared meal industry. Higher solid content tomatoes, for cooking also, have fewer issues than the retail table tomato. For cooking, a majority of the consumers use canned tomatoes that are sold at JPY 80 ? 120 (US$1.00 ? $1.50) per can (400 grams). Almost of canned tomatoes are imported and cost cheaper than fresh tomato in Japan. 4. Potential for U.S. Tomatoes Japan is the 3rd largest market for U.S. tomatoes after Canada and Mexico. The total quantity of tomato exported from U.S. to Japan in 2010 was 1,731 metric tons, less than 0.3 % of total domestic production in Japan. For Japan, the U.S. is the second biggest tomato supply country next to Korea. Moreover, the imports from Mexico and New Zealand to Japan jumped markedly in 2010. Higher brix tomatoes spoil faster than lower brix. Lower brix U.S. tomatoes with higher solids can use that as an advantage. U.S. tomatoes are known by Japanese buyers as a good ingredient suitable for hamburgers and sandwiches especially among fast food industry and convenience store industry. Suppliers in California have delivered tomatoes during the summer season, May through November. For the winter months, Japan buyers look to Mexico and New Zealand were to fill up balance of demand. There is the great potential for increasing in tomato export from the U.S. to Japan, if the U.S. suppliers can fulfill the demands of the market through a whole year. Chart 2 - U.S. Tomato Export HS Code 0702 Thousands Quantity % Share % Change Unit Partner Country 2008 2009 2010 2008 2009 2010 2010/2009 World KG 250961 241791 224279 100.00 100.00 100.00 - 7.24 Canada KG 204253 181218 190547 81.39 74.95 84.96 5.15 Mexico KG 43793 57918 29085 17.45 23.95 12.97 - 49.78 Japan KG 1044 844 1731 0.42 0.35 0.77 105.12 Bahamas KG 755 706 879 0.30 0.29 0.39 24.56 Trinidad & Tobago KG 204 210 586 0.08 0.09 0.26 179.26 Guatemala KG 0 0 358 0.00 0.00 0.16 0.00 Turks & Caicos Islands KG 71 60 150 0.03 0.02 0.07 148.27 Netherlands Antilles KG 128 203 121 0.05 0.08 0.05 - 40.22 Bermuda KG 117 119 116 0.05 0.05 0.05 - 2.16 Source: Global Trade Atlas Chart 3 - Japan Tomato Import HS Code 0702 Thousands Quantity % Share % Change Unit Partner Country 2008 2009 2010 2008 2009 2010 2010/2009 World KG 1976 2338 2971 100.00 100.00 100.00 27.07 Korea South KG 604 894 964 30.58 38.23 32.43 7.77 United States KG 759 788 929 38.39 33.72 31.27 17.84 Mexico KG 29 38 472 1.48 1.62 15.89 1146.56 New Zealand KG 76 187 460 3.85 7.98 15.48 146.55 Canada KG 508 431 146 25.69 18.45 4.93 - 66.05 Source: Global Trade Atlas (Trade Statistics of Japan, Ministry of Finance) 5. Required Specifications: The Japanese standard carton box is designed for total net weight 4 kilo grams per a case. Generally, an ?L? size box contains 20 pieces (5 x 4) of tomatoes, an ?M? size contains 24 pieces (6 x 4) and an ?S? size contains 28-35 pieces (7 x 4 or 7 x 5) in a case. Japanese importers also accept a two layered, net weight 10 kilo grams (5 kilo grams x 2 layers), case which is available in the U.S. Popular sizes for food service industry are the 5 x 6 (30 pieces) in a case, the 5 x 5 (25 pieces) and the 5 x 4 (20 pieces) in a 5 kilo gram case. Japanese ?M? size tomatoes 24 pieces/4 kilo grams per a case Color: Matured Red Each Japanese user has own color standard to identify ripening degree. For instance, a famous hamburger chain has a color chart consists of 6 different color levels from green to cardinal red. The company only accepts to buy tomatoes belongs to the level 5 color, matured red. Air shipment is a most popular delivery method from the U.S. to Japan to maintain quality. The U.S. tomatoes exported by air shipment to Japan can compete with the domestic tomatoes depending on the exchange rate and relative price. The recent strong Yen ex- change rate helps the export from U.S. to Japan. An ideal price that end-users are expecting to buy is below JPY 400 (US$4.80 ? $5.00) per kilo gram after the customs clearance. The domestic tomato prices for food service are JPY 300 ? 500 (US$3.75 ? 6.00) per kilo gram. Japanese importers are willing to use ocean shipments that will be able to provide far better price than air shipment. Meantime, the importers recognize quality of the ocean shipments did not satisfy their requirements. 6. Impact by the Great Earthquake A massive earthquake and subsequent Tsunami hit Japan?s north east pacific coastal region on March 11, 2011. The catastrophe devastated cities, towns, and villages of the prefectures located along the coast line. The most affected prefectures are Iwate, Miyagi, Fukushima, and Ibaragi. Domestic tomato production in Tohoku region has been affected by the catastrophe. The related Fukushima Nuclear accident has influenced tomato production not only in the 4 prefectures but in adjacent prefectures including Tochigi and Gunma. Total tomato production of the affected 6 (see below chart) prefectures represents 46 % of the total domestic tomato production. In terms of domestic tomato production for processing, total production of the 6 prefectures represents 51.3 % of the Japan. Chart 4 ? Regional Tomato Production 2010 Production Year total *1 for process *2 by Prefecture ton % ton % The 6 prefecture total 148,300 46.0 19,444 51.3 Iwate 8,870 2.8 1,280 3.4 Miyagi 7,130 2.2 164 0.4 Fukushima 28,700 8.9 4,120 10.9 Ibaraki 44,800 13.9 10,300 27.2 Tochigi 34,400 10.7 2,290 6.0 Gunma 24,400 7.6 1,290 3.4 Japan total 690,700 100.0 37,900 (*3) 5.5 *1 Composition ratio: Prefecture total/Total national tomato production *2 Composition ratio: prefecture total/total national tomato production for processing *3 Composition ratio: 5.5 % = Japan total for processing/Japan total production Source: MAFF However, experts note that we must wait until end of this fall in order to identify actual impact on the harvest, and many are predicting that the affect may be limited. Meanwhile, in the short term, recent trade statistics from January through April in 2011 show more than a 28 % increase of the total import of processed tomato products to Japan. (For details to the chart 5 and 6) 7. Prospects As mentioned above, there is great potential for increasing tomato exports from the U.S. to Japan, if U.S. suppliers can fulfill the demands of the market throughout the whole year. The QSR?s and convenience stores are very particular customers but present a huge opportunity. opportunity. Japanese importers may help access once they find a year round supply and adequate quality of U.S. tomatoes. 8. Tariff Table The applicable import duty for fresh tomato and processed tomato products are as follows; Tariff Schedule: Fresh Tomato and Processed Tomato Tariff Fresh tomato and processed tomato Import Duty rate % HS # Description Code General Temp. WTO 0702.00 000 Tomato; fresh or chilled 5.0 3.0 2002 Tomatoes; prepared of preserved otherwise than by vinegar or acetic acid 2002.10 000 tomatoes, whole or in pieces 9.6 9.0 2002.90 100 Other 1: Containing added sugar 22.4 13.4 Other 2: Tomato puree and tomato paste 20.0 Other 2: Tomato puree and tomato paste 16.0 In airtight containers Note; the goods, above mentioned, when used at a bonded manufacturing warehouse for the manufacture of canned fish or shellfish for export and re-exported shall be exempted from customs duty in accordance with the provisions of the Customs Law, Law No. 61, 1954 211 -- For the quantity (quota) stipulated for manufacture of Free tomato ketchup and other tomato sauces by a Cabinet Order, on the basis of the quantity of prospective domestic demand in the coming fiscal year (April-March) with deduction of the consideration of international market situation and other relevant conditions 219 --- Other 16.0 The duty is charged on a CIF basis. Source: Trade Statistics of Japan, Ministry of Finance 9. ATO Contact Information Agriculture Trade Office (ATO) Tokyo U.S. Embassy, Japan Email: atotokyo@fas.usda.gov Tel: +81-3-3505-5115 Fax: +81-3-3582-6429 10. Appendix Chart 5 - Japan Import Processed Tomato Products 1: HS 2002.00 i. Quick Estimation: January ? April ii. Confirmed: January ? March Japan Import Statistics Commodity: 2002, Tomatoes Prepared Or Preserved O/W Than By Vinegar Or Acetic Acid Year To Date: January - April Thousands Quantity % Share % Change Partner Country Unit 2009 2010 2011 2009 2010 2011 2011/2010 World KG 59045 57892 74106 100.00 100.00 100.00 28.01 Year To Date: January ? March Thousands Quantity % Share % Change Partner Country Unit 2009 2010 2011 2009 2010 2011 2011/2010 World KG 43628 43912 55056 100.00 100.00 100.00 25.38 Italy KG 19057 19016 22636 43.68 43.31 41.11 19.04 China KG 8964 10649 13799 20.55 24.25 25.06 29.58 U.S.A. KG 5547 4966 5538 12.72 11.31 10.06 11.54 Portugal KG 3739 2881 5531 8.57 6.56 10.05 92.00 Turkey KG 3905 3369 4163 8.95 7.67 7.56 23.55 Source: Trade Statistics of Japan, Ministry of Finance Chart 6 - Japan Import Processed Tomato Products 2: HS 2002.00 iii) Year to Date: January ? December, 2008 - 2010 Year To Date: January - December Thousands Quantity % Share % Change Partner Country Unit 2008 2009 2010 2008 2009 2010 2010/2009 World KG 206365 189640 200446 100.00 100.00 100.00 5.70 Italy KG 81093 86148 88781 39.30 45.43 44.29 3.06 China KG 50229 40900 38492 24.34 21.57 19.20 - 5.89 U.S.A. KG 20043 21236 22031 9.71 11.20 10.99 3.74 Portugal KG 16413 13543 18132 7.95 7.14 9.05 33.88 Turkey KG 20941 14633 17193 10.15 7.72 8.58 17.49 Chile KG 6562 5238 7930 3.18 2.76 3.96 51.40 Greece KG 1497 980 1992 0.73 0.52 0.99 103.38 Thailand KG 1929 2061 1413 0.93 1.09 0.70 - 31.45 Spain KG 2494 1890 1378 1.21 1.00 0.69 - 27.11 Israel KG 544 477 826 0.26 0.25 0.41 73.10 Source: Trade Statistics of Japan, Ministry of Finance
Posted: 17 July 2011, last updated 17 July 2011

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