Business Opportunities Expanding Through the Food Functional Claims System ② ~The Evolution of the U.S. Healthcare Market "20 Years Ahead" and Business Case Studies~ Part 2

On April 1st, Japan's new functional food labeling system came into effect. This major revision, the first in 44 years, raises questions: How will the Japanese market change? How will business opportunities expand? Members of Dentsu Inc. Healthcare Team interviewed experts.

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Japan's food functional claims system has been developed through extensive consideration, drawing on the U.S. dietary supplement system. Functional claims were introduced in the U.S. about 20 years ago. How has the U.S. healthcare market transformed since then? What are the similarities and differences with the Japanese market? We asked Takeshi Takeda of Global Nutrition Group, an expert on the global health food market.

Diverse Nutritional Claims and Detailed Category Strategies

Takizawa: Do you think differences in product strategy will emerge between Japan and the U.S.?

Takeda: In the U.S., since products aren't required to provide scientific evidence within their product information, it can be harder for consumers to understand which product is right for them. However, to compensate for this, companies often explicitly state the target consumer group in their marketing. For example, one company selling multivitamins first divides its products into male and female categories, then creates a category for both men and women aged 40 and over. Within each category, they further differentiate their functional appeal points, resulting in an extremely detailed product lineup.

※Vitamins/minerals are excluded under Japan's new regulations

 

Takizawa: Considering market trends in the U.S., how do you see the future direction of Japan's functional food labeling system?

Takeda: This is my personal view, but I've outlined ten potential scenarios for the future.

[Figure 1]

 

Regarding the first scenario, "Sales channels change, best-sellers change," as mentioned earlier, there are significant differences between Japan and the U.S. in sales channels and best-selling products. While we may not see such dramatic changes, it is certain that the trend toward creating sales environments and product appeals based on scientific evidence will intensify. In tandem with this, consumer knowledge will undoubtedly improve, and interest will grow.
Furthermore, as more products carry functional claims, commoditization will advance, reducing functional and quality differences between products. Private-label functional foods are also expected to increase.
Earlier, I introduced the category strategy for multivitamins in the US. Category management will also become a major key to growth in Japan. While many companies have grown through single-item direct sales, the segmentation of categories and diversification of sales channels will accelerate going forward. Furthermore, as the traditional world of emotional marketing shifts towards functional marketing, it will become easier for overseas companies to enter the market. Entry from other domestic industries will also increase. We can expect various forms of corporate expansion and alliances, such as M&A, horizontal and vertical integration.

Beyond functional claims, how to communicate benefits

Takizawa: What should manufacturers focus on or be mindful of when communicating with consumers?

Takeda: Simply displaying functionality doesn't guarantee product sales. A crucial point is how effectively they can communicate, within the bounds of scientific evidence, the "benefits of consuming that product" in an easily understandable way as part of the communication accompanying the functionality.

Takizawa: Do you think the way food trends emerge in Japan might change?

Takeda: If the habit of choosing products based on scientific perspectives gradually takes hold, it might change things a bit. For example, the natural-oriented mindset is a concept highly compatible with Japan.
Japan has many ingredients with expected functional benefits, like black vinegar and garlic. By adding a scientific perspective, I believe there's ample potential to create trends similar to those seen in the US.

 

Functional research and medical research will evolve hand in hand

Takizawa: Will Japan's functional food labeling market develop in a unique way over the next 10 or 20 years, different from the path the US took?

Takeda: What's unique to Japan is that this new system includes fresh produce. Previously, in the fresh food sector, efficacy testing often stopped at animal studies. Even if human research was conducted, opportunities to publish the results were limited. Since this new system requires human data, I believe the technology for evaluating food functionality in humans will advance significantly over the next decade. I expect we'll see a growing trend of researchers studying food functionality collaborating with medical faculty to advance testing and evaluation.

Takizawa: Regarding functional claims for fresh foods, what challenges do you foresee moving forward?

Takeda: The key challenge will be how to collect clinical results from healthy individuals. Proving effects on people without disease is extremely difficult. However, Japanese companies and researchers are excellent, so I'm confident solutions will emerge for such challenges.

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About the Food Functional Claims System

The Food Functional Claims System began in April. This system allows manufacturers to make functional claims on food products "under their own responsibility" by notifying the Consumer Affairs Agency, provided they have scientific data supporting safety and functionality. Functional claim foods will start appearing on store shelves as early as June.

<Key Points of the New System>
1. Unlike Tokuho (Specific Health Use Claims), the government does not review safety or functionality. The responsibility for the content and explanation of the scientific evidence, as well as ensuring no discrepancy between the scientific evidence and the labeling claims, lies with the manufacturer.
2.Notification to the Consumer Affairs Agency must be made at least 60 days prior to the sales date. Except for certain parts, all submitted materials will be disclosed on the Consumer Affairs Agency's website, allowing other businesses and consumers to verify the content.
3.All food products, including fresh foods, are covered. Therefore, participation is expected not only from food and beverage manufacturers but also from functional ingredient manufacturers, trading companies, farmers, and various other industries.

*Excludes beverages containing alcohol and foods that may lead to excessive intake of lipids or sodium.

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<Key Points of Functional Claims>
Claims can be made about the effects on maintaining or promoting health.
For example, claims can be made for specific body parts, such as "maintains eye health" or "supports quality sleep." However, expressions implying treatment or prevention of diseases, such as "for people with diabetes" or "for people with high blood pressure," or expressions exceeding the scope of health maintenance and promotion, such as "hair growth" or "skin whitening," are not permitted.

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