CHIBA, Japan (FNS) -- The Japanese retail community's growing interest in private label is drawing strong responses from worldwide suppliers.
A wide range of manufacturers are positioning themselves to sell into this potentially highly lucrative niche in a nation of 124 million people. They are aiming products both at retailers like Daiei Inc., which has jumped heavily into store brands, and at other stores that are first gearing up for private-label programs.
This was manifest at the "World of Private Label in Asia" trade show here, sponsored by the Private Label Manufacturers Association, New York. As reported earlier in SN, nearly 100 companies from the United States, Europe, Asia, Indonesia and other areas exhibited food and nonfood private-label products to more than 3,000 Japanese buyers and other visitors. This show followed two earlier versions of the event held in Hong Kong. In the future the event will rotate among leading Asian countries.
In addition to conventional manufacturers, exhibitors included a few retailers and cooperatives selling private-label goods. Few on the trade show floor doubted the complexities of selling into this market. Timothy J. Larsen, international marketing specialist for the U.S. Department of Agriculture, emphasized that U.S. products must be tailored to local tastes and needs. For instance, he said, Japanese like cookies that are not too sweet. "You must be patient," he said. He noted it may take a year or longer for an American company to establish a base in Japan. "You must invest time and money in the market," Larsen said.
He urged potential suppliers to use the resources of USDA. "Use government people to find sources," Larsen said. "Government will not charge commissions." Larsen, who is based in Colorado and covers the Western United States, has been helping develop U.S. export trade for more than 10 years. Noting the United States exports $8 billion worth of agricultural products a year, Larsen said U.S. strength is in experience and low-cost and efficient manufacturing.
While Japanese retailers haven't traditionally focused on private labels, some are beginning to follow the model of stores in Europe and the United States, which have devoted much effort to store brands.
Brian Sharoff, president of PLMA, stressed that Japan's population is roughly half that of the United States. "So when they tilt toward private label, it's an enormous change in supply and distribution patterns," he said.
Kroger Co., Cincinnati, was exhibiting here to sell store-label products into this market. The company drew and developed a long list of contacts, said James Pogue, a Kroger representative. "This is a very business-oriented show." Pogue noted. "Many retail representatives called on us."
Kroger, the largest supermarket retailer in the United States, is known for its concentration on private-label merchandising. Price/Costco, Kirkland, Wash., is known for its warehouse club operations, but it exhibited at the Japanese show in order to sell its own store-brand products to retailers here, according to Michael Day, director of export operations. The company has been involved in exporting for a number of years.
Day said his company's products have met with strong success on a number of continents, and pointed to Korea as an Asian success story for Price/Costco. "We have been successful in Korea," Day said. "Korean consumers have responded very well."
Price/Costco's product range encompasses some 3,000 to 4,000 items. "Our concept is universal -- quality and value."
J.J. Kamps, managing director of De Toren B.V., a private-label manufacturer of firelighters from Enschede, Netherlands, stressed, "Asia is fast-growing and we want to be part of it." The Dutch executive said he took part in the two previous shows in Hong Kong David R. Hayden, senior vice president of Western Family Foods, Tigard, Ore., said his company's presence in the Japanese show was geared to displaying the firm's flexibility for Japanese retail managers and buyers.
Hayden said his company, which supplies independent grocers, deals with about 600 manufacturers. The company focuses on procurement and marketing and is accustomed to filling different needs for different world regions, he said. About 5% of the firm's business is currently outside the United States, he said.
Hayden said his firm already sells to Japan through select Japanese wholesale groups, noting that there is a good potential in Japan but "it takes a while to build relationships" with Japanese contacts. Sakae Sugihara, president and chief executive officer of Prestance Corp., Seattle, said his mission at the event was to bring American-brewed beer to Japanese consumers under private labels. His supplier is Old European Brewery Co., Evansville, Ind.
Tokyo-based S. Ishimitsu & Co., an agent for many overseas suppliers, was marketing black tea from Sri Lanka, powdered coffee and cocoa from Netherlands, and freeze-dried food from Switzerland, according to Kenji Oda, assistant manager of manufactured goods.