Japanese Miso strides up the superfood charts, but can it last the pace?

For a food whose origins date back to China and 7th Century Japanese Buddhist monks, Miso isn’t a precocious culinary upstart.

Miso paste

Last year in Japan there were 480,000 tons sold, nearly 50,000 tons more than 2013. Given the static demographic headwinds here that’s some achievement.

Sales have been boosted by Miso’s growing health credentials. A doctor on a well known TV station has been waxing lyrical about its benefits and even public broadcaster NHK states that Miso is the ‘source of long life.’

Power to the beans!

Last year Japan exported around 100k tons of Miso and other condiments, the biggest markets were the US, China and Korea. In Europe, perhaps surprisingly the UK topped the charts, a nod to Washoku’s British penetration.

Miso is an easy word for foreigners to pronounce, unlike many Japanese food descriptions and is served de rigeur in iconic bowls. This has made the category memorable. Whether consumers can recall any Miso brands is less clear.

The challenge as with many Japanese foods, is that most brand owners have little category growth expertise.

Take Marukome, the market leader. They established a Thai subsidiary in 2013 and earlier this year announced plans to launch an ‘Antenna’ shop in Bangkok. It’s a great idea but the naming of the outlet ‘Hacco Labo’ will mystify most (Hacco is the Japanese word for fermentation).

Marukome Thailand’s Miso advertising

Japanese producers need to do more to emphasise the authentic origins of their product. And quickly to avoid being copied! Itsu is a London based Washoku chain, owned by British entrepreneurs, who are already selling a range of Miso products in up market supermarkets. I am not even sure it’s made in Japan.

Itsu Miso

There is no shortage of Miso innovation in Japan. Recent trends have included sweet Miso, freeze dried and also liquid varieties marketed on a freshness platform. The venerated TV doctor recommends red miso.

Let’s see if the Japanese Miso industry can keep up the pace.

Netflix’s new street food series is mandatory viewing for every food and beverage marketeer

Netflix have just launched a series on street food. It contains important insights into the mindset of stall operators, the intimate relationship they enjoy with their clientele and of course the importance of taste and constant innovation. 

What is less well acknowledged, but equally important, is that several consumer brands have made this channel central to their success.

I found the first episode featuring a wiry, 73 year old Thai chef, called Jay Fai, fascinating.

Jay Fai

The programme takes us through Jay Fai’s culinary journey, from first experimenting with the wok, taking a loan to open a stall, going upmarket with large tiger prawns to developing a crab meat omelette, one of her signature dishes. We learn the importance of ‘rich and tasty stock’, attention to detail in ingredient preparation and constantly listening to customer feedback. 

The food photography was stunning with mouth watering shots of boiling curries and drunken noodles, all deftly prepared on flaming charcoal.

The street food business involves unsociable hours, a 7 day work week not to forget the heat and humidity. Landlords and Government regulations are a constant headache. However Jay’s passion and energy shine through.

Over the years I’ve sat in focus groups and heard consumers replay their associations with food, consumption occasions and brands. Some of the most indelible involve street food. One reason is taste, the food is freshly cooked and served immediately. Another is the social aspect, it’s an informal, relaxed and familal environment with friends, relations and children.

Recently, the perception of street food has improved dramatically. Far from being cheap and dirty, the best outlets have become culinary destinations for locals and tourists alike. A number of street food chefs, like Jay Fai have won Michelin awards. Like craft beer breweries have become renowned for novelty, street food is at the cutting edge of experimentation.

As a westerner coming from a country with very little street food (Britain’s closest would be fish n chips or perhaps Balti in Birmingham?), street stalls never struck me as an important Sales or influencer channel. My thinking was narrow minded and misguided. 

Milo on a street stall, Thailand

Later when I worked in Nestle Malaysia did I see first hand the huge business Milo enjoyed because of its penetration with vendors. Soy and chill sauce, mayonnaise, cooking oils and stocks were also big. Brands like F&N’s 100 Plus and beers like Tiger have this channel in their DNA.

Watch out! Costco Japan snaps at the heels of industry giants Aeon and Ito Yokado

How times have changed! 

Early in my Japan career I remember when Costco’s arrival into the retail market was sneered at, even dismissed by the cognoscenti. “It will fail,” they said, “Japanese don’t buy bulk, their homes are too small.” 

Costco Amagasaki, Japan

Well in 2019, twenty years after its first arrival, Costco Japan has sales over JPY500b (US$4.4b) and is poised to enter the top 10 ranking.

Anyone who has been to their stores over the weekend knows a long queue awaits at the car park. Some of their bigger turnover outlets average a million shopping carts a week; Costco has become a destination shopping venue. 

It runs a laser focused operation: 3,500 SKUs per store (an Aeon or IY GMS average 4-5x more); pallet only displays; and negligible POS. Staff numbers are far lower not to mention rents. Costco Japan has 26 stores, all located in low cost suburbs.

Costco Japan, fresh food & meats

There is over US$200m revenue from membership fees, members number over 6m households, a massive 80% renew. 

When Costco Japan started, direct trading was almost unheard of. The cross shareholding links between retailers, trading houses and large wholesalers were a closed shop. Costco started bringing in well known brands from overseas which forced suppliers to review trading arrangements. Costco likes exclusive packs and many big brands produce exclusive SKUs, further driving traffic.

Toblerone: Costco Japan exclusive SKU (it was massive!)

Whether Costco is the best way to expose a new brand to the Japanese shopper is debatable. The retailer’s supply chain focus is so acute that popular items can be out of stock and slower sellers are never invited back. The company also strongly encourages suppliers to use its “Club demonstration services” – which is a separate business unit, and reportedly expensive.

Costco Demonstration Services

Most of the publicity about Japan’s changing retail landscape has focused on Amazon which is over 3x bigger. However, in food and household products where Amazon Japan is struggling to build scale, Costco has been much more successful.

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Naked ambition and street smarts make Laughing Cow the Big Cheese in Vietnam

Vietnam’s dairy market is worth over $5b and consumption is forecast to increase by 40% over the next five years. The cheese sub-segment is dominated by French multinational Groupe Bel with over 85% share.

Bel have played a long and patient game in Vietnam first entering the market 65 years ago. 

Bel’s hero product in Vietnam is Laughing Cow, “La Vache qui rit”. Undoubtedly one reason for its success has been local manufacturing (investments worth over $25m) producing formats with nutritional claims to meet local market needs and price points.

Laughing Cow Billboard in Ho Chi Minh, Vietnam

Another equally important driver has been Bel’s strategy of targeting low to middle income consumers. To reach this segment, Bel has built an innovative Route to Market programme called ‘Sharing Cities’ that focuses on street vendors selling vegetables and local favourites like Banh Mi (a baguette sandwich).

Laughing Cow Banh Mi Vendor in Vietnam

Bel has a network of over 2000 street vendors in Ho Chi Minh alone and this channel accounts for over 30% of turnover. Bel’s research has shown that the repeat sales rate and loyalty to street vendors is high; vendors typically enjoy a personal relationship with their customers, entrenching Bel ever deeper into the community.

Laughing Cow’s Sharing Cities Programme, Vietnam

Bel’s CEO Antoine Fievet openly states, “We are aiming to turn the Vietnamese market into Bel’s cradle in Asia!”

Outside of Japan, Vietnam is Bel’s only other Asian manufacturing facility. Bel’s two Vietnamese factories have an annual capacity in excess of 25,000 tons and supply the SE Asia region.

Many foreign brands focus on the modern trade for growth, even in less developed markets. Bel’s success shows the Modern Trade isn’t the only way to make hay. I’ve worked with another major beverage business in Vietnam who like Bel have made the traditional trade the lynchpin of their success.

To paraphrase the French saying, perhaps we can now understand, Pourquoi La Vache Qui Rit rit?

Thanks to my colleague John Cathcart who inspired this blog post and provided photographs.

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Will CEO-Musician play his winning ‘wow wow no cow’ number to enter the US market?

Hippy Swedish non dairy milk brand Oatly has shot up the beverage charts. Now its sales are well over $50million, quadruple 3 years ago. Capacity at its Malmo plant is doubling and a new factory is coming on stream on the US East coast this spring.

With a cult packaging design, and bohemian positioning that extols the benefits of switching from cow’s milk to save the planet, Oatly has a laser focused marketing strategy, targeting Baristas and coffee afficondos to win new converts. 

Oatly ‘billboard’ in Shoreditch, London

Oatly is led by Tony Petersson. Hired by the board who wanted a fresh perspective for a small staid business. Tony lacked the baggage of a typical food industry executive, and immediately instigated a revolutionary brand reboot, despite internal scepticism, and stuck with his conviction that the ‘oats are key to everything.’

Such is the strength of his convictions, Tony has taken to writing, composing and starring in his own Youtube commercials. 

Globally sales of non dairy milks are worth around $16billion. Whilst a relatively new phenomenon in the West where the dairy culture has traditionally held sway, they are perceived to be healthier, lower in sugar and calories yet full of calcium and other nutrients.

Although Oatly is privately held, boutique Strand equity partners is a major investor. Strand claim to invest in the ‘next generation of iconic consumer brands.’ It would seem their bet on Oatly and Tony is set to pay very handsome dividends. There is huge growth headroom for Oatly in category, channel and market expansion, not to forget Oat milks are amongst the most expensive in the non dairy segment.

Whether Oatly will be releasing an album of Tony the CEO’s greatest hits has not been disclosed…

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Too far too fast? Do the returns on Shake Shack’s international business warrant the pain?

This week I visited a recently opened Shake Shack burger outlet in Umeda, Osaka. It was on the ground floor of the newly renovated Hanshin Department store, on the popular Midosuji street.

It’s the first time I’ve seen a fast food restaurant inside an upmarket retailer selling quality branded apparel.

Shake Shack, Osaka, Midosuji street

Shake Shack now has 72 stores internationally of which 19 are in Japan, making it one of their biggest markets. There are plans to open an additional 15 outlets here by 2024.

Shake Shack has signed an exclusive franchise partnership with Sazaby League, a privately owned company that owns the rights to over 30 international brands, mostly in fashion. 

Sazaby was the original JV partner for Starbucks when it opened in Japan in 1995 and their relationship lasted until 2014 when Starbucks paid US$914m to take full ownership. Sazaby has entrenched relationships with high end retailers and property management companies meaning it has access to key locations, a prerequisite for any retailer.

Losing Starbucks was undoubtedly a shock Sazaby’s pride, let alone revenues, so the emergence of Shake Shack was prescient.


Shake Shack interior, Osaka

My lunch in Shake Shack was expensive. The burger, fries and shake came to JPY2300 (US$21), over twice the price of a MacDonald’s and roughly 40% more than a coffee and food in Starbucks.

JPY2300 lunch at Shake Shack Osaka

The restaurant was full of diners, but there was no queue and in the 30 minutes or so I was there I hardly noticed any new customers. I found the burger greasy and the bun especially was very soft and poor quality.

Whilst I don’t have access to the contract, I estimate Shake Shack makes roughly US$160,000 per franchise store/year, about 15% less than Starbucks. I suspect Starbucks have much higher outlet turnover as patrons visit more frequently. 

Licensing revenue is around 3% of Shake Shack’s turnover currently. In addition it mandates franchises to buy ‘proprietary ingredients’ including meat and buns, so its franchisees’ store traffic and spend are important. 

Since Shake Shack was IPO-ed at $21 its stock reached an all-time high of $92 in 2015. Yesterday it closed at $54.

I wonder whether Shake Shack have paid sufficient attention to consumer tastes and the value for money proposition to drive repeat store traffic?

Whilst Shake Shack is premium, it’s not Coach or Louis Vuitton.

Michelin star? Deliveroo eyes the menu of French haute cuisine

It’s not every day that a British founded food business makes waves in France.

However being the first mover in the world’s gourmet heartland has advantages. Deliveroo was quick to launch its digital platform in France, with a promise of 30 minute delivery.

Deliveroo, Paris

Today it has a turnover of over Euros 50million and is profitable. 

Deliveroo has since expanded to 8 other European countries, but states France is the engine room of its continental sales with ‘increasing growth in orders and customers.’

In fact it now has two business streams. The first a consumer one based on 6000 restaurants and 10,000 riders.

The second, an enterprise model, Deliveroo for business. This targets corporate business travellers, who from their hotel can order Paris’s finest restaurant fare on room service.

Success has not been a one way street. There have been disputes with its self-employed riders, who saw a drop in their delivery rates in 2017. And competition is fierce with Uber-Eats, Resto-In, Planet Sushi and Foodora who exited the market in 2018.

Foodora, Paris

Deliveroo’s financial model involves charging restaurants listing fees, plus an undisclosed ‘back margin’ on sales in addition to a cut from each customer.

Whether Michelin’s reviewers will be taking the Deliveroo option is not known…

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