Changing Space - Case Study
From the Asialink Business Japan Country Starter Pack
Getting Australian products into the Japanese market can take time, but with perseverance, adaptability and good brokers, it is possible to grow sales in this large and affluent market.
Andrew Davies is CEO of Changing Space, which handles the distribution of premium Australian products such as olive oil, nuts, muesli, coffee and chocolate to both the Japanese food & beverage and retail sectors. They also broker the import of Japanese Agricultural System-certified raw ingredients. On a trip to Japan in 2012 he noticed a lack of Australian products in Japanese stores outside of multinational retailers, and with his Japanese business partner set about filling the gap.
But figuring out how to break into the interlocking relationships of large Japanese business groups (known as keiretsu), was a challenge. Changing Space eventually got some products onto large retailers’ shelves, but this did not generate the volume they were looking for.
While building business networks they became aware of opportunities to supply Australian products directly to cafés and restaurants in and around Tokyo, and the food services sector now represents a large part of their volume. Davies also found getting to know the Australian expatriate community in Tokyo very helpful, with Australian chefs keen to use Australian products.
Davies says fads that periodically sweep the Japanese market are both a challenge and an opportunity. “Popcorn went crazy in the Japanese market last year,” he says. “And it was just popcorn, nothing special about it.” As a smaller operator, Davies says it is difficult to anticipate the latest trend or scale up production in time. While a well-timed product that coincides with a fad will not hurt the bottom line, it is best not to base a market-entry plan on them.
“Fads are just part of the market dynamic. It is great if you happen to sell something that is part of one, but don’t base your business plan on anticipating the next fad.”
Australians looking to sell their products in Japan also need to take into consideration the sensibilities of Japanese consumers. For one thing, appearance is very important. According to Davies, “the Japanese often eat with their eyes”, so packaging and how a product is presented is of the utmost importance. Japanese consumers will notice imperfections that others may not. One of the products Changing Space distributes in Japan had a small problem with its packaging – something that was never noticed by consumers elsewhere, but immediately picked up by the Japanese. “If there is even the slightest thing wrong with it, Japanese consumers will send it back,” says Davies.
To ease the import process into Japan, Davies strongly recommends using a customs broker. He was initially reluctant, but now puts his ability to get products into Japan in a timely fashion down to having a good customs broker. He says that while they can be expensive, a good customs broker saves time, costs and effort in the long run. It was a similar story with distribution brokers. While initially reluctant with an eye to saving costs, Davies has found using a distribution broker a great way to expand sales across Japan.
With expensive Japanese logistics, location is also an important consideration. As a business selling organic and premium products, Changing Space decided on Tokyo due to its large number of affluent Japanese and expatriate consumers. As a cosmopolitan city open to new products, it is also a useful test market before distributing to other Japanese cities and demographics.
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www.changingspaceau.com