By Paul Yamaguchi
FOSHU Approval – Is It Worth The Price?
Food Rules In Japan
Nutraceuticals consist of two major segments, dietary supplements and functional foods. The difference between the Japanese and United States nutraceutical markets is that the Japanese prefer to eat food to improve or treat health conditions rather than taking pills or capsules. Of the $21.2 billion Japanese nutraceutical market, 60 percent is generated by functional foods. In the US, less than 50 percent of its $36.3 billion nutraceutical market is made up of food. Per capita spending on functional foods in Japan is the world’s highest at just over $100 a year, compared with less than $70 in the US.
FOSHU and FNFC
There are two regulatory groups in the category of foods with health claims. One is called Foods for Specified Health Use, or ‘Tokuho’ is the more familiar term for Japanese. Since its inception 1991, ‘FOSHU’ is the more familiar term used outside of Japan. The other group within the category of foods with health claims is Food with Nutrient Functional Claims (FNFC). This regulation is only 2 years old and I’ll talk about FNFC in the next issue.
All other functional foods cannot make health claims. Only foods that have been approved by the government, in this case, the Ministry of Health, Labor and Welfare (MHLW), can claim health benefits for their products.
The Costs Of FOSHU Approval
Obtaining FOSHU approval is a big decision nutraceutical food manufacturers must make. There are two principal groups that separate functional foods by law in Japan. Foods either have government approved health claims or they do not. To make health claims will cost the manufacturer almost ¥1 million, or about $830,000, according to The Health Industry News, a leading health industry newspaper. Actual fees for FOSHU (Foods for Specified Health Use) applications and test fees are only $1,600. Most of the cost goes to scientific safety testing and proof of efficacy. Also, evaluation for approval is stringent, particularly for new products that use newly-developed ingredients. Is having health claims worth the cost? That is the million yen question.
FOSHU Food Sales Are Growing
Yet, FOSHU-approved foods is the fastest growing category in not only the nutraceutical but all food categories. Since its inception in 1991, sales have been growing at an average of 25 percent annually. Today, the FOSHU market is $4.1 billion with over 380 approved products and is expected to grow to $5 billion by 2005. Since the new Foods with Health Claims Act of 2001, FOSHU accepts non-traditional food forms (tablets and capsules) as well, however, almost 99 percent of approved products come in traditional food forms.How does one distinguish FOSHU-approved products from others? Look for the logo.
Does the Logo Help Sales?
There are 7 major health benefit food categories within FOSHU.
1) Foods that regulate gastrointestinal conditions,
2) Foods to help regulate high cholesterol levels,
3) Foods to help regulate high blood pressure,
4) Foods to help regulate high blood glucose,
5) Foods to improve mineral absorption,
6) Foods to maintain healthy teeth and bones and
7) Foods to reduce blood triglycerides.
Of the 7 categories, 54 percent of approved products and 67 percent of sales are generated by the gastrointestinal health foods category.
Recently, we began to see some changes as major food companies such as Ajinomoto, Kao, Calpis, Yakult and Nisshin push newly-developed ingredients and products through the FOSHU approval process with success. As a result, food categories like high blood pressure, high blood glucose and blood triglycerides are gaining market share. Products like Ameal from Calpis, Econa and Helthya from Kao, and Banso-reicya from Yakult are becoming $80-100 million products.
Does the FOSHU logo drive sales of these products? As there are many functional foods that sell well over $100 million a year without carrying the FOSHU logo, it’s hard to say if the logo is a major sales driver. A recent poll conducted by the Japan Health Food & Nutrition Food Association showed the recognition for FOSHU is still only 30 percent among consumers, suggesting that it is unclear whether or not the FOSHU approval process is worth the cost.
I’ll talk about more about the current nutraceutical environment in the next issue.
Paul Yamaguchi is president of Paul Yamaguchi & Associates, Inc., Tarrytown, NY. His company publishes a number of Japanese nutrition market reports, including Nutraceutical Japan 2003, Nutritional Supplement Japan 2003, Functional Foods and FOSHU (Foods for Specified Health Use) Japan 2003. For details and information on the reports, visit: www.functionalfoodsjapan.com or contact Paul at [email protected]