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Business trends

Decaf poised to perk up Japan's coffee market

Imports of decaffeinated beans double in 5 years

Makers of coffee products are optimistic of increased demand for decaffeinated beverages, especially among the elderly.   © Reuters

TOKYO -- Despite slumbering last year, Japan's market for decaffeinated coffee products remains solid, albeit still small.

Decaf amounts to less than 1% of Japan's overall coffee market, but manufacturers are optimistic as they seek to cash in on the rising popularity of decaffeinated beverages, including black and green teas.

After growing for five years, decaf bean imports slowed in 2018, with annual volume dropping 13% from the previous year. Still, last year's figure was twice that of five years earlier, indicating solid demand, especially among elderly drinkers who want both a deep sleep and their cup of Joe.

The drop in 2018 was "a temporary dip that could just be related to inventory adjustment," said Kazuyuki Kajiwara, head of the beverage materials department at Marubeni, a large trading company. "I think the positive growth trend will continue over the medium to long term."

Japan's decaf market has never really taken off. Imports of decaf beans totaled 594 tons in 2000, climbing slowly to 3,023 tons in 2016.

The market saw a spurt in growth between 2015 and 2016, prompting decaf coffee makers to expand lineups and retailers to set aside space for the products. But they want to increase the small 1% market share in terms of raw bean import volume to something more in line with the 5% of the U.S. and Europe.

Decaf coffee drinkers in Japan are primarily pregnant women wary of the effects of caffeine on their unborn babies. Now the industry is targeting the elderly and young, as well as foreign visitors.

In 2018, Ajinomoto subsidiary Ajinimoto AGF upgraded its Blendy stick-sachet instant coffee product, while in March Key Coffee added a decaffeinated version to its Mainichi Cafe line of coffee beverages, claiming the drink goes well with Japanese food. These were followed in April by UCC Ueshima Coffee's new decaf bottled latte.

A key hurdle in making decaffeinated coffee in Japan is the relatively high production cost. European and U.S. companies can use agents to remove caffeine, but these are banned in Japan. Instead, Japanese makers must soak beans in water then expose them to pressurized carbon dioxide, resulting in beans that are 50% more expensive than ordinary beans, according to a trading company employee.

Coffee consumption has been on the rise in Japan. Total bean imports rose 5% from five years ago to about 470,000 tons in 2018.

As the 2020 Tokyo Olympics nears, manufacturers are gearing up for the increase in foreign visitors, many who will be looking for a cup of decaf.

"Coffee manufacturers are thinking of expanding their decaffeinated product lines to target foreign visitors," said Nobuaki Abe, president of Ecom Japan, a Tokyo-based trading company.

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