There are around 1,000 products making FFC claims since the regulation was introduced in 2015.
Some of the function claims include providing anti-cholesterol solution, eye care, and gastrointestinal regulation.
Japan’s health food market size is estimated to attain 761,900 million yen last year, and forecasted to reach 767,400 million yen this year, according to Yano Research Institute.
In particular, market size for Foods with Function Claims is estimated to reach 164,900 million yen last year, 20% higher than 2016.
The market share of Foods with Function Claims consists of 45.7% supplements 48.9% other processed food and 5.4% fresh foods last year.
Under the FFC, food business operators are allowed to make limited health claims based on scientific evidence.
This escapes the more stringent process of Foods for Specified Health Uses (FOSHU), where authorities will evaluate the claimed effects and safety, before Consumer Affairs Agency approves labelling of food product that meets the requirements.
However, it was found that the public did not understand key characteristics of the FFC regulations, according to an online survey carried out by the National Institute of Health and Nutrition last year.
Out of 2,060 consumers, 515 physicians and 515 pharmacists surveyed, only 16% of the consumers, 23% of the physicians, and 44% of the pharmacists correctly understood key characteristics of the regulation.
Brand loyalty stifles advances
Japan has the highest percentage of senior citizens in the world－more than a quarter of its population is aged 65 or above. Last year, Japan had more than 65,000 centenarians.
Based on the United Nations, 33% of Japan's population is projected to be aged 65 or above in 2035.
Undoubtedly, Japan’s ageing population offers great opportunities for businesses, and 84% of our respondents agreed with this statement.
Opportunities aside, the Japan’s market remains challenging for most foreign brands, as they would need to overcome hurdles of brand loyalty.
Japanese, especially the elderly tend to support national products, said Sensing Asia's president and CEO Rieko Shofu during the Vitafoods Asia event last year.
As such, firms must introduce products that can convince them to switch brands.
Improvements in Japanese economy have led to a positive impact on the business, said 68.4% of our respondents.
According to Japan’s Cabinet Office, the country’s economy expanded at an annualised rate of 1.6% during October to December last year, due to an upward revision of capital expenditure and inventory data.
The figure has exceeded economists’ median estimate for 0.9% annualised growth, and was the eighth consecutive quarter of growth, marking the longest uninterrupted expansion since a 12-quarter run of growth between April-June 1986 and January-March 1989 during Japan's asset-inflated bubble economy, according to CNBC.
However, the growth has likely stumbled in the first quarter of 2018.
Based on average of assessments from 12 private research firms, real GDP slipped an annualised 0.2%, as exports of electronic parts stalled and price of consumer goods rose, according to Nikkei Asian Review.
Analysts estimated that export values grew just 0.5% in January to March.
In the same vein, 74% of respondents agreed that Japan is still struggling to exploit the export potential for its functional foods and supplements, although more than three-quarter of them agreed that Japan remains the regional leader in terms of food innovation.