CJ Haetban, which exports to 40 countries around the world, faces a market it cannot daringly approach: Japan, a country that is both close and distant. At first glance, this may seem hard to understand. However, Korea and Japan have similar eating habits as both consume Japonica rice, which is round and sticky, and they are not geographically far apart. Haetban is also exported to the South American market on the other side of the globe, making this more puzzling.
In fact, it's not just Haetban. Other instant rice products from companies like Harim and Ottogi are also hard to find in Japan. The reason is none other than the high tariff. Japan has set quite high tariffs on instant rice, justified by the need to protect domestic farmers. The rice content in instant rice is 99.9%, and the tariff on this product is about 341 yen per kilogram. With these tariffs, the calculations so far indicate that there is no chance of price competitiveness.
However, according to recent reports from the distribution industry on the 16th, the atmosphere in the Japanese instant rice market is gradually changing. While Korea is struggling with an oversupply of rice, Japan is experiencing an increase in rice demand alongside a decrease in supply, leading to a rise in rice prices.
According to the ‘Rice Basic Guidelines’ announced by the Japanese Ministry of Agriculture, Forestry and Fisheries as of June last year, the annual rice demand until June last year was around 7.02 million tons, an increase of 110,000 tons compared to the forecast in March. In contrast, the rice stock was recorded at 1.65 million tons, the lowest in history. This is attributed to the effects of natural disasters such as typhoons and earthquakes and abnormal climate conditions. According to the law of supply and demand, the rice price index in Japan hit a 20-year high at the end of last year.
Amid soaring rice prices, Japan is unusually importing rice from abroad. According to the Japan Agricultural News, a wholesale company in Osaka imported 400 tons of U.S. ‘Calrose’ rice in response to rising rice prices. The Nihon Keizai Shimbun reported that the cafeteria of the Bank of Japan, the central bank of Japan, began using cheaper Taiwanese rice instead of domestic rice from December last year.
In such a situation of rising rice prices, the demand for instant rice is also increasing. This is due to the increase in dual-income households and an aging population, leading to a preference for convenience foods. The analysis suggests that instant rice, which used to be viewed as disaster food for emergencies like earthquakes, has firmly established itself as a staple food. Additionally, the sudden increase in foreign tourists due to the depreciation of the yen has also been noted by the Japanese government as a contributing factor.
So, what about the recent prices of instant rice in Japan? The prices of instant rice have risen significantly. As rice prices go up, this is unavoidable. According to Toyosu-san (東洋水産), 210-gram instant rice is sold for around 580 to 600 yen excluding value-added taxes. Applying the exchange rate, which is about 930 won per 100 yen, this amounts to over 5,000 won in Korean terms.
In contrast, the prices of instant rice in Korea are relatively low. According to the Korea Consumer Agency’s fair price information service, the official price of domestic Haetban instant rice (210g) is 1,888 won. Trading company officials calculate that even after considering tariffs and shipping costs, the price of instant rice in Korea could become similar to that in Japan. While it's still to be determined if it can be distributed at an extremely low price compared to Japanese instant rice, it implies that the tariff issue won't completely shut out the Japanese market.
Of course, considering the trends in the won/yen exchange rate, shipping and logistics expenses, brand-building costs in Japan, distribution channel expenses, and the volatility of rice supply and demand in Japan, it is said that making an immediate decision to export is a difficult issue. This is because importing rice or rice products is sensitive due to issues of food sovereignty, as is the case in any country.
However, expectations for expanding export opportunities for Haetban are already starting to emerge. Will this opportunity be realized with Japan, a near but distant country, now becoming an accessible market for instant rice exports? Attention is being drawn to whether the newly changed atmosphere of the Japanese rice market will become a new opportunity for Haetban.