Japan Food Prices:

 https://the-japan-news.com/news/article/0007831549

Article

Japanese consumers can expect to take a bigger hit to their wallets as food price hikes expand to more products this month, the result of a global surge in raw material prices and increased demand in China as its economy recovers.

A succession of price hikes have already put a heavier burden on families, leading to fears that Japan’s own economic recovery as it comes out of the state of emergency will be hampered.

Major dairy manufacturers Megmilk Snow Brand Co. and Meiji Co. increased prices for margarine and other products that were shipped on Friday. The retail price of a 160-gram pack of Megmilk’s Neosoft margarine, including tax, is expected to rise about ¥16.

Ideas:

The global surge in raw material prices could be related to increased in shipping costs, increases in shortages and of course increases in demand of raw material prices overall.

And of course China being a large economy and population increases in demand in China is going to effect not only Chinese companies and consumes but companies and consumers everywhere.

Many Japanese companies, especially during the pandemic, have been reluctant to increase prices that they pass on to those along the chain, but as the pandemic is now beginning to slow, maybe companies now feel they have no choice but to increase prices.

The key is guessing what is the correct price increase as too much might cause consumers to search for substitutes or alternative and not enough might result in not enough profits for a company.

As some or many companies begin to increase their prices, as they see other companies doing the same and they feel its safe for them to increase prices too, its going to put more stress on families and it might begin to crowd out other kinds of spending in the economy, which is needed for the economy to grow.

Article:

The hike for margarine can be traced to poor weather in North America, which produces soybeans and rapeseed, and higher demand in China and around the world inflating the price of cooking oils and fats.

According to Satoru Yoshida, commodity analyst at Rakuten Securities Economic Research Institute, the international trading price for soybeans in September rose by 30% compared to the same month the previous year, and by 70% for rapeseed.

The restaurant industry is also being forced to raise prices.

Matsuya Foods Holdings Co., which operates the gyudon beef bowl restaurant chain Matsuya, increased the price of its standard beef bowl for the first time in 3½ years due to soaring prices of imported beef.

Ideas:

Weather conditions can always effect the supply of products. If there is a good growing season with good weather then there might be an oversupply of something which might forces prices down and growers and producers now need to sell off the extra supply.

If there is a not so good growing season due to bad weather then there might be shortage of something meaning growers and producers were not able to harvest as much as they expected or wanted and as such the supply of something is lower than expected and the growers and producers have no choice but to increase the prices on the low supply in order to maintain the same profits as in a regular harvest.

As the US produces much of the world's corn, soybeans, wheat, and other kinds of products and in the Midwest part of the US, the weather can go through extremes which can greatly affect the supply of the products being sold globally.

Restaurants in Japan are suffering a lot and now because of the increase in supply costs such as the increased price of imported beef, some customers might not like the increased prices and look for substitutes or other restaurants with lower prices, if there are any.

Which is going to cause even more challenges for restaurants in Japan which for the past 18 months have been under extreme conditions due to the suggestion to close early and not serve alcohol. With the increase in price customers might be reluctant to return.

Article:

On Tuesday, the signature menu item rose from ¥320 (¥290 in Okinawa Prefecture) to ¥380 nationwide.

Other gyudon chain operators such as Yoshinoya Holdings Co. and Zensho Holdings Co., which operates the Sukiya chain, are currently remaining cautious about hiking prices.

A Yoshinoya official said, “If the price of imported beef remains high for an extended period, it will inevitably have an impact on the price [of our products].”

Vegetable prices are also expected to rise in October, according to estimates based on wholesale prices for 14 vegetables released Wednesday by the agriculture ministry.

Ideas:

The standard beef bowl type restaurants usually target the middle or lower middle class customers and as such they might be very sensitive to prices increases. If the prices become too high they will search for other restaurants or substitutes to eating at restaurants such as bento type meals from a supermarket or a conbini.

Companies need to be very cautious about raising prices, especially if their customer market is the lower middle class or even the middle class.

But eventually they might have no choice but to raise prices. As again the puzzle is to find the right price the meets the companies needs and keeps the customers returning.

Most likely many restaurants in Japan that target the middle class are challenged now with what to do about increases in supply costs.

As they are hoping for an increase or return of customers as the emergency measures are being lifted related to restaurants and other places and more and more consumers now getting out and about, what they don't want are reluctant customers because the increase in prices is turning away customers from returning.

Article:

Because of a record-high heat wave and inadequate rainfall in Hokkaido in July, potatoes and onions are expected to be over 20% more expensive in October compared with usual years.

Chinese cabbages, lettuces and eggplants will likely fetch higher prices in the first half of October due to delayed growth stemming from extended periods of rain in the first half of September.

Some companies, anxious to keep from losing customers, are using the tactic of changing the content of their product and not the price, which actually makes the product more costly.

Ideas:

And again the weather conditions has effect the growing and harvesting of some produce such as potatoes and onions in Hokkaido, which of course has reduced the supply.

As a results producers and growers have to increase prices to make a profit and or maintain the same level of profits as in a regular good weather growing season.

The prices of produce and other similar products might not be part of the normal or regular CPI or consumer price index because the prices of food, as we see with the growing seasons, can be very volatile, meaning rapid increases or decreased which might distort the overall prices in Japan.

The tactic of changing the content seems a little ambiguous or unclear as to what are companies really doing?  If they are talking about restaurants changing the contents of, for example a beef bowl lunch or dinner set, then they need to explain or show what the substitute ingredients are in the lunch set now.

Article: 

Major department store operator Matsuya Co., which will soon start accepting reservations for over 40 kinds of Christmas cakes made by top hotels and restaurants, says this strategy is being used leading up to the holiday season.

“No brand changed its price from last year, but some are employing other means, such as using cheaper strawberries and other fruits than usual, or simplifying the design of their cakes,” said a Matsuya official in charge of confectioneries.

Yoshiki Shinke, senior economist of the Dai-ichi Life Research Institute, likens the price rises to an additional tax on households.

“While incomes barely increase, the amount spent on food and necessities is growing,” he said. “That makes these recent increases equivalent to a tax hike. This could curb spending on leisure and dining out after the state of emergency, as people tighten the purse strings to make ends meet.”

Ideas:

If the companies are just moving to use cheaper but the same quality of strawberries for example, that is mostly likely a normal occurrence that most if not all businesses do to keep costs down and not having to pass on the costs to the customers.

But some customers might see or taste the change in the cakes for example and might decide to change to another store or company.

Companies will need to find a balance between the quality of their products and meeting the needs of their customers, especially long established customers.

For example top hotels and restaurants, which of course cater the the upper middle class and above might be very sensitive to any changes in the quality of the cakes the receive from the Matsuya company, and as such Matsuya should know they can't change the quality of the cakes too much or they will lose the top hotels and restaurants as customers.

The might be able to change the cakes they provide to say the department stores that target the middle class such Sogo department store where the customers might not notice the change too much but to change it related to the big hotels and restaurants might be risking losing those customers.

And yes any increase in food prices at restaurants and supermarkets could crowd out other spending and even reduce spending.

And at this point restaurants and supermarkets need to get customer to come back and not create an incentive for them not to come back.

Both the previous Abe administration and the Bank of Japan has been trying for years to get companies to use the huge sums of extra savings they have just sitting in the banks and increase their workers salaries, with not much effect.

As such workers might not feel too good about their present salaries. If there able to get a salary increase that they felt good about they might spend some of it in the economy and of course they might try to save some of it.

Which might go a long way towards the Bank of Japan's goal of reaching a 2.0 percent increase in consumer spending inflation. 

What the Bank of Japan doesn't want is an increase in inflation related to supply cost increases which can further reduce business and consumer spending.

Have a nice day and be safe!

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