Terrie's Take: Green Tea the Next Big Thing? Toshiba, STAP, Buddhists, and Plutonium!

Terrie's Take - AkihabaraNews.com

Terrie’s Take is a selection of Japan-centric news collected and collated by long-time resident and media business professional Terrie Lloyd. AkihabaraNews is pleased to present Terrie’s learned perspective; we all could use another take on the news - here’s Terrie’s:

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Terrie’s Take on March 17, 2014

Feature:

  • Green Tea the Next Big Thing?

Briefs:

  • Toshiba sues over industrial espionage case
  • Storm in a teacup over STAP?
  • $6.6 million given to USC by Buddhist group
  • Sumitomo-Mitsui buys 40% of mid-size Indonesian bank
  • Rokkasho Plutonium easy terrorist target

Green Tea the Next Big Thing?
Ask any Japan fan living overseas the top 5 things they love about Japan and they will include food. The good thing about Japan's food culture is that it is distinctive and generally healthy (instant ramen and candy excepted), and thus in keeping with growing public awareness that "we are what we eat". Sushi, sashimi, mochi, sour plums, katsuo-based sauces, and nori have all become favorites around the world. But one of the most interesting food trends is green tea. We were approached recently by a foreign couple who have decided to create a green tea brand and wanted some advice about getting started and getting funded in Japan -- which of course got us curious about the green tea trade in this country.

Although almost all commercial tea apparently comes from the same bush, "Camellia Sinensis", it's the Japanese method of processing the leaves right after harvesting that give it the distinctive green color and bitter fresh-plant taste. Best known among Japanese green tea varieties is bright green finely-powdered matcha, and it is this format that is driving a green tea renaissance both here and overseas.

While green tea can be an acquired taste, what pulls in most repeat consumers is its health benefits. The press is continuously running stories on studies revealing the antioxidant properties of green tea, and for good reason. Among common foods available in the supermarket, matcha has one of the highest antioxidant ratings (ORAC), with 1573/gm. In comparison, gojiberries come in at 253, dark chocolate at 227, pomegranate at 105, wild blueberries: 93, and acai berries at 60. Thanks to high-profile, low-cost health food vendors like www.iherb.com in the USA, consumers are becoming convinced they need more powerful functional foods, especially if the real thing comes from somewhere exotic like Japan, and they will spend whatever it takes to make up for past dietary failings. As a result, U.S. imports of Japanese green tea have surged from US$2.8m in 2001 to US$28.6m in 2012.

This is certainly good news to Japanese green tea growers, who have seen their markets decline in the last few years. The domestic (Japanese) green tea market in 2012 was worth about JPY383bn, down from the peak of JPY447bn in 2005, but still about 10% of the overall beverages market. Within that figure, 21.3% of the green tea shipped was in ready-to-drink in cans and bottles, and this trend is continuing to grow, even as the market for leaves and powders declines.

Of particular interest to us, though, has been the green tea cafe and dessert store concept, which is seeing a lot of industry action both here in Japan and also in Asia. If you've been out looking for somewhere different to have a matcha, then you will have surely noticed the relatively new chain called Nana's. This is a franchise run by a little known company in Jiyugaoka called Nanaha ("Seven Leaves"). The company does have a website, but publishes almost no information about itself, nor have the press picked up on it either. Which we find surprising, given that it has opened 66 stores in Japan since it was established in 2001, and another 2 overseas (China and Singapore).

Nana's is notable because it incorporates a very modern feel to a very traditional product, giving the image of it being a Japanese-style Starbucks. Although Nanaha has a long way to go to start challenging the Seattle company, a number of competitors such as Japanese tea maker Ito-en do appear to be taking notice. Nana's menu ranges from the bitter to the sweet, and caters in particular to office ladies who want to combine healthy aspirations with a bit of self-indulgence. You can find a dietary values table on their website that lets calorie conscious customers plan what they are going to eat. Probably that is just as well, because while you have regular matcha and matcha lattes, and donburi rice bowl and udon bowl lunches, all of which are reasonably healthy, you also have over-the-top desserts containing kanten seaweed jelly, shiratama rice dumplings, azuki bean paste, and lashings of vanilla icecream, whipped cream, and cornflakes!

Their's is a smart approach, though, because they have developed a distinctive brand that appeals to the most critical (and picky) market segment -- young women. Nothing on the menu costs more than JPY980 and some of their light lunches go for just JPY500, and yet the stores don't attract middle-aged salarymen because they don't like the menu or the atmosphere (they feel too exposed, maybe). As a result, Nana's is an oasis for office ladies who might otherwise bring bentos to work, or eat at McDonalds. The Nana's decor is somewhat spartan but riffs off Starbucks, with ample visual stimuli in the form of artworks and striking wall interiors. It would be interesting to know what the financials of the chain are, but as we mentioned, the company is very media shy. They do seem to be doing well, though, because they have opened two more stores this year already.

Another player with a chain of local and overseas stores in the past has been coffee chain Tully's, with its Koots Green Tea brand. We say "past" because if you look up the brand, you'll find that they have shut down a whole bunch of stores over the last six years, both in the USA and here in Japan. Indeed, the two Koots stores left in Japan are not even indexed from the top page of the Tully's Japan website. Instead, you have to find them by knowing the actual URL. As an aside, the origin of the name "Koots" is interesting. Apparently the founder of the company, Kouta Matsuda, came to be called Koots by his school friends while growing up in the USA.

Anyway, this brings us to the 800 lb. gorilla in the green tea market -- no not Starbucks and their lattes -- we refer instead to Ito-en, the largest green tea distributor in Japan. In late 2006, the company bought a controlling share of FoodxGlobe, the owner of Tully's Japan, and so of Koots. This was an ironic M&A, because Ito-en was initially interested in what Tully's was doing with green tea and saw a possible future for its own dwindling empire. And yet, within just two years the company was telling the market that in order to bring Tully's into sustained profit, it was going to have to shut down Koots, which it mostly did.

But fear not, this isn't the end of the story, because Ito-en has recently launched four new concept stores in the USA (New York, Costa Mesa, San Jose, and San Diego) called Matcha Love. The company gave a presentation at Columbia University mid-last year and outlined a master plan for moving its green tea culture to the USA, using the concept of "unsweetening" America. We think it's the right message at the right time, so long as they figure out how to get American kids to follow their parents' lead in drinking unsweetened beverages. Maybe they will allow a little Stevia in there for the first couple of decades?

Ito-en obviously likes the brand name Matcha Love, because in February they launched a range of green tea products in the USA under the same name. While this may do well there, we think the place that they should really move their marketing machine to is Southeast Asia. Singaporeans, Hong Kongers, and Thais really love their green tea and gulp it down by the bottle full -- so unlike many Americans, they don't need to be educated about it first.

Toshiba sues over industrial espionage case
For once the shoe is on the other foot and the Japanese party is doing something about it. Toshiba is suing South Korea's SK Hynix here in Tokyo, after discovering that a former engineer in a joint venture Toshiba had with SanDisk had passed on confidential data to the Korean firm shortly after he started working for them. Police have arrested the 52-year old engineer, Yoshitaka Sugita, and he will be charged under new rules governing industrial espionage and the ability to request damages from such acts. Toshiba is reportedly looking for at least JPY100bn -- a huge penalty by Japanese standards. ***Ed: This case seems to be precedent-setting for Japan, given that the judiciary here seldom make meaningful awards for damages.** (Source: TT commentary from asahi.com, Mar 14, 2014)

Storm in a teacup over STAP?
At first glance, it looks like the same pedantic attitude in academia that prevents researchers from making intuition-driven breakthroughs is now spoiling the amazing discovery by RIKEN researcher, Haruko Obokata, that stem cells can be stressed into existence. The storm in a teacup is over the fact that two papers based on her research and published in January by Nature, now appear to have irregularities, including duplicated photos, adjusted data, and copying of an earlier paper. RIKEN says that the irregularities are because Obokata is inexperienced in scientific publishing, which of course is strange to say, given that she had her seniors closely monitoring the project. However, in the long run does it really matter? So long as the phenomenon of STAP itself proves to be real and repeatable. This is the point made by Dr. Charles Vacanti, at Brigham and Women's Hospital in Boston, who co-authored one of the papers. (Source: TT commentary from latimes.com, Mar 14, 2014)

$6.6 million given to USC by Buddhist group
The University of Southern California (USC) has received a gift of US$6.6m to further Japanese studies at the college. The money will be used to support scholars covering international relations, society, the arts, media, and religion. The gift came from the Buddhist sect Shinnyo-en, which was founded in Tachikawa, Tokyo. The sect is notable in that it has over 1m followers globally, and has a female head priestess. (Source: TT commentary from dailynews.com, Mar 15, 2014)

Sumitomo-Mitsui buys 40% of mid-size Indonesian bank
The level of engagement between Japan and Indonesia, the world's fifth most populous country, is heating up, and this week the Sumitomo Mitsui Bank announced that it has purchased the last tranche of a US$1.5bn investment into the Bank Tabungan Pensiunan Nasional (BTPN), a profitable mid-tier player. Sumitomo-Mitsui now owns 40% of BTPN, having bought the shares from major U.S. fund, Texas Pacific Group. BTPN focuses on both retired civil servants and small businesses. (Source: TT commentary from thejakartaglobe.com, Mar 14, 2014)

Rokkasho Plutonium easy terrorist target
Nice story from Philly.com about the security weaknesses at the Rokkasho nuclear processing facility in Aomori, and nuclear facilities here in general. One of the priceless quotes is this one, from a U.S. embassy staffer who visited the Mihama power plant in 2006 and who was commenting on local police presence. Quoth he: "A lightly armored police vehicle with up to six police officers. Some of them fast asleep." The article goes on to describe that Rokkasho will be creating enough high-grade plutonium to produce more than 2,600 warheads with a yield of more than 20 kilotons (of TNT) each a year, and yet most of the security personnel there are unarmed. ***Ed: A very timely warning that earthquakes and an angry public are not the only threat to Japan's nuclear industry...** (Source: TT commentary from philly.com, Mar 11, 2014)

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That was Terrie's Take.

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