Insights On Plant-Based Ice Cream in Japan With EECO CEO Tsuyoshi Kanazawa
Time is right for premium products — but the trend hasn't reached mainstream consumers yet.
Hello, Market Shakers!
Last week, we focused on plant-based ice cream trends worldwide and in Japan. We noted that the category is rapidly rising in North America, Europe, and Asia. The Japanese market is slowly opening up to premium products, but mainstream consumers are not on board with the trend.
Today, EECO CEO Tsuyoshi Kanazawa is with us to talk about the success of EECO’s brand Soy Gela and the plant-based market in Japan.
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The time is right for limited, premium plant-based ice cream in Japan.
Founded in 2016, EECO is an ethical organic food manufacturer located in Shizuoka. With organic, ethics, and eco-friendly at the heart of their business and company name — EECO standing for Ethical Eco Organic, EECO is a human-size food company. In May 2020, they successfully rebranded their organic plant-based ice cream, Soy Gela.
The plant-based market is growing slowly but surely.
Last year was good for the plant-based industry in Japan, with large companies and start-ups coming to the market. Product launches accelerated, and soy was at the heart of this green revolution. A perfect example of the trend is Fuji Oil, a Japanese pioneer in plant-based meat made from soy, reaping over fifty years of hard work.
However, even with 2020’s incredible momentum, the market is still very niche, with growth slower than in North America or Europe. For Tsuyoshi Kanazawa, one factor standing in the way could be the very influential Japanese agriculture industry. Through the Japan Agricultural Group, commonly known as JA, over 600 Japanese regional cooperatives hold tight control over food production in Japan. Very conservative and fighting for their business, the cooperatives have the upper hand over farmers, slowing down progress toward organic farming and sustainable agriculture.
Protecting its interest, the JA Group is notably influential for the dairy industry, a big chunk of Hokkaido’s economic activities. Acting as a middleman between farmers and Japanese schools, the JA stimulates demand for milk since the 60s.
The JA Group isn’t the sole factor. The lack of awareness and need among consumers leading to a lack of demand made it hard for retailers to venture into this sector. Contrary to other countries, Japan still has very few organic and specialized retail store chains.
French organic chain Bio c’Bon did land in Japan in 2017 through a partnership with the Aeon group and rapidly rose to over 20 store locations in the greater Tokyo area. However, the company does well thanks to the group’s investments.
Health and the internet behind the push for more soy and more organic
In our past Market Shake cycles, we explored consumer behavior and noted that, for the most part, growing health awareness is a key driver for this market. The pandemic further pushed already highly self-conscious Japanese consumers toward alternative products. Tsuyoshi Kanazawa believes the internet revolution tremendously helps consumer awareness growth in favor of organic and plant-based products.
In other words, the dynamic between food manufacturers and consumers changed. Rather than selling products they wanted to manufacture, companies seek products fitting with consumers’ needs, as reflected in trends. An approach closer to the consumer than ever before.
The plant-based ice cream market is still too niche for prominent players to succeed, but the right fit for EECO.
Currently, the demand for alternative ice cream isn’t strong enough for larger companies to jump in. They would need to grab mainstream consumers’ attention for the plant-based production to be financially viable. Mass production requires a considerable amount of investment, and reducing costs is difficult. Even major soy milk makers such as Kikkoman and Marusan do not have a line-up of products. Instead, they promote frozen soy milk recipes that consumers can do at home.
However, the market growth speed is just the right fit for EECO and offers opportunities for smaller players providing premium products.
Since their rebranding last year, EECO has received inquiries from major retailers interested in a more significant production. A move the small Hamamatsu-based company isn’t ready to make yet. They can only accept deals for limited production and mainly partner with local supermarkets and restaurants.
EECO’s business equally relies on wholesales and e-commerce.
The company takes its orders online since the launch of its membership-based website EECO Wholesales five years ago. Among their buyers, EECO counts Natural Lawson, a premium convenience store in the greater Tokyo area.
With increasing orders for retail, the company needed to work on its design packaging to grab consumers’ attention. For many years, farmers they work with simply bagged their production in plastic bags labeled with the JAS mark.
In November 2019, the company also opened its EECO Organic Cafe, a physical point of sales for the local community. However, the timing was unfortunate. With almost no sales and struggling to open regularly during Japan’s various states of emergency, the cafe is now temporarily closed.
In parallel, EECO has done well with e-commerce, a direct-to-consumer avenue for its products. Where the traditional distribution channel requires mass production, e-commerce offers the opportunity to stand out and cater to consumers that are specifically looking for plant-based and vegan products. The plant-based trend and the pandemic significantly boosted sales from their online store.
While their products are suitable for consumers with dietary restrictions, the soy gelato manufacturer believes in catering to everyone’s needs and doesn’t wish to target a vegan population specifically. Avoiding labels is a mindset reminiscent of our interview with Sho Yoshida from Gateaux de Voyage.
As a small business, EECO can move fast and experiment.
EECO used to sell Japan’s first organic rice milk through an OEM, as they didn’t have a license to produce soft drinks at the time. Japanese consumers shunned the product, and with no sales, the company retreated. Now, they make organic rice for their consumption.
Today, the company is planning to build one more production line at their factory to cater to more customers. The demand exceeded their expectations, and not everyone could get their hand on their delicious ice cream.
EECO dreams of sourcing all of its ingredients locally. Their sweet potato flavored soy gelato is made from potatoes grown on organic farms in Kagoshima. The company also invests and purchases abandoned lands from aging farmers and started producing its organic green tea. EECO also cares about tackling social issues. The company is doing a lot for the community in Hamamatsu. Their hiring program is looking into improving the insertion of people with disabilities.
See you next week!
Stay tuned. Next week we stay in the cold section with our Happy Yogurt cycle. We will explore worldwide trends, the Japanese market and get some key market insights.
Market Shake is brought to you by GourmetPro - Food & Beverage experts in Japan. Reach out for questions and comments!