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Irresistible Insects #6: Interview with FUTURENAUT CEO

Irresistible Insects #6: Interview with FUTURENAUT CEO

Exclusive interview with pioneering insect-based startup FUTURENAUT is crawling with insights about what it takes to build an edible insect business in Japan.

February 15, 2022

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Good morning Market Shakers! This week’s installment of Market Shake features an exclusive interview with Ren Sakurai, the CEO of the Japanese cricket-based food startup, FUTURENAUT.

FUTURENAUT are pioneers of Japan’s emerging edible insect industry and Sakurai’s insights illuminate the keys to the market and its future growth.

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Inspired to change consumer attitudes towards edible insects, Sakurai founded FUTURENAUT

FUTURENAUT’s website has multiple pages dedicated to the sustainable and health benefits of edible insects. On paper, the facts are a compelling reason to forget beef, chicken and pork, and consider crickets the future of food. But when we’re presented with a plateful of insect-based food, for most customers it’s a different story.

For Ren Sakurai, overcoming humans’ psychological aversion to eating insects was the challenge that motivated him to found FUTURENAUT.

I used to hate the thought of eating insects. Like most consumers, I thought they were, well, gross. But in university, I specialised in the psychological analysis of attitudes towards food. I ended up working on a project about attitudes to eating insects. I came to see that insects hold great potential for humans as future food. But even if companies produced a really good product from edible insects, people’s psychological aversion is too high a barrier to overcome. I became fascinated by finding a way to overcome this challenge so that society can benefit from a much-needed source of new protein. This struck me as a business opportunity so, at the time, I founded FUTURENAUT with support from my university professors.

FUTURENAUT was founded in 2019 by Sakurai in partnership with his professors from the Takasaki University of Economics. The company set out to produce and popularize cricket-based products in the Japanese market as sustainable future food.

The name FUTURENAUT combines the words''Future” and ''naut”. It symbolizes our company as a forward-looking crew who will increase the number of people who accept edible insects as the future of food.

The team at FUTURENAUT have certainly come a long way towards achieving their goal in such a short space of time. Since its founding, they have launched several cricket-based product lines including biscotti, wafers, and chips. They have also partnered with big brands like Japan’s no. 2 baked goods manufacturer, Pasco Shikishima, and EU-based cricket protein startup, Sens Foods, to bring edible insect products to the mass market in Japan.

The insect product market is going through a period of constant transformation

FUTURENAUT’s rapid iteration and product development are not uncommon in the edible insect market. The nascent state of the market - not only in Japan but globally, means there’s limited market data to guide and inspire companies. Naturally, startups and organizations are experimenting and innovating to try and find products and strategies that work.

The commercial market for insect-based products is still so new. There’s a lack of clarity about the demand for products and applications. I think many companies are trying a lot of different things and going in different directions.

Many of the companies we introduced in our second and third newsletter of this cycle offer broad ranges of insect-based products. Chirp Chips (2013) for example makes tortillas, protein powders, cookies, and more. The diversity in the market is exciting; players have very different stories and trajectories. Trends are starting to emerge, however. We identified a focus on insect-based sports nutrition products in the US and Europe, for example.

In FUTURENAUT’s case, they began by targeting their products and marketing towards children.

Our strategy was originally to sell our products in museums and museum shops, so at first, children (who are less averse to trying insect products than adults) were a bit curious about our products. We designed our packaging and even the company logo so that children would be interested in it.

Recently FUTURENAUT has been focussing on developing products that appeal to health consciousness - a big driver for Japanese consumers.

The next step was to make and promote products that are more natural and additive-free and also to make them more functional; high in protein for example. We are trying to find out which products will appeal to our customers by changing the strength of each new product.

Health-conscious and young consumers are key demographics

Based on FUTURENAUT’s product innovation and iteration so far, Sakurai says that middle-aged women show the most interest in the edible insect market.

We have more female customers. Rather than young women, we have a lot of women in their 30s and 40s who are fans of our products and who buy them regularly.

The reason? Health consciousness. This is a key driver for most demographics in Japan, but especially female customers.

Women in their 30s and 40s in Japan show more interest in their diet. These age groups start to care more about what they eat. Also, if you have children, you have to be careful about their food and so I think female consumers in these age groups are more accustomed to investing in food and nutrition.

Another factor in insect-based products’ appeal to middle-aged customers is price. Insect-based raw materials, which are generally imported from South East Asia by Japanese producers, remain relatively high priced because demand does not yet necessitate higher production volumes. Customers in Japan who purchase products like FUTURENAUT’s currently pay a premium price. Middle-aged customers in Japan who have more disposable income on average are therefore more likely to buy.

On the other hand, younger consumers, especially children, present an opportunity for insect-based products. Marketing edible insects to children is a smart strategy because they have not yet developed biases against insects. Also, once used to consuming insects at a young age, they will naturally incorporate them into their diets in the future.

It is true that children are not prejudiced, they do not have assumptions, and they do not have certain knowledge, so it is easier for them to eat insects. However, in the end, parents pull the purse strings. So I think it's important to create something that children will enjoy but that their parents will also want to buy.

Increasing the availability of edible insects is the biggest challenge in Japan

Of course, FUTURENAUT aspires to open up edible insect products to all demographics in Japan. This goal is key for growing the market. Sakurai believes that the first hurdle to overcome is the limited availability of insect product options in Japan.

So far early adopters, who have a certain interest in insect-eating, are trying insect products in Japan. The laggards won't eat insects until they become part of the food culture, so for most, insects are still difficult to accept.

So I think it is important to increase the number of people who have tried insects. Then first-timers will feel more confident about trying them. In Japan, we have a culture of eating things like shrimps, crabs, and sea cucumbers that look more disgusting than insects. The reason why people can’t eat insects in Japan is that they don’t have the experience yet.

FUTURENAUT does a lot of promotion to increase awareness about edible insect products in Japan. They have a dedicated website with educational material about the benefits of edible insects, and even recipes for insect products consumers can try at home. They also attend events to promote their products.

For Sakurai, though, collaboration is the key to increasing consumer access to insect-based products.

Recently, consumer perceptions of insect products are gradually changing. I would attribute a big reason for this to MUJI’s cricket crackers and the cricket chocolates that they released in 2020 and 2021, respectively. The MUJI brand is huge in Japan, so these products were a big chance for people to try insect products.

Sakurai is also proud of a big collaboration between FUTURENAUT and Japan’s second-biggest baked goods manufacturer, PASCO Shikishima Corporation.

The next big event that increased Japanese consumer’s awareness of edible insects was the Cricket Cafe range that we collaborated together with Pasco on.

In 2020, and again in 2021, FUTURENAUT collaborated on a range of cricket-based financiers and Baumkuchen under the Cricket Cafe brand. The products were sold via Pasco’s online store. The webpage includes educational information about the nutritional benefits of crickets, and how their sustainable production can help to avert a looming food crisis.

The second time we collaborated on a product under this brand, it was featured on TV, so it was really popular and we sold out very quickly. Customers said it was delicious, but they wished the price was ever so slightly cheaper. I felt that we need to work on cost reduction and price reduction.

Collaborations between startups and large manufacturers is an important strategy in Japan for increasing consumer confidence in new products. Big manufacturers' support of edible insect products will steadily help to get them on Japanese consumers’ radars. But there’s a lot more work to be done, according to Sakurai.

The future of insects in Japan depends on collaboration, regulation, and reduced raw material costs

To establish edible insect products in Japan, Sakurai believes collaboration with big manufacturers and companies is key.

Our current strategy is to find partners with whom we can develop and commercialize products. As we have more success like the Cricket Cafe, other companies will start to get interested in cricket-based product collaboration. This increases the avenue for us to sell imported raw materials to manufacturers, though in the future we’d hope to see more local production of raw insect materials as interest in products increases.

To this end, FUTURENAUT is seeking to participate in accelerator programs such as TOKYO NEX, which they have recently been selected for. The program is designed to network startups based outside of Tokyo with government, university and business contacts in the capital.

Therefore, we would like to make use of the support of the Tokyo Metropolitan Government to make new connections, and link them to commercialization, joint development…and so on.

Of course, we also need to lower the price of insect-based products in Japan. In order to reduce the price, we have to increase the volume. Interest from producers and consumers will support this.

When asked about how the market for edible insects in Japan will grow over the next 10 years, Sakurai was quietly optimistic.

It's still difficult to estimate how much it will grow. I feel that we are seeing more edible insect products this year than last year, and there are more and more manufacturers using insect raw materials to make products, so I think it is definitely one of the industries that are growing. There’s a lot of excitement around food-tech in Japan right now, so I’m optimistic about big things for bugs going forward.

Sakurai added that increased regulation of edible insects in Japan where there are no formal regulations would go a long way to making it easier for startups and companies to enter the market.

Overseas, especially in the EU, we have heard that a number of agreements and rules have been established regarding the distribution of insects. On the other hand, in Japan, the distribution and production of insects are not regulated in the same way as other livestock products, such as pork, beef or chicken, and there are no detailed production standards. If we had these, it would lead to more companies entering the market and more companies using insect raw materials.

Japan has yet to establish any formal regulations regarding insects as food for human consumption. Official guidelines, such as production and food safety standards, are a form of approval that the Japanese market is open to edible insect products. As businesses and startups increasingly show interest in insect-based business, it makes sense for Japan to get a head-start and prepare regulations now so players feel confident about market entry in the future.

Currently, FUTURENAUT is involved in lobbying the government to take steps towards this, starting with a commercial organization for insect-based products. In Japan, where relationships are particularly important for business, industry groups like Japan Soft Drink Association can make a big difference to business growth. Knowing that edible-insect companies are working on this should be reassuring news to companies hoping to enter the market in Japan.

Is Japan ready for overseas entry?

But, what about companies overseas with an eye for bringing their insect-based products to Japan? We asked Sakurai, and his response was, ‘not just yet!’

The market in Japan is still not that big. Even if a product had popularity overseas, I think it would be tough to launch it in Japan. With that said, it is common for Japanese people to see something that was popular overseas and then it becomes popular in Japan a few years later. As a result, if a product becomes a hit overseas, there is a big possibility that Japan will import such a product in the future.

If you want to bring a product to the market from abroad right now, you have to invest a lot of money in it. But there’s a possibility for collaboration like we did with European producer Sens Foods, whose products we import and sell online in Japan.

That’s all, folks!

There you have it! A big thank you to Ren Sakurai, for taking the time to interview with us and for giving such fascinating answers.

Japan’s edible insect market is still a small chrysalis, but startups and companies are thriving with activity and innovation within. Will a beautiful butterfly burst forth in the future, bringing with it a thriving market for edible insects in Japan? Probably not so soon. We’re more likely to see a gradual emergence of edible insect products in the Japanese market, led by a collaboration between edible insect startups and larger companies.

Stay tuned for next week’s issue where we will be bringing you an interview with Ÿnsect, Europe’s leading insect protein producer.

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