Japan is Hungry For F&B Crowdfunding Campaigns - D2C Discovery #4

F&B brands are increasingly turning to crowdfunding to launch products in Japan. Our crowdfunding expert reveals how to cater campaigns to consumers in Japan.

July 07, 2022

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Happy Thursday Market Brewsters. Today’s post is about crowdfunding in Japan’s F&B industry!

We talked with Vincent Nicol, co-founder and CSO at GourmetPro, to find out about F&B crowdfunding in Japan. In today’s post, we’ll explore:

  • An overview of F&B crowdfunding in Japan

  • Why launch an F&B product using crowdfunding?

  • What are the challenges for crowdfunding?

  • What are the best crowdfunding platforms in Japan for F&B products?

  • What kinds of F&B products are popular on crowdfunding sites?

  • What are examples of the most successful crowdfunding campaigns in Japan?

  • How do D2C F&B brands use crowdfunding in Japan?

  • What does the future of crowdfunding look like?

Overview of F&B crowdfunding in Japan

Crowdfunding in Japan is becoming a popular way for F&B businesses to raise money. Crowdfunding is an online service that lets people invest in a product in return for rewards.

It first originated in Japan around 2011. The first crowdfunding platform, READYFOR? was used to fund projects to support victims of the 2011 Touhoku earthquake and tsunami.

Since then, several big crowdfunding platforms have emerged, such as Campfire and Makuake. People and businesses use these platforms to create campaign pages where they explain and promote the products they want to fund. Users can “back” a campaign by investing in different rewards tiers. In return for their investment, users receive rewards based on the tier they selected. For F&B products, this is normally a certain amount the product being funded. For example, a campaign for locally produced craft beer might give beers in return for backing. The higher the reward tier, the more beer the backer will get.

More and more businesses are crowdfunding the launch of their F&B products in Japan. The market will reach a projected value of US$12.5 million by 2026 at a CAGR of 3%. Food and beverage looks set to be a high-growth category.

With Japan’s appetite for crowdfunding warming up, we asked Vincent, our crowdfunding maestro to tell us more.

Why launch an F&B product using crowdfunding?

Running a crowdfunding campaign lets you:

  • Test the market for your F&B product in Japan

  • Find new customers for your product and drive sales

  • Build an audience for your product

  • Raise funds to support future product launches

Crowdfunding your product in Japan can be considered as a pilot-scale launch. It allows you to take your brand, product, and marketing straight to consumers to see if they buy-in.

If you succeed, you gain confidence, an audience for your brand, and extra income. Existing backing means you can prove your product sells in Japan too. This helps to secure a more significant investment in the future.

If you fail, it costs a lot less time and money compared to botching a full-scale launch. It’s also useful data to consider for your next steps in Japan.

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What are the challenges of crowdfunding?

That’s not to say crowdfunding F&B products is a risk-free endeavour.

A campaign failure does have costs. Crowdfunding is public, which means failures are too. If a product does not reach its target, consumers and investors may lose confidence in it. This could damage future product launches.

In Japan, there are two main types of crowdfunding. "All-or-nothing" and "All-in". If your "All-or-nothing" project does not reach its target, you must return all funds raised. You do not need to fulfil your rewards.

For "All-in", even if your project does not reach its target, you receive all funds raised. You must deliver on whatever rewards you promised to your backers.

If you want to test the market or do PR for your product, then “All-in” campaigns are best. You’re effectively selling your existing product, listing it using crowdfunding reward tiers.

It’s also important to understand the local market in Japan. Consumers are wary about backing unfamiliar products from overseas. Crowdfunding is a great opportunity to tell the story of your brand and attract fans in Japan. You should invest in convincing copywriting for your campaign to attract backers.

Overseas products that succeed in Japanese crowdfunding campaigns all localize their brand. This includes translating your copy and messaging to appeal to Japanese consumers.

Running a crowdfunding campaign in Japan is a delicate operation. You need knowledge of the local market and crowdfunding platforms, their users, campaign page design, and more. It can be lucrative. But, trip up anywhere and backing may dry up in the early stages of your campaign.

Interested in crowdfunding your F&B product in Japan?

Having a skilled expert to guide you reduces the risks when crowdfunding in Japan and sets you up to enjoy the benefits. GourmetPro’s network of food and beverage industry experts have an average of 15+ years of experience on the ground in Japan. That includes supporting successful crowdfunding campaigns. Contact the team at GourmetPro for a chat and:

What are the best crowdfunding platforms for F&B products?

Campfire and Makuake are the main crowdfunding platforms for F&B products in Japan. Each platform has different strengths and weaknesses, and different user bases.

Campfire has 6.6 million users and net sales of ÂĄ3.3 billion as of 2021. Makuake has ÂĄ1.7 million users and net sales of ÂĄ4.5 billion.

Crowdfunding platforms in Japan fall on a scale between “pure” crowdfunding and sales. On the pure crowdfunding end, you have platforms like READYFOR. This platform aims to support projects for social good that can't be realized without community backing. On the other end is Makuake. It attracts projects offering exclusive and limited edition products. It’s the best platform for anyone that wants to use crowdfunding to test the market for their product. Campfire is a balance between the two of these.

What kinds of F&B products are popular on Japanese crowdfunding platforms?

Not all F&B products are backed equally in Japan. According to Vincent, confectionery products and condiments are big categories.

Products that do well consistently across platforms are confectionary. Condiments and seasonings are other categories that have been attracting backing recently.

On Makuake, we’ve seen limited edition alcohol, especially domestic whisky doing well recently. Domestic whisky has high resale value in Japan. Makuake users are like shoppers in high-end Japanese department stores, like Isetan. They’re affluent and have no problem investing large sums, $600, $1000, at one time. If you sell a limited edition product then it’s attractive for these kinds of users.

Vincent is confident there is room for any kind of F&B product to succeed at crowdfunding. A good strategy and excellent execution are key. These have enabled the success of products as diverse as plant-based meat to potato chips.

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What are some of the most successful crowdfunding campaigns in Japan?

What does it take for crowdfunding campaigns to succeed in Japan? Vincent revealed to us several examples of winning campaigns.

Hida Takayama Whiskey Distillery

This project launched on Makuake in 2022. It seeks funds to turn an abandoned elementary school into a whiskey distillery. The initial target was $20,000. By the time the campaign ended backing reached over $370,000. What can we learn from this high-performing campaign?

Firstly, it’s a limited edition whisky. This product has high resale value for whisky collectors. The fact that it launched on Makuake definitely helped attract such backers.

Another key aspect to this campaign, to all campaigns that earn over $20,000, is the story. It’s about converting an abandoned school into a whiskey distillery. The campaign makes it clear people can come to learn about whisky. This is attractive to Japanese consumers who are nostalgic about their school days. But the story is also structured well. It uses clear headings for example. It builds credibility for the backer who is the CEO of a sake company. These aspects make it easy for backers to trust the project in Japan.

Horinishi Black Outdoor Spice

Hornishi Black is a “smoky” blend of 23 spices. It is the most successful “spice” product on Makuake, attracting over $200,000 in backing.

The product seeks to ride the wave of growing popularity for outdoor BBQs and “glamping”, glamourous camping, in Japan.

This product signals the rise of a new F&B category on Makuake, “outdoor products”. The strength of this campaign is its timing. It also has seasonal and local appeal, which are strong drivers in Japan. It’s definitely a product that people want in the warmer Spring and Summer months. It’s also made by an“outdoor activities” store in a small town in Wakayama. Japanese consumers love seasonal products and products with a local flavour.

What are examples of D2C brands that have used crowdfunding in Japan?

Crowdfunding is also used by D2C brands as a test market and to raise awareness for their products.

NEXT MEATS

Japan’s biggest plant-based meat maker launched a campaign on Makuwake in 2020 to develop version 1.2 of their vegan burger. The campaign achieved 4X their required investment.

NEXT MEATS launched a crowdfunding campaign in the early stages of their business. It was no doubt an experiment to raise awareness for their brand, and also to test the market for interest.

Their product is quite ideal for crowdfunding. Consumers of plant-based products are already a niche market in Japan. They believe in investing in and supporting plant-based products. It means NEXT MEATS' burger is likely to get backing online.

This burger is also limited edition and only available on Makuake. Limited edition products are popular in Japan. They are powerful points of appeal in crowdfunding.

ONE WINE

ONE WINE is a D2C brand of canned wine by Suntory. They developed four flavours of wine with a famous French winery, Le Vins Georges Duboeuf. Their target is busy people who want an easy wine experience. People who don't want to open a whole bottle or spend too long choosing what to drink.

The campaign launched on Makuake and earned nearly $25,000, over 400% of the original target.

ONE WINE has been very successful. Their launch on Makuake was mainly for PR. The returns for the campaign were sets of different quantities of ONE WINE, at a 10 ~ 15% discount.

Suntory gained PR for their D2C brand and also did good sales. Since the campaign, the product has made it into the top 20 best selling wine products on Amazon.

What does the future hold for crowdfunding in Japan?

We asked Vincent for his predictions for crowdfunding.

The future of crowdfunding in F&B in Japan is exciting. We’re going to see the bridging of online and physical. Brands will use crowdfunding as way to build an early adopter community that will drive backers to physical stores or experiences. Hoegarden for example recently launched a Makuake campaign for potato chips that match with their beer. The recipe for the chips was made by a famous Japanese chef. At the same time they opened a pop-up restaurant in Tokyo. The Makuake campaign promoted the pop-up cafe, and vice versa. 

Another trend we’re seeing on Makuake is crowdfunding for members-only communities. Campaigns recruiting members for exclusive restaurants, for example, have been popular recently. I see potential synergy for NFTs with these kinds of campaigns also.

Companies overseas are also interested to test the market for their products with crowdfunding. We provided our expertise for a campaign with the Irish whiskey brand Egan’s recently. It exceeded 500% more backing than our target and was a great success. I anticipate more companies overseas will use crowdfunding as an intial test market for their product.

For companies that want to launch their product in Japan, crowdfunding is a high potential test market.

Want to learn more about crowdfunding the launch of your F&B product in Japan?

Check out our guide for crowdfunding food and beverage products in Japan:

That’s all folks

We hope you enjoyed today’s post all about crowdfunding F&B products in Japan. We’d like to say a big thank you to Vincent Nicol for sharing his wisdom with us.

See you next Thursday for our final installment of D2C Discovery.

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