Coca-Cola Japan seeks to expand foothold in functional drinks market

JAPAN – Coca-Cola Japan has forged a partnership with Kirin Holdings to develop functional drinks that contain the live bacteria, lactococcus lactis strain plasma (LC-Plasma).

LC-Plasma is a patented bacterium that is currently used in the Japanese beverage company’s health drinks. Kirin claims that the bacteria helps to boost immunity in healthy consumers.

Kirin is the first among companies that make foods and beverages they claim to boost immunity to have been approved by Japan’s Consumer Affairs Agency in 2020 to advertise its products.

Coca-Cola Japan being the beverage market share leader in Japan, but thin in the health drinks segment, plans to use Kirin’s LC-Plasma in three of its brands, Georgia, Irohasu, and Minute Maid.

The Consumer Affairs Agency has also given the go-ahead for the drinks to be advertised as having health benefits.

The Coca-Cola-Kirin partnership is seen to benefit both companies, even though they compete against each other with many products.

As much as Coca-Cola Japan intends to improve its position in the health beverage market, Kirin is increasing sales of its LC-Plasma component and sees health products as its next area of growth, at a time when domestic beer sales are falling due to the shrinking population.

Kirin anticipates that by 2027, sales of health drinks will have increased fivefold from their current level to 50 billion yen.

Taisho Pharmaceutical Holdings, as well as candy manufacturers including Morinaga & Co. and Kanro, have already purchased the component from Kirin.

 

 

According to GlobalData's 2022 consumer survey, 26% of Japanese respondents said that the factor 'containing immunity-boosting ingredients' was an essential/key driver of food and drink purchases, and 59% felt it was nice to have.

This shows that even as the pandemic caseload in Japan is subsiding, the demand for immunity-boosting drinks remains buoyant thanks to the growing consumption of ready-to-drink (RTD) beverages due to hectic consumer work schedules and sedentary.

Moreover, the rising consumer health concerns about the high prevalence of gut-related disorders, such as Gastroesophageal Reflux Disease (GERD), ulcers, gastroenteritis, etc., are driving the consumption of functional drinks, mainly including probiotics.

Imarc Group, a market research firm adds that the increasing demand for fortified beverages, particularly in preventive therapies or post-disease treatment, is further catalyzing the market growth in the country.

The firm forecasts the market to grow at a CAGR of 13% during 2021-2026 after showing a strong from 2015-2020.

With this move, Bobby Verghese, Consumer Analyst at GlobalData, said Coca-Cola, which held 21.6% volume share in 2021, can also extend its lead over rival Suntory Holdings, which held 17.4% volume share in 2021 and already has a strong portfolio of fortified/functional beverages.

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