The market

The cut flower market in Japan is huge and it is expected to grow by 25% by 2010.Cut flowers are sold from various locations such as florists, home centres, supermarkets, convenience stores and more. The increase in Internet sales has also seen a growth in sales to individuals.

Japan imports cut flowers from around the world. Of imported flowers, 90 per cent are traditional varieties such as chrysanthemums, carnations, roses, orchids, and lilies.

The chrysanthemum is one of Japan’s national flowers and regarded as the Imperial Crest.These varieties are most frequently purchased and their market is very competitive. Japanese companies often invest in or have partnerships with international suppliers and control product quality and standards.

Following are the shares of flowers in japan import market :

Chrysanthemums - 37.72%

Orchids - 18.28%

Carnation - 17.7 %

Rose - 10.48%

Lilies - 5.5%

Others - 10.32%

(Source: Japan Customs - Trade statistics)

Grabbing the Market

While some successfully branded flowers are sold at premium prices, suppliers of traditional varieties are constantly struggling with the tough competition. As a result, not only overseas suppliers but also many domestic suppliers have had to close their businesses.

It is therefore very important to consider the following before exporting:

- Select varieties that are popular in the Japanese market, and attract high values.

- Comply with required quality standards and packing, which in most cases are set by importers (standards vary depending on importers).

- Do business with reputable importers/partners that are experienced, have unique marketing strategies, and are selling to the right customers.

- Talk directly to retailers and wholesalers in Japan. Sometimes it is difficult for the growers to know about market trends.

- Know your competition:
The market for the most popular varieties of flowers in Japan is very competitive. The major supply countries of traditional varieties besides Japan are:

Chrysanthemums: Malaysia, China, Korea, Taiwan

Carnations: Colombia, China

Roses: Korea

Orchids: Taiwan, New Zealand, Malaysia, Singapore

Lilies: Korea, China

Marketing your products and services

Market entry

Options to consider when entering the cut flower market in Japan include:

A pre-entry study of market desirability.

Supply through an experienced consolidator or export agent, or work with flower associations that are familiar with Japanese quality standards and other requirements.

Participation in major tradeshows such as the International Flower Expo (IFEX) in order to meet potential customers.

Find relevant importers/wholesalers who have unique sales channels and strategies that are ideal for your products.

Distribution channels

The major wholesale distribution routes of cut flowers in Japan are as follows:

The auction system

A large percentage of cut flowers are still sold through the traditional auction system. With this system, importers receive flowers, clear customs, and send flowers to auction houses on a consignment basis. Based on their own analysis and experience, importers decide which market to send flowers to that would attract the highest price. The final amount returning to the suppliers in India is fixed after the auction. Auction houses take a 10 per cent commission, which is designated by wholesale market law in Japan. Only registered buyers can buy flowers directly through the auction system. Small retailers, flower designers, and other buyers tend to buy through ‘intermediate wholesalers’ who have shops within the auction houses.The auction system was developed because of the difficulty in standardising quality with agricultural produce. The downsides of the auction system are:

Suppliers do not know the exact sales price until the auction is finished.

Market demand also influences the price. The delivery of high quality products does not always guarantee a good return to the supplier.

Buyers can't always get what they want.

Pre-ordering and pre-auction sales

These systems were not actively used until the revision on the wholesale market law was announced. When pre-ordering the importer takes orders from the auction house or their own customers before shipment and in pre-auction sales, after shipment but before auction (pre-auction) and sell to them at fixed prices that are usually higher than auction prices. This system gives an improved return, but suppliers have to make a commitment to satisfy required standards set by the auction house or importer.

Direct sales to large retailers

Some large retail customers such as supermarkets buy flowers directly from suppliers or through importers. Although you can avoid the auction house commission using this system, opportunity is often limited to certain varieties that are reasonably priced and ideal for volume retailers.

Sales to importer’s customer

Some importers are actively developing their customer base and selling direct. This includes home delivery sales and correspondence sales operated by the importer or their related companies. This way of distribution is still only small in today’s market compared to the traditional ways of distribution.