Japan’s inbound tourism shows no sign of slowing down, and spending by foreign visitors is also on the rise. But what exactly are they splurging on?
One particular shopping draw is surely Nestle’s KitKat lineup. The British-born chocolate bar has become a tourist favorite thanks to a variety of only-in-Japan flavors — from mega-hit green tea to sake, strawberry cheesecake and even wasabi.
But Nestle Japan is dead serious about what some regard as wacky KitKat flavors. In fact, they are the company’s answer to Japan’s aging society and the way to survive its shrinking market, said Takuya Hiramatsu, an assistant manager at Nestle Japan’s marketing and communications division.
“For food makers like us, Japan’s total food consumption will inevitably decline as a result of its aging population,” he said. “We have produced unique, premium KitKat flavors to deal with this problem for more than a decade.”
The number of foreign visitors last year topped 26.17 million in the 11 months through November, already passing 2016’s record 24.04 million, according to the Japan National Tourism Organization. Tourist spending between January and September 2017 increased to ¥3.28 trillion, up 14.7 percent from the same period the year before, according to the Japan Tourism Agency.
The agency said that of all the money spent by inbound tourists in that period, shopping accounted for the largest share at 36.9 percent, followed by accommodation (28 percent), eating and drinking (20.1 percent), and transportation (11.2 percent).
Nestle Japan’s history of offering a wide variety of flavored KitKats dates back to 2000, when it released strawberry as the first nonchocolate flavor. In 2002, it introduced a melon flavor exclusively in Hokkaido, a product that helped the company realize KitKat’s untapped potential, Hiramatsu said.
“After selling the melon flavor in Hokkaido, we found that people from other prefectures and foreign visitors actually came to Hokkaido just to buy our product. That was when we realized that unique KitKats with local flavors have potential as gifts,” he said.
Since then, more than 300 varieties have hit the shelves — ranging from custard pudding and apple to soy sauce and cough drop flavors. About 30 different kinds of KitKat are currently sold in Japan, including recently launched Tokyo Banana flavor, which the company produced in collaboration with the maker of the popular sponge cake.
Hiramatsu boasted that Japan is now the role model for the global Nestle group for transforming the everyday chocolate bar into a special souvenir. KitKat sales at its Japan branch increased 50 percent from 2010 to 2016, he said.
In August, the company opened a new KitKat factory in Hyogo Prefecture — its first in 26 years — to boost production of the premium lineup.
The company also opened the KitKat Chocolatory outlet in the posh Ginza shopping district in February to promote luxury items not sold in supermarkets. They include the Moleson series, the first KitKat chocolate bars with crunchy toppings. The price of a Moleson is ¥540, or about five times the price of a regular Kit Kat bar in the familiar red package.
Despite the pricey fare, the street-level store is attracting both Japanese customers and foreign tourists looking for unique gifts.
“It’s amazing. I had to come in,” said Ajia Fukumoto, who happened to pass by the store.
“I had this image that KitKat was something you got cheap at convenience stores. But it’s amazing to know they have a luxury outlet like this in Ginza,” said the 43-year-old self-employed man, who bought boxes of luxury Gateau Mignon KitKat for his relatives.
Naomi Babcock and her daughter, Kristen, from Los Angeles, said they came to the store looking for the sake-flavored KitKat as a gift for their neighbor.
“My neighbor was here in March. And she told me that I have to go to this KitKat store,” Babcock said.
“I have tried the green tea one before. And I liked them. It tasted just like matcha,” her daughter said. “We can’t find a lot of things that you guys have here (in Japan).”
But KitKat is not the only made-in-Japan product that attracts foreign tourists.
Recently, more foreign visitors come to buy daily commodities like fruit jellies and face washes — ones that are also popular among Japanese customers, said Yu Onozawa, inbound support leader at Don Quijote Co. Surprisingly, soy sauces made for tamago kake gohan (a bowl of rice mixed with a fresh raw egg) have also gained popularity recently with South Korean visitors at its stores, he added.
Don Quijote’s discount stores in popular sightseeing areas enjoy strong sales from inbound tourists, particularly from China and South Korea; 61.9 percent of all sales at its Dotonbori Midosuji store in Osaka between July and September were from duty-free customers, according to the company.
With bakugai (shopping sprees) by Chinese visitors losing momentum, many visitors from the rest of Asia, particularly South Korea, have been snapping up daily commodities in Japan by coming here with cheap ferry tickets, Onozawa said, noting that foreign customer demand has become much more diverse recently.
They are more likely to buy things that also appeal to Japanese customers, rather than products specifically intended for foreign customers, Onozawa said. About 75 percent of all inbound visitors to Don Quijote stores are repeat customers, according to the company.
Onozawa said Don Quijote has been offering assistance for duty-free customers, such as multilingual support using a computer tablet and free Wi-Fi.
But winning the hearts of foreign tourists is not easy because “if you do too much, you may disappoint” them, he said, adding that the company’s primary target is domestic customers despite increasing foreign visitors.
“Think, for example, about the situation when you go to a foreign country and find a store full of commercial messages written in your language,” he said. “Don’t you think shopping at a store for local people can be more attractive, even though you don’t understand the language?”
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