Stable International Demand for Japanese Soy Sauce Boosts Market Growth despite Declining Domestic Consumption

The Japanese soy sauce market is undergoing a major transition, with decreased local consumption and a significant increase in overseas demand. This dynamic is transforming the sector as manufacturers respond to changing market conditions.

Declining Domestic Consumption Amid Rising Overseas Demand

Japan's domestic soy sauce consumption has been declining, with annual shipping volumes expected to fall to 241,319.24 metric tons (mt) in 2023, a considerable drop from the 1979 peak of 441,433 mt, according to Nippon data. Several reasons contribute to this trend, including a declining population, the Westernization of home cuisine, and an increased preference for eating out. Furthermore, there is a growing preference for soy sauce-based condiments like tsuyu and tare sauces, which are gaining popularity as alternatives to traditional soy sauce.

Figure 1: Export Volume of Japanese Soy Sauce 2019-2023

Source: Tridge

Despite the domestic slowdown, overseas demand for Japanese soy sauce has remained strong. In 2022, international consumption reached 124,660.77 mt, surpassing the capacity of some of the largest oil tankers. Global demand for Japanese soy sauce has increased by 50% over the previous decade and more than doubled in the last 20 years. In recent years, Japan’s soy sauce exports remained stable, although it declined marginally by 1.92% to 47,163 mt in 2023, compared to the highest record achieved in 2021 of 48,090 mt. In 2023, the United States (US) led Japan's soy sauce exports with a 17.9% market share, amounting to 6,662 mt. Belgium followed in second place with 3,798 mt. Among the top five destination countries, the US and China experienced declines of 23.71% and 17.82% YoY, respectively, while Belgium saw a significant increase of 56.81% YoY. This expanding international demand underlines Japanese soy sauce's enduring appeal and culinary adaptability.

Shift to Soy Sauce-Based Condiments

The market is also seeing a substantial move toward soy sauce-based sauces. Between 2003 and 2019, shipments of dashi soy sauce, noodle soup bases, and other soy sauce-based condiments surged by more than 40%, from 78,198.32 to 113.064.84 mt. Supermarket shelves now commonly stock a range of these condiments, including katsuo (shaved dried bonito) soy sauce and kombu (kelp) soy sauce, progressively displacing regular soy sauce. This trend reflects evolving consumer preferences and the culinary landscape's growing sophistication.

Figure 2: Kombu Ponzu Soy Sauce and Katsuo Flavoured Soy Sauce

Source: Amazon and Shopee

Soy Sauce Production Volume

In terms of production, Japan's soy sauce sector remains strong. In 2021, Japan produced 704 thousand mt of soy sauce, according to Statista. The market size of Japan's soy sauce business was estimated to be USD 39,025.57 million in 2023, with a compound annual growth rate (CAGR) of 7.1% expected between 2023 and 2030. This increase is driven by domestic innovations in soy sauce-based goods and a rising global market. To accommodate rising global demand, Japanese firms have dramatically increased offshore production. In 2022, they produced 110,181.76 mt of soy sauce at their foreign facilities.

The market leader, Kikkoman has been at the forefront of this expansion, with 13 production sites in the US, China, Taiwan, Singapore, the Netherlands, Britain, Thailand, and Brazil. This multinational production network meets rising demand and ensures that Japanese soy sauce retains its quality and authenticity in global markets.

In conclusion, while domestic consumption of soy sauce in Japan is dropping, the country's soy sauce market remains robust due to strong foreign demand and a trend toward soy sauce-based condiments. Manufacturers are increasing production abroad to fulfill global demand. This dual approach, catering to worldwide markets and shifting home tastes, equips the Japanese soy sauce sector for long-term growth and stability.