Markets (Page 157)

Japan is currently swept up in a yogurt frenzy. Yogurt has become one of the trendiest and most sought-after foods in the country, enjoying a surge in popularity.

This rising demand for yogurt in Japan has given rise to a thriving market spearheaded by Meiji Holdings, a prominent Japanese company with a subsidiary specializing in dairy products and an evangelist of yogurt consumption in Japan. It stands as the foremost domestic producer in an industry valued at US$8.42 billion and growing rapidly.

However, yogurt hadn’t always sat so well on the Japanese palate.

The dairy item, particularly its renowned Bulgarian variety, was perceived poorly by the populace, who were put off by its supposedly unappealing look and smell that gave them an impression of it having gone rancid.

Meiji’s efforts to introduce the Balkan staple to the country seemed naive with bleak possibilities of adoption. However, the company managed to engineer its consumption in the gastronomically conservative country through clever marketing that focused on culturally pertinent value propositions.

The transformation of yogurt in Japan from an unfamiliar and often unpalatable substance just four decades ago to a daily dietary essential and a symbol of health and well-being is an intriguing tale.

When King Francis I of France fell ill with a stomach ailment, a renowned physician was summoned all the way from Constantinople. To everyone’s surprise, he arrived in Paris accompanied by an unusual entourage of about 40 sheep. This extraordinary doctor set to work, fermenting the milk from these sheep and offering it as a remedy.

Much to everyone’s amazement, the king made a rapid recovery. According to certain historical accounts, this intriguing incident marked the international debut of Bulgarian yogurt, celebrated for its medicinal properties, during the 16th century.

Yogurt consumption was already a well-established tradition in this region, particularly as a key component of the Mediterranean diet, known for its anti-aging effects. However, it was in 1905, in Geneva, when the 27-year-old Bulgarian-born microbiologist Stamen Grigorov conducted in-depth research on Bulgarian yogurt.

His findings revealed that the fermentation process was attributed to a specific rod-shaped bacterium, a particular subspecies of Lactobacillus delbrueckii, and Streptococcus thermophilus, another spherical bacterium. In acknowledgment of this discovery, the scientific community christened the former strain as Lactobacillus bulgaricus.

Around the same time, renowned Nobel Prize-winning Russian scientist Elie Metchnikoff, known as the father of cell-mediated immunity, introduced the theory that aging was linked to toxic bacteria in the gut. He singled out lactic-acid bacteria, especially L bulgaricus derived from home-made Bulgarian yogurt, for its capacity to neutralize toxins produced by such bacteria and thereby slow down the aging process.

Metchnikoff highly recommended daily consumption of this bacterium, proposing it as both a preventive and a curative for various conditions.

Subsequently, in the 1950s, Bulgaria patented a distinct blend of bacterial strains in an endeavor to promote what became known as “official Bulgarian yogurt.” Sold in simple mason jars, without any brand name or labels, it was referred to as kiselo mliako, or sour milk. For Bulgarians accustomed to incorporating yogurt into a multitude of dishes, such branding was unnecessary.

Bulgarian yogurt’s most significant international venture commenced in the 1970s when the Japanese company Meiji decided to utilize L bulgaricus in its products. Initially, Meiji’s Plain Yogurt met with some skepticism among consumers.

However, after numerous refinements, Meiji has now become the largest producer of Bulgarian yogurt in Japan, holding two-fifths of the yogurt market and distributing its products in such countries as Thailand, Singapore and China.

Bulgarian yogurt is known for its probiotic properties and potential health benefits, being viewed as a veritable superfood. It is often associated with promoting digestive health, slowing aging, and overall well-being, which has contributed to its popularity among health-conscious Japanese consumers.

Meiji played a significant role in popularizing Bulgarian yogurt. It not only introduced it but also imbued it with new meanings, images, and values, effectively branding it for Japanese consumers. 

Meiji’s advertising campaigns for its yogurt product celebrate its Bulgarian origins, portraying the Eastern European nation as the hallowed birthplace of yogurt. According to these campaigns, Bulgaria boasts an age-old tradition of dairy production, where the very air, water, and light differ from the rest of the world.

So, what inspired the Japanese Meiji Bulgaria Yogurt company, which commands more than 40% market share and boasts more than 99% brand awareness, to invest in this venture?

The journey began in the late 1960s when Meiji initiated efforts to develop Bulgarian-style yogurt tailored for the Japanese market. At the time, the sole yogurt available in Japan was a sweetened, heat-treated fermented milk with a gel-like texture, often consumed in little jars as a snack or dessert.

The concept of plain yogurt with live Lactobacillus bulgaricus, akin to what is commonly enjoyed in Bulgaria, was entirely foreign to the Far East. One member of Meiji’s Bulgaria yogurt project recalled the shock of trying plain yogurt at the Bulgarian pavilion during the 1970 World Fair in Osaka, describing it as peculiar and exceptionally tart. However, plain yogurt held an irresistible allure – the promise of extended longevity.

Meiji recognized that, from a technological standpoint, producing plain yogurt with live L bulgaricus wouldn’t be a formidable task. In 1971, the company launched this innovative product in Japan, simply naming it “Plain Yogurt.” Initial consumer reactions were unfavorable, with some interpreting its sourness as spoilage or doubting its edibility.

Nonetheless, Meiji persisted. In 1973, after an agreement with the Bulgarian state-owned dairy enterprise to import yogurt starter cultures, the company gained permission to rebrand its product as Meiji Bulgaria yogurt. The strategy was to emphasize authenticity, leveraging the Bulgarian countryside with its pastoral landscapes, herds of sheep and cows, traditional bagpipers, and the image of elderly individuals living in harmony with nature.

In the 1980s, Meiji combined this approach with additional microbiological research and closer collaboration with the Bulgarian side. By 1984, Japanese consumers were introduced to a new, sleeker packaging for Meiji Bulgaria yogurt, further solidifying its presence in the market.

Meiji received another boost when it secured the right to display the government-issued Food for Specified Health Use (FOSHU) seal on the label of its Bulgarian yogurt in 1996. Health benefits became the central focus of its yogurt branding and marketing. This communication culturally resonates with Japan, one of the world’s highest-longevity countries with a culture that places a strong emphasis on meticulous dietary planning to enhance youthfulness and well-being.

Japan has an extensive tradition of consuming fermented foods which are often ascribed vitality-boosting properties. Further, the Japanese generally place great emphasis on heritage, pristineness, ambient qualities, and habitat-essentialism in culinary choices, highly valuing traditional agricraft, local and organic sourcing, and natural and human environmental conditions of food origins.

By infusing its Bulgarian brand with fresh meanings, images, and values, Meiji has not only reaped significant profits but also crafted in Japan a captivating portrayal of Bulgaria as the ‘holy land of yogurt.’ 

Back in Bulgaria, the media are captivated by the widespread acclaim of Bulgarian yogurt produced in Japan. In a 2015 article, Japanese consumers asserted that Meiji’s Bulgarian yogurt surpassed the popularity of Coca-Cola.

Whether it’s in travelogues describing experiences in Japan or in economic reports, virtually every narrative surrounding Japan includes the remarkable success of Bulgarian yogurt. This compelling tale has been embraced by businesses and politicians in post-socialist Bulgaria as a means to evoke a sense of national pride.

For many Bulgarians, the newfound Japanese identity of their native yogurt encapsulates the essence of Bulgarian collective traditions. Simultaneously, they perceive a deeper connection to the contemporary world as it becomes a symbol of health and happiness in one of the world’s prominent economic superpowers.

While globalization has reshaped cultural values around the world, the economic and cultural transformation of yogurt in Japan has been a remarkable journey, turning it into a source of health and nourishment for the Japanese people and a balm for the Bulgarian national spirit.

Bulgarian yogurt remains a popular choice in Japan, being offered by various brands. It is commonly available in supermarkets and convenience stores across the island nation and its appeal continues to grow.

Educational campaigns highlighting its probiotic content and its Bulgarian heritage have helped raise awareness and drive its popularity. Many restaurants and cafes in Japan have started incorporating Bulgarian yogurt into their menus, using it as a base for various dishes, including breakfast bowls, parfaits, and savory dishes. This has helped introduce it to a broader audience.

Japan continues to exhibit a distinct preference for Bulgarian yogurt as a healthy snack. The once-foreign product has trickled even into rural and remote areas of the island nation. The cultural ferment of Bulgarian yogurt continues to fortify it in the country’s markets.

The author declares that he has no contact, interaction, sponsorship, or commercial ties with any businesses or organizations mentioned in the article.

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The establishment of the US-China economic and financial working groups in September 2023 marked a noteworthy pivot in the often volatile relations between Washington and Beijing. 

Amid the escalating tensions of what is widely recognized as “great power rivalry,” these working groups have the potential to foster greater stability between the world’s two largest economic superpowers.

In recent years, “decoupling” has become a buzzword that symbolizes the United States and China’s intent to disentangle their economies. The establishment of the working groups challenges this notion to an extent. 

While certain dynamics of the ongoing trade war and the pandemic may have hinted at a move towards reduced interdependence, complete economic decoupling is likely to harm both the United States and China. 

Astute policymakers on both sides are wary of the risks associated with decoupling. The reality remains that bilateral economic ties are characterized by intrinsic interdependence.

Trade between the United States and China has remained substantial. As of August 2023, the total value of the US trade in goods with China exceeded US$369 billion. China has also been one of the largest foreign creditors to the US government, holding $821 billion worth of US Treasury bonds in July 2023.

The working groups will serve as a forum for bilateral policy exchange. Under the guidance of high-ranking officials from both countries, they offer a structured channel for sustained dialogue, promising several benefits.

Supported by US Treasury Secretary Janet Yellen and China’s Vice Premier He Lifeng, along with regular meetings at the vice-ministerial level, these working groups are well-prepared for consistent and high-level interactions. Such continuity ensures that discussions can move beyond superficial exchanges and delve into more substantive policy matters.

In the intricate realm of international relations, transparency – or a lack thereof – can be a significant destabilizing factor. The US-China working groups, by promoting frank dialogue on macroeconomic and fiscal trajectories, can mitigate uncertainties that might otherwise inflame tensions.

Direct communication is one of the most effective tools in preventing misunderstandings. These working groups offer an opportunity for both nations to clarify their positions, objectives and concerns directly without the distortion of third-party interpretations.

The US-China working groups have the potential to act as a fulcrum for stabilizing economic ties. Regular interactions at the bureaucratic level can build a foundation of trust, which is often missing in high-stakes diplomatic negotiations.

Balancing optimism with realism is crucial. While the inception of the working groups is a laudable stride towards de-escalating tensions, it is not a silver bullet for all bilateral challenges.

During the initial meeting of the financial working group, differences emerged, notably in the discussion of the International Monetary Fund (IMF)’s quota-based lending resources. The United States advocated for an increase in IMF quota-based lending resources without changing its shareholding structure, while China showed reluctance to support this proposal without an increase in its IMF shares.

Secretary Yellen expressed optimism for an “equi-proportional” quota increase, where each member country’s contribution to an increase in quotas is proportional to their current IMF shareholdings. This divergence reflects broader disagreements between the United States and China on financial and economic ​cooperation.

The working groups may face challenges in addressing structural trade imbalances, as the capital account can drive the current account and low-cost Chinese goods continue to retain their global competitiveness. In the domain of high-tech competition, security imperatives will continue to drive intense rivalry. 

The US government may sustain pressure on the Chinese government, as indicated by Commerce Secretary Gina Raimondo during her Beijing visit when she said the United States will not compromise or negotiate in matters of national security.

At the same time, Beijing’s increased industrial policies and domestic content requirements might impede US businesses from penetrating the Chinese market, potentially exacerbating technological contestations.

Given the overarching significance of the US-China relationship on the global stage, their choices can recalibrate global markets, influence worldwide innovation and redraw the geopolitical cartography for generations. 

As global stakeholders keenly monitor the evolving US-China interplay, the working groups, while not a panacea to address fundamental problems between these two great powers illuminate the potential for rivalry and collaboration to coexist. The working groups also demonstrate that astute diplomacy can foster mutual respect and understanding.

Such platforms for dialogue are not only beneficial but crucial for US-China relations, especially in the context of their great power rivalry.

Yuhan Zhang is a scholar based at UC Berkeley specializing in China’s political economy. He is also an adjunct assistant professor at the G20 Center of Beijing Foreign Studies University’s International Business School.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

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