U.S. BEEF OFF TO A SLOW START IN JAPAN

JULIE GALLAGHER

WASHINGTON - Japanese shoppers seem to have a beef with red meat from the U.S.

Five Costco Wholesale club stores in Japan are selling American beef, but other retailers are shunning it. Nearly a month ago, the Japanese government announced it would resume imports of U.S. beef from cattle 20 months of age or younger.

Wal-Mart Stores' Japanese division, Seiyu, has "not received any volume of customer requests and have no specific plans to recommence imports," said Amy Wyatt, spokeswoman for international corporate affairs, Wal-Mart.

This is hardly the welcome U.S. beef exporters had hoped for from the country that at one time was their most lucrative export market, worth $1.4 billion in 2003.

As a rule, the Japanese are wary of imported products, said Philip M. Seng, president and chief executive officer of the U.S. Meat Export Federation.

"In the best of times only about 30% of Japanese consumers endorse or support imported product generally speaking," Seng said earlier this month. "We looked at recent Nikkei surveys and only 37% of Japanese consumers think Australian beef is safe." Australian beef replaced American beef after Japan banned beef from the U.S. in December 2003.

Still, the popularity of American beef in Costco's Japanese stores may give U.S. beef exporters reason to be optimistic.

About five metric tons of U.S. beef introduced in three Tokyo Costco stores sold out on their first day, USMEF said.

"We brought it in and ran out of it immediately," said Jim Sinegal, president and chief executive officer, Costco Wholesale Corp., Issaquah, Wash. "We restocked it and ran out of it again; we have it in stock now. It's been well accepted and we've always had success with U.S. beef [in Japan]."

Greater economies of scale allow for U.S. beef to be offered at attractive price points in Japan. Kobe beef, offered at a premium, has traditionally been produced by Japan.

In addition to U.S. beef, Japan's Costco stores will continue to carry Australian beef, which helped replace U.S. beef during the import bans.

In December, Japan lifted its ban on imports of American beef imposed after the first confirmed case of mad cow disease came to light in the U.S. in December 2003. The ban was reinstated in January after Japan received a shipment of U.S. veal cuts containing backbone, which is barred under the export agreement Japan had with the U.S.

The sluggish re-entry does not surprise USMEF spokesman Lynn Heinze.

"The market only reopened about three weeks ago after a dumb mistake we made," he said. "After about five or six weeks of being reopened [earlier this year] the door was slammed shut again. Importers were sitting on 700,000 metric tons of products that were bought and paid for and they haven't been able to get to it yet and now they're looking at additional investment."

To help regain consumer confidence, USMEF launched its "We Care" program earlier this month with advertisements in Japanese daily newspapers.

"We care about food safety, we care about consumers, we care about our cattle," said Seng, commenting on the ad campaign's message. "The packers can say we care or states can say we care, so as they work into Japan, this theme will be the basis of a lot going forward as far as the trade and the consumers."

USMEF plans to spread its message to consumers through advertisements, a website, retail and food-service promotions.