Food prices continued to rise in Japan in 2025. Rice prices, particularly those caused by a rice shortage, triggered price hikes for many food products. This led to rising raw material, logistics, and labor costs, resulting in price increases for over 20,000 food and beverage items in 2025. Meanwhile, amid continued sluggish real wages, consumers’ frugal tendencies tightened their purse strings. As frugal tendencies intensified, product sales slowed. Some food products sold well, while others struggled. One example of this was frozen foods for home use. Sales of frozen foods for home use slumped after the price hike in March 2025. Due in part to the impact of rising rice prices, frozen fried rice products had no choice but to increase prices. This was a miscalculation for companies, and a major blow.
On the other hand, basic condiments such as “Hon-Dashi” were not significantly affected. Condiments have a significant impact on the flavor of dishes like miso soup, making them a high-switching-cost product. Miso soup, for example, is a home-style flavor. A certain level of higher cost seems to be acceptable for a flavor (dish) that households approve of. Meanwhile, foods with low switching costs have become more competitive. For example, after a price increase, one company’s frozen gyoza saw its market share decline as customers, primarily its private brand, switched to other companies’ products. Frozen gyoza has the advantage of low switching costs, which are the burden and barrier for customers to switch to another company’s product. If a product does not achieve the status of a home-style flavor, it seems easy to switch to another company’s frozen gyoza. Companies need to analyze the reasons for acceptance and rejection and use this information in developing their next product.
Nichirei Foods developed a “half-fried rice” product with a 150-gram content, about one-third the normal amount. Some consumers found this insufficient and were tempted to buy the “half-fried rice” and noodle products together. There’s an interesting example of “impulse buying” in the United States as well. In the United States, the number of obese people with dietary restrictions is increasing. Restaurants are increasingly introducing menus for people with dietary restrictions. Major restaurant chains are also expanding their small-size menus. The Italian chain Olive Garden began offering “light meals” at low prices. From June to August, they created “light meals” by reducing the size of seven main dishes. This special menu was priced at $19, about $10 less than the regular size. The small portions, low price, and the added benefit of allowing customers to enjoy other dishes made it a popular item. This innovation increased customer traffic by 3% and customer satisfaction by 15%. The restaurant industry in the United States appears to be responding to the effects of prolonged inflation, which is causing consumers to tighten their purse strings.
