Japan's Functional Food Market Grows 4% Despite Tighter Regulatory Oversight

New product launches under Japan's Foods with Function Claims (FFC) system declined in fiscal year 2025, but the overall value of Japan's functional food market grew by 4%, according to a new report analyzing the sector.

Japan's Consumer Affairs Agency (CAA), which oversees FFC filings alongside other functional health categories, received 1,176 new FFC notifications in FY2025. This represents a 26% year-over-year decrease from the peak of 1,584 notifications registered in FY2024.

Industry experts attribute the drop to heightened regulatory scrutiny following the 2024 health crisis involving red yeast rice (beni koji) extract. In his recent report, "In-Depth Analysis Report on Foods with Functional Claims notified in FY2025," Hisaaki Kato, CEO of Tokyo-based regulatory consultancy SmoothLink, detailed the market's regulatory transition.

"The most prominent characteristic of the FFC sector in FY2025 was the substantial tightening of regulations, arguably the most significant since the inception of the system. Companies were compelled to establish an integrated compliance framework encompassing everything from scientific evidence to risk management," Kato noted. "This regulatory shift led to a major decline in new FFC notifications."

First established in 2015 as part of former Prime Minister Shinzo Abe's economic growth strategy, the FFC framework aimed to accelerate market innovation by allowing brands to market functional benefits without formal government pre-approval, requiring only prior notification supported by scientific evidence.

However, following public safety incidents in 2024, the CAA introduced stringent filing requirements. Manufacturers must now adhere to PRISMA 2020 scientific review standards, implement Good Manufacturing Practices (GMP), report health hazard incidents promptly, and routinely update regulatory authorities on safety findings.

"Since April 2025, factors such as systematic review compliance with PRISMA 2020, requirements for additional forms, database renewals, and prolonged review periods accumulated, causing manufacturers to become highly cautious about submitting notifications," Kato wrote. "In particular, the standardized notification model utilizing systematic reviews has slowed down due to the increased burden of document preparation and higher compliance review risks."

Withdrawals exceeded new notifications for the first time

Alongside the drop in new filings, companies voluntarily withdrew 1,923 existing FFC notifications in FY2025. This marks the first time in the system's decade-long history that product withdrawals surpassed new submissions.

Kato explained that these withdrawals were driven by internal corporate compliance audits as businesses reassessed existing portfolios against the CAA's upgraded standards.

What’s driving growth?

Despite the decline in new entries, market research firm Fuji Keizai projects the total FFC market to expand 4.1% to 773.5 billion yen ($4.91 billion) in FY2025.

Kato identified three core drivers sustaining market momentum:

First, while consumer demand for traditional supplements such as tablets and capsules remains constrained by safety concerns, demand for functional everyday foods and beverages remains robust. Functional yogurts offering blood sugar management and ready-to-drink teas targeting fat reduction have performed strongly.

Second, multi-benefit FFC formulations combining distinct health claims—such as joint gut-health and body-fat reduction benefits—are attracting new consumer demographics. This shift mirrors a broader industry trajectory where nutritional psychiatry and inner-wellness innovations are expanding holistic health categories worldwide.

Third, FFC products remain more competitively priced than higher-tier Food for Specified Health Uses (FOSHU) products, which require individual government authorization.

Kato believes the sector is transitioning from quantitative volume expansion toward qualitative execution.

"FY2025 was a watershed year for the FFC system. While the decrease in notifications and increased operational burdens will persist in the short term, the mid-to-long-term improvement in system reliability is highly likely to concentrate market opportunities among companies with robust quality control capabilities," Kato wrote. "Consequently, the key success factors for FY2026 and beyond lie in whether a company can organically integrate regulatory adaptation, evidence design, manufacturing quality, labeling, advertising management, and channel strategies."

GABA tops most popular ingredient

Gamma-aminobutyric acid (GABA) remained the most frequently used active ingredient in single-ingredient FFC formulations, supported by permitted claims for fatigue reduction, sleep support, stress relief, and blood pressure management.

However, GABA's overall share of single-ingredient filings is contracting. After maintaining more than 14% of filings over the past four years and peaking at 18% in FY2024, GABA dropped to 10% of new single-ingredient notifications in FY2025.

In contrast, 3-(4-hydroxy-3-methoxyphenyl)propionic acid (HMPA) ranked as the second most common single ingredient, followed by reduced coenzyme Q10, ellagic acid, and indigestible dextrin. Since entering the market in FY2022, HMPA has secured five approved health claims, including visceral and abdominal fat reduction for individuals with elevated BMI. Kato attributed its rise to its polyphenol composition and high stability during production processing.

Across all product categories, fat reduction, fatigue management, and gut health regulation remained the top three health benefit claims in Japan's functional food market.