High-End Food-Fraud Scandal Deliciously Spirals Out of Control, Whacks Japanese Consumer Confidence

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Honesty and trust are still valued in Japan, by the 99% that is, not by the government, Japan Inc., and the most despised outfit of all, TEPCO, the owner of the Fukushima nuclear power plant. Japan is a food culture. So when pricy dishes with fresh ingredients of unique origins are served in restaurants, or are sold for special occasions, trust is particularly important. But now, Japanese consumers are being ambushed by an unprecedented food fraud scandal that expands by the day with new revelations, lame confessions, half-denials, and lots of finger-pointing.

Today it was Hotel Okura Co., which operates of the luxurious Hotel Okura in central Tokyo and other landmark hotels across the country. It confessed that restaurants at 13 of its hotels and three additional restaurants had misrepresented 235 menu items. For example, the menu claimed that a dish contained high-end Shiba shrimp when in fact it was a lowly Pacific white shrimp. And that super-juicy Japanese-style beef? It had been injected with fat.

Even a traditional ryokan hotel in the ancient city of Nara, Japan’s former capital, now a beautiful tourist spot, confessed that it, among other deceptions, used cheap Australian beef and served it has high-yen Japanese “wagyu.”

The scandal started out slowly, as scandals do, and was accompanied by denials. The first culprit was the Hankyu Hanshin Hotels chain, which operates the Ritz-Carlton in Osaka among other palaces, when revelations bubbled up last month – which it finally admitted, sort of – that an estimated 80,000 customers at the company’s restaurants had been served common and cheap items falsely labeled as more expensive items, going back years!

“We never had the intention to deceive them,” explained President Hiroshi Desaki on Oct. 28, when he announced his resignation. “We still believe that we did not disguise our menus, but customers have every right to think otherwise.” So, not really a confession. Days earlier, he’d had the gall to call it “erroneously presented.”

Then on Tuesday, the pace of the scandal picked up when the prestigious Takashimaya department store chain admitted that 62 food products sold at ten of its restaurants and prepared-food shops had been mislabeled, some going back nearly a decade. Among the goodies: their “tiger prawns” were actually cheap black tiger shrimp, and “filet of beef” was in fact some block of meat substance kept together with filler.

On Wednesday, other leading department stores – hugely important brands in upscale Japanese consumerism – admitted using deceptive menus in their restaurants to disguise cheap foods as more expensive varieties.

“The department store business is built on trust,” said Yasuko Kono, director general of the National Liaison Committee of Consumer’s Organization. “And as a consumer, I am fuming by knowing the reality.”

So, Isetan Mitsukoshi confessed that 14 restaurants at eight of its department stores and in a mall had lied about 52 menu item. Sogo & Seibu admitted misrepresenting 13 menu items at seven restaurants in its stores. For instance, a Sogo Tokushima restaurant in Tokushima Prefecture, on Shikoku Island – a wonderful place I highly recommend – offered a pricey local specialty, Awa beef, on its menu. But what they served their hapless customers was cheaper beef from Kagoshima Prefecture. In perfectly coordinated fashion, Odakyu Department Store confessed to the same sorts of sins.

And today, department store chain Daimaru Matsuzakaya chimed in, confessing that some of its restaurants had lured their customers with deceptive menus, including the old standby of using frozen food and calling it “fresh,” or putting South Korean chestnuts into desserts while the menu hyped them as French.

And they all tried to dodge the bullet – and avert the wrath of their customers to preserve what’s left of their brands – by blaming their tenants that had sold the prepared foods. Alas… “It’s the department stores’ responsibility to check how their tenants are managing food,” insisted Ms. Kono. “Otherwise, they should not let them use their space.”

To avert a full-blown consumer confidence crisis at the worst possible time that might throw another monkey wrench into Abenomics, the government is now getting involved. Chief Cabinet Secretary Yoshihide Suga told reporters today that he has instructed the Consumer Affairs Agency to do something, something very visible, like convene a meeting of relevant government agencies to discuss the debacle.

He also pointed out that the Consumer Affairs Agency should address the issue by, among other things, conducting on-site inspections at places that had been accused of food fraud – which apparently hadn’t occurred to anyone until now.

Meanwhile, the Consumer Affairs Agency itself is also cracking down harshly. It’s studying if this kind of food fraud is covered by the competition and policy law, which makes mislabeling of any product illegal, an agency official said. And if the agency finds violations, it will punish those companies by ordering them to take preventive steps so that it won’t happen again. I mean, come on!

There will be more revelations. It will become like Chinese water torture. The harried Japanese consumers, whose wages are not rising with inflation, are increasingly getting the impression that they’re overpaying for their most beloved and beautifully arranged, but fraudulently labeled dishes, composed of inferior or adulterated ingredients. And their less than exuberant confidence will take another hit.

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