This article applies an evolutionary economic geography perspective to the problem of explaining value chain restructuring in the Australia–Japan beef trade. In the late 1980s, Japanese investors constructed captive governance arrangements to coordinate the production of high-value beef for the Japanese market. Two decades later, this trade has come to be structured around a quite different set of principles. This is the result of a path-dependent, co-evolution of firm strategies and the institutional environment. It has involved (i) rising and then declining per capita beef consumption in Japan; (ii) the impacts of Japanese retail consolidation on competitive advantage within the beef trade; (iii) the ability of Australian and US beef firms to undertake process upgrading and (iv) the exogenous shock of a BSE outbreak in the USA in 2003. These insights have relevance for a broader appreciation of the changing incorporation of Japanese food demand within global agri-food systems.