In Japan, You Spell Birth Control: C-O-N-D-O-M : Japanese buy twice as many per person as Americans. New stores sport a chic image.

Amid blaring reggae music, bright product displays and 100 kinds of scented, textured, colored and playfully packaged condoms, the young Japanese couple made their choice: orange and chocolate.

But not before they lingered over the lollipop condoms, examined the ones with the monkey motif and laughed at the glow-in-the-darks.

Japan is a world leader in condom use, and stores like Condomania are one reason why. Opened two years ago in Tokyo’s trendy Harajuku district, the store has liberated the condom from adult store sleaze and the antiseptic feel of pharmacies. As a result, what used to be regarded as shameful rubber sheaths have become fun, even chic, for many young Japanese.

“We like the atmosphere here,” explained the girl, 15, clutching her condoms packaged in miniature orange juice and chocolate milk cartons. “If you look at the ordinary shops that sell condoms, there are a lot of strange people there.”

Thanks to Condomania’s cheerful ambience, the high school sophomores say they have no druthers about using prophylactics. And those more bashful can furtively buy them from vending machines or order them via computer network, two new services introduced here last year.

As condoms come under the global spotlight this summer--promoted at the international AIDS conference in Yokohama two weeks ago, and scheduled for discussion at the world population meeting in Cairo early next month--one thing is clear: When it comes to condoms, Japan’s market is in a class of its own, and a primary factor in birth control here.

In 1991, Japanese consumers bought 547 million condoms, the world’s biggest market after the United States, where 561 million were purchased. Per capita, Japanese buy twice as many condoms as Americans.

And 77% of Japanese couples using contraceptives choose condoms, the world’s highest market share, according to a 1994 survey by the Mainichi newspaper’s Population Problems Research Institute. The figure in the United States is about one-fourth that level, various international comparisons show.

Young Japanese appear particularly conscientious. The Condomania couple said they forgo sex if they don’t have condoms, and the Mainichi survey showed more than half of unmarried couples in their teens and 20s used birth control, compared to just 20% of unmarried people in their late 30s.

Makoto Atoh of the Ministry of Health and Welfare said Japanese society has not traditionally frowned on premarital sex; it was reportedly prevalent among farming and fishing families during the Edo period from 1600 to 1868. But the Meiji Restoration ushered in a more strict social atmosphere, importing Victorian morals, Atoh said.

Although premarital sex is becoming more common, it appears to be less prevalent than in America and Western Europe. A 1990 United Nations survey indicated, for instance, that 32%of unmarried 19-year-old women in Japan had experienced sex, compared to 65% of their U.S. counterparts. Unmarried couples living together is still discouraged. As a result of such attitudes--and easy access to abortion--Japan’s rate of out-of-wedlock births is just 1%, far lower than Canada’s 23% or Sweden’s 48%, U.N. figures indicate.

Despite growing use of condoms by Japanese youth, sales are leveling off. Condom production in Japan has stayed flat for the past decade, with 649 million produced for the domestic market last year, compared to 653 million in 1984. To stay profitable, Japan’s condom makers have expanded their exports.

And population trends don’t bode well for the future. Japan is aging quickly. The number of 20-year-olds is projected to drop by half in the next seven years, said Teruyoshi Okubo of Okamoto Industries Inc., Japan’s leading condom maker.

What’s worse, Okamoto officials have cooked up several statistical analyses and surmised that Japan’s already dwindling number of young men are having sex less frequently than before. According to one scientific study cited by Okubo, Japanese men are producing just one-fourth to one-half the amount of sperm they did 20 years ago.

“When your sperm count decreases, so does your desire to ejaculate, so the total number of sexual encounters is decreasing,” Okubo postulated.

He attributed the declining sperm count to stress, overwork and the increasing ingestion of food additives and other chemicals.

“When those of us in our 40s were in our 20s, we were stronger than today’s 20-year-olds,” he bragged. “Of course, another reason for more sex back then was that there wasn’t much other entertainment.”

Indeed, some scholars surmise that the Japanese male’s increasingly listless sex drive may be one reason for the steady decline in the average number of children borne per woman--now at 1.43, Japan’s lowest in history. Usually, women’s increasing entry into universities and the labor market are cited as reasons.

Another potential crimp on future market growth for condoms is the possible introduction of the low-dosage birth control pill. The major reason condom use is so high in Japan is that few alternatives exist. The low-dose birth-control pill is still not available in Japan, despite 20 years of efforts to legalize it, said Yuriko Ashino of the Japan Family Planning Federation.

The Ministry of Health and Welfare was expected to approve the pill this year but sent the proposal back for more study. They said at the time that widespread use of the pill would discourage condom use and promote the spread of AIDS. The decision outraged such activists as Ashino, who saw it as a move to protect the profits of abortionists, deny women reproductive freedom and arrest the country’s declining birthrate.

“But compared to the high fertility of developing countries, low fertility is not such a problem,” Ashino said.

Even with new contraceptive competitors, however, some producers still see profits in Japan’s condom market. The London International Group, a specialist in thin-film technology and the world’s market leader in condoms, plans to introduce its first prophylactic in Japan next year in partnership with Okamoto. The product will be the world’s first polyurethane condom, both thinner and stronger than the current latex condoms in use, said Clive Kitchener, director of marketing.

The new product will be introduced this autumn in the United States, where the London group already markets its condoms under the brand names Ramses and Chic.

“This will be the biggest change in technology in 60 years,” Kitchener said.

The London group will be the first foreign firm to break into the Japanese market. So far, Japan has not imported one single condom, even though the world’s four other top markets--the United States, Germany, Britain and Spain--have allowed imported brands.

Okamoto is also putting out new products. A year or two ago, it responded to complaints that the condoms were too tight and introduced in the Japanese market the same diameter it sells in America with the catch phrase: “Your boy these days is big.”

Overall, however, Okamoto executive Okubo is not optimistic. Given the glum future, the firm plans to focus on its other lines of business: rubber for Michelin tires and Reebok sports shoes.

Researcher Megumi Shimizu in The Times’ Tokyo Bureau contributed to this report.