Ezaki Glico Company Ltd.

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Ezaki Glico Company Ltd.

4-6-5 Utajima, Nishi-Yodogawaku
Osaka
555-8502
Japan
Telephone: ( + 81) 6 6477 8352
Fax: ( + 81) 6 6477 5670
Web site: http://www.glico.co.jp

Public Company
Incorporated: 1922
Employees: 4,315
Sales: ($2.53 billion) (2004)
Stock Exchanges: Tokyo
Ticker Symbol: 2206
NAIC: 311330 Confectionery Manufacturing from Purchased Chocolate; 311320 Chocolate and Confectionery Manufacturing from Cacao Beans; 311423 Dried and Dehydrated Food Manufacturing; 311520 Ice Cream and Frozen Dessert Manufacturing

Ezaki Glico Company Ltd. is one of Japan's leading manufacturers of confectionery products and other foods. The company's biggest-selling brands are its stick-like Pocky and Pretz lines, which feature chocolate covered cookies and pretzels, respectively, in a variety of flavors. The brands, especially Pocky, are also the group's biggest international sellers. (Pocky is known as Mikado for markets in the West.) Ezaki Glico is also a major producer of ice cream for the Japanese market, as well as other dairy products, including Putching Pudding. The declining Japanese market for candy and sweets in general has led Ezaki Glico to boost its food operations elsewhere. Thus, the company produces toddlers' food and ready-to-eat foods such as Chinese-style dumplings and mild curries. Another area of company development in the early 2000s has been the fast-growing health food and supplement market. The company's products include its Power Production CCD drink, which contains the company-developed and patented ingredient "cluster dextrin." Ezaki Glico has also entered the market for formula, acquiring Icreo Co. Ltd. in 2001. The company has long benefited from a knack for innovation and a commitment to research and development. For example, its original candy was derived from oysters, and in 2005 the company unveiled a method for transforming wood cellulose into compounds digestible by human beings and other animals. Listed on the Tokyo Stock Exchange, Ezaki Glico remains guided by the founding Ezaki family, including president and CEO Katsuhisa Ezaki. In 2004, the company posted sales of $2.53 billion.

Oyster-Inspired Treats in the 1920s

Ezaki Glico was founded by Riichi Ezaki in 1922 in order to produce caramels containing glycogen, a substance found in oysters. Ezaki had come across glycogen on a trip to the seashore earlier in the century, following the death of one of his sons. In a fishing village, Ezaki had noticed a group of children playing and had been impressed by how healthy they were. He determined that their diet was a probable contributor to their good health, especially their consumption of oysters containing glycogen.

Ezaki began experimenting with means of extracting glycogen for use in other foods, particularly in confectionery, in order to improve the health of other Japanese children. By 1921, Ezaki had launched initial production of his first sweet, a caramel containing glycogen named "Glico." Ezaki also established a company, originally called Ezaki Shoten, in Osaka, and began construction of its first factory, known as the Horie Plant.

By 1922, Ezaki was ready to go into business with its Glico candy, beginning sales of its product at a department store in Osaka, thereby officially launching the Ezaki Glico company. Glico quickly became popular, and by 1925 the company was forced to expand its production capacity, moving manufacturing to a new facility in Toyosaki.

Ezaki Glico proved itself an innovator on other fronts as well. The company early on adopted a successful publicity campaign, "300 Meters on a Single Piece," featuring the Glico Running Man. The implication was that a single piece of Glico candy provided enough energy to run a 300-meter race.

The company nonetheless faced stiff competition from two other fast-rising confectionery groups, Morinaga, the company that had introduced caramels to Japan in 1914, and Meiji. Ezaki sought a means to set itself apart from its competitors. Ezaki came up with a new innovation based on the reasoning that "both nourishment and playtime activity are essential to a wholesome childhood." In 1927, Ezaki Glico became the first Japanese confectionery company to offer free toys (omake) along with its Glico candies. The operations proved an instant success, securing Ezaki Glico a place among Japan's confectionery leaders.

Glico sought other means of attracting customers. In 1931, for example, the company developed a vending machine with a built-in projector that proved highly popular among department store shoppers. In 1933, the company developed a new type of "mini" advertisement, featuring a short, easily retained message. In 1935, the company unveiled a giant 35-meter neon sign that became an Osaka landmark.

The rising sales of Glico caramels caused the company to expand its production again, moving to a new Osaka facility in 1931. Japan's domination of China in the 1930s also led the company to open a plant in Dalian in 1932 and to begin marketing its products in China and elsewhere in Southeast Asia. Continued growth of Glico sales at home led the company to open a second production facility in Tokyo in order to supply that market directly. In the meantime, the company had developed a second popular product line, the Bisco yeast-based cookie, produced using an innovative method developed by Ezaki Glico itself.

Struggles and Successes: 1940s–70s

Both the Osaka and Tokyo plants were destroyed during World War II. The company also lost control of its Chinese operations during this time and was forced to continue production at temporary facilities. It was not able to rebuild its main facilities and return to full-scale production until 1951. The following year, Ezaki Glico received government approval to market both the Glico caramel and the Bisco cookies as nutritional products. The company also continued seeking means of extending its product line, resulting in the launch of a Almond Glico, the first confectionery item in Japan to include almonds as an ingredient.

In 1956, Ezaki Glico created two new subsidiaries, Glico Dairy Products and Glico Foods, in order to extend its operations into the greater food production industry. The company then began making ice cream, becoming one of Japan's major producers in this sector, particularly following the launch of the Glico Cone in 1963. In the meantime, Glico Foods oversaw the development of a new type of curry, launched in 1960 as "One-touch Curry". This followed the successful launch of another confectionery product, Almond Chocolate, in 1958.

The introduction of what was perhaps the company's greatest success came in the mid-1960s. In 1963, the company launched its first snack product, Butter Pretz, a flavored pretzel stick. This was followed two years later by the launch of the hugely popular Pocky Chocolate, a chocolate-covered, stick-shaped cookie product. The name for the product purportedly came from the Japanese rendering of the sound ("pokki") made when the sticks were broken.

Pocky, followed by Pretz, not only became the company's major products in Japan but also became Ezaki Glico's flag-ships for international growth. In 1970, the company moved to expand its presence in Southeast Asia, launching a new subsidiary, Thai Glico Co. Ltd. That company began producing and marketing both Pocky and Pretz for the Thai market, as well as supplying neighboring markets.

The success of these products in Southeast Asia led the company to begin testing them in the European market as well. After a series of encouraging trials, the company launched General Biscuit Glico France, a production joint venture located in Bordeaux. Instead of retaining the Pocky name, however, the company adopted a new designation for its flagship product, Mikado, so called because of the product's resemblance to the sticks used in the popular game. Sales of Mikado quickly spread beyond France, becoming the most successful Japanese confectionery ever to be introduced in Europe.

Diversification and Expansion:
1980s to the Mid-2000s

The early 1980s were marred by a series of crimes directed against Ezaki Glico and other Japanese confectioners. The crime wave began in 1984, when a gang calling itself the Phantom with 21 Faces kidnaped then Ezaki Glico president Katsuhisa Ezakia and demanded a ransom of ¥1 billion and 100 kilograms of gold bullion. While Ezaki managed to escape three days later, the crime wave continued, and the company's headquarters were firebombed as the gang continued to press its demands for money.

The country's other confectionery companies also fell victim to the attacks. These included the lacing of a number of chocolates with cyanide, which caused a national panic and forced a number of confectioners, including Morinaga, to withdraw all of their products from store shelves. By 1985, however, the crime wave ended when the gang suddenly declared that it would not engage in further attacks. The perpetrators of the crimes were never caught, and their identity remained a mystery.

Company Perspectives:

The Philosophy of Glico: A WHOLESOME LIFE IN THE BEST OF TASTE. Be inspired by tastefulness! Provide delight through wholesomeness! Glory in the resplendence of life! At Glico, we are inspired to contribute to a tastefully wholesome delight in the resplendence of human life. The Glico Spirit: Taking full pleasure in innovation. Let us boldly undertake all actions through that which is interesting, that which is fresh, that which is delightful, that which is excellent and that which challenges ingenuity. We will experience the thrill of the positive. Even more, everyone will experience the thrill of the positive.

Ezaki Glico continued to roll out new products during the 1980s, including the release of a high-quality ice cream, the Excellent brand, in 1985, the rock candy Ice no Mi in 1986, and KissMint Gum in 1987. The company had also begun to take steps to lessen its reliance on the confectionery market. In 1986, Ezaki Glico opened a new Biotechnology Research Laboratory in order to conduct research into the development of new foods and food additives. In addition, the company began developing new pouch foods, including the Lee line of beef curries, launched in 1986, and the Donburi retort pouch rice, introduced in 1989. Another popular company-developed food product came in 1995 with the launch of the Juku line of mild curries.

Ezaki Glico returned to China in 1995, establishing a new production and marketing subsidiary, Shanghai Glico Foods Co., in order to introduce its products into the vast and fast-growing market there. The company also expanded into the North American market. This effort culminated in 2003 with the creation of a dedicated U.S. subsidiary, Ezaki Glico USA Corporation, in California.

The turn of the 21st century presented a new series of challenges for the company, as confectionery consumption in its core Japanese market continued to decline. In response, Ezaki Glico began a drive to diversify its product offerings. As part of that effort, the company acquired Japanese formula producer Icreo Co. in 2001. The company also entered the market for food and cosmetics additives and the growing market for healthful foods.

Ezaki Glico's research and development branch played an important role in this development. In the early 2000s, the company introduced its patented additive "cluster dextrin," an energy-giving substance which it began marketing as an ingredient in its new Power Production CCD drink. The company also debuted Alpha-Arbutin, an agent prove to be effective for skin-whitening applications. Ezaki's tradition for innovation continued into 2005 as the company announced that it had developed a process to transform wood cellulose, which was normally indigestible by human beings and most animals, into amylose, a substance that can be broken down by human and animal digestive tracts. The discovery opened the possibility of one day deriving food from wood, a fitting future for a company that began by transforming oysters into candy.

Principal Subsidiaries

Ezaki Glico USA Corporation; Generale Biscuit Glico France S.A. (France); Glico Dairy Products Co., Ltd.; Glico Foods Co., Ltd; Icreo Co., Ltd.; Shanghai Glico Foods Co., Ltd (China); Thai Glico Co., Ltd. (Thailand).

Principal Competitors

Morinaga & Co., Ltd.; Central Group of Cos.; Meiji Seika Kaisha Ltd.; Taiwan Sugar Corp.; Tiger Brands Ltd.; Ezaki Glico Company Ltd.; Katokichi Company Ltd.

Key Dates:

1922:: Riichi Ezaki founds Ezaki Shoten in Osaka in order to produce caramels containing glycogen, extracted from oysters; the candies, and later the company itself, were called Glico.
1932:: The company opens a production subsidiary in Dalian, China.
1933:: The popular Bisco cookie is launched.
1945:: The company's production facilities in Osaka and Tokyo are destroyed by bombing raids during World War II.
1951:: Ezaki Glico rebuilds the company's main facilities in Osaka and Tokyo and returns to full-scale production.
1956:: Glico Dairy Products and Glico Foods are launched in order to extend the company's interests into dairy products and foods production.
1963:: The first stick-type snack food, Butter Pretz, is introduced.
1965:: The highly successful Pocky snack is launched.
1970:: The company opens a production and sales subsidiary in Thailand to market products to Southeast Asia.
1982:: The company enters into a production joint venture in France in order to introduce Pocky—renamed as Mikado—to the European market.
1984:: Katsuhisa Ezakia is kidnapped by the Phantom with 21 Faces gang.
1986:: The company opens a biotechnology research and development center.
1995:: The company reenters China with the creation of Shanghai Glico Foods Co.
2001:: The formula producer Icreo Co. is acquired as part of a diversification effort.
2003:: The company enters North America with the creation of Ezaki Glico USA Corp. in California.
2005:: The development of a process to transform wood cellulose into edible amylose is announced.