Hagoromo Foods Corporation

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Hagoromo Foods Corporation

151 Shimizu Shimazaki-cho
Shizuoka,
Japan
Telephone: (81) 0543 54 5000
Fax: (81) 0543 54 5017
Web site: http://www.hagoromofoods.co.jp

Public Company
Incorporated: 1947
Employees: 955
Sales: ¥81.90 billion ($729.9 million) (2006)
Stock Exchanges: Tokyo
Ticker Symbol: 2831
NAIC: 311711 Seafood Canning

Hagoromo Foods Corporation is a leading Japanese producer of canned foods, including canned seafoods, pasta and rice, pet foods, and other food products. Based in Shizuoka, Hagoromo produces more than 1,000 food items in a network of five main factories and some 80 affiliates factories and operations either owned directly by the company or operated in partnership with affiliated companies. Hagoromo's flagship brand is its Sea Chicken canned tuna brand, launched in the 1950s. The company is also a leading producer of pasta and macaroni products, under the Sala Spa and Sala Maca brand names. Hagoromo also manufactures canned fruits and vegetables, as well as pasta sauces, meat products, and other products for the consumer foods market.

In addition to its retail product, Hagoromo produces a variety of foods for the wholesale, institutional and foodservice sectors, providing canned and bottled goods, pouch-based foods, pasta, fish meal, fish oil and fish extracts, and packaged boiled rice. In 2005, the company added to its range with the acquisition of Maruai Corporation, a producer of dried bonito, seaweed products, and rice toppings. While most of Hagoromo's operations and sales are based in Japan, the company operates a joint-venture subsidiary in Indonesia, PT Aneka Tuna Indonesia, in partnership with Itochu Corporation, which accounts for much of the company's tuna production. Hagoromo also operates offices in Thailand and England. Hagoromo is listed on the Tokyo Stock Exchange and is led by Yasuo Goto, son of the company's founder. In 2005, Hagoromo generated total sales of nearly ¥82 billion ($730 million).

SEAFOOD CANNER IN 1931

Isokichi Goto was born in Yui-Cho, a fishing village in Japan's Shizuoka prefecture, in 1897. Goto began his working life as an apprentice to a Kofu City-based fish seller. In 1922, following four years of military service, Goto married into a prominent family in Shimizu port, joining the family's fish merchanting business there. Shimizu was by then an important port for Japan's vital seafoods industry; the city was also known in part because of its proximity to Miho no Matsubara. That site had inspired the famous Hagoromo legend, the story of a fisherman who stole an angel's cloak of feathers in order to prevent her return to heaven.

Goto's years in the military had led him to adopt the Japanese government's ambitions for developing the country's industrial and economic independence. Into the early 1920s, the country's industrial infrastructure remained rudimentary, leaving the company highly dependent on imported goods. At the beginning of the decade, however, the Japanese government began encouraging the creation of a domestic industrial base, with an emphasis on developing the country into a technological power in its own right.

Goto recognized the need to adapt new production technologies to Shimizu's largely artisan-based seafood industry. In 1929, Goto traveled to Chiba, and went to work for a canning company there. After several months, Goto then went to the United States in order to study that country's fast-growing seafood processing industry. On his return to Japan, Goto went into business for himself, launching his own seafood canning company, the Goto Canning Company, in Shimizu in 1931. In this effort, Goto was aided by Yoshio Murakami, who worked for the prefecture's fishing department and who played a major role in adapting canning techniques for the seafood industry in Japan.

Goto's company initially canned tuna for the local market, then increasingly began to supply the overseas market, including the United States. Goto quickly branched out, adding canned fruits and vegetables to its product line. The company's fortunes slipped in the early 1930s, however, as the Great Depression hampered sales. At the same time, increasing trade tensions between Japan and other countries, and particularly the United States, placed still greater pressure on the Goto company's export operations. By the end of the decade, amid the gathering hostility between Japan and the rest of the world, Goto's exports all but disappeared.

Nonetheless, Goto's operations remained strong, due to the strong growth in domestic demand. Goto's contacts with the military especially ensured a steady stream of orders for the company, as the Japanese government greatly expanded the country's military capacity in the period before the Japanese invasion of China and the outbreak of World War II. Goto was able to expand his range of operations, opening a second production factory in Yaizu. That city, and its deep-sea port, became one of the centers of the Shizuoka prefecture fishing industry in the 1930s. At the same time, Goto also became involved in another canning company, Tokai Mitsui Consolidated Canners, part of the prewar Mitsui conglomerate. Goto became the general director of the Tokai plant in 1937.

BRANDED TUNA LEADER IN 1958

During World War II, the Japanese government established the Shizuoka Canning Company, which was placed under military control in order to ensure the supply of seafood and other food items for the country's military effort. Goto's operations were taken over by the Shizuoka Prefectural Canning Company in 1942. Goto's production was then turned over to supporting the Japanese army, while Goto served as an inspector for canning facilities taken over by the country during its occupation of mainland China. By the end of the war, however, Shimizu had suffered heavy bombing damage. Goto's business, like most of the industrial complex in the city and region, had been destroyed. Following the war, Goto set up a new business operating a taxi. It was short-lived, however; at the beginning of 1946, he died of a brain hemorrhage.

Goto's children set out to rebuild the canning business, reincorporating the company as Shimizuya Co. Ltd. in 1947, then adopting the Goto Canning Products name in 1948. By the mid-1950s, the company had restored itself to a national level, and by 1956 Goto opened its first sales office outside of Shizuoka, in Tokyo. That office was later supplemented by a second sales office, opened in Nagoya in 1961. The company then expanded into Osaka, opening an office there in 1962. Fueling the company's growth was the launch of its highly popular Sea Chicken brand in 1958. That brand rapidly grew into one of the leading canned tuna brands in Japan. The brand's popularity was further boosted when the company launched its first television advertising campaigns in 1967.

COMPANY PERSPECTIVES

In recent decades our company has focused on insuring that our corporate label stands as a mark of excellence in the Japanese market rather than exporting tuna abroad. We have also sought to develop a vigorous and strong domestic sales network throughout Japan. Utilizing ultramodern production facilities and a stringent system of quality control at our 5 main plants as well as about 80 domestic and overseas affiliated plants, we have a dynamic sales network with around 40 offices stretching from Hokkaido to Okinawa. With a solid and independent network of production and distribution facilities, we are able to offer quality foods to consumers throughout Japan.

Goto had also begun to seek to expand its product range beyond its core canned products. This led the company to begin producing pasta in the early 1960s. In 1962 the company built a dedicated factory, producing spaghetti and a range of macaroni shapes. The growing diversity of the company's product line led to a new name change in 1968. For this, the company adopted the name Hagoromo Canning Company-based on the famous Japanese legend and highly popular Noh theater play.

Hagoromo continued its expansion through the 1970s and into the 1980s. The company increasingly began to supply the wholesale and foodservice markets, while also establishing itself as a major presence in the consumer foods sector. In 1978, the company expanded its capabilities to include the production of fish extracts, at a new Bio Plant constructed that year. This operation allowed the company to add the production of fish meal and fish oil as well.

By the end of the 1980s, Hagoromo had added a number of new factories, acquiring a facility in Tohoku prefecture in 1987, then building a new factory in Yaizu in 1988. Increasingly, however, Hagoromo had begun to eye expansion beyond Japan. This was in large part due to a significant shift in the Japanese seafood industry, which saw an increasing proportion of the country's seafood catch being processed and canned outside of the country. Thailand played a major role in this development, emerging as one of the region's primary seafood canning markets. In response, Hagoromo opened its own office in Bangkok in 1988. By then, the company had changed its name again, becoming Hagoromo Foods.

MAJOR JAPANESE FOOD PRODUCTS GROUP IN THE NEW CENTURY

Hagoromo's foreign expansion continued into the early 1990s. The company teamed up with Itochu Corporation and other partners to launch a canning joint venture in Indonesia in 1991. That company was named PT Aneka Tuna Indonesia and it soon became Hagoromo's primary source of canned tuna. Back at home, the company continued to expand its other food operations, completing extensions of its Bio Plant as well as its Pasta Plant. Hagoromo also turned to a number of partner companies for its production needs, and by the middle of the next decade the company had five main production facilities, as well as some 80 other factories and facilities that were either directly controlled or operated by its production affiliates. In support of this nationally operating production network, Hagoromo established its own dedicated logistics subsidiary in 1990.

Through the end of the decade, Hagoromo, like much of the Japanese foods industry, turned its attention to the development of a new generation of value-added, health-promoting foods. The company's own efforts in developing new food products was enhanced in 1994 with the establishment of a new Research Center. In the meantime, the increasingly global nature of the seafood market led Hagoromo to establish an office in Watson, near London, England, in 1996. Like the group's Bangkok office, the London office gave the company closer proximity to another major seafood region, providing it market and other information.

Hagoromo continued to expand its product line. In 1998, for example, the company opened a new chilled foods factory in Yaizu. This enabled the company to launch new food products, including chilled fruit juices.

KEY DATES

1931:: Isokichi Goto founds the Goto Canning Company in Shimizu, Shizuoka prefecture, Japan.
1935:: Goto adds a factory in Yaizu.
1942:: Goto Canning is taken over by the Shizuoka Prefecture Canning Company, which is controlled by Japanese military.
1946:: Isokichi Goto dies of a brain hemorrhage.
1947:: The Goto family reestablishes the canning company.
1958:: Sea Chicken brand canned tuna is launched.
1962:: Goto introduces pasta production.
1969:: Goto is renamed the Hagoromo Canning Company.
1978:: Hagoromo launches the production of fish extracts at the company's new Bio Plant.
1988:: An office is opened in Bangkok, Thailand.
1990:: A dedicated logistics subsidiary is founded.
1991:: Hagoromo forms the Aneka tuna canning joint venture in Indonesia with the Itochu Corporation.
1994:: The company establishes a research center.
1996:: Hagoromo opens an office in England.
1999:: A chilled foods plant is built in Yaizu.
2000:: Hagoromo Foods Corporation goes public on the Tokyo Exchange.
2005:: The Maruai Corporation, producer of dried bonito and seaweed products, is acquired.

Hagoromo prepared for its 70th anniversary by going public in 2000, listing its stock on the Tokyo Stock Exchange's Second Section. The public offering enabled the company to begin planning a new expansion, starting with the construction of its newest facility, the Sunrise Plant, that year. By the middle of the decade, Hagoromo had laid plans for a new extension of its product range. In 2005, those plans led to the acquisition of Maruai Co. Ltd. and its two subsidiaries. The acquisition allowed Hagoromo to add a new range of dried bonito products, as well as seaweed-based foods and rice toppings. Still led by members of the Goto family, the 75-year-old company by then had become Japan's major food producers, with annual sales of ¥82 billion ($730 million).

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Central Logistics Corporation; Maruai Corporation; P.T. Aneka Tuna Indonesia.

PRINCIPAL COMPETITORS

George Weston Ltd.; Antarktika Fishing Co.; Orkla ASA; H.J. Heinz Co.; Atlantika—Sevastopol State Enterprise; Unilever Deutschland GmbH; Ebro Puleva S.A.; Del Monte Foods Co.; Bolton Group B.V.; Pesca Chile S.A.