Maruha Group Inc.

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Maruha Group Inc.

1-1-2 Otemachi, Chiyoda-ku
Tokyo
100-8608
Japan
Telephone: +81 3 3216 0821
Fax: +81 3 3216 0342
Web site: http://www.maruha.co.jp

Public Company
Founded: 1880 as Tosa Hogei
Employees: 12,000
Sales: ¥757.96 billion ($40 billion) (2004)
Stock Exchanges: Tokyo
NAIC: 551112 Offices of Other Holding Companies; 311412 Frozen Specialty Food Manufacturing; 311712 Fresh and Frozen Seafood Processing; 424420 Packaged Frozen Food Merchant Wholesalers; 424460 Fish and Seafood Merchant Wholesalers; 493120 Refrigerated Storage Facilities

Maruha Group Inc. is Japan's leading importer and processor of seafoods, and a leading producer and processor of frozen, canned, fresh, and convenience foods. Maruha's operations span the full range of seafood production, from managing its own fishing fleet, to extensive global fish purchasing and processing operations, cold-storage facilities, food production and packaging, and distribution, including restaurant operations. Formed in the late 19th century, Maruha developed into one of Japan's major whaling companies, under its former name of Taiyo Gyogyo KK (Taiyo Fishery Co.), and also built up one of the country's largest fleets of trawlers. The worldwide moratorium on whaling forced the company to exit that industry, and the company has responded to increasing conservation pressures on the global fishing industry by reducing its own fishing fleet and relying instead on an international network of supply partnerships. Maruha also has established some 60 international subsidiaries, including in the United States, Thailand, China, Spain, Chile, New Zealand, Indonesia, Mozambique, and Madagascar. The company also operates nearly 110 subsidiaries in Japan. In addition to seafoods, Maruha produces meat and poultry products, pet foods, and feed. The company ended a longstanding presence in the sugar industry through the sale of its stake in Ensuiko Sugar Refining Co. in 2005. This followed the company's move to restructure itself as a holding company in 2004, part of a wider reorganization and consolidation of its operations. The company is listed on the Tokyo Stock Exchange. Yuji Igarashi is company president and CEO.

Fishmonger in the 19th Century

Maruha's origins reach back to the late 19th century, when Ikujiro Nakabe began a business buying fish from local fishermen and delivering the product to wholesalers in Osaka. The company, originally known as Tosa Hogei, remained a small family-owned business into the 20th century. Yet the importance of fish to the Japanese diet—the country was to distinguish itself as the world's single largest market for fish—encouraged the company's growth. By 1904, Nakabe had moved his company to Shimonoseki, in the Yamaguchi Prefecture.

The move precipitated the Nakabe family's entry into the whaling industry. Shimonoseki had by then been a center of Japanese whaling for more than a century, and Nakabe's company rapidly established itself among the pioneers of modern whaling methods. The launch of Japanese whaling in Antarctica provided a new opportunity for the company, which went public in 1924 as KK Hayashikane Shoten. By 1926, the company had launched its own fleet of whaling vessels in Antarctica.

The group's whaling operations led it to develop an expanded range of businesses, including its own fishing fleet and fish processing businesses. The company also added diversified activities such as restaurant operation, shipbuilding, transport, and even the operation of its own hospitals. In 1943, the company changed its name to recognize its expanded focus, becoming Nishi Taiyo Gyogyo Tosei KK. Two years later, however, at the end of World War II, the company shortened its name to Taiyo Gyogyo KK (Taiyo Fishery Co.). Following the war, the company moved its headquarters to Tokyo in 1949. In that year, the company also became involved in Japanese baseball, forming its own professional baseball team, the Taiyo Whalers (later changed to the Yokohama Bay Stars).

World War II, however, had had drastic consequences for the company. With much of its domestic operations damaged during the war, the company lost nearly all of its assets and businesses overseas as well. Forced to rebuild, Taiyo developed a two-pronged business focus. The company reentered whaling and fishing, boosting its operations with the 1955 acquisition of Nippon Kinkai Hogei, formed in a merger between three prominent Japanese whalers just a year earlier. The company also contributed to the rebuilding of Japan's whaling fleet, once again targeting the Antarctic region. By the beginning of the 1960s, Taiyo was one of the country's leading whalers, with its own fleet hunting whales in the Antarctic, supported by its own factory ship.

During this period, as well, Taiyo began rebuilding its overseas fishing fleet. By 1951, the company had returned to salmon fishing and processing operations, including in the Alaskan region. The company became one of the first to enter the West African fishing market, when the region was opened for trawling in 1958.

Yet Taiyo also had begun to develop its food production arm, emerging as one of Japan's longtime leading seafood importers, producers, and processors. In 1963, the company launched its own aquaculture business. By 1960, Taiyo also had begun to expand its production beyond seafood and marine products into other food areas, as well as into the production of pet foods and feeds (which served as a means of making use of the waste byproducts of its seafood processing operations) and livestock production. In 1964, the company made another significant extension of its operations when it acquired a stake in Ensuiko Sugar Refining Co. That company grew into one of Japan's top-five sugar producers.

Leading Seafoods Group in the New Century

Conservationist pressures began building on a global scale in the late 1960s and early 1970s. The voracious Japanese appetite for whale meat had brought on a drastic reduction in the world's whale populations. Japanese aggressive, industrialized fishing methods also were called into question as fish stocks began to dwindle around the world. A massive lobbying effort to ban whaling grew during the 1970s. At the same time, the international community began placing restrictions on international fishing operations, leading to the adoption of 200-mile protection zones by many countries in an effort to protect their local fishing industries from large-scale international fishing companies.

The prospect of a whaling ban led Taiyo to merge its whaling operations with those two other prominent Japanese whalers, Nihon Suisan and Kyukyuo Hogei, in 1976, forming Nihon Kyodo Hogei. At the height of the Japanese whaling industry in the 1960s, the three companies had operated a combined fleet of more than 140 vessels, including nearly 90 whaling ships. The new company, however, started operations with a far reduced fleet of just 20 whaling ships and three factory ships. During the company's first post-merger whaling campaign, the company sent out 18 whaling ships. By the 1977 whaling season, however, the company fielded just four whalers. In support of the whaling fleet, though, Taiyo founded a new subsidiary, Nihon Hogei, which began processing and distributing whale meat to the Japanese market. By 1987, however, Taiyo had exited the whaling industry altogether, transferring the remains of Nihon Hogei to a new company, Kyodo Senpaku.

Continued restrictions also had forced the company to slim down its fishing fleet. Instead, during the 1980s and 1990s, the company began building up a network of international partnerships and local affiliates. By the mid-2000s, the company had developed joint ventures in some 15 countries. An early example was the creation of Solomon Taiyo Ltd. (STL) in a joint venture with the government of the Solomon Islands in 1973. Under that agreement, Taiyo supplied the fishing vessels and equipment, as well as the construction of a processing and cannery facility, in exchange for the right to fish off of the Solomon Islands waters, as well as a 75 percent stake in STL. The venture was a success, and STL rapidly became the Solomon Islands' largest employer.

Taiyo looked for other international expansion opportunities into the 1990s. In 1990, for example, the company acquired control of Kingfisher Holdings Limited in Thailand. That company had been formed in 1972 as SAFCOL Thailand, the first tuna processor in the country. SAFCOL later developed a wider line of frozen, canned, and other value-added seafood products, with an emphasis on the export market, before changing its name to Kingfisher in 1989.

Other investments brought Taiyo to the United States, where it acquired control of Trans-Ocean Products, based in Bellingham, Washington. That company was one of the first in the United States to begin producing and marketing surimi to the U.S. market.

Company Perspectives:

Group Vision: For almost a century, Maruha has delivered the seafood bounties of the world's oceans to customers' dining tables through all stages of the business from fisheries and aquaculture to processing, storage, logistics, and sales.

In addition to fulfilling customer needs through high-quality foodstuffs, materials, and services, our vision is to provide the innovation of the Maruha Group as well as "value" to a variety of dining settings.

Taiyo changed its name to Maruha Corporation, and developed a new logo, in an effort to shake off its past as a whaling company and to emphasize its new focus as a major seafood importer and processor. By the early 1990s, fishing accounted for just 10 percent of the company's sales, while the sale of fish and shellfish had become its core business, representing more than 70 percent of its revenues. The company also had developed a strong aquaculture business, with 20 fish farms in operation in Japan.

Maruha sought an entry into the Chinese market in the early 1990s as well. This led the company to form a joint venture, Zhousan Industrial Company Ltd., in 1994. The Zhousan company, held at 49 percent by Maruha, then took over its partner's original fishery business, Zhousan No. 2 Fishery Corporation, which had been founded in 1978.

Maruha launched a restructuring effort at the end of the 1990s and into the 2000s. As part of that process, the company began selling its stake in Ensuiko Sugar Refining, which had been hit by declining sugar consumption in Japan. That process was completed in 2005, when Maruha sold its remaining 24 percent stake to Mitsubishi, which also controlled the number two sugar producer in Japan, Dai-Nippon Meiji Sugar Co. In 2001, the company spun off its pet food business into a new company, Maruha Pet Food Co. Ltd., as part of a management buyout.

Maruha's restructuring continued into 2002. The company sold off its share of the Yokohama Bay Stars baseball team that year. Also in 2002, the company disposed of its trawling fleet, and spun off its cold-storage business into a new company. On a positive note, the company's restaurant business had been growing strongly, and in 2002 the company announced its intention to triple its number of restaurants. A step in that direction came in 2003 when the company opened its new Oregon Bar & Grill in Tokyo in a partnership with the Oregon state government.

Maruha's restructuring effort was completed, in large part, in 2004, capped by its own reorganization as a holding company, Maruha Group Inc., that year. The newly formed company then began taking steps to exert tighter control over its somewhat loosely linked federation of more than 170 subsidiaries worldwide. Maruha also formed new partnerships, such as a link with Osaka Uoichiba Co. in 2003, and a frozen foods development partnership with Japan Tobacco at the end of 2004. Maruha Group looked forward to another century as a leading name in the Japanese seafood industry.

Principal Subsidiaries

Alyeska Seafoods Inc (U.S.A.); Bengal Fisheries Ltd. (Bangladesh); Cixi Yongching Frozen Foods Co., Ltd. (China); Cixi Young-shin Foods Co., Ltd. (China); Dalian Riken Maruha Foodstuff Co., Ltd. (China); Entreposto Frigorifico de Pesca de Mocambique, Ltda.; Gill & Duffus S.A. (Switzerland); Kingfisher Holdings Limited (Thailand); Maruha (N.Z.) Corporation Ltd. (New Zealand); Maruha (Shanghai) Trading Corporation (China); Maruha Capital Investment, Inc. (U.S.A.); P.T. Nusantara Fishery (Indonesia); Raoping Younglian Foodstuffs Factory Co., Ltd. (China); Sociedad Pesquera Taiyo Chile Ltda.; Société Malgache de Pêcherie (Madagascar); Société Malgache de Pecherie du Boina (Madagascar); Southeast Asian Packaging & Canning Ltd. (Thailand); Supreme Alaska Seafoods Inc. (U.S.A.); Taiyo (U.K.) Ltd.; Taiyo (U.S.A.) Inc.; Trans Ocean Products Inc. (U.S.A.); TransEurope Seafood Sales B.V. (Netherlands); Viver-Atun Cartagena, S.A. (Spain); Westward Seafoods Inc. (U.S.A.); Zhoushan Industrial Co., Ltd. (China).

Key Dates:

1880:: Ikujiro Nakabe founds a fish purchasing business to supply Osaka-area wholesalers.
1904:: Nakabe moves the business to Shimonoseki and enters the whaling and fishing industry.
1924:: The company goes public and changes its name to KK Hayashikane Shoten.
1926:: The company launches an Antarctic whaling fleet and later diversifies into shipbuilding, restaurant operation, and other businesses.
1943:: The company changes its name to Nishi Taiyo Gyogyo Tosei.
1945:: The name is shortened to Taiyo Gyogyo (Taiyo Fishery Company, Limited); the company loses its overseas whaling and fishing fleet and other assets.
1949:: Company headquarters are moved to Tokyo; the company forms a professional baseball team, the Taiyo Whalers.
1951:: The company relaunches international fishing and whaling operations, and helps rebuild the Japanese whaling fleet; the company relaunches the salmon fishing fleet.
1953:: Fish farming operations begin.
1958:: The company launches West African trawl fishing operations.
1960:: Operations are extended into pet foods, feed, and livestock production.
1964:: The company acquires control of Ensuiko Sugar Refining Co.
1973:: Joint venture Solomon Taiyo Limited is formed in the Solomon Islands.
1976:: The whaling fleet merges into Nihon Kyodo Hogei.
1978:: The company opens new headquarters in Tokyo.
1990:: Kingfisher Holdings in Thailand is acquired.
1993:: The company changes its name to Maruha Corporation.
1994:: The Zhousan Industrial Co. joint venture is formed in China.
1999:: The company begins a sell-off of its stake in Ensuiko Sugar.
2002:: The company launches a restructuring, divesting its cold-storage operations, trawler fleet, and baseball team.
2004:: The company restructures as Maruha Group Inc.; a frozen food partnership is formed with Japan Tobacco.
2005:: The company sells its remaining stake in Ensuiko Sugar.

Principal Competitors

Antarktika Fishing Co.; Mar Fishing Company Inc.; ENACA; Kyokuyo Company Ltd.; Unilever Deutschland GmbH; Mavesa S.A.; Mukorob Fishing Proprietary Ltd.; Hanwa Company Ltd.; Nichiro Corporation.