Nissin Food Products Company Ltd.

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Nissin Food Products Company Ltd.

1-1, 4-chome, Nishinakajima, Yodogawa-ku
Osaka
532-8524
Japan
Telephone: + 66 3057711
Fax: + 66 3041288
Web site: http://www.nissinfoods.co.jp

Public Company
Incorporated: 1948 as Chukososha Co., Ltd.
Employees: 6,176
Sales: ¥320.02 billion ($2.87 billion) (2004)
Stock Exchanges: Tokyo
Ticker Symbol: 2897
NAIC: 311823 Pasta Manufacturing; 551112 Offices of Other Holding Companies

Nissin Food Products Company Ltd. is the world's leading producer of instant ramen noodles. The Osaka-based company controls more than 40 percent of the Japanese market, despite competition from some 500 other noodle-makers, and some 9 percent of the worldwide market. Nissin founder Momofuku Ando is credited with inventing the instant noodle, considered by many to feature among the most important Japanese inventions of all time. The company produces a large range of instant noodle flavors, introducing some 100 new flavors each year. Since the 1990s, Nissin also has expanded its business to include fresh and frozen noodles, and other products, such as cereals. The company has responded to increasing consumer demand for ready-to-eat meals by launching its own line of fresh and frozen prepared foods. The company was also the first in Japan to launch retort-packaged foods. Nissin's products reach more than 100 countries worldwide. In support of its international business, the company operates some branches and subsidiaries, including manufacturing facilities, in ten countries, including the United States, Germany, The Netherlands, Hong Kong, the Philippines, Thailand, Singapore, and China. Nissin is listed on the Tokyo Stock Exchange but remains controlled by the Ando family. In 2005, Momofuku Ando announced his decision to retire as company chairman at the age of 91.

Japanese Food Revolutionary in the 1950s

Momofuku Ando started his career as a wholesaler for foodstuffs in the Osaka area. Ando also became managing director of a credit union. Yet in the aftermath of World War II, the credit union went bankrupt and Ando lost all of his assets. The loss of his livelihood, coupled with the extreme scarcity of food in postwar Japan, led Ando to recognize the importance of food—and to decide to begin a new career in food production. In 1948, Ando founded a new company, Chukososha Co., Ltd.

Ando was inspired by the sight of the long lines of people waiting to purchase ramen noodles on the black market. Noodles, however, remained difficult to produce, time-consuming to cook, and especially difficult to preserve. Ando set up a small laboratory in his home and began experimenting with the production of a new type of noodle that could be preserved indefinitely and cooked easily. As a basic ingredient, Ando chose to use wheat, instead of the traditional rice flour. The introduction of wheat, in the form of U.S. aid shipments, had already begun to transform the Japanese diet, and schools had begun to serve bread to children. Ando, however, saw a greater nutritional benefit from transforming wheat into noodles, which then can be used in soups along with other ingredients.

By 1958, Ando had succeeded in developing a method for creating the world's first instant noodle soup. Consumers had only to add water, wait two minutes, and stir. Ando's method involved salting and seasoning the noodles themselves, then deep-frying them in order to dry them. Frying the noodles also introduced pores in them, further facilitating the rehydration process.

Ando named his first, chicken-flavored instant soup "Chikin Ramen" and set up a sales booth in a department store in Tokyo, providing samples to customers. The noodles, despite being several times more expensive than ordinary noodles, quickly caught on with Japanese consumers, earning the nickname "Magic Ramen." Always eager to embrace new novelties, the Japanese market was especially ripe for Ando's instant soup. As the Japanese economy entered its extended boom period in the 1950s and through the 1960s, "Magic Ramen" became a symbol of sorts of the country's industriousness.

Ando relaunched his company as Nissin Food Products and began developing additional recipes. By 1961, the company was selling some 500 million packets of soup per year. Just five years later, that figure had leapt to 2.5 billion—and by the mid-2000s had soared to more than 47 billion annually. Supporting the company's growth was its early decision to go public, placing its stock on the Tokyo and Osaka Stock Exchanges in 1963.

Success in a Cup in the 1970s

Nissin faced a great deal of competition, however, as an increasing number of companies sprang up with their own instant noodle recipes. Nissin responded to the competition by staying one step ahead, introducing new recipes and noodle types. Among the company's new products was the launch of "Nissin Yakisoba" in 1963, which was the first ramen soup to include a separate flavoring packet. The company introduced the so-called "pillow" type of noodle, which floated at the top of soup, in 1968. That brand, Damae Ramen, became Nissin's strongest seller in the Japanese market. Nissin's market share remained strong into the next century, and by the mid-2000s the company continued to claim some 40 percent of the Japanese instant noodle market.

Nonetheless, the Japanese market for instant noodles began to soften toward the end of the 1960s. This led Nissin toward two very important developments that not only solidified Nissin's position as Japan's dominant instant noodle producer but also established the ramen noodle as a global fast-food phenomenon. The first of these was the decision to introduce its instant ramen noodles to an international market, starting with the launch of a subsidiary in the United States in 1970.

The move into the United States proved fortuitous in another way. During his visits to the United States, Ando had been introduced to the country's fast-food industry, and particularly the widespread use of paper cups and containers. Ando recognized the potential for developing a new type of packaging for his company's instant soup. By 1971, the company had prepared to launch what was to become the other important component of Nissin's growth: the Cup o' Noodles brand (later renamed as Cup Noodles) of soup. Nissin's packaging was something of a revolution in the global food industry, presenting a food product that could be distributed, cooked, and eaten all in the same container.

Cup Noodles paved the way for the company's expansion throughout the world. The company entered South America with the establishment of a Brazilian sales subsidiary in 1975. At the same time, Nissin added new factories in Kanto in 1971, Shiga in 1973, and Shimonoseki in 1975. In 1978, Nissin launched production in the United States, with the completion of its first U.S. plant in Lancaster, Pennsylvania. The company added to its overseas production capacity with the opening of a Brazilian plant in 1981. In that year, as well, Nissin entered Singapore.

Through the 1980s, Nissin's international expansion continued. The company entered Hong Kong in 1984, launching production there the following year. Nissin also expanded through acquisitions, acquiring a frozen and fresh noodle operation in Hong Kong in 1987 and adding U.S. frozen burrito maker Camino Foods in 1988. The company returned to Hong Kong the following year, buying up Beatrice Hong Kong and 74 percent of Winner Food Products there. In 1991, the company entered India, forming a joint venture with Brooke Bond to produce noodles for that market.

Diversification in the 1990s

Nissin entered the European market in the 1990s as well, starting with the creation of a sales subsidiary in The Netherlands in 1991. The company launched production in that country in 1993, and later expanded its European operations to include a subsidiary in Germany as well. Other markets followed through the 1990s, including Thailand, Indonesia, and the Philippines, which the company entered through local joint ventures. Nissin also entered the mainland Chinese market for the first time. For this expansion, the company chose to form its own network of wholly owned subsidiaries, establishing its first production plant in Guangdong in 1994. That was followed by plants in Shanghai in 1996, then Beijing in 1998. By the early 2000s, the company operated some 12 subsidiaries in the Chinese mainland. Yet the company's decision not to enter China through local joint ventures was credited with the group's relatively slow penetration of the vast Chinese market. In contrast with its strong share of the global market, some 9 percent worldwide, the company barely managed a 3 percent market share in China into the 2000s.

Company Perspectives:

The Philosophy of Nissin Foods

Nissin Foods was established in 1948 by the visionary Mr. Momofuku Ando, who foresaw the rise of the fast-paced modern lifestyle in our post war society. Our daily habits were being streamlined for speed and efficiency, and that included our eating habits. Based on this, he founded Nissin Foods and put his heart and soul into developing the instant food industry.

Through innovation and the continuous search for excellence, the delicious taste of Nissin Foods was quickly accepted by consumers all over the world.

Nissin Foods is still the No. 1 manufacturer of instant food in Japan and is gaining huge popularity overseas. Mr. Momofuku Ando can truly be called a great man in the food industry, as he brings great tastes to the world!

Global Noodle Leader in the 2000s

At the same time as it built its international network, Nissin backed up its increasingly global business with a continued commitment to product innovation, as well as a drive toward diversification. As early as 1986, the company entered the frozen foods business. That unit was boosted with the acquisition of frozen foods specialist Pegui Foods Co. (later renamed as Nissin Frozen Foods) in 1991. The company also entered the breakfast cereals market with the purchase of Cisco Co. That company had been the first to introduce breakfast cereals in Japan in 1963; under Nissin, the Cisco unit developed a "cup" version of its breakfast cereals, which proved popular with Japanese consumers.

Nissin also maintained its tradition of innovation. In 1988, the company became the first to develop new food preparation technology based on retort pouches. This led to the launch of LL cup noodles in 1992, which quickly became one of the company's hottest sellers. By 1995, the company had launched its SpaO brand of retort pouch spaghetti. In the meantime, Nissin also had solved an important obstacle in the development of the fresh noodle market, that of preservation. In 1992, the company launched the first of its long-life noodle products.

Nissin took steps to correct its slow growth in China at the beginning of the 2000s, merging its 12 Chinese subsidiaries under a single holding company in 2001. The company also continued to seek out new food areas. In the early 2000s, the company entered the "functional food" category, receiving approval to market a new line of health-promoting soups containing psyllium dietary fibers. The company also launched a dedicated Food Safety Research Institute in 2002.

Nissin's acquisition of a stake in Hebei Hualong F&N Industry Group in 2004 allowed the company to claim the global leadership position in the instant noodle soup category that year. Nissin also continued to seek ways of building its brand name. Starting in 1996, for example, the company's billboard, of a bowl of soup putting out real steam, had become a fixture in New York's Times Square. By 2005, the company had set its advertising sights still higher, launching a newly developed zero-gravity "Space Ram" for Japanese astronaut Soichi Noguchi's trip into space aboard the Discovery. In that year, as well, Nissin, now led by Koki Ando, announced that Momofuku Ando was retiring from his position as chairman of the board. Ando was by then acknowledged as one of the most influential figures in the 20th-century global food industry.

Principal Subsidiaries

Accelerated Freeze Drying Co., Ltd. (India); Camino Real Foods, Inc. (U.S.A.); Guangdong Shunde Nissin Foods Co., Ltd. (China); Indo Nissin Foods Ltd. (India); Miracle Foods Co., Ltd. (Hong Kong); Nissin Cisco Co., Ltd.; Nissin Food Products Co., Ltd. (Mexico); Nissin Foods (China) Holding Co., Ltd.; Nissin Foods (HK) Management Co., Ltd. (Hong Kong); Nissin Foods (Huabei) Co., Ltd. (China); Nissin Foods (Thailand) Co., Ltd.; Nissin Foods (U.S.A.) Co., Inc.; Nissin Foods B.V. (Netherlands); Nissin Foods Co., Ltd. (Hong Kong); Nissin Foods GmbH (Germany); Nissin Frozen Foods Co., Ltd.; Nissin Plastics Co., Ltd.; Nissin-Ajinomoto Alimentos Ltda. (Brazil); Nissin-Universal Robina Corporation (Philippines); NITEC (Europe) B.V. (Netherlands); NITEC (H.K.) Ltd. (Hong Kong); NITEC (U.S.A.), Inc.; P.T. NISSINMAS (Indonesia); Sapporo Nissin Co., Ltd.; Shandong Nissin Foods Co., Ltd. (China); Shandong Winner Food Products Co., Ltd. (China); Shanghai Nissin Foods Co., Ltd. (China); Winner Food Products Ltd. (Hong Kong); Zhuhai Golden Coast Winner Food Products Ltd. (China).

Principal Competitors

Toyo Suisan Kaisha Ltd.; House Foods Corporation; Nong Shim Company Ltd.; Tingyi Cayman Islands Holding Corporation; Asia Food and Properties Ltd.; Ottogi Corporation; Myojo Foods Company Ltd.; Tokatsu Foods Company Ltd.; Bing-Grae Company Ltd.

Key Dates:

1948:: Momofuku Ando founds the Chukososha Co. in Osaka and begins developing a method of producing instant noodles.
1958:: The company changes its name to Nissin Food Products and launches Chikin Ramen, the first instant ramen soup.
1963:: Nissin goes public on the Osaka and Tokyo Stock Exchanges.
1968:: Nissin launches "pillow" type of noodles.
1970:: The company establishes its first international subsidiary in the United States.
1971:: Nissin launches Cup o' Noodles (later Cup Noodles), which becomes an international hit.
1975:: A sales subsidiary is established in Brazil.
1978:: Nissin launches production in its first U.S. plant.
1981:: The company launches production in Brazil; a subsidiary is established in Singapore.
1984:: Nissin enters the Hong Kong market.
1986:: Production of frozen foods begins.
1988:: Nissin acquires frozen burrito maker Camino Foods in the United States; the first retort pouch products are launched.
1991:: Nissin establishes its first European subsidiary in The Netherlands; the company acquires frozen foods specialist Pegui in Japan.
1992:: The first long-life fresh noodles are launched.
1994:: Nissin enters the Chinese market with a subsidiary in Guangdong.
1999:: The company launches production in India.
2001:: The Chinese subsidiaries are consolidated under a single holding company.
2004:: Nissin becomes the world's instant noodle market leader through a stake in Hebei Hualong F&N Industry Group.
2005:: Founder Ando retires from the company.