Kikkoman Corporation

views updated Jun 11 2018

Kikkoman Corporation

250 Noda
Noda, Chiba 278-8601
Japan
Telephone: 81-471-23-5111
Fax: 81-471-23-5200
Web site: http://www.kikkoman.co.jp

Kikkoman International, Inc.
50 California Street
Suite 3600
San Francisco, California 94111
U.S.A.
Telephone: (415) 956-7750
Fax: (415) 956-7760

Public Company
Incorporated: 1917
Employees: 2,640
Sales: $2.8 billion (2000)
Stock Exchanges: Tokyo
NAIC: 311941 Mayonaisse, Dressing, and Other Prepared Sauce Manufacturing; 312130 Wineries; 311999 All Other Miscellaneous Food Manufacturing; 325412 Pharmaceutical Preparation Manufacturing; 325998 All Other Miscellaneous Chemical Product and Preparation Manufacturing

Kikkoman Corporation is the world’s largest and most famous producer of soy sauce. It is the best-selling soy sauce brand in Japan, and virtually the only soy sauce with an international presence. Some 20 percent of its revenue derives from overseas sales, and about half of its profits come from its U.S. market. The company makes a variety of other products besides soy sauce, including Mann’s Wine, one of the most popular labels in Japan, health foods such as vegetable juices and brown rice under the Del Monte brand label, and a slew of biotechnology products such as the enzyme luciferase, which is used in food production facilities to test for microorganisms. In addition, Kikkoman owns and operates the Colza restaurant chains along with the Nakanakaya chain of pubs, and also runs a wine garden in the heart of downtown Tokyo. The company’s five main divisons are soy sauce, products related to soy sauce, wine and liquor, Del Monte (Kikkoman acquired that company’s Far Eastern division in 1990), and biotechnology. Kikkoman maintains production facilities in Japan, Singapore, Taiwan, and the Netherlands, and two factories in the United States, one in Walworth, Wisconsin, and another in Folsom, California. U.S. marketing and sales are overseen by Kikkoman International, Inc., in San Francisco.

Ancient Roots

Kikkoman Corporation was founded in 1917 in Noda, Japan, but the company’s roots go back to the 17th century. Around 1650, a number of families began to produce food seasonings from the plants and crops of their small, intensely cultivated growing fields. One of these products was soy sauce, a concoction primarily made from soybeans that was used to enhance the flavor of countless dishes, from soup to skewers of chicken. Many of these family-operated businesses located their operation next to the Edo River, so that freshly made soy sauce could be delivered as quickly as possible to customers in the capital of Edo, present-day Tokyo. During the time that Japan was open to outside trade, Dutch ships from half a world away bought soy sauce in the city of Nagasaki. These Dutch traders shipped the soy sauce back to The Netherlands, where the new taste became the overnight sensation for the upper classes.

Over the years, some of the families who produced soy sauce grew in wealth, prominence, and influence and contributed many astute business leaders that helped develop Japan’s economy into one of the strongest in the Orient. However, by the end of the 19th and beginning of the 20th centuries, there were over 1,000 soy sauce companies competing for a rather limited Japanese market. In order to ensure the survival of their businesses, eight families producing soy sauce and other food seasonings in Noda banded together and formed Kikkoman Corporation in 1917.

From the very beginning, the production of high-quality soy sauce was the cornerstone of Kikkoman’s success. The ingredients of soy sauce and the method of its production have been the same for nearly 400 years. Soy sauce is made from three simple ingredients—soybeans, wheat, and salt. The soybeans, rich and full of protein, are first steamed and then mixed with wheat, previously crushed and roasted. This mixture of soybeans and wheat is then combined with something similar but not identical to yeast, which serves as a catalyst for the culturing process. The result is a dry mash, known as koji. According to the traditional brewing procedure, brine is next added to the koji in order to make moromi. Moromi is a strong, even potent concoction, which remains in fermentation casks or tanks. During fermentation, the koji acts as an enzyme and changes the protein of a soybean into an amino acid while also transforming the starch of the wheat into sugar. After a short time, the moromi turns a startling reddish brown, and lactic acid cocci and yeast activate all the combined factors that make and distinguish the flavor, color, and aroma of soy sauce.

Kikkoman Corporation not only maintained the traditional manner of making soy sauce but also continued the historical method of careful atmospheric and temperature control that enables the brewing processes to take place. In the old days, master brewers took extensive precautions in brewing the soy sauce and spent long hours monitoring its progress. Buckets known as kakioke and paddles called kakioke provided these brewing experts with all they needed to control the entire process. After four centuries, the quality-control process was refined through the development and cultivation of microorganisms that made production much more efficient.

Kikkoman in the Early 20th Century

After its founding in 1917, Kikkoman Corporation became known as the biggest soy sauce producer in Japan. The company sold exclusively to consumers in Japan and, since virtually every person used some form of soy sauce during a meal, revenues grew rapidly during the 1920s. Kikkoman began to expand its product line at this time and produced such variations as soy sauces for meat, noodles, fish, and chicken. By the end of the 1930s the company had grown so large that a brand-new plant, named Goyogura, was constructed in Noda; it was specifically developed and designed to preserve the traditional manner and techniques of brewing soy sauce. The Goyogura plant was designated to produce soy sauce for the emperor of Japan and the entire imperial retinue.

During the early part of World War II, the company’s Japanese market remained high, but as the war progressed there was less and less food to eat, and consequently the demand for soy sauce decreased. By the end of the war, the company’s production facilities in Noda had almost come to a complete halt. The postwar years were harsh ones for the entire Japanese population. Food shortages, lack of fuel, and a ruined economy contributed to years of privation. However, with the help of the United States and other countries, Japan slowly rebuilt its country and economy.

Postwar Expansion

Kikkoman revived its fortunes along with the rest of Japanese business in the late 1940s. By the early 1950s the company was selling large amounts of soy sauce and other seasonings both to the domestic market in Japan and to the new burgeoning markets around the Pacific Rim. In the Asia-Pacific region, countries including Australia, New Zealand, Malaysia, Taiwan, and Korea began to open their doors to such Japanese companies as Kikkoman. Within a very short time, Kikkoman’s soy sauce was used on many different kinds of food, including fried noodles, fried rice, barbecued beef, roasted lamb, fish, fowl, and the entire range of vegetables. Chefs in those countries began to notice how soy sauce awakened the flavor of food, and soon the popularity of the product had spread across the Pacific Ocean to the United States.

In 1957, the company took a big step in its international development by establishing Kikkoman International, Inc., in San Francisco, California. The company’s first subsidiary outside of mainland Japan, Kikkoman International was a marketing operation that helped popularize soy sauce in the United States. Although interest started slowly, soy sauce soon found its way into the recipes of chefs at glamorous restaurants as well as into common lunchtime meals. Soy sauce began to be used on distinctly American cuisine such as hamburgers, Caesar salads, and barbecued baby pork ribs. As its presence in the United States grew, and its share of the food seasonings market increased, Kikkoman began to introduce other items such as teriyaki sauce and tofu in order to stir Americans’ imaginations. By the end of the 1950s, the company was firmly established on the West Coast of the United States, and sales of its products were increasing rapidly.

By the 1960s, Kikkoman Corporation was ready to initiate a major expansion program in both the domestic and international markets. In 1962, the company created Tone Coca-Cola Bottling Company, Ltd., a soft drink bottling company located near Tokyo. This venture signaled the company’s entry into a market not directly related to soy sauce and food seasonings. In one of its most important decisions, Kikkoman arranged to produce and market a number of Del Monte products for the Japanese market. The first of these items included a variety of Del Monte juices and tomato products. Kikkoman’s advertising campaign for Del Monte products caused the brand to become a household name throughout the Japanese islands. In 1964, Kikkoman formed Mann’s Wine Company, Ltd., for the purpose of producing and distributing its own wine labels in Japan. To complement the formation of this company, management at Kikkoman also created a laboratory in order to develop sophisticated technology that would allow the use of domestically grown grapes to produce distinctive and unique Japanese wines. In addition, Mann’s Wine Company began to import various brandy and champagne labels to market for domestic consumption. The decade ended on a high note when Kikkoman invested in the Japan Food Corporation, a large trading firm that provided greater access to overseas markets.

Company Perspectives:

The ancient origins of soy sauce are shrouded in the mists of Asia’s culinary history; yet for many, today’s soy sauce brings only one name to mind: Kikkoman.

The 1970s witnessed a continuation of the policies set by the company during the 1960s. The ever-increasing demand for its products led Kikkoman to design and construct its own U.S.-based manufacturing facility. Located in Walworth, Wisconsin, in the heart of the Upper Midwest, the plant began making soy sauce and other food products in 1972. During the same year, Kikkoman initiated its operation of a chain of restaurants located in major cities across West Germany. Named Kikkoman Daitokai (Europe) GmbH, the venture garnered immediate popularity. Kikkoman Daitokai was the company’s entry into the restaurant business, and, since revenues were increasing rapidly, management decided to open a chain of similarly styled restaurants in Japan. The Colza restaurant chain began operating in 1974 in Tokyo, specializing in teppanyaki —prepared grilled foods—and the Kushi Colza restaurant chain opened during the same year, specializing in vegetables and various meats heated on skewers of bamboo. This style of food, called kushiyaki, is one of the most popular in Japan. Since the restaurant chain within Germany had performed so well from its opening in 1974 through 1979, the company established Kikkoman Trading Europe GmbH in Dusseldorf to take advantage of the growing demand for Japanese products such as soy sauce.

Kikkoman’s markets in the Asia-Pacific region grew in importance during the 1980s. The use of so many different kinds of food seasonings in countries such as Korea, China, Malaysia, and Australia led the company to establish a production facility in Singapore, called Kikkoman (S) Pte. Ltd., in 1983. As consumer demand continued to grow, the company added a fully automated plant located in Chitose, Japan. Both the facility in Singapore and the one in Chitose made products for the Asia-Pacific region. The European arm of Kikkoman’s operations also expanded during the 1980s. The company grew its restaurant business by creating Kikkoman Restaurants S.A., a subsidiary based in Switzerland.

Perhaps the most important development during the 1980s was the company’s commitment to laboratory research and development. Kikkoman established a state-of-the-art research facility that would remain on the cutting edge of technological sophistication in the food industry. Kikkoman’s laboratory focused on applying biotechnology and enzymology to create new seasonings and foods. One of its most significant achievements included the improvement of a proprietary microorganism employed in the production of soy sauce. Other accomplishments were just as impressive. Scientists were able to create an enzyme that produced gallic acid, normally used within the semiconductor and pharmaceutical industries. Initially created for industrial production, this enzyme developed into one of the company’s most lucrative commercial products. Company researchers were also the first to isolate luciferase and produce it for industrial use. Luciferase is an enzyme that enables fireflies to glow, and scientists at Kikkoman’s laboratory used it to detect various microorganisms in water and food. Luciferase also found commercial applications in hospitals and in the semiconductor industry. Another research success involved the development of the Oretachi orange, a fruit that is resistant to cold temperatures. Based on cellfusion techniques, this knowledge was exported by Kikkoman to help orange growers around the world.

International Growth in the 1990s and After

In the 1990s, Kikkoman continued to expand its international operations. The company purchased the perpetual marketing rights for the Del Monte brand label covering the entire Asia-Pacific region, except for the Philippines. After this agreement was reached in 1990, the company made a concerted effort to increase sales throughout the region. During the same year, Kikkoman entered into a joint venture and established President Kikkoman, Inc., a soy sauce production facility based in Taiwan. The company also formed Kikkoman Trading (S) Pte. Ltd., a subsidiary that marketed products made in both Japan and Singapore, in addition to the whole line of Del Monte products, to the countries around the Pacific Rim. In 1992, Kikkoman Australia Pty. Limited was formed to take advantage of the market demand in Australia and New Zealand. This Australian subsidiary was able to help make Kikkoman’s soy sauce the highest selling oriental food seasoning ingredient in the country.

International growth was particularly important to Kikkoman as its domestic market stagnated. The bubble that had sustained the Japanese economy through the 1980s had burst, and the country was plagued by a long recession throughout the 1990s. Domestic consumption of soy sauce was not burgeoning, and Kikkoman needed to find new products and new markets. In 1995, the company gained a new president and CEO, Yuzaburo Mogi. Mogi was an outspoken businessman who was also vice-chairman of Japan’s Association of Corporate Executives (Keizai Doyukai) and chairman of the Committee on Infrastructure for New Industries. He spoke in front of the World Economic Forum in Davos, Switzerland, in 1997 about topics thought unusual in a Japanese corporate leader: taking risks, innovating broadly, deregulating the Japanese economy. Mogi railed against the sometimes stultifying management style of Japanese companies, and he converted Kikkoman’s top executives to an incentive-based pay system in 1996. Mogi struggled to bring more products to market, and to do it faster. The company investigated ways to invigorate Japan’s soy sauce market by developing brand extensions such as a deluxe soy sauce and a new sauce for beef, which was growing in popularity. But markets outside of Japan seemed to be the company’s best bet.

Key Dates:

1917:: Eight soy sauce producers band together to form Kikkoman Corporation.
1957:: Kikkoman International, Inc. is established in San Francisco.
1962:: The company begins bottling Coke soft drinks in Japan.
1964:: Mann’s Wine Company is formed.
1972:: Kikkoman opens soy sauce production facility in Walworth, Wisconsin.
1990:: The company buys the Asian arm of Del Monte.

Kikkoman enjoyed a strong presence in the United States, where its only significant competitor was La Choy, a chemically processed soy sauce. In the mid-1990s, Kikkoman changed its U.S. advertising agency. Eventually the San Francisco agency Foote, Cone & Belding put out a series of animated television advertisements which aimed to reach a mainstream audience. The thrust of the messages was how easy it was to cook with Kikkoman sauces, and the animated spokesperson was notable for not appearing to be Japanese. Kikkoman also upped its production capability in the United States, breaking ground for a new plant in Folsom, California, in 1997. The Folsom plant was designed to serve the Western United States and the Canadian market. That same year, Kikkoman began building a soy sauce plant in the Netherlands to serve its European market.

The company also continued its biotechnology research. After Kikkoman purchased Del Monte’s Asian business in 1990, the company began research into new tomato varieties. Kikkoman researchers evolved a new method of inoculating tomato plants against a common virus, and developed hardier and juicier tomatoes. Kikkoman also continued to develop and market enzymes for industrial use. By 1997, the company had a stable of 12 enzymes it sold to other food manufacturers, laboratories, and cosmetic manufacturers. Kikkoman also developed soy-based pharmaceuticals, such as the estrogen product Isoflavon.

By 1999, the company was enjoying strong growth in its U.S. market. Approximately 50 percent of its operating profits for the first half of 1999 came from the United States. But other Japanese companies were attracted to the hot American market as well. The Yamasa Corp. and the San-J Corp. both began producing soy sauce in the U.S. in the 1990s. Kikkoman, which had about 50 percent of the U.S. soy sauce market, faced losing market share to these companies. Kikkoman also competed with U.S. firms such as Nabisco and Lawry’s over condiments and marinades. In 2000, Kikkoman launched a new, $7 million advertising campaign in the United States, again demonstrating how easy it was to cook with Kikkoman products. The company also began cross-promoting its sauces with Reynolds brand aluminum foil and with Hefty brand food storage bags. Sales for 2000 were over $2.8 million, a surge of more than 30 percent over 1999. Net income rose only slightly.

Principal Subsidiaries

Kikkoman Ajinomingei Co., Ltd.; Kikkoman Business Development Inc.; Kikkoman Restaurant, Inc.; Mann’s Wine Co., Ltd.; Manns Wine Pub Co., Ltd.; Nippon Del Monte Corporation; Pacific Trading Co., Ltd.; Seishin Corporation; Sobu Butsuryu Co., Ltd.; Sobu Service Center Inc.; Tone Coca-Cola Bottling Co., Ltd.; Japan Food Corp. (Aust) Pty. Limited; Japan Food Canada Inc.; Japan Food (Hawaii), Inc.; JFC Hong Kong Limited; JFC International Inc.; Kikkoman Australia Pty. Limited; Kikkoman Daitokai (Europe) GmbH; Kikkoman Foods, Inc.; Kikkoman International Inc. (USA); Kikkoman Restaurants S.A.; Kikkoman (S) Pte. Ltd.; Kikkoman Trading Europe GmbH; Kikkoman Trading (S) Pte. Ltd.; President Kikkoman Inc.

Principal Competitors

Yamasa Corp.; San-J Corp.

Kikkoman Corporation

views updated May 17 2018

Kikkoman Corporation

1 -5 Kanda Nishiki-cho, Chiyoda-ku
Tokyo 101
Japan
(3) 3233-5605
Fax: (3) 3233-5604

or
Kikkoman International, Inc.
50 California Street
Suite 3600
San Francisco, California 94111
U.S.A.
(415) 956-7750
Fax: (415) 956-7760

Public Company
Incorporated: 1917
Employees: 4,500
Revenues: Y 215 billion
Stock Exchange: Tokyo
SICs: 2099 Food Preparations; 2085 Distilled& Blended
Liquors; 2035 Pickles, Sauces& Salad Dressings; 2087
Flavorings, Extracts& Syrups

Kikkoman Corporation is the world’s largest and most famous producer of soy sauce, yet the company has not been merely a single-product business. Kikkoman produced and distributed Manns Wine, one of the most popular labels in Japan, made health foods such as vegetable juices and brown rice under the Del Monte brand label, owned and operated the Colza restaurant chains along with the Nakanakaya chain of pubs, and also ran a wine garden in the heart of downtown Tokyo. The company is well known for its biotechnology research and turning laboratory results in highly successful commercial products. Pioneering efforts in the cultivation of microorganisms, genetic engineering, and the testing of food products has enable Kikkoman to grab hold of a significant portion of the market within the food industry.

Kikkoman Corporation not only maintained the traditional manner of making soy sauce but also continued the historical method of careful atmospheric and temperature control that enables the brewing processes to take place. In the old days, master brewers took extensive precautions in brewing the soy sauce and spent long hours monitoring its progress. Buckets known as kakioke and paddles called kaibo provided these brewing experts with all they needed to control the entire process. After four centuries, the quality-control process has been refined through the development and cultivation of microorganisms that make production much more efficient.

Kikkoman revived its fortunes along with the rest of Japanese business in the late 1940s. By the early 1950s the company was selling large amounts of soy sauce and other seasonings both to the domestic market in Japan and to the new burgeoning markets around the Pacific Rim. In the Asia-Pacific region, countries like Australia, New Zealand, Malaysia, Taiwan, and Korea began to open their doors to Japanese companies like Kikkoman. Within a very short time, Kikkoman’s soy sauce was used on many different kinds of food, including fried noodles, fried rice, barbecued beef, roasted lamb, fish, fowl, and the entire range of vegetables. Chefs in those countries began to notice how soy sauce awakened the flavor of food, and soon the popularity of the product had spread across the Pacific Ocean to the United States.

In 1957, the company took a big step in its international development by establishing Kikkoman International, Inc., in San Francisco, California. The company’s first subsidiary outside of mainland Japan, Kikkoman International was a marketing operation that helped popularize soy sauce in the United States. Although interest started slowly, soy sauce soon found its way into the recipes of chefs at glamorous restaurants as well as into common lunchtime meals. Soy sauce began to be used on distinctly American cuisine such as hamburgers, Caesar salads, and barbecued baby pork ribs. As its presence in the United States grew and its share of the food seasonings market increased, Kikkoman began to introduce other items such as teriyaki sauce and tofu in order to stir Americans’ imaginations. By the end of the 1950s, the company was firmly established on the West Coast of the United States, and sales of its products were increasing rapidly.

The 1970s witnessed a continuation of the policies set by the company during the 1960s. The ever-increasing demand for its products led Kikkoman to design and construct its own U.S.-based manufacturing facility. Located in Walworth, Wisconsin, in the heart of the Upper Midwest, the plant began making soy sauce and other food products in 1972. During the same year, Kikkoman initiated its operation of a chain of restaurants located in major cities across West Germany. Named Kikkoman Daitokai (Europe) GmbH, the venture garnered immediately popularity. Kikkoman Daitokai was the company’s entry into the restaurant business, and, since revenues were increasing rapidly, management decided to open a chain of similarly styled restaurants in Japan. The Colza restaurant chain began operating in 1974 in Tokyo, specializing in teppanyaki-prepared grilled foods, and the Kushi Colza restaurant chain opened during the same year, specializing in vegetables and various meats heated on skewers of bamboo. This style of food, called kushiyaki, is one of the most popular in Japan. Since the restaurant chain within Germany had performed so well from its opening in 1974 through 1979, the company established Kikkoman Trading Europe GmbH in Dusseldorf to take advantage of the growing demand for Japanese products such as soy sauce.

Kikkoman’s markets in the Asia-Pacific region grew in importance during the 1980s. The use of so many different kinds of food seasonings in countries such as Korea, China, Malaysia, and Australia led the company to establish a production facility in Singapore, called Kikkoman (S) Pte. Ltd., in 1983. As consumer demand continued to grow, the company added a fully automated plant located in Chitose, Japan. Both the facility in Singapore and the one in Chitose made products for the Asia-Pacific region. The European arm of Kikkoman’s operations also expanded during the 1980s. The company expanded its restaurant business by creating Kikkoman Restaurants S.A., a subsidiary based in Switzerland.

Perhaps the most important development during the 1980s was the company’s commitment to laboratory research and development. Kikkoman established a state-of-the-art research facility that remains on the cutting edge of technological sophistication in the food industry. Kikkoman’s laboratory focuses on applying biotechnology and enzymology to create new seasonings and foods. One of its most significant achievements includes the improvement of a proprietary microorganism employed in the production of soy sauce. Other accomplishments are just as impressive. Scientists have been able to create an enzyme that produces gallic acid, normally used within the semiconductor and pharmaceutical industries. Initially created for industrial production, this enzyme has developed into one of the company’s most lucrative commercial products. Company researchers were also the first to isolate luciferase and produce it for industrial use. Luciferase is an enzyme that enables fireflies to glow, and scientists at Kikkoman’s laboratory have used it to detect various microorganisms in water and food. Another recent research success involves the development of the Oretachi orange, a fruit that is resistent to cold temperatures. Based on cell-fusion techniques, this knowledge is being exporting by Kikkoman to help orange growers around the world.

In the 1990s, Kikkoman continued to expand its international operations. The company purchased the perpetual marketing rights for the Del Monte brand label covering the entire Asia-Pacific region, except for the Philippines. Since this agreement was reached in 1990, the company has made a concerted effort to increase sales throughout the region. During the same year, Kikkoman entered into a joint venture and established President Kikkoman, Inc., a soy sauce production facility based in Taiwan. The company also formed Kikkoman Trading (S) Pte. Ltd., a subsidiary that markets products made in both Japan and Singapore, in addition to the whole line of Del Monte products, to the countries around the Pacific Rim. In 1992, Kikkoman Australia Pty. Limited was formed to take advantage of the market demand in Australia and New Zealand. This Australian subsidiary has been able to help make Kikkoman’s soy sauce the highest selling oriental food seasoning ingredient in the country.

From a relatively small regional business, Kikkoman Corporation has grown into one of the most successful of all the multinational organizations. The company’s organizational structure, cost-effective production methods, research and development commitment, and uncanny ability to take advantage of new food industry markets should be a case study for any student pursuing a master’s degree in business administration.

Principal Subsidiaries

Kikkoman Ajinomingei Co., Ltd.; Kikkoman Business Development Inc.; KMC Co., Ltd.; Kikkoman Restaurant, Inc.; Mann’s Wine Co., Ltd.; Manns Wine Pub Co., Ltd.; Nippon Del Monte Corporation; Pacific Trading Co., Ltd.; Seishin Corporation; Sobu Butsuryu Co., Ltd.; Sobu Service Center Inc.; Tone Coca-Cola Bottling Co., Ltd.; Japan Food Corp. (Aust) Pty. Limited; Japan Food Canada Inc.; Japan Food (Hawaii), Inc.; JFC Hong Kong Limited; JFC International Inc.; Kikkoman Australia Pty. Limited; Kikkoman Daitokai (Europe) GmbH; Kikkoman Foods, Inc.; Kikkoman International Inc.; Kikkoman Restaurants S.A.; Kikkoman (S) Pte. Ltd.; Kikkoman Trading Europe GmbH; Kikkoman Trading (S) Pte. Ltd.; President Kikkoman Inc.