Kikkoman: Market Maturity, Globalization, Diversification

Topics: Soy sauce, Kikkoman, Tofu Pages: 13 (2782 words) Published: March 9, 2011
Shoyu (soy) had come to Japan with the arrival of Buddhism, a teaching that turned Japanese from meat based to vegetable based flavorings. It was brought by a Japanese Zen Buddhist who studied in China. Noda became a major center for shoyu manufacturing in Japan because of its rich agricultural kanto plain and strategic location. The Mogi family was the one who began brewing shoyu in Noda and has maintained an exceptional quality of shoyu for almost a century. Another Noda family who is very active in the shoyu industry was the Takanashi family who eventually became interrelated to the Mogi family through marriage. During the early years, Japan’s shoyu industry distributed their product in two ways: selling directly to the household or by wholesaling. The wholesales formed alliances that eventually took control on prices, inventory, and distribution of shoyu that gave them a monopolistic power. This led the Mogi and Takanashi family in taking a step to counteract this dominance. During 1910, there were thousand known shoyu makers that led to consolidation and large batch processing of shoyu. By the year 1918, Noda Shoyu Co. was founded by the joint effort of Mogi and Takanashi family as a reaction to the market upheaval cased by the World War I. It was also in 1910 that Noda City’s brewers were introduced overseas when they were selected to appear in a public relation publication. In 1930, Noda Shoyu Company has already exported 10% of its output. The post World War II period brought a number of societal changes to Japanese society. Noda Shoyu Company decided to shut down all its operations abroad. It also issued publicly traded stock to meet the need for capital which reduced family ownership in the company. During this time, Japan began to market more aggressively in Japan which resulted to company’s market share rose sharply. The company also diversified its product that led the Research and Development expertise to different activities in biotechnology and product. Company’s diversification also included venture to market Del Monte product in Japan. By 1964, the company officially changed its name to Kikkoman Shoyu and became Kikkoman Corporation in 1980. When Japan’s consumption began to decline, Kikkoman decided to give focus on its market by exporting their products. In 1957, Kikkoman International Inc. was incorporated in San Francisco to serve as the marketing and distribution center for its product in the United States. High transportation cost and various import/export restrictions and tariff gave Kikkoman the idea of establishing a manufacturing plant In the United States, which was opened in 1970 at Walworth, Wisconsin despite of high labor cost. This manufacturing plant was the first Japanese investment in production facility in the United States after World War II. The plant opened with only two products and fifty employees and has expanded eight times until 1995 with 18 variety of products produced. Kikkoman has two major U.S. competitors which are: Chung King and LaChoy, both used hydrolyzing vegetable protein which was faster and less expensive than the fermentation used by Kikkoman. Nevertheless, Kikkoman managed to outsell these two companies and positioned itself as the leading soy sauce company for almost two decades. But Chung King and LaChoy revved their market efforts under new ownership allowing them to lead the Oriental food category. Kikkoman also opened a manufacturing facility which supplied soy sauce to Australia and Europe, and in Singapore both in the year 1983. It also planned to enter China and other Asian countries as those offered various opportunities. As the world continuously change in taste preference and dietary needs, Kikkoman was confronted with a number of challenges in the global market in the latter part of the 1990s. The company experienced a continuous drop on their market share from 1983 in its homeland. In 1996, analysts noted the company’s slow sales...
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