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World Development Vol. 28, No. 3, pp. 487512, 2000

2000 Elsevier Science Ltd. All rights reserved
Printed in Great Britain
0305-750X/00/$ - see front matter

PII: S0305-750X(99)00139-4

Food Firms and Food Flows in Japan 194598

MARY G. McDONALD *
University of Hawaii, Honolulu, Hawaii, USA
Summary. Japan's food capitals in food processing, retailing, and services have grown to rank
among the world's largest companies in three stages over the past 50 years. In each stage, rms have
increased the import content of their products and expanded their interdependencies with foreign
rms. This paper traces the growth and survival strategies of four rms: Ajinomoto, Kikkoman,
Kirin Brewery, and Nissin Food Products. Production abroad for markets abroad is not a new
trend, but is more globally extensive in recent years. 2000 Elsevier Science Ltd. All rights
reserved.
Key words Asia, Japan, food, agriculture, rms, restructuring

1. INTRODUCTION
Because the hyphenated term ``agro-food''
disciplines our thinking to linear stories about
the ow of commodities from farm to dinner
table, the question of agro-food restructuring in
Japan is often one of widening streams of food
imports from producers in several exporting
countries (Ufkes, 1993). Success in such
accounts seems to be on the side of the foreign
shores now feeding Japan, but we know little
about the food capitals linking these imports
with Japanese consumers, or of their success in
their own right. This paper examines the ways
in which Japanese food capitals have both
survived and helped create the increasing
globalization of Japans food market. Japanese
food capitals are seen as the primary agents
linking oshore products with Japanese
consumers. They adopt food processing and
food retailing strategies that are both competitive and cooperative with foreign interests, and
thrive on both. They have pioneered Japans
global reach for oshore production bases and
consumer markets, even in advance of other
manufacturers. They have sent a ripple of
easternization in food investments and food
products over the globe, as a counterow to the
general stream of new foods entering Japan.
The multiple strategies of food rms themselves
have turned the food ``chain'' into a more
complex web of relations among wholesalers,
processors, retailers, and restauranteurs.
Japans postwar food supply has been eectively split into a shrinking domestic agriculture
and an import-dependent food supply, in what
487

McMichael and Kim (1994) call Japans ``bifurcated food regime.'' Changes both in the
domestic sector and in the import stream have
followed a continuous trend in which it is hard
to argue clear watersheds or reversals (Goodman and Watts, 1994). Yet the expansion of
food capitals to oshore sources might be seen
in three stages that organize the chronology of
this study. The rst period after 1945 was one
of expanding staple imports as supplies for
primary processors in Japan. The second was a
period in which food rms broadened product
and market diversity in foods and food services,
often jointly with foreign rms. In the third
period, since 1986, many rms have leapt
oshore to organize fresh, frozen, and processed foods for the Japanese market, and to
manufacture abroad for markets abroad.
Although this last trend of widening imports
has been ``by no means good for Japanese
agriculture'' (Kada, 1996), it has not meant the
demise of Japans food capitals. Japanese rms
still feed Japan. They have remained the
exporters of food from foreign shores into
Japan, the shippers, the wholesalers, the
builders of refrigeration and processing plants,
the packagers of processed foods and beverages, the distributors, the supermarkets, the
fast food and the slow food restauranteurs.
These capitals have focused inward on the

* The

author thanks Susan J. Thompson, Tadlock

Cowan, Mark Selden, Philip McMichael, and two
anonymous reviewers for their generous assistance and
improvements to this paper.

488

WORLD DEVELOPMENT

Japanese market, but now increasingly feed

foreign consumers. They have found prots
and technologies in links to foreign food rms.
Some have cooperated in the entry of foreign
food rms into Japan, while some have developed competitive alternatives to foreign foods.
This paper examines these changes through the
strategies of food rms in their changing
contexts, with particular attention to four food
processors: Ajinomoto, Kikkoman, Kirin
Brewery and Nissin Food Products. Data on
the market changes and rms have been
assembled for this study from statistical sources, news reports, company annual reports,
company histories, and analyses of food trends
by Japanese academics.
Japans industrial economic growth has been
accompanied by the rise of industrial foods,
produced by increasingly scientic, mechanized, energy-intensive methods, and marketed
as regional and national wage goods. Demographic changes and the eating habits of the
Japanese people have boosted and constrained
the sales of various foods over time. Although
per capita calorie consumption in Japan
remains lower than in Europe or the United
States, Japan encompasses a huge food economy serving quality-conscious consumers.
Technology and innovation have been pushed
by producers and accepted by the public. As in
other industrial countries (Goodman and
Redclift, 1991), consumption of processed
foods and convenience foods has grown together with the quickening pace of life and rising
labor force participation.
This industrialization has produced a polarization between the few food capitals that grew
into large corporations, and the many that
remained small and local in scale. This widening gap has left continuous policy tensions in
food production, processing, and retailing. In
the past 50 years, a heavy regulatory hand has
mitigated the shakeout of small capitals, mainly
to avoid political backlash from locally inuential small farmers, family-scale food processors, and small shopkeepers. State regulation of
agricultural production, imports, commerce,
industry, land, store size and opening hours,
has tried to bridge conicting demands from
large and small enterprises. Food capitals have
strategized to take advantage of these regulations, to circumvent them, and to respond to
the steadily changing policy environment.
The result has been the increasingly complex
and diverse map of linkages between local
food capitals and global markets. As Japans

external food sourcing has exploded in many

directions with the conclusion of the GATT
Agreement on Agriculture at the end of the
Uruguay Round (see McMichael in this issue),
the Japanese food web has become denser with
new rms, new alliances, new production
bases, new products, and new services, all
seeking control of food consumption inside
and outside of Japan. The high rate of food
imports into Japan does mean a high dependence upon foreign producers in one sense, but
Japanese food capitals can be seen struggling
to maintain a place among the worlds food
industries.
The fact that the food system of Japan is
increasingly disengaged from the domestic farm
sector is obvious at every turn, despite the
remaining protections surrounding rice and the
persistence of farmers producing regional
specialties (Sakamaki, 1996b). Imports of
foodstus in 1996 totaled 5,523,398 million yen,
about US$52 billion, more than Japan spent on
imported oil (Statistics Bureau, 1998, pp. 424
425). Agricultural self-suciency which was
73% of calories in 1965 was only 37% in the
poor harvest year of 1993, and was 42% in 1995
(N^
orin T^
okei Ky^
okai, 1996). Even vegetables,
100% domestically grown in 1970, were only
85% self-supplied in 1995 (Statistics Bureau,
1998, p. 274). Land cropped by domestic agriculture has fallen from eight million to ve
million hectares, while land used abroad for
food imports has risen from three million to 12
million hectares during 196092 (Shokury^
o
Hakusho, 1996, p. 19). The gross value of
domestic agricultural production was the same
in 1996 as it was in 1980 (Statistics Bureau,
1998). The Japanese farmers share of the nal
food budget was 41% in 1960, but only 21% in
1990. Food processors share of the food
budget grew during 196090, and remains
slightly over one-fourth of consumer food
spending. The real growth in the food business
was in food service establishments, whose share
of nal food spending rose from 6% to 19% in
the same 30 years. Food retailing saw the
expansion of 24-hour convenience stores, which
were only 5% of stores and sales in 1982, but
27% of stores and 23% of sales by 1994. Clearly
the agriculture end of the food stream within
Japan has seen a relative decline, while food
capitals in the secondary and tertiary sectors
have managed to grow. These two trends have
been accelerated in the environment of the
strong yen and Japans market liberalization in
the 1990s.

FOOD FIRMS AND FOOD FLOWS

2. FOOD INDUSTRIES IN THE

NATIONAL FOOD SYSTEM 194570
In one sense, agro-food restructuring has
been a continuous concomitant of national
development from the dawn of Japans history.
Ancient adoptions from abroad, ``domestication'' of foreign foods into a national diet, and
innovations in processing literally fed the
expansion of commerce. Rice, soybeans, and
tea came from the Asian continent. Salt from
the Inland Sea was an early trade good
throughout Japan. Salted and dried foods
supplied armies, road travel, and urban population growth in medieval Japan. New foods
such as pan (bread) arrived with the Portuguese
and the Dutch in the sixteenth century. Rice
markets and sh markets served castle towns
and port cities, while local preserves and
confections grew into regional specialties.
``Protoindustrial'' food processors ranged from
family-scale workshops serving neighborhoods
to large breweries making sake and miso for
regional distribution. From the inception of
trade at the treaty ports in the 1850s and 1860s,
some domestic farm products such as sugar and
cotton suered with the ood of cheaper
imports, while others became important foreign
exchange earners, such as tea, silk, shery
products, reed mats, and mikan tangerines.
Nineteenth century convenience foods such as
freeze-dried tofu helped households devote
more time to wage work in the widening silk
economy (Wigen, 1995). Pre-packed lunches,
bento, long available to foot trac on the major
roads, moved to the rail stations to fuel the new
mobility on the expanding railroad lines.
Japan rapidly adopted and mastered industrial food processing technologies, and industrial food processing grew alongside other
factory-style industries in the late 19th and early
20th centuries. Japan began to identify itself to
the world through foods which expressed its
national culture; Kikkoman soy sauce won
honors at the Vienna World Exposition of 1873
(Fruin, 1983). Food processors were among the
rst industrialists to establish marketing branches overseas. Ajinomoto opened its New York
oce in 1917 and oces throughout Asia soon
thereafter. In reciprocal fashion, Japan
appeared to be a promising market for the
earliest Western multinational food corporations. Nestle of Switzerland opened an oce in
Yokohama in 1913, moved to Kobe in 1922, and
established Nestle Japan Ltd. in Kobe in 1933
(T^
oy^
o Keizai Shinposha, 1997b).

489

In 1945, Japans food processing factories in

Korea, Taiwan, and Manchuria, collapsed
back into the home territory. The cosmopolitan
history of Japans food culture was downplayed, and attention to rice production helped
rehabilitate Japanese identity (Edwards, 1991).
Japans shortage of foreign exchange, isolation
from Asian neighbors and distance from world
markets in 1945 made food self-suciency an
urgent postwar goal. Japan was over 90% self
sucient during 195060 (Nihon N^
ogy^
o
Nenkan, 1996, p. 648).
In the chaotic aftermath of the war, the
production and consumption of food in Japan
was reorganized mainly by households: small
farms, small food processors, small retailers,
and home-based preparation of meals for the
family. Many of these functions might have
become reconcentrated quickly, but deliberate
policy interventions constrained the ways in
which food capitals could operate. Prior to the
war, nonfarm capitals such as millers, brewers
and trading companies had enjoyed considerable freedom in domestic farm nance,
commodity circulation, and overseas trade.
These corporations found themselves after 1945
the object of reformist measures that kept them
at bay from the Japanese countryside. Farmland ownership, cultivation rights, trade in
inputs and outputs, as well as nance, were
now solely in the hands of small landholders
and their cooperatives (McDonald, 1997).
Industrialists and merchants could procure
domestic farm products and sell commercial
farm inputs only via agreements with the
farmers cooperatives. The bifurcation of
Japans food system dates from this settlement,
in which the farm cooperative would broker
domestic farm products, and processors wanting alternatives would have to procure them
from outside Japan, to the extent that import
quotas and taris would allow. Conned to
purchasing in this regulated environment in the
late 1940s, industrial food processors nonetheless played a vital role in the reemergence of
postwar industrial production. When the
Tokyo Stock Exchange reopened in May 1949,
several large Japanese food processors were
listed, including Ajinomoto, Kikkoman, and
Kirin Brewery. By 1950, food processing was
about 10% of the value of all industrial shipments in Japan, and has remained so ever
since, about the same proportion as in the
United States. Until 1970, food processing was
Japans single largest intermediate industrial
sector.

490

WORLD DEVELOPMENT

Inputs into food processing factories came

from domestic farms in the 1950s and 1960s,
but the growth of food processing ultimately
depended upon the growth of imports. Japans
expansion of imports up to 1970 was mainly in
wheat, barley, oats, soybeans, hops, azuki,
buckwheat and feeds. Japanese production of
these crops declined steadily both in absolute
and relative terms. The our milling, oil milling
and brewing industries established the pattern
that other food industries would later follow of
substituting lower-cost imported inputs for
higher-cost domestic ones. The state remained
the trader of most grains, thus, costs of inputs
to food processors were standardized, and
taris on imported processed foods protected
their nished products. Imports of wheat our
were banned, assuring millers survival. Grain
self-suciency fell dramatically in the 1960s.
Japan was still 39% self-sucient in wheat in
1960, but remained only 9% so in 1970. Barley
fell from 107% to 34%, soybeans from 28% to
4%, and concentrate feed from 67% to 33%
(Hayami, 1975). Today Japan imports 90% of
its consumption of these grains. Other farm
products and many processed foods, however,
remained protected. In 1962, import restrictions remained on 103 agricultural items.
Restrictions were rst loosened in 196264 on a
set of commodities not produced in Japan such
as coee beans, cocoa beans, wool, lamb, and
lemons (Nihon Sh^
ohisha Renmei, 1993).
Large food processing factories grew most
rapidly in urban and coastal locations. By 1960,
over half the national value of shipments from
food processors was produced in six prefectures, ve prefectures in the urban core plus
Hokkaid^
o. Hokkaid^
o, the sixth-ranked among
these, was the only prefecture processing locally
grown products. The ve urban prefectures,
^
T^
oky^
o, Kanagawa, Aichi, Osaka
and Hy^
ogo,
were processing imported commodities (see
Figure 1). Ports of entry for imported food
were delimited in the 1950s and 1960s by the
location of food inspection stations operated by
the Health Ministry. In 1951 the Occupation
began this inspection system, designating six
sites at which imported commodities were
allowed to enter Japan. Over time, the Health
Ministry expanded the number of ports of entry
to 20: 15 ports and ve airports, all except the
ports of Niigata and Naha located at the
waterfront of large urban industrial zones in
the Pacic belt. The four ports inspecting the
largest volume of foodstus at the end of the
1980s were Yokohama, K^
obe, Nagoya and

T^
oky^
o, together receiving 75% of the volume of
^
imported foods entering the country (Oya,
1989).
Ports became ringed with the silos and
warehouses of trading companies and food
processors receiving imported commodities.
Regional planners made room specically for
food processors at coastal kombinats. When the
Mizushima Kombinat in Okayama Prefecture
was developed by Mitsubishi, planners designated a portion of the port as a food processing
zone across the harbor from the heavy industries. Today a food processing subsidiary of
Mitsubishi Trading Corporation occupies this
site. Nihon Shokuhin Kak^
o is Japans largest
manufacturer of corn products, thanks in part
to investment and technology from the worlds
largest corn processor, CPC International
(T^
oy^
o Keizai Shinposha, 1997b). On Mizushima Harbor, Nihon Shokuhin Kak^
o receives
shiploads of corn to process into starches,
ours, oils, feeds, and sweeteners, for nished
products such as margarine, mayonnaise, and
corn syrup (Nihon Shokuhin Kak^
o, 1989,
p. 189). Secondary food processors who buy
milled commodities from primary processors
are typically located in a second ring inland
from the waterfront.
This corn processor illustrates another
important feature of postwar food capitals, that
the large grain-based processors often sit within
the keiretsu industrial alliances. Two features of
the keiretsu have privileged their aliated food
capitals, lending to their oligopoly status. First,
these capitals were internally networked to the
capital of their bank and to the information and
trade links of the general trading company of
the keiretsu. They could also call upon aliates
in transport and advertising to help them
compete. The second advantage of the keiretsu
food rms was their appointment as state food
agents. The states monopoly function as sole
grain importer was divided among the large
trading houses of the keiretsu, so the general
trading corporations became involved from the
earliest years in organizing food shipments from
their overseas branches to Japan. Food
importing gave the trading houses an advantage
in establishing the large primary processors of
commodities they traded.
Keiretsu rms in food trading, our milling,
sugar rening, corn products, and brewing
became some of the largest food capitals in
Japan (see Table 1). Concentration of production among Western-style food rms quickly
reached much higher levels than among tradi-

FOOD FIRMS AND FOOD FLOWS

491

Figure 1. Cities and prefectures of Japan.

tional processors. In our, instant coee,

macaroni, beer, powdered milk, whiskey, articial avors, curry stock, mayonnaise and
salad dressings, the top four producers
controlled over 90% of production, and the top
10 rms accounted for virtually all of Japans
output in the 1980s. Firms producing traditional foods, however, showed much lower
degrees of concentration. The top 10 producers
of sake made just 20% of Japanese sake, and

the top 10 producers of miso just 31% (Kat^

o,
1989, p. 5). Some independent food processors
did begin to grow into large companies in the
postwar years but depended on the general
trading companies, nevertheless, to distribute
their products. If the trading companies were
not the parent rms, they were the customers,
bankers, and major shareholders of listed
companies, so were indispensable to independent food capitals.

492

WORLD DEVELOPMENT
Table 1. Keiretsu aliated food rmsa

Mitsubishi
Flour
Feed
Corn products
Confectionery
Milk products
Meat
Beer
Beverages
Edible Oil
Related

Tokyo-Mitsubishi Bank; Mitsubishi Shoji Trading Company

Nitto Flour Milling
Nihon Nosan Kogyo
Nihon Shokuhin Kako
Morinaga & Co. chocolates, caramels. Licences Sunkist products. Kanro Co.
Morinaga Milk Products. Ties to Kraft & Emmi (Swiss). Rokko Butter
Nippon Meat Packers
Kirin Brewery
Kirin-Seagram; Kirin Beverage; 3 Coca Colas: Chukyo, Kinki and Fuji
Nisshin Oil Mills; Settsu Oil Mill
Kentucky Fried Chicken; Pizza Hut Japan; Mitsubishi Farm Equip

Mitsui
Flour
Feed
Sugar
Confectionery
Meat
Beverages
Edible oil
Related
Department store

Sakura Bank; Mitsui Bussan Trading Company

Nippon Flour Mills
Nippon Formula Feed
Mitsui Sugar; Taito Company
Joint venture with Lotte Co confectionery in Beijing
Zenchiku
Mikuni Coca-Cola
Honen Oil
Mitsui Forestry
Mitsukoshi Department Stores

Sumitomo
Flour
Meat
Beer
Other beverages
Edible oil
Other foods
Related
Department store

Sumitomo Bank; Sumitomo Trading Company

Shinko Seito
Marudai Food
Asahi Breweries
Nikka Whiskey
Yoshihara Oil Mill
Takeda Food Products
Sumitomo Forestry
Summit Stores

Fuyo
Flour
Feed
Sugar
Meat
Beer
Other beverages
Edible oil
Other foods
Related

Fuji Bank; Marubeni Trading Company

Nisshin Flour Milling
Marubeni Shiryo
Toyo Sugar Rening
Marubeni Livestock and Meat
Sapporo Breweries
Sanyo Coca Cola, Takara Shuzo (sake)
Nikko Oil Mills
Nichirei Foods (frozen foods); Oriental Yeast
Marubeni Reizo (cold storage); Kubota Farm Equipment

DKB group

Daiichi Kangyo Bank; Itochu, Nissho Iwai, Kanematsu, Kawasho Trading

Companies
C. Itoh Flour Mills
C. Itoh Feed Mills
Nippon Beet Sugar Mfg.; C. Itoh Sugar
Meiji Seika; Morozo Ltd.
Meiji Milk Products
Prima Meat Packers
Fuji Oil
Kanematsu Food; Kyowa Hakko Kogyo
Nissan Agricultural Industries; Iseki Farm Machinery
Seibu Department Stores

Flour
Feed
Sugar
Confectionery
Milk products
Meat
Edible oil
Other foods
Related
Department store
a

Source: Dodwell Marketing Consultants (1992) and Ohsono (1995).

Early postwar sourcing of unprocessed

staples was mainly from the United States and
Canada. The trading houses of the keiretsu all
established their US oces about 1950. Their

foreign investment was for the purpose of

securing foods among the other raw materials
they supplied to Japan. The focus of the food
processing capitals remained the Japanese

FOOD FIRMS AND FOOD FLOWS

consumer market. Population growth from 75

million in 1945 to over 100 million in 1970 kept
food processors growing. When industry
observers within Japan debate why there is no
Japanese Nestle, why the biggest Japanese food
capitals remained relatively small and relatively
inward-looking, one answer is that the growth
of the domestic market alone was suciently
large and a sucient challenge to management
skills (Sait^
o, 1992, p. 25).
Food companies from abroad took their
place in Japans food web from the 1950s,
sometimes independently but often in cooperation with Japanese food capitals. Coca-Cola
Japan Co. Ltd. was formed in 1957 as a whollyowned subsidiary of the Coca-Cola Export
Corporation of the US, the worlds largest soft
drink maker. Coca-Cola Japan now sells
ingredients to 17 Japanese-owned bottling
companies in Japan, commanding 90% of the
cola market, 50% of the canned coee market,
thus 30% of the Japanese soft drink market
(T^
oy^
o Keizai Shinposha, 1997b). Pepsi entered
Japan in similar fashion in 1958. The H.J.
Heinz Co. of the United States set up whollyowned Heinz Japan in 1961 to manufacture
bottled foods, seasoning, and frozen foods in
Utsunomiya. Kelloggs asked Ajinomoto to
distribute its cereals, and General Foods
teamed with Ajinomoto in 1954 to produce
instant coee, ground coee, non-dairy creamer
powder, and pet food. Del Monte began to
market tomato products through Kikkoman.
Food capitals during 194570 were growing
and innovating in ways that would win national
mass markets, and a few rm were re-pioneering markets abroad. These trends are illustrated
here with four examples. To take up rms that
might be recognized by Westerners is to select
those that have been winners in the long-term
struggle for growth, atypical in their degree of
success, but illustrative of survival strategies.
Ajinomoto grew at the turn of the century out
of a rm extracting iodine from Tokyo Bay, so
from the outset held interests that bridged the
food and pharmaceutical industries. The rms
research sought to identify the particular
avors in Japanese soups made from dried
bonito akes, shiitake mushrooms, kelp and
tofu. In 1908, experiments with avors led to
the discovery of monosodium glutamate
(MSG), marketed in 1909 as ``Ajinomoto,''
meaning source of avor. The rm grew on the
basis of a handful of products, which it sold in
several countries in the interwar years. Ajinomoto was not formally aliated with any

493

keiretsu, rather it has grown into an acknowledged industrial group unto itself in recent
years. Though Western-style foods remained a
novelty in Japan in the 1950s, Ajinomoto
undertook a joint investment with General
Foods of the United States in 1954 to produce
instant and ground coee, non-dairy cream
powder, and pet food in Japan. Half of
Ajinomoto General Foods is still owned by
Ajinomoto of Japan; the General Foods half
now resides in Kraft Foods within the Philip
Morris Companies (T^
oy^
o Keizai Shinposha,
1997b). Ajinomoto incorporated its US sales
oce in 1956. Ajinomoto expanded on the
Pacic Rim in the 1960s, establishing MSG
plants in Thailand in 1961, the Philippines in
1962, Malaysia in 1965 and Peru in 1969.
Kikkoman, Japans largest soy sauce manufacturer, traces its history as a family rm to
1630. From its location in the farm town of
Noda in Chiba Prefecture, it would ship kegs of
sh^
oyu to the growing market in the nearby city
of Edo (Tokyo). Kikkoman was a dynasty of
various brewing establishments in Noda, and
retains a corporate structure that reads like a
family tree (Fruin, 1983). Because it was a
family-run league unto itself, and because its
product was a traditional food product, Kikkoman remained unaliated with any of the
keiretsu. Ambitious for markets and for brand
recognition, Kikkoman sent samples to various
European world expositions in the late 19th
century and garnered awards still mentioned in
Kikkoman publications. The construction of
the railroads in the early 20th century allowed
Kikkoman to grow into a national brand.
Family scions pioneered soy sauce sales in
Europe and the United States from about 1900,
and introduced Worcestershire sauce to Japan
in 1936. The company built subsidiary plants
throughout Japans Asian colonies in the 1930s.
Kikkoman rebuilt within Japan after the war,
and was among the rst Japanese companies to
resume sales to the United States after the war,
sending soy sauce to Japanese communities in
Hawaii and the Western states. In 1957,
Kikkoman formed its US marketing subsidiary
in San Francisco, California, and in 1968 asked
Leslie Foods in Oakland to bottle soy sauce
shipped from Japan. In 1969, Kikkoman in San
Francisco absorbed JFC, the largest distributor
of Asian food in the United States. Back in
Japan, Kikkoman promoted its soy sauce as an
international food (Fruin, 1983), and introduced new lines of Western foods to Japan.
Kikkoman became the Japanese partner of Del

494

WORLD DEVELOPMENT

Monte Foods in 1954, bought Tone Coca-Cola

Bottling in 1962, began a line of Western wines,
Manns Wines in 1962, and imported US fruits
as Japan Calpak from 1963. Kikkomans reinternationalization rst took the form of a
dense set of links between Japan and the United
States, especially California.
Kirin Beer rst appeared in 1888, after the
Japan Brewery took over the Yokohama brew
house founded by American William Copeland
in 1869. The Occupations Industrial Deconcentration Law broke up the prewar forms of
breweries and established ve independents:
Kirin, Asahi, Sapporo, Suntory, and Orion.
Over time, four of these developed close aliations with various keiretsu; Kirin is a Mitsubishi
aliate. These ve companies produced virtually all of Japans beer until the past three years.
Kirin grew to command about half the national
market in the 1950s (Diamond Company, 1992).
Nissin Shokuhin, or Nissin Food Products, is
today Japans largest noodle maker and is
credited with the instant ramen revolution. This
company had no prewar roots in industrial
capital, but began postwar in the ambitions of
one immigrant noodle maker. Ando
Momofuku moved to the Japanese mainland
from Taiwan in 1933 at age 23, and in the ruins
^
of Osaka
in 1948 he started his own noodle
company. The name of his company, Nissin
Shokuhin, meaning Sino-Japanese Foods,
recalls Andos birthplace in Taiwan and the
Chinese origins of his product.
Andos rst production sites were near the
^
port of Osaka
on salt ats given over to
industries in the late 1940s (Nissin Shokuhin
Kabushiki Kaisha Henshu, 1992, p. 47). Ando
was one of rst to produce noodles on a factory
scale, while most production of Chinese and
Japanese-style noodles remained in family
shops. He innovated with ingredients, mixing,
and drying, and gave Japan the rst instant
ramen in 1958. The general growth of consumer
culture and the growth of Nissins Chikin
Ramen (a chicken-avored noodle soup) reinforced each other in the early period of high
speed economic growth. In 1958, Nissin
produced a total of 300 packages of instant
ramen per day, but in one year increased
output to 3,000 packages per day (Nissin
Shokuhin Kabushiki Kaisha Henshu, 1992,
p. 60). At the time, refrigerators were owned by
9% of households (Nissin Shokuhin, 1992,
p. 63). Televisions were increasing faster than
refrigerators, however, doubling to 1,730,000 in
1959 alone. By 1962 almost half of all house-

holds had a television. Nissin began sponsoring

popular TV quiz shows and The Lone Ranger
(Nissin Shokuhin Kabushiki Kaisha Henshu,
1992, p. 73).
The success of Nissin in the 1960s brought a
steady march of increased automation,
increased production, expanded plant capacity,
and greater output per worker. Capital grew
with an initial public oering on the Tokyo
Stock Exchange in 1963. Nissin expanded and
^
relocated plants in the Osaka
area, then built its
rst Kant^
o plant in Yokohama in 1964. A
production line that required 30 people at the
^
main Osaka
plant, required only 13 people at
the new Yokohama plant. Whereas the old
main plant produced 900 packages of ramen
per worker per day, the new Yokohama plant
produced 4,500 packs per worker per day, for a
daily production of 900,000 instant ramen
(Nissin Shokuhin Kabushiki Kaisha Henshu,
1992, p. 112). The rm also contracted out
production of instant ramen to regional food
processors in smaller city markets and rural
areas. Over the years Nissin has contracted a
dozen local processors for regional production
and distribution (Nissin Shokuhin Kabushiki
Kaisha Henshu, 1992, p. 116).
Nissins success by the late 1960s invited
domestic competition. Noodle manufacturing
grew to consume just as much wheat in Japan
as bread and pasta. At least 170 instant ramen
makers were producing 3.3 billion packages per
year, but Nissins share fell to 20%. Nissin faced
its rst period of restructuring, laying o over
half its workers and investing in even greater
automation. Employment fell to a trough in
1968 of 450 employees. When the company
resumed hiring again after 1968, it recruited
skilled engineers (Nissin Shokuhin Kabushiki
Kaisha Henshu, 1992, p. 138).
In this earliest postwar period of growth in
food industries, food capitals focused mainly
on the large domestic market, imported bulk
grains to supplement domestic sources, and
managed to export a small amount of Japanese
food such as soy sauce to communities of
overseas Japanese. The food path was a relatively direct one from growers to wholesalers to
processors to small grocers to home kitchens.
3. MASS CONSUMERISM, OPENING
DOORS, AND NEW FOODWAYS 197086
About 1970, a new set of circumstances faced
Japanese food rms. Demographic change

FOOD FIRMS AND FOOD FLOWS

boosted consumption. Postwar babies were

forming new households, wages of workers
were improving, and mass consumerism was
booming. The gas range and the electric rice
cooker had become widespread kitchen appliances in the 1960s, and in the 1970s the refrigerator followed. Exchange rate change favored
food importers. The rst postwar rise in the
exchange value of the yen in 1971 lowered the
cost of materials purchased abroad to industries. Following the oil shocks, however, higher
production costs and chaos in world
commodity markets drove prices up. The
threatened US soybean embargo of 1973
prompted Japanese grain and soybean buyers
to diversify their oshore sourcing. Foreign
countries claims to 200-mile exclusive
economic zones changed the geography of
Japanese sh processing. A degree of liberalization helped to allow the food import stream
to widen, but the 1970s thus became a period of
regulatory tension in the ways Japans food
rms could access Japanese and foreign farm
products. Innovations worked toward liberalization in some cases, and toward protections
in other cases. Rice self-suciency had been
achieved, and overproduction became a
perennial problem, yet protections for domestic
rice producers remained a political necessity.
Japans borders opened to more types of semiprocessed foods. Food processors favored the
widening of the import stream if it brought
them cheaper inputs, yet opposed the import of
processed foods that would compete with their
products. Food processors also had to tailor
products to new venues of food sales. Supermarkets proved very attractive to consumers,
but the spread of the large stores would be
limited by new laws protecting small grocers.
Regulatory change shaped a sometimes
contradictory terrain on which Japanese food
capitals could operate. Food capitals were left
to innovate in food products, in site selection,
in new alliances and new forms of food sales.
Dietary change from about 1970 favored the
larger industrial food processors, and direct
food consumption from the Japanese countryside began to fall noticeably. Rice consumption
peaked at 110 kg per person in 1960 then
started its slide toward todays level of half that
amount. Per capita fresh fruit and vegetable
consumption started to decline from 1970
(Yasumura, 1989, p. 223). The foods from
Japans traditional small-scale processors, such
as miso, sh^
oyu and sake, faced declining
consumption. Compared to 20 years earlier,

495

consumers in 1980 ate about half as much

pickled daikon (takuan), mackerel (saba), sh
sausage (kamaboko), and napa cabbage (hakusai) (Kase, 1993). Consumption of wheat and
other grains which had comprised the rst wave
of imports began to level o. Wheat
consumption was 26 kg per person in 1960 and
still only 32 kg in 1990. Japanese consumers
were instead eating more processed foods based
on inputs and feeds owing through the import
stream. By 1980, per person consumption of a
new set of foods stood several times that of
1960: chicken 8.7 times, bacon 6.2, beer 6.1,
pork 5.7, mayonnaise & dressing 4.3, cheese
4.1, margarine 3.8, ham 2.3, sausage 2.1, milk
2.3, oil 2.5, jam 2.4 (Kase, 1993). New technologies of food preserving, packaging, and
freezing brought these foods to homes and
restaurants.
Food processing industries grew. In the three
decades following 1960, employment in food
processing jobs continued to rise by half again
to about 1.2 million workers, while output per
worker increased nine times and the value of
shipments increased thirteen times in current
prices. Food processing jobs became mostly
wage jobs; family-based workshops survived in
apparel and metal working, but fell away from
food processing (Statistics Bureau, 1994). In
1970, the value of food shipments lost its top
position among industrial sectors for the rst
time to transport equipment, which held a slim
lead through the 1970s. In the 1980s the annual
production of both electrical machinery and
transport equipment exceeded food, rising to
levels around 50 trillion yen per year recently,
while food has remained the third-ranking
industrial sector, shipping about 35 trillion yen
per yearor about US$300 billionin food,
beverages, feed, and tobacco (Nihon N^
ogy^
o
Nenkan, 1994, p. 321). Food processors shipments grew to exceed the value of all farm and
shery products produced in Japan, though the
proportion of GDP occupied by both continued to fall.
The food capitals that had established an
oligopolistic position in the early postwar years
continued to grow. The four keiretsu-aliated
beer breweries were the largest food rms in
terms of sales. Ajinomoto grew to be the largest
food processing conglomerate. Yamazaki
Baking grew with the Tokyo population to be
the largest bakery. Snow Brand Milk Products,
originally a cooperative of Hokkaido dairies,
became the largest dairy producer, and Nippon
Meat Packers, a Mitsubishi aliate, the largest

496

WORLD DEVELOPMENT

in meat products. These were the top eight food

processors by the mid-1980s, with sales ranging
from 500 billion yen to over one trillion yen.
With the exchange rate move in 1986 to 120
per US dollar, these rms vaulted into the
ranks of the worlds largest food companies, on
the basis of domestic sales alone in the range of
ve to 10 billion US dollars. One advantage
these rms enjoyed was their power to aord
advertising. By 1986, the food and beverage
industry spent an annual advertising budget of
400 billion yen, larger than that of any other
manufacturing or service sector. Competition
through advertising spending power reinforced
the monopoly position of dominant food
processors (Kishima, 1989, p. 61). Several
companies listed their stock on the Tokyo
Stock Exchange in this period. House Foods, in
business since 1947, listed in 1971, and soon
followed several regional Coca-Cola Bottling
Companies that had been operating for about
10 years. This is not to say that the large
eliminated the small altogether; new rms did
appear. One rising star was Mr. Honjo Masanori, a tea dealer who reasoned in the 1970s
that Japanese consumers would appreciate a
soft drink alternative to sweet cola. Honjo
began putting Japanese green tea into cans
under the name of his tea company, Ito-En.
Canned tea was a hit in 1981, and drew other
beverage makers, even Coca Cola, into selling
cold and hot canned tea.
More foreign food rms found their place in
Japan, often linked to Japanese food processors. In 1970, Yamazaki Bakery linked with
Nabisco to produce crackers and cookies. In
1972, Grith Laboratories Worldwide Inc. of
the United States formed a wholly-owned
subsidiary in Shizuoka to manufacture avorings, colorings, and additives for Japans largest
food processors (T^
oy^
o Keizai Shinposha,
1997a). Welch Foods of the United States and
the distributor Nisshin Tsusho formed an equal
partnership in Welch Foods of Japan in 1976,
to produce juice at a plant in Nagano. PepsiCo
Inc. of the United States established whollyowned Japan Frito-Lay Ltd. in 1977, producing chips and snacks in Ibaraki Prefecture.
Campbell Soup Co. of the United States
established wholly-owned Campbell Japan
Inc. in 1983 to sell vegetable juices (Campbells,
V-8) and confectionery (Pepperidge Farm,
Godiva) (T^
oy^
o Keizai Shinposha, 1997b). By
1986, Japan was the fourth largest market for
Nestle after the United States, France and
Germany, at a time when Switzerland was just

2% of Nestles world market (Sait^

o, 1992, pp.
25, 38).
The continued growth of food processing
took new spatial forms. Automation eliminated
jobs in many large industrial processors,
processors moved to larger sites in a third ring
around metropolitan centers, and spread
production somewhat outward from their
highly concentrated geography. The top six
producing prefectures by 1991 were the same as
in 1960, in rearranged rank order, but instead
of controlling half of all shipments they
produced just 37%. Three prefectures of
Saitama, Chiba, and Ibaraki to the north of
T^
oky^
o grew particularly rapidly from a joint
position of 7% of all food shipments in 1960 to
13% in 1991. This diusion has by no means
occurred in all rural prefectures, but especially
those in the immediate hinterland of Japans
three largest metropolitan cities. Dierences are
dramatic among individual prefectures in the
fortunes of food processors. Food processing
has stagnated in some prefectures along the
Japan Sea such as Shimane Prefecture and
Akita Prefecture, while food processing jobs
more than doubled in Ibaraki Prefecture during
196091. Here I might interject my own
surprise in studying the countryside in recent
years at how little rural Japan has to do with
feeding the country. The productive work of
rural citizens is now mostly in factories making
electronic components and auto parts, while
families farm concurrently to earn a diminishing partial income from rice (McDonald, 1996).
Even rural factories which once processed local
farm products have largely disappeared. In the
town of Nakaniida-machi in Miyagi Prefecture,
I would daily pass the closed premises of sake
breweries and a weaver of rice-straw rope and
bags. One jam maker which had opened 20
years earlier to process locally grown strawberries did survive in the late 1980s only by
importing cheaper blocks of frozen strawberries
from Korea.
While Japans food imports were growing to
become the largest net amount entering any
country, many imports were destined to enter
industrial processing. The foods in which Japan
remained self-sucient, such as rice, potatoes,
vegetables, and eggs, were not bound for any
form of processing (Nihon N^
ogy^
o Nenkan,
1994, p. 322). Rothacher (1989, p. 69) found
only 18% of domestic farm products to enter
into processing industries. Farm policy that
tried to work toward a safe food supply and
equity for rural producers proceeded at odds

FOOD FIRMS AND FOOD FLOWS

with industrial policy that helped food processors rationalize input costs. This divide has
characterized has food policy since the 1970s,
and there has been little articulation across this
divide between food producers and food
processors (Ueno, 1992).
Outward foreign direct investment by food
capitals grew especially to obtain semi-processed inputs for Japanese producers. During
195170, though many food traders were
oshore directing bulk goods back to Japan,
only 91 food manufacturers had establishments
abroad. The October 1969 liberalization of
foreign exchange laws and subsequent rounds
of nancial deregulation broadened the possibility for foreign direct investment (Sait^
o, 1992,
p. 10). Many Japanese food capitals and trading companies were prompted by this deregulation to invest overseas in order to procure
more of their inputs abroad. In response to the
new 200 mile Exclusive Economic Zones on the
seas, shing rms set up processing plants
abroad such as ones opened by Marubeni and
Hokoku Marine Products in Anchorage and
Seattle in the 1970s. A few food capitals
followed tourism to destinations such as
Hawaii, where Japan Air Lines started International In-ight Catering Company in 1971,
and retailer Daiei, Inc. built a supermarket in
1972 and a Japanese restaurant in 1975
(Oriental Economist, 1981, p. 176). Fujiya
invested in restaurant operations in San Francisco in 1972 (Oriental Economist, 1981, p. 179)
Farm machinery makers established sales oces abroad, such as the Kubota-Marubeni
tractor sales oce in Southern California in
1973 (Oriental Economist, 1981, p. 186). Some
developed production bases for their products.
Mitsubishi began rening vegetable oil in
Portland, Oregon in 1973. Morinaga Milk
began producing baby food in San Jose California. These were among rst Japanese
manufacturing companies to produce in the
United States. Part of their quest was also a
longer-term search for management resources
(Sait^
o, 1992, p. 5). The level of foreign direct
investment remained small compared to the size
of the domestic food industry itself, and
compared to the foreign investments of other
sectors. Of Japans total cumulative investment
in manufacturing abroad over 195189 of
US$66 billion, just US$3 billion was in food
industries, under 5% (Sait^
o, 1992, p. 20).
A shift toward Asia began in Japans food
trade and investment in the 1980s (Nihon
Sh^
ohisha Renmei, 1993). Japanese processors

497

established plants in Singapore, Korea,

Taiwan, then in other Southeast Asian nations
and recently in China. These countries became
markets for Japanese processed foods, especially Japanese-produced Western-style products, such as wheat our, instant coee, dried
soup mixes, and canned fruits. These bases
could also provide Asian foods to Japan that
were not among the export oerings of North
or South America, such as kelp, eel, squid,
bream, mushrooms, bamboo, and ginko nuts.
Japanese food processors had to respond to
growing diversity in food retailing and services
in the 1970s and 1980s. Daiei supermarkets,
founded in Kobe in 1957, overtook the annual
sales of Mitsukoshi in 1972 to become Japans
largest retailer. When the state broadened the
wholesale and retail channels of rice in 1971 to
allow supermarkets to sell rice alongside the
small rice dealers, small store owners reacted
with political demands for restraints on the
growth of large stores. The Large-scale Retail
Store Law was passed in 1974, and the spread
of stores with oor space exceeding 1,500
square meters was restrained by state policy.
The law forced large stores to limit business
hours and to observe a closing day each week,
rules which did not govern small shops. In
response, the supermarket chains developed
outlets in the form of convenience stores which
could operate as small shops. In 1973 the large
retailer Ito Yokado licensed the name Seven
Eleven from Southland Corporation in Texas
and began to franchise Seven Eleven stores
around Japan. Large retailers thus positioned
themselves in all three forms in which
consumers might buy groceries: department
stores, supermarkets, and 24-hour convenience
stores. These stores shared purchasing power as
a group, and grew to become retail conglomerates (see Table 2). The Daiei group expanded
Lawson convenience stores, Jusco developed
Ministop, and Seiyu developed Family Mart.
Retailers expanded groups of their own which
could thus compete for the consumer food
budget. Supermarkets and department saw
annual sales growth in the 1970s of between 6%
and 18%, and more modest 4% to 8% annual
growth in the 1980s (Statistics Bureau, 1998,
p. 393).
The most dramatic expansion of food sales
was not in the form of staple groceries, but in
dishes served by restaurants and take-away
food services. Foreign fast food rms were part
of this expansion. Kentucky Fried Chicken
debuted at the Osaka Worlds Fair in 1970, and

498

WORLD DEVELOPMENT
Table 2. Four largest food retail groups in Japana ;b

a
b

Daiei
Department stores
Supermarkets
Convenience stores
Food services
Hotels, resorts
Other foods

Printemps Ginza, Juyujiya

Daiei
Lawson, 5,700
Volks, Captain Cook, Hokka-Hokka-tei, Wendys, 70
Daiei Leisure Land , Yokohama Dream Land, Fukuoka Dome, Sea Hawk Hotels
Daiei Food Service

Ito-Yokado
Department stores
Supermarkets
Convenience stores
Food services
Other foods

Ito-Yokado, 154; Marudai, 4; Maruk^

o, 1; Robinson Japan; Daikuma 24
York-Benimaru, 67; York Mart, 50; Life, 2; Sanei, 7
Seven Eleven Japan , 7,000, 70% of Seven Eleven USA, 5,500
Dennys Japan, 480; Famille, 312; York Bussan, 111
Nihon Nosuisan; I.Y. Foods; York Seika; Kanseien; Day-lee Foods

Saison
Department stores
Supermarkets
Convenience stores
Food services
Hotels, resorts
Other foods

Seibu Dept Store

Seiyu, 200; Seiyu Foods; Food Plus
Family Mart, 3,400
Seiyo Food Systems; Yoshinoya
Hotel Seiyo Ginza; Kyoto Royal Hotel; Intercontinental Hotels
Seiyu Foods; Asahi Industries; Mikasa Coca-Cola

Jusco
Supermarkets
Convenience stores

Jusco Supermarkets
Ministop (640 stores)

Compiled from Ohsono (1995) and Fukuda (1998).

Number number of stores.

joined the Mitsubishi group along with

PepsiCo sister Pizza Hut. Mister Donut and
McDonalds opened in 1971. In 1975, 31% of
consumer food spending was for fresh food, but
by 1985, it was only 22%, and 78% was for
processed and prepared foods (Kase, 1993).
During 197085, the portion of the consumer
food budget that went to the original farm
producers dropped by 14%, but the part that
went to eating out increased by 11% (N^
osei
Jyaanarisuto no Kai, 1990). Meals not selfprepared by the consumer accounted for 23%
of all food consumed in Japan by 1987. This
externalization of cooking and centralization
into industrial kitchens increased the amount of
imported food, including imported processed
food, in the Japanese diet (Yasumura, 1989, p.
237). Foods gaining ground in the import
stream in the 1980s were sh, tomato products,
bean products, tea and coee. New forms of
convenience food retailing and food services
gave the food processing industry new institutional customers, but also added to the
competitive demands on them to include more
innovation and user-end labor savings into
their products. If we follow four food rms into
the 1970s, they can be seen competing in a more
diverse food world of new products and servi-

ces within Japan, and expanding their reach

abroad.
Ajinomoto entered the 1970s by launching
several new products. In 1971, Ajinomoto
introduced the rst instant soup, Hon-Dashi, to
replace the sh stock base of many miso soups
and stews. Ajinomoto began to market
margarine in 1970, frozen foods in 1972, and
coees in 1973. Abroad, the company built
MSG plants in Indonesia in 1972 and Brazil in
1977. Ajinomotos biggest push in the 1970s
was into other amino acids to sell to industrial
processors of foods and drugs. Ajinomoto
expanded its lysine production, a vital component of livestock feeds, to supply expanding
livestock industries in Japan, Europe, and the
United States.
Kikkoman also diversied its products until,
in the early 1980s, soy sauce comprised just
62% of domestic sales (Fruin, 1983, p. 277).
Products in Japan included specialty sauces and
soups, fruit and sweet potato wines, Ragu
brand spaghetti sauce, Del Monte tomatobased products, fruit juices marketed under the
licensed name ``Disney,'' and a new healthconscious low-salt soy sauce. Kikkomans
internationalization remained mainly a matter
of marketing soy sauce in North America,

FOOD FIRMS AND FOOD FLOWS

though in 1972, Kikkoman opened a restaurant

in Germany. Growth of soy sauce sales in
North America prompted Kikkoman to think
of producing sh^
oyu at the source of its raw
materials, in the US midwest. One scion of the
family, Mogi Yuzaburo, a young Columbia
Business School MBA (and now CEO of
Kikkoman) led the construction of Kikkomans
rst US plant in Walworth, Wisconsin, in 1972.
This was a path-breaking step of Japanese
industry into the US heartland. For over a
decade this remained the only foreign soy sauce
brewery of Kikkoman, until construction of a
Singapore plant in 1983.
Kirin Brewery joined the dining-out boom to
encourage beer sales by constructing its own
restaurants. In beer production, state regulation
sustained the oligopoly of Kirin Beer and the
four other beer producers. Licenses were granted only to brewers producing 2,000 kl per year,
keeping new entries out of the brewing business.
Beer prices were decontrolled in the 1960s, but a
can of Japanese beer remained 225 anywhere in
Japan (at 125 yen/dollar $1.80). Taxes long
comprised about half the retail price of beer
(Food & Drink Daily, 1994b), but beyond that,
simple collusion among wholesalers and retailers maintained the unvarying price of domestic
beer. Kirin also sought horizontal integration
with other lines of spirits through a 1972 joint
investment with Seagram. Joseph E. Seagram &
Sons, Inc. of the United States, with Seagramowned Chivas Bros. Ltd. of the UK, and Kirin
Brewery formed Kirin Seagram Ltd. with
respective 50%, 45%, and 5% capital investments to import and distribute the products of
the foreign partners and produce several
domestic whiskeys.
Nissin struggled hard to retain its position as
leading instant noodle producer in 1970, after
the ramen wars of the late 1960s. Kishima (1989,
pp. 6473) credits advertising for the success of
Nissin and four other companies in increasing
their market share from 71% in 1965 to 82% by
1987. National production of instant ramen had
risen from almost nothing in the early 1960s to
4.5 billion ramen per year by 1987. Nissin held
its number one or number two rank in market
share over those years with a continuous heavy
commitment to advertising budgets.
Nissin took its rst international step with
the introduction of instant ramen to the US
market in 1970. Nissin constructed a new plant
in Gardena, near Los Angeles, in 1971. This
subsidiary was capitalized by Nissin Shokuhin
of Japan together with a 25% investment from

499

Ajinomoto, one of Nissins suppliers, and 20%

from one of Nissins wholesalers, Mitsubishi
Sh^
oji. Nissin faced the task of making Americans understand and eat ramen. In its rst
proposal for Food and Drug Administration
approval, Nissin said the product would be
named ``Five Minutes Noodletti.'' The FDA
told Nissin that its noodle recipe did not
contain the ingredients of an authorized US
noodle, so they must label the package Imitation Noodle. Undaunted, Nissin labeled their
rst package ``Five Minutes Noodletti, Imitation Noodle.'' When this product did not get
far, Nissin decided to use the Japanese term for
their product. Nissin marketed instant ramen
rst to the Asians in the California population,
and launched an advertising campaign to teach
Americans ``What Is Ramen.'' Thus Top
Ramen was born in 1971, at 25 cents per
package. Nissin built its second factory in
Lancaster, Pennsylvania, in 1978.
Nissins second important innovation of the
early 1970s pushed the convenience-content of
instant noodles to a new edge. Andos own
invention of Cup Noodle combined several new
technologies for the rst time: the retortable
pouch in which foods could be packaged and
eaten, and new freeze-drying processes that
yielded vegetable and shrimp bits easily rehydrated in hot water. Ando invented Cup
Noodle after two revelations on a ramen sales
trip to the United States. First, a supermarket
manager, ignorant of proper ramen preparation in a pan, broke a noodle into a styrofoam
cup and poured hot water over it. Second, in
his in-ight meal Mr. Ando noticed macadamia
nuts sealed in a plastic cup with a foil lid, which
he slipped into his pocket. Back in Japan, Ando
played out the idea of selling ramen in its own
cup. The only styrofoam he found manufactured in Japan in 1970 was in the form of thick
boxes for shipping sh. He used 40 types of
imported styrofoam cups to experiment with
his new idea, and was nally satised with his
new recipe for Cup Noodle in 1971. For the
rst two years of production, he imported
styrofoam cups from the United States, but
then Ando helped his US supplier, Dart
Industries, to set up production in Japan in a
joint venture with Nissin. In 1975, Cup Noodle
alone was the end use of half the styrofoam
manufactured in Japan (Nissin Shokuhin
Kabushiki Kaisha, Henshu, 1992, p. 180). US
investment was drawn to Japan as a part of this
story to provide the packaging technology that
Nissin wanted.

500

WORLD DEVELOPMENT

When production of Cup Noodle began in

1971, Nissin received a lukewarm reaction to
test markets in Japanese grocery stores. Shoppers said that 100 yen was too much to pay for
just another ramen product. Nissin decided to
position the Cup Noodle as a fast food for
fashionable people. Nissin staged the debut of
Cup Noodle on the Ginza directly in front of
McDonalds in November 1971, pouring hot
water into the cups and selling the noodles in
street fair fashion. Nissin sold 20,000 Cup
Noodles to pedestrians that day, happy to
outdo McDonalds sales of 6,000 hamburgers.
Another venue for the Cup Noodle was in
automated vending machines that dispensed
boiling water into the cup. Nissin installed the
rst such machine in late 1971 for the edication of journalists at the leading business
newspaper, the Nihon Keizai Shinbun. Cup
Noodle was introduced in fashionable department stores in the Kansai Region, with patter
about how easy the ``one way cup'' made the
job of preparation and clean-up, and suggestions that this was the perfect food for outdoors
(Nissin Shokuhin, 1992, pp. 162176) All in all,
this marketing succeeded in promoting Cup
Noodle as the latest innovation for people
keeping up with trends and as an alternative to
streetfront take-away fast foods.
In October 1971, Nissin opened a new Kant^
o
Plant in Ibaraki Prefecture to manufacture Cup
Noodle exclusively. The factory was a 7,000
square meter automated ``dream plant,'' in the
words of the company history, producing
500,000 Cup Noodle per day, with a full sta of
only 65 employees. Nissin next opened its own
freeze-drying plant in Okayama Prefecture in
1972. These moves relate to the slight diusion
after 1960 of the value of food shipments into
the prefectures surrounding the metropolitan
cities. Nissins employment in Japan rose to
1,115 employees in 1984. These examples
illustrate the ways in which large food capitals
both created and rode the wave of expansion in
the market for processed foods and food
services. The webs of food capitals stretched to
farther shores, serving more consumers with
greater capital investment at home and abroad.
4. EATING GLOBALLY AND FEEDING
THE WORLD: 198698
The years since 1986 have accelerated change
in the strategies and relations of food capitals.
The purchasing power of the yen doubled after

1986 from about 240 to about 120 to the US

dollar. Twelve remaining import barriers on
farm products and other restraints on processed foods were negotiated into a set of falling
taris at the GATT in 1994. The bubble and its
aftermath held chaotic consequences. The
accessibility of new Asian food supply regions
to Japanese food buyers and investors also
gured in restructuring the links in the food
web. Strategies by food rms in every part of
this web have contributed to the continuing
growth of food imports.The bubble economy
shook the nancial foundations of the food
world, and left it changed by boom and bust.
Easy money in the late 1980s was the governments attempt to expand the domestic economy to oset expected eects of the high yen.
This credit fueled a speculative rise in land and
stock prices which sent capitals of every sort
into a global spree of buying, investing, building, borrowing and leveraging. By December
1989, the value of stocks on the Tokyo Stock
Exchange (the TOPIX index) stood at 29 times
their value in 1968. Food manufacturers
stocks, at only 17 times their 1968 value,
reecting the relatively limited historic and
potential growth of food in the estimation of
the nancial world. In a search for higher
prots through nancial strategies, food capitals began taking new risks, for better and for
worse when the bubble collapsed. By 1997, the
TOPIX index of all stocks had fallen back to 12
times 1968, and the index of food stocks had
fallen back to seven. Food capitals were among
the many rms left with unnished projects,
unrecoverable outstanding loans, and debts
they could not repay. The farm cooperative
system faced a nancial disaster in bad debts
(Sakamaki, 1996a). The 1997 bankruptcy of
food wholesaler Toshoku was due not so much
to problems in its main business as one of
Japans largest independent food traders, but
due to risks taken in a leasing sideline begun in
the late bubble years. Toshoku had no way of
repaying its creditor banks and so became
simply another casualty in the 600 billion
dollars of bad debt held by Japanese banks in
the late 1990s. Likewise, the trading house of
Itochu has written o US$1.6 billion in real
estate losses (Nikkei Weekly, 1998, p. 8) The
nancial crisis has wrought new nancial
strategies rearranging the web of capital in
food, including some sell-os of holdings to
oset losses, which loosens some ties. With the
banks now quite credit-shy, rms which were
not publicly traded have listed themselves on

FOOD FIRMS AND FOOD FLOWS

the stock exchange as a place to raise capital.

These rms, formerly reliant on loans from
their own banks and aliates, have turned to
market investors as one consequence of the
crisis. The late 1990s saw initial public oerings
from several long-established Coca-Cola
bottling companies, as well as Key Coee
which has been in business since 1952, and
Kirin Beverage and Ito En, both in business
since the 1960s.
The deationary environment of the Japanese consumer market in the 1990s has been in
part an eect of the bubble, in part an eect of
the Kobe earthquake in 1995, in part a matter
of the graying demographics, all constraining
consumer spending, together with the downward leveling of prices toward international
levels. As rms nd lower-cost inputs and cost
savings, sales gures for most food rms have
remained at. The countertrend toward
increased consumption comes from the stillgrowing numbers of smaller households relying
more and more on convenience foods, prepared
foods, and meals eaten outside the home. In
1995, 49% of all households in Japan had just
one or two members, and in Tokyo, 60%
(Statistics Bureau, 1998). Now 87% of all
Japanese households have a microwave oven
(Nihon Keizai Shinbun, 1996, p. 116). As meal
preparation grows more centralized in industrial kitchens, the import content of the meal
climbs, as food preparers import more fruits,
vegetables, meats, semi-processed and processed foods (Kase, 1993). Food capitals are
catering to consumers who will buy value and
convenience, through new technologies like
information systems, the cold chain and the
microwave oven. Firms are widening the web of
their business to include procurements and
sales overseas, and many can be seen with new
cross-sectoral links in restaurants, entertainment, and transport.
Food processing rms have, as a group,
retained a rather steady share of the consumer
food budget. The value of their shipments in
1993 was 10 times that of 1965. The biggest
rms have invested the most heavily in capital
equipment, thus have the highest output per
worker, and hire large proportions of male
workers. The smaller capitals produce smaller
shipments, produce a lower output per worker,
and hire more women workers. The beer
breweries are at the largest end of this spectrum, followed by grain millers, oil and feed
processors. Noodle-makers and bakeries are in
the middle range. Makers of tofu, sh products,

501

and frozen foods are in the lowest ranks (Kase,

1993, pp. 103104). Production remains
concentrated in many processed foods. In edible oils, ve companies, including Ajinomoto,
hold 70% of the market. In frozen food,
Nichirei, Katokichi and Ajinomoto are among
the top ve rms holding 60% of market. In
ham and sausage, the top ve producers hold
65% of domestic production. In ice cream, the
top ve manufacturers hold 55% of domestic
sales. In instant noodles, the top ve makers
ship 80%; Nissin alone makes 40%. In whiskey,
Suntory, Nikka and Kirin-Seagram make 75%
of domestic sales. In wine, Mercian, Suntory,
Sapporo, Kikkoman and Kyowa Hakko hold
about 66% of the market (Nihon Keizai Shinbun, 1996). Despite these indications of
continued concentration, big processors shipments fell from 20% of the market in 1965 to
10% in 1993, due to the proliferation of smaller
processors of a greater variety of foods.
The nature of canning has shifted away from
canned sh, meat, jam, and fruit, toward
increases in canned beverages. In 1970, only
one million metric tons of foods and beverages
were canned, but by 1993, almost ve million
metric tons were canned, mostly in the form of
canned drinks (N^
orin Suisansh^
o Keizaikyoku
Johobu, 1997). Imports of juice (both bulk and
canned) by manufacturers have risen. Japan
was the fth largest juice importer in the world
in 1994, with purchases of $448.6 million.
Imports of frozen orange juice concentrate rose
while domestic mandarin orange juice and
apple juice production fell during 198993. In
the Japanese orange juice market, the major
brands reect many entries by foreign rms:
Dole, Nokyu Kaju, Kagome 100, POM, Meiji,
Sunkist, Kirin and Tropicana. Many canned
juices are now manufactured as private labels
for supermarkets. Daiei was the rst to introduce private label juices, and Seiyu and Jusco
have followed suit, so that about a fth of the
juice sold is under supermarket house brands
(Quick Frozen Foods International, 1996). The
drink dispensing machine, jid^
o hanbai, has
proliferated along with the growth of canned
beverages, so canned drinks are now found at
arms reach everywhere in Japan (Ashkenazi,
1997).
The cold-chain has been a vital conduit to the
expansion of domestic processed foods and
imported foods. Frozen cooked meats are 80%
of the frozen food sales. Production of frozen
foods was 947,000 tons in 1989 and 1.3 million
tons in 1994. Nichirei, Japans largest frozen

502

WORLD DEVELOPMENT

food producer, nds that its traditional sh

sales are at, but frozen foods is a growth area
(Nihon Keizai Shinbun, 1996, p. 116). Ajinomoto and Nippon Meat Packers of Osaka are
likewise expanding frozen foods. Consumers
purchased 1.7 million tons of packaged frozen
foods in 1993, up 35% over 1989. Concomitantly, Japans imports of frozen foods for all
destinations more than doubled from 1984 to
nearly six million tons in 1993, requiring a
rapid expansion of capacity in refrigerated
warehouses in Tokyo, Yokohama, Osaka,
Nagoya and Kobe. Fishery products remain
the largest category of frozen foods, but new
kinds of frozen foods have been organized by
Japanese investment, especially in Asia. The
Chang Mai Frozen Foods Public Co. Ltd. in
northern Thailand is a joint venture of the
trading house of Itochu and Taiyao of Taiwan,
producing frozen vegetables and herbs for
shipment to Japan (Saulnier, 1995). Yangtze
Agribusiness Company, a joint venture of
several Chinese production groups, contracts
with producers on 200,000 hectares in 16
provinces of China to ship 80,000 tons of
frozen food to Japan. Yangtze also operates a
^
supermarket in Osaka
to study the Japanese
market, aiming to supply 30% of Japans
vegetables in another decade (Saulnier, 1997).
Frozen vegetable exports from the United
States to Japan nearly doubled during 199096,
to almost one billion pounds (Fritz & Finseth,
1997).
Japanese food processors and retailers are
organizing more industrial production oshore
to survive the liberalization of imports, to take
advantage of the strong yen, and to escape the
high costs of domestic manufacturing. Over 26
months from November 1986 to January 1989,
food processors contracting production overseas rose from 9% to 19%, with another 33%
thinking of doing so. Those with direct foreign
investment in production rose from 11% to
15%, with another 33% thinking of doing so
(N^
osei Jyaanarisuto no Kai, 1990, p. 23).
Japans annual growth rate in imported
processed foods during 198594 was 21%,
outstripping the 12% annual growth in manufactured imports. In 1994, processed foods were
18% of the value of all manufactured imports
(Nihon N^
ogy^
o Nenkan, 1996, p. 321). Formation of new foreign subsidiaries averaged well
over 100 cases per year since 1985. By 1993,
there were 2,165 foreign subsidiaries of Japanese food processors, comprising 10% of all
Japanese oshore factories. In 1994, there were

another 76 cases of direct foreign investment in

food, in 1995 another 82, and in 1996, 11 cases
in US, 37 cases in Asia, and six in Europe
(Import-Export Bank of Japan, 1997) Production at overseas food plants in 1993 was only
2.4% of the value produced in the industry at
home, while all manufacturing together averaged 7.4% (Nihon N^
ogy^
o Nenkan, 1996,
p. 321). Some of this investment was by food
manufacturers hoping to expand sales of their
Asian-style foods into oshore. Nichirei Foods
succeeded in marketing its articial crab meat,
``surimi,'' to US consumers. Nichirei has
expanded its US base near Seattle, Washington,
to make ready-to-eat ``bento'' box lunches and
frozen potstickers for US consumers. But
increasingly, processed foods t into the
general pattern of Japans so-called reverse
imports. In 1997, Japanese companies (in all
industrial sectors) were reverse importing from
their own subsidiaries 28% of all production,
and of all imports into Japan in the same year,
32% were organized within channels of parent
rms. Firms involved acknowledged that the
advantage of reverse-importing was cost
savings.
As a result, more US processed foods went to
Japan. By 1994, the value of consumer-oriented
processed food exceeded the value of bulk
commodities shipped from the United States to
Japan (USDA, 1996a). These exports were
often manufactured by Japanese rms. Japanese food and beverage processors in the
United States numbered 318 in 1995, in addition to the 48 farm products traders and 20 feed
companies (JETRO, 1995). In 1995, $7.6 billion
in processed food from the United States
entered Japan, 26% of all US processed food
exports. Most important were $3 billion worth
of packed meats and $1.8 billion worth of
prepared and frozen sh, but also imported
were frozen fruits and vegetables, canned fruits
and vegetables, and poultry (USDA, 1996b).
Japans QP Corporation has started producing
mayonnaise in Irwindale, California for export
to Japan; Pokka makes juice in American
Canyon, California; Sumitomo is processing
vegetable oils, and Nisshin Flour Milling
Companys ``Medallion Foods'' is the rst
Japanese-owned pasta plant in US producing
for the Japanese market.
Japanese investment in Asia grew enormously after 1986. While Japanese investments
abroad in all sectors doubled in number from
about 9,000 to about 18,000 cases over 1987
96, Japans investments in Asia tripled. Thai-

FOOD FIRMS AND FOOD FLOWS

land alone saw Japanese rms increase ninefold from 128 in 1987 to 1,191 in 1996 (T^
oy^
o
Keizai Shinposha, 1997b). Investment from
Japan and elsewhere spurred the rapid growth
of commercial farming and agribusiness in
Chinas coastal area (Helsell, 1997). Japans
direct foreign investments in food processing in
China has quickly reached 140 ventures in 1996
(T^
oy^
o Keizai Shinposha, 1997b).
Although since 1986 the cost of doing business in Japan has become even higher for
investors from the outside, newcomers are still
attracted to the Japanese food scene. Frances
Danone entered into a 25% partnership with
Ajinomoto (25%) and Calpis (50%) in 1992 to
produce yogurt, beverages, and fresh cheese.
The Kirin Beverage Company became the 50%
partner of Tropicana Products Inc. of the USA
(a Seagram Company) to manufacture juices in
Japan. Kellogg, now holding half the breakfast
cereal market in Japan, has debuted successful
new products in the 1990s such as ChocoBanana Flakes and Strawberry Pop Cereal, via
its distributor, Ajinomoto. Haagen Dazs
entered Japan in 1984 with 50% ownership by
Pillsbury (now Grand Metropolitan of the
United Kingdom) with 40% investment from
Suntory and 10% from Takanishi Milk of
Japan. Haagen Dazs has opened 88 ice cream
shops across Japan. Anheuser Busch Company
watched Budweiser sales in Japan grow, then
established Budweiser Japan in 1993 with 10%
investment from Kirin Brewery (T^
oy^
o Keizai
Shinposha, 1997b).
Food wholesalers have been squeezed in the
1990s; this might be an area in which relations
are becoming more simplied and direct among
food capitals. Retailers increasingly order
directly from suppliers and develop their own
store brands with suppliers and manufacturers.
Wholesalers are handling lower priced products
due to the lower cost of imported foods and the
lower pricing of domestically manufactured
foods. Wholesalers margins shrink accordingly, so this ``price destruction'' drives the
restructuring observed among wholesalers
Kokubu (sales of 809 billion yen), Yuki Jirushi
Access, Ryoshoku, Meidi-ya, Nihon Shurui
Hanbai (379 billion in sales) in 1994 (Nihon
Keizai Shinbun, 1995). Trading houses of the
keiretsu have likewise been strained by price
deation and independent sourcing. Some of
the trading houses have countered by developing retailing business. An example is Sumitomo
with Summit stores, selling Sumitomo imports.
Specialty wholesalers are seeing the regulatory

503

environment broaden to permit new competition. Rice wholesalers, who suered in the rice
shortage of 1994, are further worried by the
reregulation of the rice market, allowing major
trading houses to reenter the business of rice
wholesaling for the rst time in over 50 years.
For trading houses and for farm input
manufacturers, shrinking domestic agriculture
means further diversication and integration
oshore. Because the trading houses are regular
buyers from foreign agricultural markets, and
because they export the machinery and chemicals produced by other rms within their keiretsu, they have an interest in the inputs into
agriculture in the regions where they buy crops.
The trading houses are expanding their
ownership of farm input industries abroad. In
1987, Marubeni purchased the Helena Chemical Company of the United States and has
expanded its farm chemical and seed businesses
in the United States and Mexico (JETRO,
1995). The trading house of Nichimen has been
since 1980 a supplier of inputs to the soybean
producers in Heilongjiang Province in China
(Helsell, 1997) and in turn buys the soybean
crop. Trading houses have worked together
with their subsidiaries to control both the
inputs and the outputs of farms overseas in a
way they have not been allowed to do at home.
Trading houses and other wholesalers have
lost business due to new strategies of retailers
who are developing closer direct ties with
agriculture and manufacturing. Consumers
have not increased their spending at retail
stores since 1990. To lower costs, supermarkets
Seiyu, Daiei and Jusco are contracting overseas
for vegetable production; sometimes supplying
seed (Nihon Keizai Shinbun, 1996, p. 57). This
strategy of retailers represents ``the biggest
threat to wholesalers'' (Fahy & Taguchi, 1995).
Through inventory technologies, retailers can
quickly assess consumer response and communicate orders to manufacturers. Daiei Inc., in
particular, has formed a variety of alliances
with leading manufacturers. It has a cooperative agreement with Ajinomoto to develop lowpriced retail brands. Large retailers now
produce their own beers overseas, import them
and sell them as store brands, accounting for a
tripling of beer imports over 199394 (Nihon
Keizai Shinbun, 1996, p. 117). Daiei Stores
introduced Richard Bransons Virgin Cola in
1995 to compete directly with Coca-Colas 90%
share of Japans cola market.
Japanese retail capitals have also simply
increased their ownership of stores overseas to

504

WORLD DEVELOPMENT

expand their sales. Yaohan built a network of

supermarkets abroad, though overextension
has forced reorganization from 1997. Retailer
Ito Yokado, owner of Seven Eleven Japan,
invested in its ailing US parent, Southland, in
1991 to become owner of most Seven Eleven
stores in the US. Thus, Southland is the Japanese-owned company with the second highest
revenues in the US (US$ 7 billion) after Toyota
Corporation (US$16 billion) (JETRO, 1995).
Although chain supermarkets have grown in
number to 130 chains with nearly 8,000 stores,
sales of food have fallen by 2% per year since
1990 (Statistics Bureau, 1998, p. 393). Falling
prices have been one reason, but also, since
1980, the consumption of only a few foods,
such as beer, cheese, and beef, has continued to
expand. Per capita consumption of many other
foods such as noodles, bread, meats other than
beef, and oils has declined. The top ve
supermarkets in 1994 each sold from 1 to 2.5
trillion yen. Daiei with 348 supermarkets is
largest in sales; Ito-Yokado with 149 supermarkets is second in sales but most protable,
then Jusco, Seiyu, and Nichii complete the top
ve. Many other big supermarket chains have
over 100 stores, and city-based consumer
cooperatives have over a hundred supermarkets
in cities like Kobe, Sapporo, and Yokohama
(Nihon Keizai Shinbun, 1996).
Convenience stores have continued to
proliferate since 1986. The two largest convenience store chains are Ito Yokados SevenEleven with over 5,900 stores and 1.4 trillion
yen in sales in 1994, and the Daiei chain of
5,139 Lawson stores, with sales of 821 billion
yen in 1994. These two now annually outgross
even the biggest department store chains. The
next in the top ve are Family Mart owned by
Seiyu, Sun Shop Yamazaki owned by Yamazaki Baking, and Circle K Japan, owned by
Uny of Aichi Prefecture, the sixth largest
supermarket chain. The poor nancial performance of the parent companies have recently
destabilized these pairings, causing Daiei to sell
shares of Lawsons, and Seiyu to sell the Family
Mart stores to Itochu (Fukuda, 1998). There
are 30 other chains with between 100 and 1,000
stores (Nihon Keizai Shinbun, 1996, p. 159).
Convenience stores great advantage was their
small size, allowing them to stay open when
large supermarkets were required to close, but
the 1994 amendment of the Large-Scale Retail
Store Law has permitted large stores longer
hours. Convenience stores have had to compete
with new pricing, discounts on national-brand

goods, sale of store brands, and new sales of

alcohol and rice, both forbidden prior to 1996.
Twenty-four hour convenience marts accounted for just 5% of all grocery sales in 1982, but
by 1994 they were one quarter of all sales
(Shokury^
o Hakusho, 1996). If they are viewed
as fast food providers, they now hold 10% of
the fast food market (Kobayashi, 1997). In
February 1997, fresh-made box lunches were
13% of sales in Japanese Seven Elevens (T^
oy^
o
Keizai Shinposha, 1998). One of the best sellers
of Seven Eleven is the low-cost onigiri, a ball of
cold rice covered with a strip of dried seaweed.
Department stores remain the third face of
food retailing. Mitsukoshi is the top department store in sales, 768 billion yen in 1994, and
next ranking are Takashimaya, Seibu,
Daimaru, Marui, Matsuzakaya, and Isetan.
Department stores large food markets in their
basements account for a high part of each
chains sales; Hankyu 24%, Hanshin 31%,
Yokohama Matsuzakaya 43%, Isetan 18%,
Matsuya 25%, and Takashimaya 20% (T^
oy^
o
Keizai Shinposha, 1998). Food retailers use
dierential shopper demographics in product
placement. Even ``convenience'' foods, are
quite dierent as purveyed to the 20 to 30 year
olds in convenience stores, the 30 to 40 year
olds who shop in supermarkets, and those
nearer 50 or over who favor department stores
(Kobayashi, 1997).
While convenience foods are increasingly
oered by retail markets, many households are
abandoning the food store altogether in favor
of whole meals eaten out. The amount of food
eaten outside the home per person is now 15
times what it was in 1965, approaching onefth of all spending on food (Shokury^
o
Hakusho, 1996). The one hundred top food
services sold the equivalent of $30 billion in
1994 (Nihon Keizai Shinbun, 1996, p. 156), yet
still control just one-tenth of the dining-out
market. The large food services market
continues to draw foreign entrants using
powerful Japanese partners in order to secure
prime locations (Hamstra, 1997). US restaurant
chains in Japan had $90 billion of sales in 1992
(Martin, 1994).
Foreign companies have been notably
successful in food services, and have seen imitators in both hamburgers and in fast Japanesestyle food. McDonalds Japan now has 2,400
stores, mostly in busy pedestrian districts and
venturing toward automobile-oriented locations. McDonalds is Japans largest restaurant
in annual sales (Nihon Keizai Shinbun, 1996;

FOOD FIRMS AND FOOD FLOWS

Weinberg, 1998). Burger King, now owned by

Grand Metropolitan, has teamed with Japan
Tobacco to convert Morinaga Love fast food
shops into Burger Kings. Competing in the
hamburger business are Japanese chains such
as Mos and Lotteria, a subsidiary of the
Korean-Japanese confectionery Lotte. Tokyo
wards had 354 outlets of the top four
hamburger chains in 1994, clustered especially
in neighborhoods with populations aged 15 to
30 (Ishizaki, 1995). Kentucky Fried Chicken
now has 1,300 shops and Mister Donut has
927. Japanese-style fast food chains Hokka
Hokka-tei and Kozo Sushi have over 1,000
outlets each. Western-style ``family restaurants'' have grown rapidly. These are often
members of the big food service groups on
Figure 1. Skylark has 1,356 cafes, Royal now
1,002, and Dennys Japan 850. Sapporo Lion
runs 178 beer halls around the country;
Tokyo Disneyland (Oriental Land Co.) sells
enough food each year to be listed among the
top food service companies (Kase, 1993, p.
116).
Food services further the growth of food
imports. Restaurants have increased their direct
food imports to lower costsespecially from
other Asian countries (Nihon Keizai Shinbun,
1996). The foods used in hamburger fast food
chains are 80% imported; the foods used in
Chinese and Korean restaurants 65%, and the
foods in Western-style taverns 57%. One pub
chain saved 10% by importing ready-to-grill
chicken pieces for yakitori from Thailand
(Nihon Keizai Shinbun, 1996, p. 156).
Kentucky Fried Chicken Japan is importing
chicken from the United States and China.
Skylark Restaurants are importing spinach
grown to order from China, from Japanese
seed. Now half the pork, over 90% of the beef,
and almost 20% of the chicken served in
restaurants is imported (Kase, 1993, p. 127).
The 1990s have brought a dramatic increase
in the sheer tonnage of food imported, and
amounts have increased most dramatically in
newly liberalized products. Fruit juices, pickles,
canned vegetables, frozen vegetables, and
frozen potatoes for frying have been among the
new foods entering Japan in great multiples of
prior levels (Kase, 1993, p. 123) In the rst four
years of the 1990s, tonnage continued to
increase in cheese, frozen crab, oranges, bananas, beef, frozen vegetables by a third to half
again. Grapefruit, canned peaches fresh onions,
fruit juice doubled. Imports of beer and nursery
plants tripled, kiwi fruits jumped seven-fold,

505

and vegetable juice ten-fold (Statistics Bureau,

1998).
In the 1980s, the drama in the rise of imports
was in meat and sh. Of Japans annual
consumption of 300,000 tons of shrimp and
prawn, for example, 90% is now imported. The
retail value of this market is about 1 trillion
(Focus Japan, 1997c). In the 1990s, the new
wave of import growth has brought fruits, now
about 30% imported, as well as vegetables and
chicken. Imports of fresh vegetables reached
600,000 tons in 1994, up 70% from prior year
(Nihon Keizai Shinbun, 1996, p. 57). Ice cream
imports to Japan jumped 14% in 1996 alone, to
double their level in 1991, supplied from
Australia, New Zealand, and the United States
(Focus Japan, 1997b). Japans food imports in
1996 rose by 5.62 trillion yen, or 16.7%. Food
was 15% of the value of all imports. Fish and
shellsh were about one third of the total, meat
was 15%, and grains were 14%. Together, these
were 60% of food imports, and the remaining
40% was a diverse group of processed foods. By
country, the United States supplied almost 30%
of the value of Japans food imports, China
slightly over 10%, then Australia, Taiwan,
Canada, Thailand, Korea, Indonesia, Russia,
and France followed as the leading providers in
1996. Two-thirds of Japans food imports are
either from North America 36% or from Asia
33% (JETRO, 1997). It is to the extent that
Japanese food capitals are involved in these
ows, either onshore or o, that they are
surviving the widening stream of imports.
Back on the farm in Japan, agricultural
observers are quite aware of the power of both
Japanese and foreign multinational food
conglomerates (Horiguchi, 1993). Questions
about the future of Japans food system take
three forms. One is about agriculture itself:
whether farm producers in Japan can possibly
relink with Japans food capitals in manufacturing and trade. Only in recent years have the
two dierent annual White Papers on agriculture and food acknowledged a need for
renewed ties between Japanese farm producers
and Japanese food industries. A second is a
more industrial question: whether the food
industries will remove themselves further to
foreign shores, taking employment base with
them in the further hollowing of industrial
Japan (Kada, 1996, p. 242). Given that it is the
food capitals who are cooperating in this trend
toward oshore production that are having the
most success, Ido (1989) argues that growth in
food will most likely not be in primary or even

506

WORLD DEVELOPMENT

secondary production, but in the tertiary elds

of information and delivery services. The nal
concern is for Japans increasing vulnerability
to the fortunes of oshore producing regions
and of a few large industrial and retailing
conglomerates (Horiguchi, 1993). The farming
base of Japan is likely being prepared by these
pressures for change in the terms under which
farmland can be reaccessed by o-farm food
capitals. One newcomer on the farm in Japan
is no stranger to organizing fresh fruit and
vegetable production in new places: Dole
Japan Ltd. is a new joint investment of Dole
Food Company and its distributors in Japan,
contracting directly with 1,000 Japanese
farmers for fresh fruits and vegetables. Dole
intends to sell sliced fruits in supermarkets
and convenience stores, and to open juice
cafes. Already Dole has reduced the distribution costs of fruits like bananas. It sees
potential for better integration throughout
Japans food system. Dole is expanding its
capacity to import fresh fruits and vegetables
into Japan at its main warehouse at the Port
of Kawasaki (Focus Japan, 1997a; Nikkei
Weekly, 1997).
Our four examples of food processors are
found after 1986 with intensive investments in
other industrial countries, expanding investments that count on the rising consumerism in
Asia, and with cooperative ties to other globalizing food capitals to capture more
consumption. Ajinomoto has grown to be
Japans largest integrated food processing
company and one of Japans most extensively
globalized manufacturers. It makes many
inputs for food and pharmaceutical industries
such as aspartame sweetener and amino acids.
Ajinomoto continues to diversify its products
for food services, as well as consumer products
sold through supermarkets. It produces foods
and chemicals at ve domestic plants, and
contracts for beverages and dairy products. It
has invested in the beverage maker Calpis in
order to expand into beverage production and
to take Calpis into Southeast Asian markets. It
has joint ventures with CPC of the United
States in six Southeast Asian countries to
produce dried foods, sauces and soups; also
with Danone of France in yogurt, and with
Chil in South Korea in frozen foods. Ajinomoto has 42 overseas plants in 13 countries,
including Thailand, Philippines, Indonesia,
Malaysia, Brazil, Vietnam. Eleven plants
abroad produce 90% of Ajinomotos MSG,
which is about one-third of world production.

Ajinomoto now supplies 40% of the worlds

lysine through six factories abroad, the newest
in Sichuan Province in China, and in Brazil.
Ajinomoto now has frozen food ventures in
Taiwan, Thailand and China, growing rapidly
to export frozen foods to Japan. Ajinomoto is
making instant noodles in Brazil, Thailand, and
Myanmar, and ``Birdy'' canned coee in
Thailand.
In Noda, Kikkoman manufactures one
million one-liter bottles of soy sauce per day.
Of its 2,300 products, 600 are soy sauce
(Forrest, 1994). Kikkoman has been broadening into a general food company, and expanding into health foods and biotechnology.
Crosslicensing of genetic technologies from
Calgene takes Kikkoman into genetically
altered vegetables. Kikkoman, like other food
conglomerates, has an expanding business in
fresh ower production and marketing worldwide. Kikkoman has expanded soy sauce
production to Singapore (1983), Taiwan (1989),
the Netherlands (1996) and a second US plant
in Folsom, California (1998) (Business Wire,
1996; Mogi, 1996). Kikkoman continues to
distribute Asian foods in the United States
through JFC International, which produces its
own Dynasty line of processed foods and
distributes a premium California rice, Nishiki.
In 1990, Kikkoman obtained the rights to the
name and the distribution of Del Monte in
Asia.
Kirin and other brewers have faced many
changes and challenges since 1986, starting
with the economic boom years of the late
1980s which fostered domestic expansion, and
ending in the deregulatory and deationary
years of the 1990s. Globalization has been
both a threat and a hope. The bubble years
were boom times for Japans beer companies.
Brewing expanded by half during 198292,
while Japans whiskey and brandy production
dropped by half (Nihon Keizai Shinbun, 1994,
p. 110). Brewers constructed new breweries in
the Kant^
o area and developed their real estate
in the metropolitan centers. Asahi completed
its eighth plant in Kitasoma-gun, Ibaraki, in
1991, as the largest brewery in Asia, on the
strength of its successful Asahi Super Dry
(Modern Brewery Age, 1991a,b). At the same
time, Asahi constructed a new black granite
headquarters on T^
oky^
os Sumida River,
designed by Philippe Stark. In parallel,
Sapporo Beer expanded brewing at a new
Chiba Prefecture plant in 1988 and redeveloped the site of its old central T^
oky^
o brewery.

FOOD FIRMS AND FOOD FLOWS

Yebisu Garden Palace opened in 1994 as not

only Sapporo corporate headquarters, but also
oces, hotel, condominiums, and shops
(Modern Brewery Age, 1992). In this spirit,
Kirin renovated its 60-year-old brewery in
Yokohama to serve as a showcase of production and as a visitor attraction named ``Beer
Village.'' Two-thirds of the brewery site was
leveled and rebuilt into a new factory, while
the other third of the property was landscaped
into a museum, beer hall, and visitor center.
Beer Village attracted 600,000 visitors in its
rst year, and has become the second busiest
attraction in the Tokyo area after Tokyo
Disneyland.
Inside Kirins Beer Village, machines assembled from around the world run four packaging
lines canning beer 24 hours per day. The entire
process, from feeding empty containers onto
conveyor belts to warehousing the cardboard
cases of canned beer, is automated. Production
requires two workers to oversee but never
actually touch any of the 1,500 cans that are
lled per minute on each line. Flexible manufacturing systems control these lines, allowing
lines to convert at rapid speed among three
dierent can sizes. Five dierent brews are
canned here for a total output of 130 million
gallons per year. Delivery trucks are scheduled
into the loading zone at 30 minute intervals for
just-in-time loading with pallets of ``fresh''
canned beer. The entire facility employs only
150 persons, one half of the workforce prior to
renovation (Keck, 1992; Keck, 1993; Chiltons
Food Engineering, 1993) Visitors may tour
Kirins Beer Village as they may visit Disneyland or any number of attractions in the T^
oky^
o
area. Beer Village entertained 600,000 visitors
in its rst year.
The 1990s have been chaotic for the brewers,
despite their condent new architectural
achievements. Many of the protections
surrounding domestic brewers have been
relaxed, and retailers have been aggressive
about underselling domestic beers with
imports. From April 1994, import taris on
beer were lowered to just a few yen per liter,
and supermarkets have been freer under law to
sell imported beer. Retailers have thus helped
low-priced imports break into the Japanese
market (Food Drink Daily, 1994b). The Seven
Eleven chain, for example, worked with Philip
Morris to market cans of Miller Ice Beer at
178 per can against domestic beers at 225.
Regulatory change also allowed small brewers
to begin producing in Japan, so a variety of

507

new small producers and regional breweries

appeared as a result (Japan Economic Journal,
1994, p. 111). Major brewers countered by
developing their own small subsidiary brands
and tailoring the appeal and identity of each to
specic regions of the country (Japan Weekly
Monitor, 1994). Domestic brewers also lowered
prices by producing certain beers with a malt
content of less than 67%, which would pay only
half the 78 per can tax. Cans of these low-malt
products sold for 180 or 160 compared to
225 for standard beer. In addition to these
general pressure on brewers, Kirins 50%
market share was challenged in the 1990s by
Asahi Super Dry, which became the best selling
beer in Japan.
One response of Kirin and other brewers in
the bubble years was buy-outs and new
investments in overseas beverage markets.
After years of holding bottling franchises in
Japan, Kirin purchased the Northern New
England Coca Cola Bottling Co. in 1988 (Japan
Economic Newswire, 1988a). Asahi purchased
a substantial part of Fosters of Australia.
Suntory was the rst to begin brewing in China
in 1984, and now has two Chinese breweries.
Sapporo completed its rst China beer plant in
Tsingtao in 1988 (Japan Economic Newswire,
1988b) Asahi started brewing beer in China in
1994 (Asian Economic News, 1994b). Kirin
opened its rst brewery in China in 1995 (Asian
Economic News, 1995).
Japanese brewers tried to export their beers
even after the rise of the yen, but could only
ght the tide of beer imports into Japan by
becoming importers from their own breweries
oshore. In 1991, Japan exported 28,000 kl of
beer, two-thirds of this to the US (Nihon
N^
ogy^
o Nenkan, 1994, p. 236). When foreign
brewers sent 100,000 kl of beer into Japan in
1992-93, however (Sumiya, 1993; Nihon N^
ogy^
o
Nenkan, 1994, p. 236), new strategies were in
order. In 1993, Kirin agreed to become a
brewing partner of Anheuser-Busch of the
United States to manufacture Japans leading
``import'' beer, Budweiser. In turn, Kirin asked
Anheuser-Busch to manufacture several Kirin
Beers at its Los Angeles plant. Kirin used the
low production costs and the low back-haul
shipping rates to pioneer the import of Kirin
Beer from California for distribution in Japan
(OReilly, 1994a,b; Modern Brewery Age,
1994a). Cooperation between the two brewers
was formalized in two new joint ventures,
Budweiser Japan Company and Kirin Brewery
of America, each a 90/10 investment in which

508

WORLD DEVELOPMENT

the host country company is the minority but

does the actual brewing of the partners beer.
Anheuser-Busch produces several Kirin beers
for the North America market and ships
canned Budweiser and Kirin to Japan. Kirin
produces bottled Budweiser in Japan (Ono,
1993; Cramb, 1993; Food Drink Daily, 1994a,c,
Modern Brewery Age, 1994b, 1997). Following
this agreement, Kirin Brewery Company
moved its US headquarters from New York to
Santa Monica, California (Beverage World,
1997).
Kirin has found that Anheuser-Busch can
supply cheaper packaging materials, such as
papers, plastics, and metals. Since 1994, Kirin
Beer, has purchased a portion of its annual four
billion aluminum cans through AnheuserBusch instead of from Japanese aluminum
makers. This move saves Kirin about half the
cost of cans, but dismays its aliate Mitsubishi
Materials and other suppliers in the domestic
aluminum industry (JapanUS Business
Report, 1994a,b). This sort of incremental costsaving strategy loosens food makers commitments to keiretsu-style sourcing, and stimulates
globalization as a competitive strategy among
industries which supply food processors. The
global reach of one rm for cheaper inputs has
multiple consequences for the horizons of its
competitors and suppliers.
In Japan, Nissin Food Products has
remained focused on variations on its noodle
products, such as fresh noodles and Cup Rice.
Research is shifting toward pharmaceuticals.
Nissin nds expansion most promising
oshore, where sourcing, manufacturing and
sales now simply bypass Japan altogether. By
the early 1990s, Nissin produced 15 million
ramen servings per year in countries including
Brazil, Singapore, Hong Kong, India, and the
Netherlands. Two-thirds of its production is
outside Japan for foreign markets. In its latest
coup, Nissin is now producing Japanese-style
Chinese noodles in China itself; its rst instant
ramen plants were established in Guangdong
Province in 1993 and in 1994 (Asian Economic
News, 1994a). Nissin is today the worlds
largest instant noodle maker.
In the United States in 1990, Nissin produced
422.4 million portions of ramen, worth $100
million in sales (Nissin Shokuhin Kabushiki
Kaisha Henshu, 1992, p. 276). Realizing that
the average Japanese eats 45 servings of instant
ramen per year, but that the average American
eats only ve, Nissin sought to break through
further cultural boundaries with promotions

especially in the south. Nissin opened its third

US plant in Memphis, Tennessee, in late 1994,
with lines producing 600 packages of instant
ramen and 400 Cup Noodles every minute. At
full force, the Memphis plant was projected to
employ 300 workers and to produce 600,000
ramen per day (Hunter, 1994; Japan-US Business Report, 1994b). US sales account for over
20% of Nissins worldwide sales of $7.6 billion
(Kilgore, 1996).
The growth of ramen in the United States
and in other countries is a boost to US our
millers (Milling Baking News, 1992) who have
seen most of their own growth in our usage
through so-called ethnic foods such as tortillas, pizza, and bagels. This fact is not lost on
Nissin, which has recently purchased a
subsidiary to manufacture frozen burritos
(Japan-US Business Report, 1995). Consumers
may perceive the presence of ramen and frozen
burritos as the new food choices from far
corners of the earth, but the structures that
deliver these foods are food capitals larger
than ever, with an increasing transnational
reach. The late 1990s are both heady and
frightening for Nissin. The company mounted
a 60-foot neon bowl of steaming noodles on a
permanent sign in New Yorks Times Square
in 1996, at a cost of US$2.5 million for rst
year (Bullmore, 1996). But Nissin is also
damaged by the collapse of one of its distributors, Toshoku. Nissin was a stockholder in
Toshoku, for a loss of 150 million yen (Japan
Economic Newswire, 1997), and the bankrupt
company owed Nissin 13.2 billion when it
folded. Such damage from the aftermath of
the bubble economy is still in the late 1990s
aecting the nancial health of even Japans
most successful food rms.
These four food capitals have survived as
producers of old and new products, manufactured and purveyed through the use of
advanced technologies. They now command
biotechnology and substitution chemistry in
production, and they nd success in changing
what and how consumers will eat. Japanese
food manufacturers are still not as large as the
conglomerates of Europe or the United States
(see Table 3), but some large Japanese food
capitals, such as Snow Brand Dairy Products
and the breweries rank among the worlds
largest by virtue of their sales in their domestic
market alone. Companies such as Kirin, Nissin,
Ajinomoto and Kikkoman hold their ground in
growing global food markets by increasingly
feeding the regions that feed Japan.

FOOD FIRMS AND FOOD FLOWS

509

Table 3. Relative size of food capitals, Europe, US, Japana

$million
1.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
30.
31.
36.
40.
69.
86.
98.
111.
123.
170.
178.
195.
196.
218.
221.
236.
306.
318.
335.
346.
400.
401.
416.
422.
426.
468.
492.

General Motors
Mitsui Trading
Mitsubishi
Itochu
Royal Dutch Shell
Marubeni
Exxon
Sumitomo
Toyota Motor Corp.
Walmart
General Electric
Nissho Iwai
Philip Morris
Unilever N V
Nestle S.A.
Tomen
Nichimen
Pepsico
Daiei
Ito Yokado
Con Agra
Jusco
Costco
Sara Lee
Coca Cola
Safeway
RJR Nabisco
Groupe Danone
Albertsons
Archer Daniels Midland
Winn Dixie
Kirin Brewery
Grand Metropolitain
Seagram Co. Ltd
Takashimaya Ltd.
Anheuser Busch Cos. Inc.
Snow Brands Milk Products
McDonalds Corp.
CPC International
Asahi Brewery
Mitsukoshi, Ltd.
Ajinomoto
Yamazaki Baking
Nissin Food Products
Kikkoman
Kinki Coca Cola Bottling
Nihon Shokuhin Kako

168,369
144.943 (trading companies include all sales)
140,204
135,542
128,174
124,027
119,434
119,281
108,702
106,147
79,179
78,921
54,553
52,067
48,933
46,506
34,545
31,645
28,281 (retailers include all sales)
27,137
24,822
20,120
19,566
18,624
18,546
17,269
17,063
16,407
13,777
13,314
12,955
12,770
12,576
11,194
11,177
10,884
10,783
10,686
9,844
9,696
9,297
6,307
5,313
2,302
1,648
1,284
413

Numbered companies are from Colby 1997, the Fortune Global 500. The number is Fortune's rank.Unnumbered
companies are from consolidated earnings in Japan Company Record (1998), at 125 $1. unit: $ million annual
sales, business year 1996.

5. CONCLUSION
Japanese food capitals are
progressive opening of Japans
as organizers and innovators
and networks that feed both

surviving the
food markets
in the foods
Japanese and

foreign consumers. Japanese capitals conduct

an import stream of foods from far oshore,
process and sell unique foods, command
large consumer markets through retailing and
food services. Japanese food capitals have,
like other industrial capitals, survived by

510

WORLD DEVELOPMENT

managing links between the inside and the

outside; some are important global players in
industrial and consumer food markets.
Japanese observers see dangers in this story.
Years of restructuring have resulted in the loss
of both agriculture and industry from Japanese
shores, contributed to the ``hollowing'' of
economy and employment, and increased
Japans vulnerability to food supply lines that
now behave according to market rather than to
plan. Beer Village, Kirin Beers automated
factory in Yokohama, is doubly ironic in a
country where real villages now play a limited
role in the agro-food system. The sentimental

appeal of the idea of a village may be a selling

point by which a large food capital can engage
urban consumers, but all the while real Japanese villages diminish in number and in significance to food supply. Second, it has been
national policy itself, partly intended to protect
Japans countryside from the workings of free
range food capitals, that has displaced food
processors interaction to regions oshore and
has encouraged their globalization. Japans
food capitals beyond the farm are a large,
creative, competitive mix of agents to be
accounted for in the provisioning of Japan
under conditions of agro-food restructuring.

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