In the business of heightening the senses

The global market for flavors and fragrances was valued at $26.0 billion in 2015. This market is expected to increase from $27.1 billion in 2016 to $37.0 billion in 2021 at a compound annual growth rate (CAGR) of 6.4% for 2016-2021. As the fifth biggest producer worldwide what is your personal perspective about the emerging trends shaping the future of the sector?

Asia is one of the areas we have identified as having great potential for the future of the fragrance, flavor and personal care industry – specifically in terms of potential economic growth. As the economics of the Asian countries continue to grow, and the lifestyles of people continue to change, we expect to see a higher demand for products that contain fragrances and flavors. In addition to the Asian markets, we also have high expectations for market growth in the Middle East and Africa. As these markets will doubtlessly continue to change and adapt, I feel it is an appropriate time for us to reexamine the value that our fragrances and flavors contribute to society, not only the core industries of each country but also to the increasing shift of individual preferences towards a healthier lifestyle. With this reexamination, we expect the future of the sector to see product innovations and the development of new markets, though at the same time we cannot take our eyes off of the markets of European countries and America, as these traditional leading markets still have potential for growth.

The US represents a promising future market with 25% of the global market attributed to the US. Japan has been doubling its exports to the US. If there is one country which seems to be well positioned to seize the opportunities presented by the American market, it is Japan. With a population reputed for its perfect skin, young looks and healthy diet, Japan has all the pre-requisites to tap into America’s wellness demand. With this in mind what are your goals for R&D and in terms of launching new products to markets like, for example the US?

To date, Japan has mainly only exported to the Asian countries; with a share of 90% of exports allocated to those countries. The remaining 10% reflects exports to Europe and America currently on a smaller scale. Although exports to the US are increasing as you mentioned, Japan has yet to fully introduce the US to its unique opportunities and Monozukuri. As Takasago is not an end commodity company, in that we do not make the final commodity itself, our goals remain focused on providing our clients with innovating products that can match consumer demand for health, anti-aging, and other wellness commodities.

Your company not only focuses on fragrance but also flavors (drinks), aroma ingredients and fine chemicals. Where have you in your one hundred years of history been able to apply the concepts of Monozukuri, Kaizen or Shu-Ha-Ri. How have these philosophies helped to improve the quality or generate new research and development for your company?

Takasago was founded in 1920 and was initially only a producer of aroma ingredients. The first challenge we faced as a company was how to develop technology that would allow us to also synthesize such ingredients. Fortunately, one of the masters we learned from was Nobel Prize winner Professor Ryoji Noyori. A significant milestone in our history was the collaboration with Professor Noyori that led to the development via optical activation of menthol as well as its productization.

This milestone was followed by many more developments into synthesis technology, as we subsequently established efficient methods for menthol production as an aroma ingredient and created means for utilizing catalysts in chemical synthesis. These achievements allowed Takasago to expand beyond the traditional scope of fragrances and flavors, and they have become the core technologies used in pharmaceutical intermediate production in our fine chemicals division.

The export to the US sector grew from 7 billion Japanese yen to 15 billion, despite this increase of almost 100% if we were to compare these two periods with South Korea’s export to the US, we see a big difference with their figures reaching around 200 thousand billion. Exports are seeing a trend of growth but there is still a long journey of opportunity available to Japan to increase exports to the US. Takasago’s latest financial statement stated sales to the US grew by 18% in the last year. What are the reasons for this magnificent two-digit growth?

This 18% increase is in sales growth by our US affiliate, Takasago Corporation USA, not in exports. This sales growth is due largely to an increase in flavors for beverage items and in fragrances for aromatic air fresheners and deodorizers. Our Japan facilities did contribute to this growth, though, seen in a sales increase of pharmaceutical intermediates which are produced domestically and then sold to pharmaceutical companies in the US by our affiliate.

What are you plans to increase the market of the taste enhancers for example in the US?

Takasago has identified this sector as an area of high interest and we are looking forward to further expanding within it. We continue to see the rise in demand for products with decreased amounts of fats, salt and sugar, as consumers wish to live longer and healthier lives. Although not all salts and sugars can be replaced easily, our R&D capability does provide us with several options. For example, we continue to develop technology that gives us the ability to replace or mask the sometimes undesirable flavor of functional ingredients and artificial sweeteners, or instead to enhance more desirable flavors or sweetness itself. In the US, we work closely with our affiliates to develop and propose flavors which are a match for the local market.

You mentioned a concept which is very important for our report – that word being bridge. In this instance we wish to create a bridge between US and Japanese companies. Why should Japanese business men choose Takasago as a potential business partner to generate business from the US to Asia through Japan and why are Takasago the best choice?

We take pride in our near 100-year history and have a strong ambition for sustainability. As such, our corporate identity and focus is not on immediate profits but on stability, and on our ability and desire to come together with our clients to create something new, something beautiful.