Bringing Japan’s Hidden Food Gems to the World

For 11 consecutive years, Japan’s food-related exports have continued to grow, reaching JPY 1.45 trillion in 2023. A key driver of this expansion has been the global rise of Japanese restaurants, which have tripled in number over the past decade. What do you believe has fueled this significant increase in Japanese food exports? Additionally, why do you think now is the moment for washoku to gain even greater international recognition?

As you are likely aware, Japan’s population is shrinking rapidly due to an aging society and historically low birthrates. This has led many Japanese businesses to shift their focus overseas. While large corporations have the resources and capacity to expand internationally, SMEs often struggle, even when they offer high-quality products or services. As a result, many SMEs seek local partnerships in foreign markets to navigate the complexities of global expansion.

Among all industries, the food sector has the highest number of players, and the domestic market’s decline has created significant uncertainty. Companies across the industry are taking this challenge much more seriously. This has led to an increase in business owners opting to sell their companies rather than deal with succession issues. Baby boomers are now in their 70s, and many are retiring, leading to a wave of market consolidation. However, there is limited interest from investment firms, as they tend to focus exclusively on return on investment (ROI).

As a listed company, Yoshimura Food Holdings operates outside this typical acquisition cycle. Many firms looking to sell their business approach us through mediators and banks. Unlike traditional investment firms, which focus primarily on large acquisitions with high growth potential, Yoshimura Food Holdings can acquire smaller SMEs, provided they meet a certain profitability threshold. Furthermore, unlike investment funds that typically sell acquired companies after a certain period, we do not sell the companies we acquire. This flexibility and unique structure offer multiple business opportunities and allows partner companies to expand overseas. While investment funds focus on a small selection of sellers, Yoshimura Food Holdings has the ability to support a much wider segment of the market. This is a key strength that sets us apart from the competition.

In the past, selling a company was often viewed negatively in Japan. However, over the past decade, this perception has shifted dramatically. Many SMEs face succession challenges, and for smaller companies, remaining independent may no longer be viable. In these cases, consolidation becomes a practical solution. The option of being acquired by companies like ours has become a real and strategic choice for SMEs. This changing mindset is why we are seeing a growing number of potential sellers in the market today.

Japan is facing a significant succession crisis, with many first- and second-generation SMEs struggling to identify future leadership. At the same time, there is a noticeable shift away from the JPX and the Tokyo Stock Exchange, as companies prioritize capital efficiency. This has led many businesses to divest non-core assets, fueling an increase in M&A deal flow. In 2024, Japan recorded its highest-ever year for M&A activity. Looking ahead over the next five years, how do you see M&A trends evolving within your sector? Do you believe these patterns of consolidation and divestment will continue to accelerate, or do you anticipate a shift in the market?

This trend is still in its early stages of growth, and so far, only a small portion of companies have seriously considered selling themselves. However, this number is expected to increase significantly in the near future. Among SMEs, relatively larger companies may not immediately consider divesting, but affiliates and subsidiaries of major corporations will need to reevaluate their non-core businesses. As these companies seek to streamline operations and improve capital efficiency, more divestitures will take place, creating new business opportunities for Yoshimura Food Holdings. Even for companies that do not face succession issues, some will still be open to selling as part of their strategic realignment, further expanding the potential acquisition landscape for us.

Our research shows that you earned an MBA from The Wharton School of Business before beginning your career at Daiwa Securities, followed by a move to Morgan Stanley. Given your strong finance background, what led you to create a fund with a long-term perspective? Additionally, why did you choose to focus on the food sector rather than other industries?

Ever since I was a child, I knew I wanted to own my own business, but when it came time to choose a specific sector, I wasn’t sure which direction to take. That’s why I decided to join Daiwa Securities—it allowed me to gain exposure to a variety of industries and learn about different business models. I enjoyed the work more than I had initially expected, which led me to stay longer than I had originally planned.

When I finally decided to pursue my own business, I considered several sectors. The core industries I focused on were food, tourism, and technology—in particular, the Shinkansen and its impact on regional connectivity interested me. However, my upbringing in Hokkaido played a major role in my decision. I grew up eating fresh, high-quality food, and when I studied in the United States, I realized how different the food experience was. That’s when I saw an opportunity—Japanese food, with its quality and unique flavors, had huge potential as a value-added product in overseas markets.

Hokkaido itself is an incredible region, known for its powdery white snow, beautiful landscapes, and affordable hot springs, but what stood out to me the most was the exceptional seafood and local cuisine. I wanted to bring these flavors and experiences to the world—to allow more people to appreciate what Japanese food has to offer on a global scale.

A key point in your response was bringing Japanese food to overseas markets, and earlier in this interview, we discussed the significant rise in food exports. With this in mind, the Japanese government has set an ambitious target to reach JPY 5 trillion in food export value by 2030. To achieve this, they are shifting toward a more international strategy, aiming to expand Japan’s global food presence. Do you believe this target is realistic within the given timeframe? Additionally, what do you see as the biggest opportunities and challenges in this government-led push for increased exports?

Regarding the JPY 5 trillion export target, it is difficult to give a definitive answer since I don’t have specific numbers to support any claims, but I believe it is achievable with sufficient government support. Japanese food is not just a passing trend—its global presence has been steadily growing for years, and at this stage, I don’t see it fading from the global consciousness.

The key to further expansion is ensuring that tourists visiting Japan experience authentic Japanese food firsthand. Many people become fans of Japanese cuisine through their experiences in Japan, and when they return home, they look for ways to recreate that experience. However, the reality is that many regions still lack access to authentic Japanese restaurants. If we can increase the availability of high-quality Japanese dining experiences abroad, it will create a virtuous cycle—driving demand for more Japanese restaurants and food products. If this happens globally, I believe the government’s targets are achievable.

We are not just selling food products, we are selling content, food culture, and a rich culinary experience. This is why achieving the export goals must be a collective effort between businesses and the government. There is much we can learn from Korea and the global success of K-pop, which was strategically marketed with strong government backing.

Japanese food has built an international reputation for being healthy, refined, and at times luxurious. Many of the necessary factors for success are already in place, but in order to fully unlock the potential of exports, we need a coordinated, long-term strategy.

A significant part of this success will depend on companies like ours focusing on the artistry and aesthetics of Japanese culture as a whole. As I mentioned, it’s not just about the food itself—it’s about selling an experience. Japan’s cultural uniqueness sets it apart from any other country, and it’s essential that we highlight these strengths while making them accessible to international consumers.

After World War II, Japan became heavily Westernized, with businesses and individuals looking to mirror the West. This is why Japanese people love Disneyland—it represents an aspiration toward Western culture. I believe this approach is misguided. If we try to imitate the West, we will always be a weaker version of it. Instead, we need to embrace what makes Japan unique and lean into our cultural strengths.

Before the war, Japan had a distinct architectural style, art, and cultural identity, but over time, there has been less emphasis on preserving and celebrating our own heritage. As a result, the value of our culture has been diluted. Moving forward, we need to take a proactive approach to marketing Japanese culture globally, ensuring that its true essence and strengths are recognized and appreciated by international audiences.

Our research indicates that you’ve been exploring overseas acquisitions as part of your growth strategy. When evaluating potential companies to acquire, what are the key factors you consider? How do you determine whether a business aligns with your long-term vision, and what criteria must a company meet to become part of your portfolio?

Whenever I make a decision, the first thing I evaluate is the financials—cash flow, profit margins, and other key metrics. However, even with strong financial indicators, some acquisitions have been successful, while others have not performed as expected. Over the years, I’ve realized that the most important factor for success isn’t just the numbers—it’s whether the owner’s values and philosophy align with ours.

Of course, we conduct thorough due diligence, but no amount of financial analysis can provide 100% transparency on how a business is truly run. That means there are always inherent risks in any acquisition. This is why an owner’s integrity is critical—it helps us determine whether the company has the right foundation for long-term success and minimizes the risk of unexpected challenges post-acquisition.

For example, if a seller is only focused on short-term gains, such as manipulating stock prices or trying to sell at the perfect timing, it raises serious red flags. Someone willing to cut corners or hide key details in a sale likely ran their business the same way, and that presents a massive risk for us. This is why, in some cases, I have walked away from deals midway after sensing a misalignment in values and trust.

Historically, your company has primarily focused on acquiring Japanese food manufacturers, but in 2022, you acquired ONESTORY, a marketing company that is not directly related to the food industry. Then, in 2024, you expanded further by acquiring Fukyo Food, a Chinese ingredient company. What led you to take this more diversified approach to acquisitions? Looking ahead, do you plan to continue expanding beyond your typical scope, or will your primary focus remain within the food sector?

These two acquisitions may seem very different, but they are both aligned with two key strategies in our business model. Our internal talent pool has traditionally been strong in finance and manufacturing, but marketing and R&D were areas where we saw room for improvement. ONESTORY was a strategic acquisition aimed at enhancing our marketing capabilities and increasing the sophistication of our consumer targeting. By strengthening these areas, we can refine our branding strategies and ensure that our products reach the right audiences more effectively.

The acquisition of Fukyo Food, on the other hand, had a different objective. This move was focused on scaling our business through high-quality products. Rather than expanding broadly, we took a niche approach, acquiring a company with strong products and a high market share in its category. This allows us to build depth in specific markets, reinforcing our position as a leader in select segments.

Fukyo Food’s Spring roll wrappers that are used in high-end Chinese restaurants

Moving forward, our acquisition strategy will continue to be driven by these two approaches—enhancing capabilities where we see gaps and expanding into high-value niche markets with strong product offerings.

In recent years, your company has delivered strong sales and financial performance, even exceeding your own expectations. What do you believe are the key factors behind this success? Looking ahead, how do you plan to sustain this momentum and continue driving growth and profitability? 

Our scallop business was a major driver of exponential growth last year. We currently hold approximately 10% share of the Japanese scallop export market, specifically in Hokkaido, which is the only place in the world where artificial scallop cultivation has been successfully established. Other countries rely entirely on natural sources.

Attempts to cultivate scallops artificially in locations such as China have not been successful. This may be due to Hokkaido’s colder waters or the cleanliness of its marine environment, both of which appear to create the ideal conditions for scallop farming.

Scallops hold tremendous export value, rivaling even wagyu beef. However, not everything has been smooth sailing. The Chinese ban on Japanese seafood exports forced us to bypass China and instead focus on direct exports to the U.S. and Europe. Interestingly, this shift has actually increased the value and price of our scallops in overseas markets. From what we understand, Chinese processers have been inflating scallop size by pumping them with water, whereas our products maintain superior quality and authenticity, making them even more desirable internationally.

These factors—our strong presence in the scallop market, the unique cultivation advantages of Hokkaido, and the adjustments to our export strategy—have all contributed to our strong financial performance in 2024.

We have obtained HACCP certification for the U.S. and EU markets, which is considered difficult to acquire due to strict hygiene management requirements.

Despite delivering strong financial results, your stock price and company valuation have dropped 40% over the past six months. In September 2024, the stock was trading at around JPY 1,800, but as of January 2025, it has declined to approximately JPY 1,000. What do you believe is causing this disconnect between your company’s impressive growth and its market valuation? Are there external factors at play, or do you see this as a temporary market reaction?

Obviously, this is an extremely difficult question to answer, but I believe the disconnect may stem from our overly conservative market outlook and investor relations (IR) strategy. We disclose our earnings on a quarterly basis, but the scallop business is highly susceptible to market price fluctuations, and the timing of revenue generation varies depending on our sales strategy. As a result, financial performance tends to fluctuate significantly. Given our cautious guidance, some investors may have anticipated a temporary decline in earnings and preemptively sold shares, rather than holding onto the stock for long-term growth. Moving forward, we need to consider how we communicate our business cycles more effectively to investors and provide a clearer long-term perspective on our financial trajectory.

Which international markets do you see as key to your future expansion? Are there any specific regions where you anticipate strong demand growth for your products?

I would have to say the U.S. and China due to their large populations and the high number of affluent, high-net-worth individuals. Our ideal target markets are mature economies with a significant senior population, as these consumers tend to value premium food products.

That said, China presents challenges due to geopolitical risks, so we are currently focusing more aggressively on expanding in the U.S. as a key international growth market.

What would you like to have achieved by your company’s 20th anniversary in three years time?

My goal is to grow the company to a JPY 100 billion market capitalization within three years. Achieving this milestone will capture the attention of institutional investors, increasing market confidence and enhancing our long-term growth potential.

For more information, please visit their website at: https://www.y-food-h.com/en/