Crab-solutely Global: Sugiyo’s Rise to Fame

For 11 consecutive years, we've seen Japanese food-related exports increase. If we look up to 2023, they reached JPY 1.45 trillion. This has been consolidated overseas by the growing popularity of Japanese restaurants, which grew from 55,000 in 2013 to more than 200,000 today. How do you account for this substantial rise in Japanese food exports? Why is now the time for washoku to shine internationally?

Three hundred and eighty years ago, our company, Sugiyo, was established, and at that time, we were a fishing company. 1868 was the year that we started food, specifically fish processing and making fish-based products. Mr. Yosaku Sugino is the founder of our company.

The biggest driver of Japanese cuisine growth across the globe has to be the UNESCO World Heritage recognition that it received back in 2013. Since then, 11 years have passed, and globally, washoku has been recognized as healthy and full of culture. The Japanese government has also realized the importance of stressing Japanese cuisine as part of their export strategy, and since the UNESCO announcement, chain companies have expanded Japanese cuisine overseas.

Personally, I see three different streams: one in the US, one in Europe, and another in Southeast Asia. In Western nations, Japanese cuisine is recognized for its exclusivity, boasting a unique culture. This includes five different ways of cooking: slicing, steaming, simmering, deep frying, and grilling. Washoku should also consist of five different flavors: sweet, salty, umami, bitter, and sour. There are five colors: red, green, yellow, black, and white. Finally, the five senses are very important, and hitting all of these five senses during a dining experience is crucial. There are even calculations that need to be made in terms of enjoyment through munching or chewing. By chewing food, you can enjoy its sounds, tastes, and smells. All of these complexities are embedded into the mindset of Japanese washoku, and this leads to the Japanese hospitality mindset, also known as omotenashi. This unique dining experience is considered very special by a Western audience.

In Southeast Asia, things are a little different. Japanese food is considered a commodity. At first, the living standards of Southeast Asians were not thought to be high enough to purchase Japanese products, but now, with the depreciation of the JPY, it has become more affordable for the public of these Southeast Asian nations. Recently, our Unakamachan product has sold very well in Vietnam and Thailand. In the past, people did not have access to Japanese eel, but now, this product is easily accessible in supermarkets. This Unakamachan is now recognized as an important product for Southeast Asia.

Japanese cuisine really traces its roots back to convenience, especially with certain items such as sushi, which people could prepare as a quick bite before going back to work. This has now been taken out of Japan and has become popular with restaurant chains all over the world.

Over the next 15 years, Japan anticipates significant demographic shifts that will be characterized by both an aging and declining population. This will result in both labor shortages and a shrinking domestic market. What challenges do these demographic shifts create for your company, and can you tell us your company’s strategy to compensate for the shrinking domestic market?

The decline and market shrinkage are a great threat, but we do still see huge potential in the domestic market, ideally by entering new areas and new ways of selling products. We are expanding, especially in the US, constantly finding new ways and new demands in the market.

Let me tell you a little of our history in the US. Sales first started back in 1977 with fish-based products, but at the time, these products were not well received by the American people because the texture was very gooey and not very favorable. In 1985, we started working with United Airlines, offering in-cabin meals that incorporated fish balls. We called them Kaniashi(Crab leg meat), but basically, they were imitation crab. Something we discovered was that many passengers picked the imitation crab instead of the meat, and the leftovers were quite low. There was obviously a high demand for this imitation crab. Next, we approached the restaurant industry, where traditional American steakhouses serve crab together with meat on the same plate. The price of snow crabs was increasing, and so many middle-class restaurants chose to use our imitation crab instead of actual crab. This opened a new sales channel for us.

The next big hit came when we combined the imitation crab legs meat and mixed it together with mayonnaise, celery, and wasabi. We sold it in supermarkets, and it became a huge hit. Soon, however, Chinese and Korean makers introduced a similar product that was produced cheaper, creating a red ocean. This is when we shifted ourselves to more added-value areas, such as the snow crab imitation meat. Our products used to be sold in the frozen area only, but now they are sold in the frozen area and with the rest of the seafood. We have also trained our US staff on how to showcase the products and recipes that incorporate the ingredients. Altogether, we are doing much better in the US by diversifying our efforts into new fields.

Your imitation crab meat is widely used for various dishes, including California rolls. It is crafted to mimic the flavor of real crab closely. Your company was the original developer of this product in 1972, highlighting your innovation within the business. Can you tell us what strengths in R&D allow you to create innovative products?

Developing new products is a constant challenge for us, and receiving social acceptance takes time. Our flagship product is called Kanikama, which is a portmanteau of crab and fish cake. This product was first developed in 1972, and it first came about thanks to Japanese delicatessen who requested imitation jellyfish, which, at the time, imports from China had stopped. We started making this, but from the seaweed essence, we realized that the imitation jellyfish prototype contained specific types of acid that could not resist the saltiness of soy sauce, which basically caused the imitation jellyfish to melt. When the previous president tasted the jellyfish, he felt it tasted like a crab. The area we are in is known for crabs, and November 6th will mark the beginning of crab season, with the prices of crab meat rising. My predecessor tasted the imitation jellyfish and decided that if they added milk, they could imitate the look of crab as well. The addition of red coloring finishes the look. This was very successful, and we’ve now taken it to the next step by letting it sit at a high temperature in order to add a bouncy texture. It became massively popular in Japan, especially among those who saw crab as too high-end. I remember taking it to Tsukiji Fish Market for the first time and seeing middlemen flooding forward to purchase products.

Honestly speaking, at first, the name imitation crab was looked down on by society. The consumer organization filed complaints against us, saying that what we are selling isn’t crab, so we can’t call it crab. We’ve had to make changes to the name many times. Thankfully, after 50 years, we are now accepted by society, and this imitation crab product is now recognized as an indispensable ingredient in Japanese cuisine. We also had issues in the US, and the FDA said that letting the ingredients sit in high temperatures to add a bouncy texture amounts to letting food rot, and therefore, they couldn’t certify our product. I flew personally to Seattle to talk with FDA officials, explaining our history and providing evidence that there have never been any incidents of food poisoning happening with our production methods. They finally conceded, and we were able to sell our products in the US. Our discussions actually changed regulations in the US for how long a product can sit in high temperatures.

We saw in our research that your company provides a lot of products besides your imitation crab meat. Which of your many products do you feel has the most potential on an international scale? Are there any new products you would like to showcase for us today?

At first, our products were called imitation crabs or copy crabs because no terminology existed, and we had to label our own products since they were considered mysterious, unknown products. There was no choice at the time to use anything other than imitation, but now we are trying to rename ourselves as alternative crab. We've also had more and more people becoming sustainable and changing their eating preferences. To accommodate those people, we are providing alternative products. In the US, I have tried a lot of the alternative meats that are on offer, and they don't taste good, so making these alternatives taste better is very important, particularly in order to penetrate markets with these kinds of products.

Another focus we have is strengthening the protein content of our products so that athletes and people who like to exercise looking to build muscle can consume these products. Additionally, as time progresses, Americans are getting better at using chopsticks, and with that, more people are enjoying Japanese food. This presents a good business opportunity for us to rebrand ourselves as a sustainable alternative. With the war in Russia, however, our main source of procurement is Alaska. With the changing of sources, it is important for a company to focus on primary agriculture, fisheries, and primary industries. With this in mind, we have started farming with a 60-hectare plot of land.

Are you looking to expand your partnership network internationally, and if so, which countries do you see as having the most opportunities for your company?

Finding the most appropriate overseas partner is very important in our business expansion in the US. We have worked with an influential individual in the US who initially declined Cup Noodle, so out of repentance of this failure, he decided to try our imitation crab with his younger son. He was open to the imitation crab, and it became a success. Our company also had dealings with an Indian company that wanted to take this alternative crab and put it into Indian curry. We felt that this was a waste since all you would taste was the spice. The whole point of imitation crab is to enjoy the product itself. Something we have learned is to share a mindset with a partner.

Imagine that we come back in five years and have this interview all over again. What goals or dreams do you hope to achieve by the time we come back for that new interview?

Our society is constantly evolving, and environmental factors are changing. Global warming is posing a great threat to the people of the world, and there are food scarcity issues. As a food company, it is important that we are constantly mindful of providing sustainable food to the people in the best way possible. It is vital that our company constantly adapts to the changing world.

To read more about SUGIYO, check out this article about them

For more information, please visit their website at:  https://www.sugiyo.co.jp/en/