In this candid interview with Meiji Group CEO and President Mr. Kazuo Kawamura we learn the secrets to Meiji's continued success.
Japan’s government is now targeting JPY 5 trillion in food exports by 2030, but a point of contention in achieving this is Japan’s aging population, where one in three people is over the age of 60 and one in ten is over the age of 80. Addressing this concern is leading to labor supply issues as well as logistics issues, as well as the health and well-being of those aging people. We saw that in June 2023, you introduced Meiji Nutritional Profiling System (Meiji NPS), which measures food in order to enhance its nutritional content scientifically. Can you tell us how the Meiji NPS is helping to address this aging population issue, particularly when your company is focusing on the frailty aspect of the older generation?
The aging population is the biggest issue that Japanese society is now facing, and for food companies, it is important to incorporate and have a perspective toward aging nutrition. You must grasp this megatrend as a business opportunity to grow as a company. The needs of the elder generation are much different from the needs of young people. The younger generation needs food to be delicious, but for the elderly, it is more important that the food is easy to swallow. It also needs to cater to the specific needs of the elderly in terms of maintaining their health, especially for those with high blood pressure or diabetes. A big issue with the elderly is that they cannot consume large amounts of food, thus leading to malnutrition in some cases. It is important to supplement this nutrition with amounts that they can consume.
The Meiji NPS categorizes people into general adults and older adults. We base this on Japanese standards and traditional food culture, taking nutritional calculations off this. NPS for older adults are very rare globally, and Japan is at the forefront of this aging demographic and has become a pioneer. As a Japanese company, Meiji must take the lead in establishing this NPS.
It is important to note that European food culture and Asian food culture are very different. In order to establish a practical and usable NPS it is vital to base it off local food culture, basically being regional or locality specific. What we are trying to achieve is food guidance, selection, and consumption amount through thorough profiling.
Meiji has a long standing history of over 30 years manufacturing nutritious food for the elderly in nursing care homes. We are now taking this know-how and technology and expanding this to the more general, elderly market. We want to make appropriate food accessible in supermarkets and drugstores. To this end, we are now developing to increase our product lineup.
Nutrition for the elderly isn’t just an issue in Japan, and we are seeing this issue pop up in locations across Asia. Currently, we are exporting to Taiwan and Vietnam, but soon we want to expand throughout Asia.
Another issue is food loss. Japan’s population is declining, but the world’s population is growing year-on-year and is expected to reach 10 billion by 2050. Here in Japan, food loss was approximately 5.2 million tonnes in 2021, but there are goals to reduce this by half before 2030. For food companies, achieving this goal could be done through improved packaging technology in order to extend shelf life, but can also be achieved through better fermentation techniques and the utilization of circular economies. In the case of your company, can you tell us what initiatives you are taking to increase the shelf life of your products and what technologies you are implementing to reduce food loss?
We are in line with governmental policy in reducing food loss, and we are targeting fiscal 2025 as the deadline for reducing our product waste by half of its fiscal 2016 levels. In order to do so, our core strategy is the extension of the shelf lives of products. By extending the shelf life of a product, particularly chilled products, you can reduce food loss massively. Take, for example, our milk, which up to now has a shelf life of about 7 days. This has now been extended to 19 days, massive reductions in food loss will be seen, and nowhere is this truer than with milk-based products. The food loss that we have already reduced shows that this is an effective strategy for sustainability.
Currently, production is done on a prospect basis, so we produce based on past assumptions. Once we can extend the shelf life, we will have a bigger inventory of products. It would allow us to manage our products better. Before going ahead with all this, it is still important that we consider not only the safety aspect but also the taste. There are still many challenges ahead in order for our company to move forward with extending the shelf lives of products.
Meiji Oishii Gyunyu
Last year, Meiji was selected for the Dow Jones Sustainability World Index, which is a benchmark for environmental, social, and governance (ESG) investors. A core reason for this selection is Meiji’s projects within the dairy markets. In 2018, you came up with the Meiji Dairy Advisory, seeking to create a more sustainable supply chain from dairy products and milk. You are also quite well known for your collaboration with Ajinomoto, where you are looking to tackle the nitrous oxide emitted by cattle. How do you envision the future of the milk and dairy supply chain, and how are your technologies contributing to changing these highly necessary yet polluting sectors?
Companies globally are now trying to tackle this issue of greenhouse gasses, namely methane and carbon dioxide emitted from dairy farms. Japan is also taking action towards this goal. There is a global platform that is setting a path towards zero emissions and dairy net zero.
Globally speaking, the biggest issues seen in dairy farms are found in those that are situated in developing nations. The productivity of the milk is quite low, and a cow will emit the same average amount of CO2 no matter how much it is milked. By increasing productivity, you are able to operate the best practices. The most efficient region is the US, followed by Japan and Europe; however, we understand that each country is taking its own approach to mitigate this issue.
As Meiji, it is important for us to support dairy farmers in order to sustain our milk and dairy business. We are supporting them through the introduction and implementation of feed additives that reduce the amount of CO2 and methane gas emitted by cattle. You mentioned Ajinomoto, and with them, we are collaborating on a feed that reduces nitric oxide, which is emitted by the feces and urine of cattle. We also collaborate with other companies who have developed another additive to reduce methane by 30%. We then purchase this reduction as a credit from dairy farmers, which incentivizes farmers to introduce more environmentally friendly measures. As a company that releases dairy-related products, it is vital that we support the businesses of dairy farmers, converting businesses to be more sustainable.
From nutrition to lifestyle, from prevention to medicine, Meiji has positioned itself with a series of products that have become essential to daily life. Please tell us about the synergies between your food business and your pharmaceutical business.
There are multiple synergies; however, the biggest may be seen in financial prospects because the food segment has high stability with less growth, whereas the pharmaceutical sector takes a long time to develop but has high growth potential. The volatility in pharmaceuticals might be high, but so is the growth potential. By combining the two, we can have the best of both worlds. Having a more balanced ratio, we are able to acquire stable profitability and high growth potential.
Although food and pharmaceuticals are different segments, the commonality is health. Food shouldn’t only be delicious, but it also needs to contribute to better health, and pharmaceuticals should contribute to the maintenance of good health. It is very difficult for us to find any specific collaborations but we have established our own research center within our holding group with the aim to contribute to peoples’ daily health. To this end, we are trying to create a new category that falls between food and pharmaceutical. We call this center the Wellness Science Labs, and the themes we cover are Anti-aging immune Boosting and Microbiome. Based on these three research topics, the research center is now developing new types of health-benefit products that contribute to a better standard of living for society.
Protein-based dairy products have surged in popularity over the last ten years, and people are becoming more and more aware of the health benefits of certain trends. From the data, we saw that 60% of Americans are looking to increase their protein intake, and your SAVAS brand has become very popular in recent years, especially in Asia. How do you plan to continue to grow the brand in the years to come? We also saw that you’ve invested in a startup for non-dairy-based protein. How do you reconcile the fact that you will be so well known in dairy for plant-based protein in the future?
Currently, the market size for protein in Japan is about JPY 250 billion, whereas in the US, it is over JPY 1.3 trillion. It is important, however, to note the population difference. The US has three times as many people living there as Japan, but even with that in mind, the consumption of protein per person is much higher in the US. The Japanese market could be considered an underdeveloped market for protein. Seeing the US market, I see huge growth potential in the Japanese market.
Having said this, people’s mindsets towards protein are very different compared to those of the US, Japan, and Asian markets. The US has a mega supplement market, and protein is just one part that can be consumed as a powder or in tablet form. Japanese culture does not have experience with this type of protein consumption. We have 45 years of history providing protein powder, but we launched a ready-to-drink type in 2015. Ready-to-drink sales have already caught up with the powder, and we foresee further growth.
We are diversifying our SAVAS lineup to provide a wider selection for people to choose from, taking into consideration preferences and dietary habits. This will allow consumers easier access to opportunities to consume protein. Considering our 45-year history with protein powder, we still have a lot of powder fans, but they are mainly athletes and, therefore, considered a minority. In order to increase our share, it is critical to spread out more and target the general public through more accessible products.
A core difference between the US and Japan is tastes. If you try protein drinks in the US, you will be stunned by how sweet they can be. As part of Meiji’s 2026 mid-term plan, you have set expanding its overseas business as a priority. This includes a big push for dairy products in Asian markets and your chocolate business in North America. Considering you are in the middle of an international expansion, how are you tailoring your products to each specific region based on cultural differences?
It is important to adapt products to local food culture and dietary habits. In the case of SAVAS, if we just took the powder form and tried to sell it in the US it would not be successful since the market is already flooded with different protein powder products. If we were to operate in the US we would have to have a more unique approach and bring a product that doesn’t exist in the US. That may be a niche, but finding this niche is very important.
Rather, we want to focus on East Asia right now. There, we can take successful SAVAS products from Japan and apply them to other Asian nations. At Meiji, we focus on the protein itself, and that protein could be sourced from dairy, milk, or also from soy. Each protein has its own uniqueness, so we want to leverage on each one’s characteristics. As for the new protein fund, we have been investing in the fund for new technological developments. This is particularly focused on infant formula. Currently, infant formulas are dairy protein-oriented, but this fund is developing technology to base infant formula on human protein from the mother’s milk. There are many technical, ethical, and emotional issues to overcome since it involves cell culturing, so our latest technology may not necessarily be accepted by consumers. We are very careful when implementing this new technology. We feel it is important that we keep ourselves open to many types of proteins and find the ones that contribute the most to society.
Imagine that we come back on the last day of your presidency and have this interview all over again. What goals or dreams do you hope to achieve by the time you are ready to pass the baton onto the next generation of Meiji Holdings executives?
I am not satisfied with the current situation, and I would not be satisfied if I were to retire from the company in the same position. Meiji, as a company, constantly takes on new challenges, but we experience more failures than successes. The few successes greatly boost the growth of the company, but the failures are simply failures, and they can lead to my dissatisfaction as the company’s president. It is important, therefore, that I constantly aim higher and learn from the mistakes of the past to make our successes even greater. I’ve always said that Meiji should have a clear uniqueness, and although we have many rivals, each of these rivals does have a uniqueness that has been accepted by consumers. Meiji likewise must strive to evolve constantly, providing our uniqueness to customers and gaining their loyalty and preferences.
For more information, visit their website at: https://www.meiji.com/global/
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