From Sparkling Wine to Nutritional Jelly; Tombow Beverage Innovates Beverages

Before we begin today’s interview, could you briefly describe the beautiful landscape around us?

Being a beverage maker in the Toyama Prefecture of Japan, we are fortunate to be blessed with natural beauty and abundant clear water from the Tateyama mountain range. We are surrounded by high mountains and deep ocean, with cold and warm ocean currents meeting in Toyama bay. We, therefore, benefit from fish from both ocean currents, creating a very diverse fish culture. Our prefecture is also known as the “Kingdom of Fermentation,” particularly for our tasty koji. This great local fermentation culture is great for preserving food. The local region is also the biggest consumer of kombu in Japan.

Traditionally, there are transportation routes from Hokkaido to Kyoto, meaning that kombu is produced in Hokkaido, not here in Toyama. Kombu brought here travels along the coast before going to Kyoto. In Toyama, sashimi is wrapped in kombu for preservation reasons.

If I talk about our company now, Tombow Beverage was established 127 years ago, starting with Ramune, the Japanese soft drink, and we don’t actually sell this a lot these days. In fact, we have stopped the manufacturing of Ramune all together. As a result, our business has transformed a lot over the years. While we do have overseas sales, they are almost zero, so we are seriously considering expanding our overseas sales.

One of the challenges Japan is facing is the population crisis. Now, over 33% of people are over the age of 60, and to compound this issue, Japan has historically low birth rates. This will result in a shrinking domestic market and difficulty in hiring staff. We know that one of your group companies is currently involved in developing jellies and products for the elderly who have difficulty swallowing. How can the products your company supports improve the quality of life for an aging society?

Our company has a long history, and throughout much of that history, we have targeted school children with our products and Ramune soft drinks. Nowadays, however, Japan suffers from very low birth rates, with other demographic trends such as the aging society and women’s empowerment also prevalent. We noticed that we didn’t have many products for the elderly and women. About 25 years ago, we started to develop products for the elderly and women.

As we age, it becomes harder to swallow, and that is because of aging of the muscle that blocks the entry of food into the lungs. Obviously, food is meant to go to the stomach, but in some cases, it can go to the lungs by accident. This can cause mis-swallowing. The reason this happens is that as you get older, your muscles don’t work as well as they used to, and the muscle that blocks entry to the lungs creates a problem. To solve this issue, food needs to be made into a block on the tongue, which sends a signal that food is going towards your stomach. Jelly is the perfect format to make that happen, especially when compared to liquids. It was from this understanding that we decided to develop pineapple juice jellies for the elderly. We understood that a pouch type was the best packaging for this kind of product. Usually, a pouch is used for babies and children because it's easy to use and adjust. I believe that only Japan uses these packages for adults and the elderly, not for children.

We produce jellies, and water or moisture is removed from the solids to prevent leakage. This also will help decrease mis-swallowing among consumers. Our target is to produce jelly that is friendly to the elderly and prevents accidents. To this end, we acquired jelly technology that does not produce excess moisture. Jelly is now accepted by a variety of consumers, from children all the way to the elderly. With our possession of jelly technology, we can now cover a variety of demands.

If we talk about the challenge of the aging population, Japan is not the only country facing this issue. Korea, China, the US, and Italy are just a few that are following closely behind Japan. It is said that by 2050, there will be more than 20 countries that will be in a similar situation to Japan with aged populations. This has led many observers to argue that Japan has a 20-year head start in trying to solve these problems, placing them very favorably to be able to enter into other global markets. Do you agree with this sentiment? What opportunities do you see from leveraging Japan’s position as a pioneer in tackling an aging population?

Yes, we do see this as an opportunity. As mentioned earlier, we use pouched products for our elderly products, even though other countries only use these pouches for children. We hope to make proposals to other countries that are facing issues like those in Japan.

You’ve split a large portion of your business into three major areas: cosmetics, nutritional jelly, and beverages. Could you tell us about this side of your business and some of the services or production capabilities that you’re able to offer?

There are six major beverage manufacturers in Japan that dominate the market. Coca-Cola, Santory, Kirin, Asahi, Otsaka, and Ito En. If there is demand from these major manufacturers and if it meets our production capacity, we are happy to take their orders, but basically, our concept is to have the total package, from development to manufacturing.

Over our extensive history, our company has developed a strength for creating great flavor. Customers make requests regarding the kind of flavor they want to achieve, and we can fulfill that request based on our special technology as a beverage manufacturer. This is the same as the major giant manufacturers. This is why there isn’t much we can do for major companies. Pharmaceutical companies, on the other hand, often do not possess the technology to develop flavors, yet they will want to create pharmaceuticals that are delicious to take. In Japan, we have a saying that translates to “Good medicine tastes bitter.” This is an area we can help, changing effective medicine and helping it taste better. This is why most of our customers are from the pharmaceutical and beauty industries. In these areas, we can make a big difference. International companies entering the Japanese market and Japanese companies looking to enter the international market can benefit greatly from our strengths.

Jelly products

Another large part of your company is the non-alcoholic wines you sell. In the West, as people look for a healthier lifestyle, many are looking to non-alcoholic beverages. There is also growth in Muslim countries. Looking to the future, are you implementing any strategies to take advantage of trends in these markets and, therefore, sell your products, specifically your private brands?

Eighty percent of our sales come from contracted manufacturing. The other twenty percent comes from our own brand products, including our jellies for the elderly. We are certainly considering those growing markets for our private-brand products. Based on the information we have obtained about these markets, we can also assist OEM customers.

Even in Japan, the market for alcohol-free sparkling wine is growing. In the past, non-alcoholic beverages focused on non-alcoholic beer, but sparkling wine is now becoming popular. Our target customers are mostly women who enjoy wine at restaurants but cannot drink alcohol. They don’t need to feel pressured into drinking alcohol and can celebrate with their friends or family. Many restaurants have begun stocking our products.

Can you explain how you are able to mimic the flavor so well without any traces of alcohol?

Usually, fruits are fermented first with alcohol, which produces alcohol. We ferment, but our method does not produce alcohol, which means we don’t need to remove any alcohol. When you remove the alcohol, the flavor created by the fermentation process is also removed. Flavor isn’t removed with our process, so it still tastes like the real thing.

Japan has a lot of fancy French, Italian, and Japanese restaurants, and these establishments have started to use our products. Sometimes, it is difficult for some casual restaurants because of the cost, yet we are still seeing an increase in the number of restaurants that stock our products. Even nursing facilities have started purchasing our products. In fact, one interesting thing to note is that gynecologists have started purchasing our products to toast women who have just given birth. These products can be halal-certified and are great for vegans. This drink really is perfect for any age, and this concept is a core part of our export strategy.

Non-alcoholic wine

We have already exported our products to Saudi Arabia and Dubai. Ramadan is also coming soon in March, and after Ramadan, there is usually a big celebratory dinner. This presents the perfect opportunity for our non-alcoholic wine. With our increased presence in those countries, we hope that more people will start using our products.

You mentioned plans to export to overseas markets. Which markets do you plan on focusing on?

Liquids are difficult to export since they are heavy, especially considering that products are mostly stored in glass bottles. The unit price is also quite low. All these elements make export quite tricky. Only alcoholic beverages are suitable for export since the unit price is much higher. With those kinds of beverages, the unit price makes export feasible. With soft drinks, major companies use local production to spread their products around the globe.

In terms of what areas we are considering right now for overseas markets to tackle, we are currently thinking about Muslim countries like Singapore, Malaysia, Indonesia, and the Middle East. This is why we need to focus on our branding, too, since without a strong brand, it is very difficult to compete in international markets.

Imagine that we came back on the last day of your presidency and had this interview all over again. What goals or dreams do you hope to achieve by the time we come back for that new interview?

The mission of our company is to take on challenging tasks since challenging tasks help us grow as humans. This is the kind of message I hope to pass on to my employees on my last day as the president of Tombow Beverage.

For more information, please visit their website at: https://www.tombow-b.jp/english/

To read more about Tombow Beverage, check out this article about them