Nihon Shokuhin Kako aims to transition itself from a corn starch supplier to a solution-oriented business, developing functional saccharides and starch-based resins like Star Cross 70PPi, an environmentally friendly alternative to conventional plastics. The company complies with strict safety standards, particularly in the pharmaceutical and cosmetics industries.
Right now is a pivotal time for Japanese makers. Policies like the US Inflation Reduction Act are forcing corporations to diversify their supply chains for reliability and to reduce country risks, with nations such as China. Japan is known for its reliability, advanced technology, and a weak JPY, so for the time being Japan has never been a more cost-effective option. This means that Japanese firms have an opportunity to expand their existing global market shares. Do you agree with this sentiment, and in your opinion, what do you believe to be the advantages of Japanese companies in this current macroeconomic environment?
In the most recent (February 2023) GDP figures for countries around the world, Japan was overtaken by Germany and dropped to fourth place, indicating a decline in economic strength. Nevertheless, Japanese products continue to enjoy a high reputation for stable quality, and Japan's technological and developmental capabilities are not inferior to those of neighboring countries. Japanese products used to be high-priced and high quality in the global marketplace, but now, due in part to the weak yen, they are being recognized as low-priced and high quality, creating an opportunity for Japanese companies to expand their business overseas. Many Japanese companies are taking on the challenge of entering overseas markets armed with technological and development capabilities that can add value to their products and services, such as reliable high quality and functionality that meets diverse needs.
Domestically we have factories in Shizuoka and Okayama prefectures and by utilizing these two factories we can cover the whole of Japan. We provide commodities for high-end products. In particular, our strengths lie in the stable production of high-end products that we can provide. We cater to a wide range of applications; from food to industrial usage. Being able to provide stable products is a core pillar of our business.
High fructose ingredients usually come in a liquid form, so it is important to have a robust logistics network to ensure a stable supply of these liquid materials. If it was in the form of powder it would be easier to transport, but since it is a liquid there are limitations such as exports.
Our competitors are other domestic companies and there is harsh competitiveness, but fortunately, we don’t experience this with overseas companies exporting to Japan.
One of the unique aspects of the Japanese market is that customers not only consider price in their decisions but also ensure a stable supply of core ingredients is vitally important for them. Credibility plays a role in establishing long-term business relationships.
Japan is known worldwide for its aging population, and experts are now predicting that by 2050 the population of Japan will dip below 100 million due to low birth rates. This has created a labor crisis as well as a shrinking domestic market. From your perspective, what have been some of the challenges and opportunities you’ve seen as a result of this demographic shift, and how are you reacting to these changes?
Japanese society is shifting more towards a nuclei family unit, smaller families with everyone working together including mothers and fathers. This has made frozen food more important in Japan. Also, there has been a diversification of diets with the younger generation being more environmentally conscious and choosing vegan lifestyles. It is important to accommodate these diverse needs and diets, and starch is a crucial component in the making of vegetarian or vegan food.
Take vegetarian meat for example, soybean meat requires starch for additional flavoring and texturing to make it taste chewy. Also, with frozen food like chicken, adding starch makes it tastier. We see huge potential for growth in our particular segments.
More and more people are becoming health conscious, not only just the elderly but especially those who want to prevent diseases and disorders through changes in their diet. We refer to them as MIBYOU and we want to cater to them. To do so, we have developed a type of saccharide that prevents a sharp rise in glucose levels after taking in a meal, which would prevent further exacerbation of diseases such as diabetes.
Your company utilizes many business divisions, which do you believe has the most growth potential from a business perspective? How does this structure give your company an advantage when compared to your competition?
Conventionally our business model has been the provision of corn starch and it has been our mission to establish a supply of corn starch in mass quantities. Now we want to conduct more of a cross-sectional solution type of business. For example, in the field of saccharides, we want to develop functional saccharides, and this is one of the key R&D projects that we are undertaking. Oftentimes, finding chemical deficiencies is based on a solution-oriented approach. Being able to evolve our company’s value through creating new solutions is the approach we are taking and is essential to the growth of our company.
The advantage of our company is that we provide various solutions to all sorts of different industries. Most times, specific companies specialize in only one product. We want to present solutions and products that cover a wide range of productions, applications, and industries. We also have a high percentage of our employees working in R&D, in fact, 10% of our employees are working in our R&D department. This approach is helping us become a very solution-oriented company.
One product that caught our attention was your Star Cross 70PPi which was released in November 2023. Could you tell us more about your Star Cross 70PPi product and how it compares to conventional polypropylene (PP) materials? What level of compatibility does your Star Cross 70PPi have with traditional industrial materials?
Along with our starch and saccharide business for food, we have always been conducting and evolving our industrial starch business. 50-60 years ago, Japan was a major expert in textiles, and in that field, starch was used as a filler, and binder. Ever since Japanese society has shifted more towards starch being utilized in paper manufacturing. With the recent growing awareness of the environment and eco-friendliness, we wanted to reduce the amount of petroleum-based materials we offer, so we thought about combining PP with starch. It would create a more environmentally friendly approach.
Conventionally we have accumulated a vast amount of experience in paper making, for example, in fortifying pulp. Why not take this technology and provide a starch and plastic mix to create a new type of fortified resin? Starch and resin are incompatible initially, but by using special chemicals we can create a good mixture. Our 70% starch-based resin, also known as Star Cross 70PPi, is most appropriate for molding, and since the starch molecule remains it creates a more matte surface which is better for more high-end designs.
We have already acquired certification for its use with food, so we are looking to convert this to new products very soon. We are also providing Star Cross 70PPi as a master batch to other plastic producers. Once a resin product contains over 30% starch material, it is considered a biomass plastic. Interestingly, as a molded product containing more than 51% starch is not considered plastic, it can be incinerated in Japan.
Take, for instance, cellulose, another plastic alternative. Our Star Cross 70PPi is much simpler to make and cost-wise it is less expensive. Star Cross 70PPi is indeed more expensive than PP, but the price is within the absorbing range. Finding the right application would be a great boost.
What applications can you foresee it being used for?
Mostly as an alternative to plastic. A key one might be in food containers. There is little static electricity so it doesn’t get dirty easily. This means it is best suited for food.
In addition to food, we’ve seen that your company is catering to other industries that play a major role in our daily lives like pharmaceuticals and cosmetics. These industries require highly functional materials and safety measures since we are talking about the health of the public. How are your fine chemicals supporting the pharmaceutical and cosmetic industries?
We are compliant with the Food Safety System Certification Scheme (FSSC) 22000, for international management system standards. This strictly regulates the design as well as the procurement of ingredients, production, packaging, storage, delivery, and inspection. All of these aspects are strictly observed and controlled. Each individual in our company including myself is highly aware of how important it is to comply with these high regulation standards. Especially in the field of pharmaceuticals, compliance with GMP standards is critical to good manufacturing practices.
We are monitored closely by the Japanese Health Ministry and often receive audits from governmental entities to ensure that we are always compliant with the high standards required for starch and glucose. We are a unique company in the fact that we can provide starch and glucose to the pharmaceutical industry.
Throughout many of our interviews, we have heard about the importance of collaboration or co-creation as a means to co-develop new products and penetrate new markets. What role do partnerships play in your business model and are you currently looking for any partnership opportunities either domestically or overseas?
Overseas expansion centers around our factory in Thailand, so one thing we can do is increase our exports from Thailand to Japan. We are also able to exploit Thai local markets and make headway towards neighboring countries like China, Indonesia, Malaysia, and Vietnam. Since we’ve been present in Thailand since 1987 we’ve been able to establish a big customer portfolio, so big in fact that in five years, we believe we will reach full factory production capacity. To this end, we need to diversify into more new fields, and one example might be the materials that we produce in Japan for industrial purposes like starch for the resin.
Unfortunately, a lot of this information is confidential but I can reveal that we have been collaborating with overseas companies to further expand internationally. We are currently contemplating in our Global Initiatives Department which would be the best destination next for international partnerships. The location and method are still under discussion internally.
Which region do you believe will have the most growth potential for your firm?
Southeast Asia and China will be the best markets for us to apply our experience from Japan. This is because the Southeast Asian countries are following the path that Japan has laid out. Cold chain and freezing technology is now becoming very prevalent, therefore freezers and refrigerators are now commonplace in households throughout Southeast Asia. With the change in the family structure, there have been more diverse diets and a further reliance on frozen food. Catering to these changing needs is a business opportunity we would like to capitalize on.
Imagine that we come back in four 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?
70% of our revenue comes from our primary business, but we are hoping that in four years that might be 60%. The idea is to shift over to a solution proposition business. Our company has a long-term vision that reaches the year 2030. At the same time as this solution-based shift, we also want to expand our product lineup range, especially products derived from corn starch. Providing products that help with social issues such as CO2 emission reduction or disease prevention are what we strive to provide. These are areas where we want to focus on, providing society with alternative solutions to big issues. As for overseas, we want to continue to propose potential new business to overseas companies. If they are intrigued by our technology, we would be interested in exploring possible business ventures with them.
For more details, explore their website at https://www.nisshoku.co.jp/
0 COMMENTS