Initially established in 1941, today Jellice is the fifth largest producer of gelatin in the world, with an in-house R&D department is renowned for its cutting-edge, innovative practices. Business is booming, with the global gelatin market projected to grow from USD 3 billion in 2020 to USD 4.4 billion in 2029.
Over the past 25-30 years Japan has seen the rise of regional competitors such as China, South Korea, and Taiwan, which have replicated the Japanese model of success but done so at a cheaper cost. However, despite this we still see many Japanese firms maintaining large market shares in sectors such as health and beauty. What are some of the competitive advantages of Japanese firms that have allowed them to maintain high market shares despite the stiff price competition?
Honestly speaking, our firm hasn’t had much exposure overseas and we’ve only had a plant in Miyagi prefecture. It was very hard for us to maintain this plant between 2002-2005 in Sendai. As you can imagine, the price in the area is very high, and there are certain noises or drainage problems in the center of the city. We felt a lot of issues at the time. Another problem arose, and that was the shortage of labor.
At the end of the day, Japan is not a cheap place to manufacture things, so our strategic decision was to divide our processes into two parts: pre- and post-gelatin manufacturing processes. Gelatin was made in China and India, then brought here to Japan where we can do processing and blending processes. This became a very decisive point for us. This also contributed to our decision to move more towards the suburb of Sendai City in Miyagi prefecture since we were able to benefit from cheaper prices.
One problem I would like to bring up right now that comes from localized overseas production is, of course, cross-contamination. This is why we have clear divides, for example, Taiwan only produces pig skin, fish skin and collagen peptides and India deals with bovine bone. China only deals with pig skin and bone gelatin. Different places are responsible for different types of gelatin, thus preventing cross-contamination.
Quality matters, as I’m sure you are aware, and meeting customer specifications and satisfying those customers is something we take very seriously. In many ways, walking the extra mile for the customer is going to be the thing that gains their trust, and in that sense, I think that this is why Japanese companies have a competitive edge in so many industries. Jellice prides itself on our in-house R&D, basically developing ideas into products using our expertise in gelatin and collagen. This has resulted in Collagen Tripeptide (CTP), a development we made.
It is a difficult task to find a place where we fit. In the industry, there are a number of competitive gelatin manufacturers, and honestly, we are quite proud that we are fourth in global rankings. Annually we produce 19.2 thousand tonnes of gelatin and we have a manufacturing capacity for 1.2 thousand tonnes of collagen peptide.
Japan is known for an aging population, and by 2050 it is expected that the population will drop below 100 million with one in three people over the age of 60. This raises issues such as a labor crisis and a shrinking domestic market. At the same time, Japan has the second longest life expectancy in the world, just behind Hong Kong with a median age of 85 years old. Experts agree that a diet on top of fantastic medical services plays a huge role in people’s longevity. How is your firm supporting and helping to contribute to the longevity of the Japanese population? To what extent do you believe you need to look overseas to ensure long-term business success?
Our company by definition is contributing to the longevity of Japanese people. We live in a time when people want to live long lives, so there are trends with health and wellness products.
Japan’s population is experiencing rapid aging, and in some sense, this has become a driving force for the economy. In fact, I would say that to some extent this is good from our perspective because there are more elderly people in Japan. It is creating new opportunities for our firm to develop new products that cater to this elderly population in particular. I’m talking about products such as skincare solutions and functional foods that are encouraging people to have healthier lives. Collagen is proven scientifically to help people, especially with joints, blood vessels, and legs. As we get older we have problems with these body parts so we as a company are looking to provide solutions.
One of the raw materials we produce originated from the idea of prolonging people’s lives. I think this speaks to how we are helping try to solve some of the social problems that are affecting Japan in particular.
Japan is the first super-aged society, but Korea, Italy, Greece, and Germany all have 20% of their population over the age of 65, meaning that in the not-so-distant future, they will follow Japan in becoming super-aged. Some would even say that Japan has a first-mover advantage. Do you see Japan as leading when it comes to elderly-based solutions? Are there any ideas you see Japan excelling at?
First of all, we should probably talk about Japan. As a country, it is not widely known as a heavy meat-eating nation. Meat culture was brought to our shores from Western countries several centuries ago, and before that Japanese people relied on a diet of vegetables, fruit, and beans. I believe that this may be at the root of the healthy longevity of the Japanese people.
Collagen and gelatin itself can be embedded into products in many forms. We are developing a way to allow physiologically active metabolites derived from collagen to be absorbed by the brain structure, helping to escalate brain functions as well as help with disorders such as dementia. This product has already been patented and now we are looking for a medicine delivery vessel. Blood vessels are also another area where collagen has been proven effective. Blood vessels and internal organs can all benefit from collagen. These are activities we would like to further emphasize in the future.
The gelatin global market is projected to grow from about USD 3 billion in 2020 to USD 4.4 billion by 2029. This growth is going to be driven mainly by surging demand for functional foods and pharmaceuticals. How do you foresee the next 12 months for your business and what do you believe will be the main growth drivers from your perspective?
A major Irish company that makes a lot of food-related products has signed an agreement with us. The first shipments are going to be happening this year and this is because the market tendency is shifting away from protein and more towards collagen. The benefits of protein are widely known at this point, and products such as whey protein powder are sure-fire hits in the West. CTP on the other hand is smaller, and in this domain the smaller the better. With CTP, you don’t need to eat nearly as much. In fact, a lot of products can be produced with embedded CTP, so in my opinion, this is a good tendency of the market; I honestly think the possibilities are looking great in the food and beverages sector.
With your history and expertise in gelatin, you have been able to set a position for your company in various industries. Food, medicine, and even photography are all fields you’ve tackled. Among all of the industries that you are catering to, which do you believe has the most potential for future growth?
I would define potential growth by industry, rather for me I see it divided into two segments of products, those being gelatin and collagen. The gelatin market is more or less stable, meaning there is stable demand for this product. It also means that the market has reached its potential and is now heading into a maturity phase. Any applications for gelatin beyond conventional ones are very difficult to imagine, however, collagen is a completely different story. We’ve talked earlier about some internal body uses for collagen, and collagen is helpful to the body as a whole. No matter the vessel, collagen is working to help people achieve a healthy lifestyle. This is why we see so many opportunities in this field.
It isn’t just the Japanese market either, collagen has proven itself on a global scale. I feel like people around the world know of the effects of using collagen, so in that sense, we are looking forward to overseas expansion. I would even say that our company has already taken keen steps towards overseas markets.
Maintaining the benefits of CTP during the manufacturing process is quite challenging. Scaling up production would disturb the complex amino acid sequence. How do your production processes for CTP ensure scalability without compromising the unique characteristics that make CTP special? Are there any particular CTP products that you would like to showcase to us today?
CTP is quite a simple structure in which gelatin is broken down into its smallest units, tripeptides. It is known as glycine-XY sequences, meaning three parts are cut off from the gelatin. I think that the magic of CTP is that it goes straight to the body’s organs, and for that reason, we promote CTP’s bio-activity. Usually with collagen, you need to ingest a lot for there to be benefits, but with CTP, thanks to its direct delivery and action to organs there are much fewer ingestion requirements. What this means is that CTP is much better, faster, and more efficient than regular collagen, and this improvement comes from the extraction of the glycine-XY sequence.
Bio-activities is the key word here, essentially being able to deliver the necessary amount of collagen to where it is needed in the body. CTP allows for the straightforward, direct delivery of this collagen.
We could say that a drug delivery system is an application but I wouldn’t say this is the primary target here. Instead, the primary target here is delivering collagen to parts of the body.
Earlier you mentioned collaborating to widen the range of applications for your collagen. One way to achieve this is through collaborations with business partners. What role do partnerships play in your business model and are you currently looking for any new partnerships in overseas markets?
Yes, we have plenty of collaborations, especially here in the domestic market where we provide our collagen to supplement makers. Even if you look at our neighboring countries, there is a beauty and health food company in Korea that we collaborate with. At that company, they have products that are based on collagen we produce. There are countless examples even in markets such as America or Ireland that we mentioned earlier.
In America, our business is more B2B, and we are providing our collagen products to manufacturing companies in that market. Now we are trying to shift to a more B2C model with original products sold through Amazon. These products include a moisturizing serum and the lineup will launch in May 2024.
In order to maximize the effectiveness of our launch later this year we are becoming active on social media to change the mindset; we believe the smaller the better.
Are you looking for distributors or is this solely e-commerce?
The first step will be e-commerce through Amazon, but once we have exposure, we will possibly explore the idea of local distribution in physical stores.
Considering that skin types vary wildly from country to country, how are you able to make sure that your products are able to cater to different markets such as the US?
We are offering a targeted product and we are aware that each nationality has different skin with different features. Our product is targeted to the American market and we have been conducting due diligence with a local American company. They were able to conduct the market research on our behalf.
This local company has even launched their website to sell on our behalf too. Their data proves that our product will work well in the American market.
Do you envision success in Europe too?
It is a step-by-step process but we are confident that we can replicate the model elsewhere. We have a plant in the Netherlands, and we asked our people to try the product. The results were very positive.
Imagine that we come back in 2031 and have this interview all over again. What goals or dreams would you like to achieve before we come back for that new interview?
Ideally, I would love to see a future where our firm is capable of offering a full menu of collagen products to our loyal customers. I would really like to see our company offering all sorts of options to cater to all sorts of different needs. Obviously, this wouldn’t be limited to Japan either, Jellice is looking to make an impact on a global scale with all of our collagen-related products.
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