Unique product planning in the confectionery packaging market

It is our view that Japan is at a very exciting time for manufacturing. On one hand, we have had major supply chain disruptions in the last three years, caused by the COVID-19 pandemic as well as tension from the China-US decoupling situation. As a result, we are seeing many multinational groups try to diversify their supply chains with a focus on reliability. This is where Japan can enter; a country known for decades of high reliability, trustworthiness, and short lead times when it comes to production. Now, with a depreciated JPY, it is our view that there’s never been a more opportune moment for Japanese manufacturers to meet the pressing needs of this macroeconomic environment. Do you agree with this premise, and why or why not? What do you think are the advantages of Japanese firms in this current economic environment?

It is true that with the depreciation of the JPY exports are looking good, however, there is the fact that Japanese companies procure raw materials from overseas, and right now imports are at a much higher cost than they were pre-pandemic. In the end, this has not resulted in Japanese companies being put in an advantageous position.

One of the biggest trends happening in Japan right now is, of course, the changing demographic situation. Japan is the oldest society in the world with a rapidly declining population. Experts are predicting that the population will drop to under 100 million by 2050, with one in three people over the age of 65. This is causing several issues including a labor crisis and a shrinking domestic market. Having said this, what is your firm doing to ensure business continuity and to what extent do you believe you need to look overseas to ensure long-term success? 

With the decline of the Japanese population, market size shrinkage is inevitable, so to compensate Japanese companies including ourselves need to go overseas. Currently, we have a joint venture with a Taiwanese company and thus we have a factory in China to manufacture the packaging for confectioneries. China, despite its size however still has a relatively small market in terms of consumers of confectioneries.

Western-style confectionery packaging will certainly become popular in the future, but the process of changing Chinese people’s palettes and introducing them to these new foods will take some time.

In Southeast Asia, from my observations at least, I’ve seen that the upper-class people tend to prefer Western-style packaged sweets, whereas the general public still hasn’t been exposed to these types of sweets and they are much less accessible to the general public in these markets.

Our business started as a wholesaler of confectioneries right after WWII. After the ashes of war devastated our country we rebuilt by building machinery as well as working with pâtisseries of the time. We gathered all the ingredients such as sugar and flour from the black market and created sweets with them to sell in Osaka. At the time the demand for Western confectionery had risen, and our company’s grew along with this increased demand.  

Of course, this population decline is affecting our business, but we aren’t alone. With fewer children being born we have fewer young people, and thus our country’s military power decreases. This worries me as our country is becoming vulnerable and less protected. The aging and declining population is the biggest issue facing Japan as a country, and I’m hoping that the government will take an active lead in finding solutions.

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Another megatrend in the packaging sector has been environmental consciousness. More and more we are seeing countries banning the use of single-use plastic, and as such companies are looking for sustainable alternatives to traditional products. As a result, we have seen in recent years the rise of paper-based alternatives as well as plastic alternatives. How is this trend towards environmentally conscious consumption impacting your company and how are you responding to these kinds of industry changes?

We are absolutely in line with SDGs and support their realization. To achieve a carbon-neutral society the conversion of power is important, and so we have installed multiple solar panels to use as much natural energy as possible.

The second issue is forest resource management. We have obtained FSC certification and strive to properly manage and use wood resources, the raw material for paper, to ensure they are not depleted. The third is the release of carbon dioxide emissions data for each product. This will be implemented from now on, but we will disclose how many cc of carbon dioxide are emitted by each product. This will serve as a guideline for customers and consumers to use our products, and will also serve as a detailed management goal to reduce emissions.

In many interviews with key players in the industry, they mentioned that to unlock the international market there is a need to partner with local companies to better understand the needs of a locality. We know that your firm sells your products in over 20 countries worldwide, so with that in mind can you tell us the role that partnerships play in your business model? Are you currently looking for any new partnerships or collaborations in overseas markets?

We are actively seeking partners and that is because we feel it is very important to have local partners to help penetrate new markets. This is especially true in the confectionery field where we need to work with companies such as oven or mixer makers as well as food packaging makers. Creating joint ventures is something we are keen to do.

Speaking of joint ventures, we know that you have a joint venture in China. Can you explain to us what some of the advantages are of having this joint venture? Looking forward, what other strategies will you employ to strengthen your international operations?

We established a joint venture with a Taiwanese company on the premise that the Chinese market holds huge potential. We wanted to enter the Chinese market, and right now we are still waiting for the market to grow.

At this moment in time, we aren’t planning anything for overseas markets, but in the future, India may be a potential country to go to since it has a large population, but right now this is only a hypothesis.

Are there any countries or regions that you would like to focus on more?

Disneyland in the US uses our products and we have an employee whose wife is one of the biggest Disney fans I’ve ever seen. They went to see how our products are used in Disneyland and they found the whole experience very exciting.

One product that stuck out to us was your To Go Containers, and demand has increased recently with the expansion of fast food production delivery. As a result, there is now a lot of competition in the market. How are your to-go containers superior to similar products offered by your competitors?

Our products are paper-based with a polyethylene surface treatment to block water leaking in. We are planning to expand as the SDGs spread.

Most of your products are in the confectionery market as you explained, which is quite a cost-competitive market where there are a lot of companies offering similar things. It comes down to being able to lower costs while maintaining a certain level of quality. What would you say are the competitive advantages of your firm that allow you to stand out against similar firms in the sector?

Our superiority in product planning and design capabilities, as well as in-house development of molds and manufacturing equipment, allows us to propose highly unique products to our customers and also improve manufacturing efficiency.

Price competition in my opinion does not create a healthy market. We all understand that going to extremes isn’t going to help anyone, and so we as a company try to maintain a price range and provide added value to the products for that price. The field of confectionery caters to personal preferences, so creating new types of confectionery is something we urge our clients to do. It allows us to then offer them unique packaging solutions.

I feel that Japanese confectionery and the technology behind it is a remarkable wave. If you compare Japanese confectionery to ones from overseas, the non-Japanese products tend to be too sweet and hard to eat. Japanese confectionery is less sweet but still stays fluffy.

Your company offers clients baking molds in addition to packaging solutions. Knowing that you cater products to both restaurants and bakeries, which sector do you believe has the most future growth potential?

It is hard to say which has the most growth potential. Speaking on the domestic market we believe a decline is coming, and this is going to be brought about due to the declining population. When people get older they eat less food, so for that reason, it is important to compensate overseas.

Throughout your company’s 60 years of history, what do you consider to be some of the key milestones in the development of Temmashiki?

The recent COVID-19 pandemic had devastating effects on our company. We had to ask employees to take alternating days off since there were considerably fewer orders coming in. Factory operations were at less than full capacity, however, having said this, the confectionery industry is traditionally very stable, and we see COVID-19 as a once-in-a-lifetime freak occurrence.

Have you rebounded since COVID-19?

We still aren’t back to 100% yet. It is very hard to foresee, but we are expecting demand to come back to pre-COVID levels shortly. The only good thing about the pandemic was that home usage of our products has risen. Other than that, B2B saw a significant downturn.

Imagine that we come back on the very 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 Temmashiki executives?

This is an incredibly difficult question to answer and I’m not exactly sure if I can answer it. Even though I have very high aspirations for the future, the changing society will not always necessarily allow me to reach those goals. Rather than setting concrete goals, I would rather find the best solutions for our company as we go. I would tell the next generation of executives to always do their best, and as long as they put forward their best efforts I’m sure they will find their way to make sure Temmashiki is a success.

 For more details, explore their website at https://www.temma.co.jp/en/