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Thermos: make everyday life better every time

Interview - October 1, 2022

With over 115 years of heritage, Thermos’ durable double wall stainless steel vacuum insulated technology ensures superior temperature retention, providing a product that fits your lifestyle while delivering superior performance with exceptional durability.

YUJI KATAOKA, PRESIDENT OF THERMOS K.K.
YUJI KATAOKA | PRESIDENT OF THERMOS K.K.

I would love to start by having you describe your company to us. Thermos® is a recognizable brand to many as a producer of insulated vacuum flasks, but I want to dive deeper into what exactly is Thermos®, what is your core business, and what are the unique strengths of your company that enable you to be competitive as well as a market leader in over 120 countries worldwide?

The brand was born in 1904, and since 1989 we have expanded our business on a global scale. We are a Japanese company, but in actuality we operate more like a global company. Product development is led by Japanese engineers; however, we are always making sure there is clear communication between the sales, development, and marketing departments.

You’ve asked why we are a strong company, and that probably comes down to the brand. We have invested in the brand, and in Japan, especially over the past ten years, and really has cost us a lot of money to establish that recognizable brand name here in Japan. We are always monitoring our brand situation through research with different age groups, and we tried to ask the public how they feel about the brand when compared to others. Our company is always thinking about how to make our brand stronger.

Product marketing is another one of our strengths, and we have a very big R&D team as well as a big marketing team. They are always focused on consumer activities, and as you very well know, consumers are always changing. The COVID-19 pandemic has also had a huge effect on consumers and fundamentally changed shopping behavior.



With so much of our core strength being in product development, we take it as a challenge to not only improve products but to also create new markets. Take for instance our very traditional vacuum flask, usually, they are light and compact to accommodate the needs of the customers. From that, we developed the sport bottle range in 1998, and that was a really big hit, especially with Japanese kids. They really loved the design and sports are very important to Japanese children. After that, we developed the soup jar, which really penetrated the market for those wanting to bring their own lunches to an office or school. This was kinda a boom for us. In the last 4-5 years, tabletop tumblers have become such a huge market, especially with the COVID-19 situation, this market has grown.

The technology has essentially stayed the same, the idea of vacuum insulation and metal forming, but to take this technology further we develop new markets and new applications. This is what I mean by our product marketing. Using this strength we entered the kitchen market under Thermos® brand, especially with products like frying pans. We have studied the market and found that the average household has around 3-4 frying pans, and with that in mind, we decided that this market has potential and was something we wished to pursue. We also found that typically in a household, the purchaser of our products will also be the person that purchases frying pans for a household. Families are very familiar with our famous brand and this lineup has been very successful.

 

In the last 30 years, Japanese consumer electronics have lost significant market share to Taiwanese, Chinese and Korean makers, however, if we look at kitchen appliances, Japan still has a very strong hold there; companies such as Tiger have thousands of different products which have sold very well. What is your take as to why Japanese companies are so strong in this field? What are the distinguishing advantages that Japanese firms hold?

I think that Japanese consumers are stricter about quality, and the product itself. In addition, the buyer of products, the stores that sell them I mean, are also very strict when it comes to quality, especially when you run a comparison against other regional markets. That is why I think we must improve ourselves, the products we make, and the presentation we show to our customers. The entire business must continue to improve, otherwise, we lose easily. For consumers, price is only one of many factors that contribute to purchase, and they are always looking for something new, and products that have new functions they have never seen before.  This is why here at Thermos we are always trying to create and develop new products.

 

One of the biggest challenges with the switch to carbon neutrality is consumer habits as we see that single-use plastic items are everywhere. Obviously, your product is a stainless-steel product that is not only reusable but also more eco-friendly because there are no harmful chemicals like those contained in plastic items. How does your company view these consumer habits and what could be key for making them switch?

Eco-friendly SDGs and ESGs are trends and our products are all eco-friendly products, but at the same time our products give consumers a tasty temperature and that is very important. Taste is a key factor in whether a consumer will continue to use a product, and that is especially true in our business. Of course, nowadays many people are thinking about the environment, but I think enjoying the taste is the reason why our market has grown so big right now. Across the entire company, we have a lot of SDG activities, and PR appeal is necessary in order to catch the attention of media and consumers; letting them know that we are onboard with contributing to a better society. Thermos® really values its image, and we want people to know that we are not only active in these activities but that we take SDGs very seriously too.

 

We know that you’ve partnered with certain companies for this sustainable endeavor, for example, we saw Band of Doodlers in Singapore, which is a group of artists, who you collaborated on your Go Green series. Of course, you are also collaborating with giants like Starbucks and Disney. For the future, what type of collaborations are you seeking, and which specific markets would you be looking for those collaborations, either for product development or for advertising and promotional efforts?

I think we are really looking at both, and it is very effective to have partners to promote this sort of more sustainable lifestyle. At the same time, you must be careful not to paint yourself entirely with what we like to call the “SDG wash,” which isn’t such a good look.  Thermos® brand is our most valuable asset. We have maintained it seriously.

 

Your brand started in 1904 in Germany with the invention of the vacuum bottle technology, and since then historical figures such as Theodore Roosevelt the 26th President of the United States used your flasks, as well as the Wright brothers all the way back in 1909. What milestones either technically or historically would you like for us to highlight, and which were key to developing the brand we see today?

Yeah, many famous people have used our products, including former President Obama. With that being said, we are always looking toward the future, and that isn’t to say that we are not proud of our products, on the contrary, we are enormously proud of our company’s history. To be used by so many people worldwide is quite an honor.



You are the original brand for vacuum insulated flasks, but today of course you’re competing with many different companies in this field. The performance of these products, while it may seem simple, actually has a lot of engineering that goes into it. What do you do to ensure your products' quality remains that of a market leader? 

I think it comes down to the details. Our best-selling products appear quite simple at first, lightweight and thin stainless-steel walls with small insulation spaces, often with some sort of one-push method to get it open. The details, however, come with ease of use, if it is easy to drink from and easy to clean as well as insulating either hot or cold beverages then consumers are going to want to buy quality products like that. Customers may not know at the store, but after using our products customers understand why our products Thermos® is great. There are so many features that you don’t realize at first glance, but once you start using them, they become indispensable, and I think that is the secret sauce in our product development.

We collect a lot of consumer data, things like how they use the product for instance, or what kinds of drinks customers put in the vacuum bottles. That data is valuable, and we are constantly using it to assist product development in coming up with new ideas. Complaints too can be a valuable resource for data collection and understanding what exactly customers want and expect from our products. All of that data is coming back to marketing and being utilized in a positive way.

 

With the COVID-19 situation and the war in Ukraine, commodity prices are soaring. Nippon Steel just announced increases in their steel prices and Toyota is creating a huge new forecast in terms of material costs. How is your company coping with these rising commodity prices, especially as a user of stainless steel?

Good question. It is a difficult thing right now, and it isn’t just coming from material costs, but also transportation costs. Gas prices, freight costs, and the exchange rate are all not working in our favor right now. It is tough for us, but of course, we continue to do cost reduction activities. Unfortunately, as with so many industries right now, those costs will be passed on to the customers, but we are trying to do all we can to minimize that.

 

In the case of your company, how were you impacted by COVID-19, and what sales strategies or new methods did you do to offset the downturn?

I think the biggest impact on the Japanese market comes from the fact that we used to have a lot of visitors from China, and those visitors bought a lot of our products, which accounted for more than 20% of the total market. In Y2020, the market shrunk about 20% compared to Y2019 due to COVID. We also had an impact from schools, as you know many schools closed, there were no sports activities and many students studied from home. At the same, however, we had expanded home usage products such as tabletop tumblers.

We also had the kitchenware business with our frying pans and other kitchen accessories. This business segment has grown as a result of COVID, and I think this is why we could offset the market drop. I think we were very lucky. When people spent more time at home because of the lockdown, they enjoyed cooking at home. We also saw people enjoying beers at home instead of a bar.

 

The frying pan product is something that you’ve launched here domestically, and you’ve clearly had a lot of success with it. If we're to look internationally, however, you have brands like Tefal which are giants in the market. How do you compete against such giants and what would you say is your advantage?

Four years ago, we entered the market, but before that, we spent around 3 years studying the market closely and monitoring the situation. In addition to that, we spent a lot of time working on product development and marketing planning, so now we have launched in Japan and it has been very successful. We’ve just started selling in some of the Asian countries including China, and distributing our Thermos® flasks and Thermos® frying pans there. We know that Tefal is strong, but we can see their back, and we are trying to catch up in Japan.   

 

When it comes to R&D, Japan is famous for its level of spending, with up to 3% of the national GDP going towards these ventures. We know that your company has had a number of innovations throughout your storied history. Currently, what are you working on, and are there any new products you would like to showcase to us?

Those kinds of things are very secret right now and unfortunately, I can’t tell you too much. I can say that of course, we are always trying to develop a lot of new projects. The speaker that we developed in 2015, the world's first vacuum enclosure speaker, was not successful. I think it wasn’t successful purely because the market isn’t there for that type of product right now. We must always focus on the needs of the consumer, and then the market after that. I think that is the key to success right there.

Houseware is our main market, Thermos® brand is strong, so our current focus is an expansion in the household market.

 

In terms of product development, are you interested in working with partners either material suppliers or research firms both overseas or here in Japan?

We are pretty much open, especially as we have such a global operation. Our network stretches quite far. We always want to try new materials for innovation, we also are looking for new market by co-working with the right beverage companies or food companies.

Over 20 years ago we first introduced a carbonated beverage bottle, and it wasn’t successful. We account for the market not being ready for such a product. 20 years later we have improved on this, and we think that the market is ready, especially when you consider how popular carbonated drinks are like carbonated water.

We introduced this product in March 2022 and it has been very successful. Carbonated drinks build up pressure inside of a conventional flask, and the way that pressure is released is a key feature. If you don’t find a way, either the drink will no longer be carbonated, or the flask will have some gushing when it is released. These bottles can maintain temperature and carbonation for colder and longer.

 

Now you have a very diverse international profile spreading across Asia, Europe, and America. You are clearly an international brand through and through. Which countries and regions do you foresee as part of your mid-term strategy for growth and where are you focusing your efforts on?

Over the last 10 years, we have been focusing on Europe. Around in 2000 we had three companies there but had to withdraw them, close them down and appointed  distributors. From the year 2000-2010 business did not go well in the region. That is why we decided to establish the Thermos UK  and bought alfi GmbH in Germany. This contributed a little bit to delaying our expectations but probably in the next five years we will grow more business in Europe. Of course, the next target is Asia, both Southeast, and South. Those regions have huge populations that are trending upwards, and those economies are growing too. We have three companies in the region, Thermos Malaysia, Thermos Singapore, and Thermos Indonesia. Currently, Thermos Singapore is also heading up the export market in South and South East Asia. There may be a time in the near future however when we need to establish more companies in the region in order to further grow the business.

 

I wanted to ask about your strategy moving forward. Are you interested in joint ventures or M&As to acquire new factories or sales offices to further expand the brand?

We are always open to new opportunities, and especially in some markets, we may need to use M&As to enter the market and grow the business. These are all possibilities. 

 

Imagine that we come back on the last day of your presidency, hopefully, many years from now, and interview you all over again. What dreams or goals would you like to achieve for the company by then and what would you like to tell us in that interview?

I’ve been working for this company for 37 years now, and I really have a passion for this business. World domination is my dream, and joking aside, my passion is to really grow this company into something that I would be proud to pass on to the next generation.

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