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No. 361, October 1999

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Japanese Companies in the US


FOOD AND AGRICULTURAL PRODUCTS

Its Folsom, California soy sauce plant is not even a year old (see Japan-U.S. Business Report No. 350, November 1998, p. 5), but KIKKOMAN CORP. already has announced aggressive expansion plans for the facility. It will spend $18.5 million to boost capacity by 50 percent to nearly 4 million gallons a year in 2000. In Kikkoman's current thinking, this increase will be the first stage of a $138.9 million, seven- or eight-year process that will raise the Folsom brewery's annual output to 10.6 million gallons. If plans proceed on schedule, Kikkoman will be able to make by the late 2000s 31.7 million gallons of soy sauce a year in the United States, with about two-thirds of the production coming from its original Walworth, Wisconsin plant. The company, which controls roughly half of the American soy sauce market, expects demand to continue to rise by approximately 5 percent a year.

Responding to the backlash in Japan against food products made from bioengineered soybeans, ITOCHU CORP. has decided that almost all of the 165,000 tons to 220,000 tons of soybeans that it buys annually from the United States for tofu and similar products will not be genetically modified. The trader's wholly owned QUALITY TRADERS INC. subsidiary of Cincinnati, Ohio, which was formed in the fall of 1997, is in charge of this project. QTI will use a storage facility it owns in Sharon, Wisconsin to segregate GM-free soybeans that it grows on neighboring land or that it buys from contract farmers from the modified variety. The business already does this for corn. Trading companies handle the bulk of the American-grown soybeans exported to Japan, whether for food products or the far bigger volume that is crushed for oil and feed.

With some recent studies indicating that drinking green tea can be good for a person's health, Japan's top maker of canned and bottled green tea sees a marketing opportunity in the United States. ITO-EN CO., LTD. will open a representative office in New York City in May 2000. According to current plans, it will launch sales of its green tea drinks sometime in 2001 after setting up a marketing subsidiary. Initially at least, Ito-En will contract production out to an American beverage manufacturer, although it will import tea leaves and other materials from Japan as well as from its tea-growing operations in the People's Republic of China and Australia.

An exchange rate of ¥108=$1.00 was used in this report.

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