Nichirei Corporation History

Company Perspectives:

The Nichirei Group will devote unceasing efforts to creating products and services genuinely useful for people's lives and helping customers achieve good health and fulfilling lives. As a food company "pioneer" developing superior food products and logistics networks, the Nichirei Group will seek to create and supply products and services of the highest quality and best value to achieve unparalleled customer satisfaction and grow with society as a widely trusted and well-respected firm.

Key Dates:

1942:

Teikoku Marine Products Control Company is formed by 18 fishery companies in response to new legislation governing the Japanese fishing market.

1945:

The company incorporates as a private corporation under name Nippon Reizo Co. Ltd.

1946:

Nippon Reizo begins food wholesaling.

1949:

The company makes a public offering on the Tokyo Stock Exchange.

1951:

Nippon Reizo establishes a cannery and a food processing business.

1977:

A dedicated transportation and logistics subsidiary is formed.

1979:

Nippon Reizo opens offices in New York.

1984:

The company diversifies into biosciences, pharmaceuticals, and seed and seedling production.

1988:

Expansion into the European market begins with the acquisition of Eurofrigo BV in the Netherlands.

1989:

The company Germany with its purchase of Thermotraffic.

1990:

The company expands its presence in the Netherlands with purchase of HIWA.

1997:

A central research and development facility in is opened in Chiba.

2004:

A second subsidiary is opened in Shanghai.

2005:

The company reorganizes as a holding company for five independent businesses.

Company History:

Nichirei Corporation has developed a two-pronged leadership strategy in two core markets: processed foods, on the one hand, and, on the other, refrigerated and frozen food warehousing and logistics. The company is one of Japan's leading producers of frozen and canned processed foods, as well as a leading domestic importer and processor of fresh fish and shellfish. Nichirei has also developed a line of drinks and health foods based on acerola berries and has begun extracting cosmetic ingredients from acerola seeds. Nichirei also processes beef and poultry for use in soups, fried chicken recipes, and the like. The company's Temperature Controlled Logistics division, operating through subsidiary Nippon Teion Ryutsu Co. Ltd., is Japan's leading providers of refrigerated and frozen food transport and warehousing services and is also one of the top five frozen foods logistics groups in the world. These operations are carried out in more than 70 logistics centers throughout Japan and the Asian region, as well as in Europe and North America. In addition to food processing and logistics, Nichirei has interests in residential and commercial property developments, including the operation of a parking garage in Osaka. Nichirei's Biosciences division develops antibiotics, cell culture reagents, and active ingredients for cosmetics. The company also develops orchids and other flowers. Nichirei is listed on the Tokyo Stock Exchange. In 2004, the company's sales topped ¥496 billion ($4.8 billion).

Beginnings in the 1940s

Nichirei Corporation was launched in 1942 in order to coordinate the processing, freezing, warehousing, and distribution of the ocean-netted fish and shellfish of some 18 Japanese fishing companies. The new company, originally called Teikoku Marine Products Control Co., operated under legislation enacted that year, the Fisheries Control Ordinance, which regulated the seafood market during the wartime years. With the end of the war, and the lapsing of the control ordinance, Teikoku Marine Products incorporated as a privately held company, changing its name to Nippon Reizon Co. in 1945.

As Nippon Reizon, the company began to branch out, adding a foods wholesaling operation in 1946. That business later became known as Yukiwa Co. Ltd., and remained an important part of the group's activities into the late 1990s. Nippon Reizon's entry into food wholesaling soon led the company to deepen its operations in the foods sector. In 1948, the company expanded its foodstuffs business to including the import and export of a range of products, including canned foods, fertilizers, oils and fats, and animal feed. The company also began processing and selling its own canned goods at this time.

In order to expand, Nippon Reizon listed its stock on the Tokyo Stock Exchange in 1949. The public offering enabled the company to begin investing in expanding its production, notably with the construction of a canning factory in 1951. This marked the company's full-scale entry into the food processing business. One year later, Nippon Reizon launched its first branded line of frozen fish products. By the end of the decade, it added a livestock program in order to insure the supply and quality of fish for its growing food processing business. The company became known for its quality standards, including its insistence on hormone-free and antibiotic-free fish, shellfish, and meats.

Diversifying in the Late 1970s and 1980s

Nippon Reizon changed its name to Nichirei Corporation in 1985. Through this period and into the 1990s, food processing, as well as food import and export operations, remained the major part of the company's business. As late as 1992, foodstuffs still accounted for 83 percent of the company's sales. This segment of Nichirei's operations was boosted in the late 1970s with an expansion into the United States. In 1979, the company established a U.S. subsidiary, Nichirei Foods Inc., which began purchasing food products, including meats, fish, and shellfish, as well as agricultural products, for import into Japan.

The late 1970s and 1980s marked a period of the diversification for the company. In 1977, for example, the company launched a dedicated subsidiary for its transportation and logistics operations. That subsidiary became known as Nippon Teion Ryutsu and grew quickly into Japan's leading refrigerated and frozen foods logistics group. An important step in Teion Ryutsu's development came with the opening in 1986 of a freight-handling refrigerated warehouse. The company also acquired a number of other refrigerated transport specialists, notably in Tokyo and Osaka.

Another area of diversification for the company came in 1982, when the company established its own biotechnology wing. That operation focused on producing antibiotics but was also concerned with the development of other products, including health foods. This latter activity led to the company's commercialization of its first acerola-based product, an acerola beverage, in 1988. Another offshoot of the company's bioscience interests was its entry into the production, wholesaling, and marketing of pharmaceuticals and reagents in 1984. The company also began trading and developing seeds and seedlings at this time.

Nichirei added two more business lines in the 1980s. The company's seed interest led it into the cultivation of flowers, with an emphasis on developing new flower varieties. (Orchids became a particular specialty for the company.) Nichirei also entered the real estate development market, beginning with such projects as the construction of office buildings, residential apartments, and parking garages.

Reorganization in the 2000s

By the early 1990s, Nichirei had added another wing to its growing empire, that of a network of distribution and service centers. By 1992, the company operated 68 centers in Japan. Nichirei had also boosted its logistics business, merging its three existing businesses into a single, national giant, Nippon Teion Ryutsu, in 1990. In 1992, that business opened a new Kansai logistics terminal, reinforcing its leadership status in Japan's refrigerated and frozen foods logistics sector.

At the same time, Nichirei had launched an international expansion drive as well. The company boosted its presence in the United States, adding six new operations in that market, including a meat processing subsidiary known as Sun Husker Foods and a Seattle-based branch for expanding its frozen fish exports. Nichirei also added a subsidiary in Australia before turning its attention to the European market in the late 1980s.

Nichirei's expertise in frozen and refrigerated foods logistics provided the group's entry into Europe. With the purchase of Eurofrigo in 1988, the Netherlands became the company's first target market in the region. Nichirei next turned to Germany, acquiring Thermotraffic in 1989. The following year, Nichirei boosted its presence in the region with the addition of Holland International Warehousing, known as HIWA. Into the late 1990s, Nichirei's logistics business was primarily directed toward supporting the company's own food processing activities. In 1998, however, Nichirei began providing its frozen and refrigerated foods logistics services to third parties.

In 2000, the company acquired more than 15 percent of Bangalore, India's Snowman Frozen Foods Ltd., becoming the second-largest shareholder in that company after majority shareholder Mitsubishi. Having entered the Chinese market in the 1990s, Nichirei quickly became a major supplier of shrimp and other seafood to that country and opened a subsidiary in Shanghai. In 2004, the company added a second subsidiary in that city in order to market pouch-packed soaps and other products.

Nichirei opened a central research and development facility in Chiba in 1997. By then, the company had developed a number of products and technologies, including a line of special purpose foods for diabetics in the late 1980s and early 1990s. Nichirei also continued working on the development of products from the acerola fruit. These efforts led to the launch of a new cosmetics ingredient extracted from acerola seeds--previously a waste byproduct--in 2004. In the same year, the company unveiled its newly developed frozen fish with edible bones.

The shift of Japan's demographics, accompanied by a zero population growth and the loss of the country's financial luster at the turn of the 21st century, introduced new challenges for the company. In the early 2000s, Nichirei undertook a new Medium-Term Plan that restructured the company around a dual core of food processing and logistics. The company's restructuring continued into the mid-2000s with the launch of a company-wide reorganization at the beginning of 2005. Under this reorganization, Nichirei established itself as a holding company. The company then planned to merge businesses within each of its five primary divisions, which were then to be reincorporated as five independently operated businesses. In this way, Nichirei expected to prepare itself for the coming challenges in Japan's food and food logistics industries.

Principal Subsidiaries: Nichirei Foods Inc.; Nichirei Australia Proprietary Ltd.; Nichirei Carib Corporation N.V.; Nichirei do Brasil Agricola Ltda.; Nichirei Europe S.A.; Nichirei Holding Holland B.V.; Shandong Nichirei Foods Company Ltd.; Shanghai Nichirei Foods Company Ltd.; Surapon Nichirei Foods Company Ltd.

Principal Competitors: Maruha Group Inc.; Agricola International S.A.; John Swire and Sons Ltd.; Christian Salvesen plc; Senko Company Ltd.; Komatsu Forklift Company Ltd.; Mitsui-Soko Company Ltd.; CJ Food System.

Further Reading:

• "Nichirei Launches New Marketing Unit in Shanghai," Jiji, October 1, 2004.
• "Japan's Nichirei Develops Acerola Seed Extract for Use in Cosmetics," Asia Pulse, March 31, 2004.
• "Nichirei Develops Frozen Fish product with Edible Bones," Japan Food Products & Service Journal, June 25, 2004.
• "Nichirei's Net Profit up but Slumping Sales Cut Full-yr Outlook," Japan Weekly Monitor, November 10, 2003.
• "Nichirei Found to Have Secretly Recalled Imported Prawns," Jiji, October 2, 2003.
• "Japan's Nichirei to Take Stake in Mitsubishi Unit in India," AsiaPulse News, April 4, 2003.

Source: International Directory of Company Histories, Vol. 70. St. James Press, 2005.

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