When most people hear the name Kraft Foods, they think of cheese. Yet cheese accounts for only 14% of the company’s sales worldwide. In Japan, Kraft Foods is much more successful with gum and candy brands such as Clorets, Stride, Recaldent, Halls, Mentos, Xylicrystal, Bubblicious and many more. Kraft Foods also sells Cadbury chocolate in Japan.
Kraft Foods is currently the 2nd largest food company in the world (after Nestle) with global revenues of around $50 billion. Some of the Kraft Foods’ brands have had a presence in Japan for more than 30 years.
Heading the operations in Japan is Yukari Inoue, who is president and representative director of Nihon Kraft Foods Ltd. Born in Osaka, Inoue majored in economics at Osaka University. After graduating in 1985, she joined Proctor & Gamble in Kobe and remained with the company for 17 years. That was followed by a stint at the LVMH Group, and then Cadbury Japan. Last year, Kraft Foods took over Cadbury Japan, renaming the company Nihon Kraft Foods as of Jan 1, 2011.
GaijinPot, together with Japan Today editor Chris Betros, visits Inoue at the Nihon Kraft Foods offices in Shinagawa ward to hear more.
In 1960, Warner Lambert’s Adams Division started operations in Japan, selling confectionery. They were selling the first pellet gum in Japan which was called “Chiclets”. Then Warner Lambert was acquired by Pfizer and the Adams Division was acquired by Cadbury. Last year, Cadbury was acquired by Kraft Foods.
What is Kraft Foods’ structure in Japan?
There are three entities. Nihon Kraft Foods sells gum, candy and Cadbury chocolate. Another entity is Kraft Foods Japan which is doing a licensing business with Yamazaki-Nabisco, and cheese licensing with Morinaga. The third entity is Ajinomoto General Foods (AGF), a tie-up between Kraft Foods and Ajinomoto, which is a coffee company.
How have sales been so far this year for Nihon Kraft Foods?
We have had an excellent 7 months. Sales are up over last year. We did have some impact from the earthquake in terms of sourcing ingredients and packaging in March and April. But after May, we stabilized.
What are your best-selling brands?
Our best-selling products in Japan, by far, are Clorets gum. They are popular because they offer long-lasting flavors for fresh breath. Stride, which was newly launched in last May, has become very popular among young consumers. Recaldent, a dental gum, is also one of our focused brands. A whole new Recaldent line targeting women in their 30s will be launched on Sept 5. It has a unique function of restoring cavities from within. In other countries, Trident is a similar product. All our gum products are sugarless, which adds to their appeal. For candy, Xylicrystal is the No. 1 bag candy in Japan.
How much autonomy do you get from head office?
I think we have a lot of local flexibility and autonomy. Of course, we stick to a road map of key initiatives, but with branding and product development, we have a lot of autonomy. At the same time, we work closely with the global R&D, marketing and operations teams to develop innovative products and marketing programs. Twice a year, we meet with the global R&D team to decide future product innovation.
Where are your products manufactured?
For gum production, we have our own factory in Nagoya, producing Clorets, Recaldent and Stride, and we have a factory in Thailand which meets Japanese quality control standards. We also have a candy factory in Hyogo Prefecture which produces Xylicrystal.
How do you market the various brands in Japan?
We do some TV and outdoor advertising, and a lot of in-store promotions. We have also started using social media such as Facebook and Twitter.
What are some unique characteristics of the Japanese market?
Japanese consumers love to try out new products. So, in Japan, you have to launch new products with much greater frequency than in other markets. For gum, candy and chocolates, thousands of items are put on the market each year in Japan. That’s much more than in other countries.
How long does it take to launch a new product?
From product development to market launch can take 15-18 months. For most product launches, we always do various consumer tests to see if it really meets with consumers’ needs and expectations.
What are your main distribution channels?
For gum and candy, our main distribution points are convenience stores, supermarkets, drugstores and home centers. The competition for shelf space is toughest in every channel. I often visit stores to see how our products are displayed.
How is the Cadbury chocolate business doing?
It’s a very small part of our business. The chocolate market is tough because there is so much competition among many major players. But the brand is loved and we intend to keep selling it.
What is your management style?
It’s critically important to have the right level of delegating to one’s team. Our board members consist of a director of marketing, sales, R&D, operations, finance and HR. I set the agenda and make sure the team is marching together.
What is a typical day for you?
I come here around 9 a.m. The day might consist of meetings, going out to do store checks, visiting business partners and customers, and also talking to employees. I try to leave by 6:30 or 7 p.m.
How much gum or candy do you eat?
I eat chocolate and candy a few times a week. I have gum every day, usually late morning. It makes you refreshed, and takes hunger away.
How did Nihon Kraft Foods respond to the March 11 disaster?
We donated 20,000 boxes of each product to evacuees after the quake and tsunami. The company also matched cash donations by employees.
What community activities are you involved in?
Kraft Foods dedicates the first week of October globally to do volunteer work. Last year in Japan, 90% of employees participated in various projects such as river clean-up work, making rice balls for homeless people, etc.
Are you optimistic about the Japanese economy amid the ongoing crisis?
I am concerned and feel bad about the current situation. However, what we can do is to concentrate on our responsibilities and where we can make a difference. We have great products and great brands to delight people and make people’s life more “delicious.” That’s what I concentrate on.