Bourbon Corporation

Bourbon Corporation

4-2-14 Matsunami
Kashiwazaki, Japan
Telephone: (81) 0257 23 2333
Fax: (81) 0257 22 2005
Web site: http://www.bourbon.co.jp

Public Company
Incorporated: 1924 as Kitanihon Seika
Employees: 2,790
Sales: ¥91.79 billion ($806.6 million) (2005)
Stock Exchanges: Tokyo
Ticker Symbol: 2208
NAIC: 311821 Cookie and Cracker Manufacturing; 311320 Chocolate and Confectionery Manufacturing from Cacao Beans; 311330 Confectionery Manufacturing from Purchased Chocolate; 311340 Non-Chocolate Confectionery Manufacturing

Bourbon Corporation is a major Japanese producer of candy, confectionery, snacks, beverages, bottled water, and other food products. The company's product range includes rice crackers, bean snacks, wheat crackers, tea-based soft drinks, and fresh and frozen deserts. Approximately two-thirds of the company's sales, which neared ¥92 billion ($800 million) in 2005, come through the company's Biscuit division, which includes its cookie, candy, chocolate, and bean snack product lines. The rice cracker division adds 28 percent, while beverages, water, cocoa, tea, and chewing gum combine for 5 percent of group sales. Bourbon distributes its products under a variety of brand names, including Bonbure, Veneti, Sepiart, Chotos, Mini Bit, Paribre, Cres, and Petit. The company has increasingly targeted the fast-growing "healthy snack" market in Japan, and operates a research and development facility that focuses on producing foods that promote health and help to prevent disease. Bourbon operates through 11 manufacturing subsidiaries throughout Japan. Listed on the Tokyo Stock Exchange, Bourbon was founded in 1924 by Kichizo Yoshida and is led by President Yasushi Yoshida.

FILLING A CONFECTIONERY GAP IN 1924

Bourbon Corporation was founded in the aftermath of the Great Kanto Earthquake, which, in 1923, had destroyed much of Tokyo, Yokohama, and other heavily populated areas in the Kanto plain region of Japan. More than 100,000 people were killed in the earthquake, which was measured at as high as 8.4 on the Richter scale at its epicenter. The earthquake, and the rioting and looting that followed, also had destroyed a great deal of Tokyo's industry as well, and many goods remained in short supply for some time afterward. These shortages were felt particularly strongly in Japan's rural areas.

The confectionery industry was already an important part of Japanese life in the 1920s. Among those hit hard by the disruption in confectionery production and delivery was the well-known Mogamiya, a Japanese-style confectionery shop in Kashiwazaki, in Niigata Prefecture. In order to supply the Mogamiya store, as well as other stores in the area, Kichizo Yoshida decided to set up his own factory to launch mass production of Mogamiya's biscuits and other confectionery. In 1924, Yoshida established a new company, Kitanihon Seika, which set up operations next to the city's railroad station that year.

Before long, Kitanihon Seika became Yoshida's main business, and the company began expanding its range of products. In 1925, for example, the company began production of Japanese-style candies. The fast-rising demand for the company's products led it to increase its production capacity. In 1927, the company doubled its biscuit production capacity, and also added a second candy line. Into the early 1930s, the company extended its range to include other candies and confectionery, including chewing gum and candy cigarettes, and by the end of the decade had begun producing rice crackers, miso powder, and sweeteners. The company also began supplying the Tokyo market during this time. In 1933, the company launched direct sales in Tokyo, opening its own retail store.

The Japanese war effort prompted the company to develop more diversified operations during the war, with the addition of livestock farming and fishing operations, and a new subsidiary, Kitanihon Shoji Corporation, founded in 1940. By 1942, all of the company's production had been converted to wartime supplies. It was only in 1945 that the company was granted permission to return to its civilian production, at which time the company began producing flour and crackers. By the end of the 1940s, the company had added food items such as baby biscuits, soy sauce, and caramel.

GOING PUBLIC IN 1954

Kitanihon changed its name to Kitanihon Shokuhin Kogyo Corporation in 1952, then went public in 1954, listing its shares on the Niigata Stock Exchange. The company continued adding new products through the decade, such as candy confetti and "China Marble" candies. In the late 1950s, Kitanihon invested in expanding its production capacity. The addition of the company's first biscuit band oven in 1957 was a particularly significant moment, enabling the company to begin continuous production of its popular biscuits. In 1963, Kitanihon opened a new factory in Arahama, near Kashiwazaki. That facility also became the site of the company's headquarters in 1968.

In another expansion, the company added an automated rice cracker production line in 1966, becoming the first in Japan to do so. The company added several new product categories through the 1960s, including Haroromo style crackers and white crackers. In 1962, the company filled a gap in its production when it launched its own line of confectionery based on beans—a traditionally important confectionery ingredient in Japan.

Kitanihon began building a national presence in the 1960s as well. In 1967, the company opened an office in Tokyo, which was shortly followed by the end of the decade by offices in Osaka, Nagoya, Kobe, and Yokohama. The company also built new factories, in Maki in 1969, in Ogata in 1973, and in Wajima in 1975. The expanded production helped support the launch of one of the company's most successful products ever, the Lumonde waferlike cookies, introduced in 1974. The new product helped double the group's sales in just a year, to more than ¥50 billion by the end of 1975, compared with the company's revenues at the start of the decade at just ¥8 billion. Part of the credit for the group's strong growth was a restructuring of its operations, launched in 1971. By 1976, the company had expanded its network to more than 60 offices across the country. That figure was raised to 100 offices by the end of the decade.

With its expanded presence and increasing demand, Kitanihon invested in new production facilities at the start of the 1980s, building a factory in Tsukigata in 1981. This was followed by the construction of the company's Murakami factory in 1989. During this period, the company launched a number of successful brands, including its award-winning Pikkara crackers, and other sweet cracker brands, such as Cheese Okaki, Elise, and Ajigonomi.

COMPANY PERSPECTIVES

"Resonance" is our watchword, and we at Bourbon aim to contribute to society by enhancing our customers' physical and mental well-being and the lives of their families through our original, high-value products and services, which are responsive to changes in consumers' basic needs and lifestyles. Moreover, we have added the concept of enjoyment to our basic principles of promoting health and ensuring safety, convenience, and affordability.

HEALTHY IDENTITY FOR THE NEW CENTURY

The year 1989 marked another major milestone in the company's history when Kitanihon merged with another popular confectionery brand, Bourbon. As a result the enlarged company adopted the Bourbon name as its own. Bourbon then entered a new confectionery market that year, launching production of its High Chocolate line of chocolate confectionery products.

Bourbon built a new factory in Haguro in 1993. The expanded production helped support that company's move into a new product category, wheat flour crackers, the following year. At the same time, Bourbon laid plans to expand beyond the confectionery market. The aging of the Japanese population, which could be expected inevitably to lead to a decline in candy and confectionery sales, had nonetheless stimulated the growth of a new market devoted to healthful and health-promoting foods. Bourbon's entry into this segment came in 1995, when the company launched its own brand of mineral water, as well as its Alkaline brand of ionized water. Marketed as healthful alternatives, the launch of the group's bottled waters coincided with the Kobe earthquake of that year. In response, the company's initial production, launched that same day, was shipped immediately to the Kobe region as part of the relief effort. In another product extension in the mid-1990s, the company, which traditionally had remained focused on the snack categories, added its first dessert products.

A new generation, under Yashushi Yoshida, took over at the head of the company in 1996, and stepped up the group's product diversification. In that year, for example, the company began selling cocoa powder; the following year, the company began marketing its own tea brands. Closing out the decade, the company added a new subsidiary, Reman Seika Co., in 1998. In 2000 Bourbon added its shares listing to the Tokyo Stock Exchange's secondary market.

Into the middle of the 2000s, Bourbon continued its effort to expand its development of healthful snacks. The company became caught up, however, in the controversy surrounding genetically modified foods. In 2002, for example, the company was among those forced to recall their potato-based snacks after becoming tainted with the genetically manipulated New Leaf Plus potato variety. That year, as well, the company was forced to recall some 19 products that had become contaminated with unauthorized flavoring ingredients.

Despite these setbacks, Bourbon's sales remained high, nearing ¥92 billion ($800 million) by 2006. The company also had made progress in its development of health-promoting foods. In 2004, for example, the company began marketing a new line of tomato-based cookies—the presence of lycopene, found in condensed tomato paste, enabled the company to label the new snack as a nutritional product. Bourbon's determination to build a healthful identity promised robust growth in the increasingly health-conscious Japanese market.

PRINCIPAL SUBSIDIARIES

Bonbisco Co., Ltd.; Kitanihon Haguro Shok Co. Ltd.; Kitanihon Maki Shokuhin Co., Ltd.; Kitanihon Murakami Shokuhin Co., Ltd.; Kitanihon Ogata Shokuhin Co., Ltd.; Kitanihon Tsukigata Shokuhin Co., Ltd.; Kitanihon Washima Shokuhin Co., Ltd.; Nishikan Beika Co., Ltd.

KEY DATES

1924:

Kichizo Yoshida founds a confectionery factory, Kitanihon Seika, in order to ensure supply to the Kashiwazaki market.

1952:

The company name is changed to Kitanihon Shokuhin Kogyo Corporation.

1954:

The company lists shares on the Niigata Stock Exchange.

1966:

An automated rice cracker production line, the first in Japan, is added.

1974:

The launch of Lumonde cookies helps double the company's sales in just one year.

1989:

The company acquires the Bourbon confectionery brand and changes the company name to Bourbon Corporation.

1995:

Bourbon launches diversification into food and beverage production, including the first bottled mineral waters.

1996:

Yasushi Yoshida takes over as company president and leads diversification into healthful foods and snack production.

2000:

Bourbon lists shares on the Tokyo Stock Exchange.

2004:

The company launches a tomato-based biscuit as part of a drive to introduce nutritional foods.

2005:

Company sales near ¥92 billion ($800 million).

PRINCIPAL COMPETITORS

Japan Tobacco Inc.; Yamazaki Baking Company Ltd.; Morinaga Milk Industry Company Ltd.; Warabeya Nichiyo Company Ltd.; Ezaki Glico Co. Ltd.; Kameda Seika Company Ltd.; First Baking Company Ltd.; Na-kamuraya Company Ltd.; Imuraya Confectionery Company Ltd.; Morozoff Ltd.; Kotobuki Seika Company Ltd.

FURTHER READING

"Bourbon Corporation to Add Niigata-Based Confectioner As Its Special Subsidiary," Reuters Key Development, March 31, 2006.

"Illegal Flavouring Agents Prompt Food Recall," Dairy Reporter.com, April 6, 2002.

Jae, Hur, "Japan's Snack Recalls Exacerbate Biotech Fuss," Reuters News Service, June 25, 2001.

"Japan Confectioner to Stop GMO Sweetener Use," Food & Drink Weekly, June 19, 2000.

"Tomato Cookies," Food Engineering & Ingredients, December 2004, p. 21.