Kyokuyo Company Ltd.

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Kyokuyo Company Ltd.

3-3-5 Akasaka, Minato-ku
Tokyo
107-0052
Japan
Telephone: +81 3 5545 0701
Fax: +81 3 5545 0751
Web site: http://www.kyokuyo.co.jp

Public Company
Incorporated: 1937
Employees: 1,145
Sales: ¥152.64 billion ($1.45 billion) (2004)
Stock Exchanges: Tokyo
NAIC: 311712 Fresh and Frozen Seafood Processing; 311412 Frozen Specialty Food Manufacturing

Kyokuyo Company Ltd. is one of Japan's leading seafood products companies. Originally focused on the whaling industry in the 1930s, Kyokuyo has since abandoned that activity in order to transform itself into a full-fledged marine foods company. Kyokuyo's operations include worldwide marine products purchasing and marketing, as well as seafood processing through a global network of more than 220 factories, including seagoing processing facilities. The company also produces food products such as frozen foods and canned seafoods. In addition to its purchasing and processing activities, Kyokuyo remains active in commercial fishing, with a fleet of four tuna seiners. Kyokuyo also has boosted its position in the Japanese sushi market through its partnership with Thailand's Union Frozen Products Co. (UFP). In 2005, that partnership was strengthened with the creation of a joint venture, K&U Enterprise, which began producing sushi for the Japanese and other markets. Kyokuyo is listed on the Tokyo Stock Exchange and is led by Chairman Kiyokazu Fukui.

Whaler in the 1930s

Kyokuyo's history dated back to the beginnings of the Japanese whaling industry in the early 20th century. Ayukawa rapidly became the center of the country's whaling industry, following the establishment of the first slaughterhouse there in 1906. At the beginning of the next decade, nearly all of the country's major whalers were based in Ayukawa.

By the 1920s, the Japanese whaling fleet had expanded operations to include many of the world's primary whale hunting regions. A number of new companies sprang up, such as Ayukawa Hogei, founded in 1925, as Japan began asserting itself among the world's most active whalers. The new company, like many others in the industry, began focusing on hunting smaller whale species in the early 1930s. This led to further expansion in the Japanese whaling industry, with increasing interests in the northern polar region. Ayukawa Hogei's own expansion into polar whaling led it to change its name, to Kyokuyo Hogei KK (literally, Polar Seas Whaling Ltd.), in 1937.

Although Kyokuyo remained an active whaler through the next decades, by the 1950s the company had begun its transformation into a seafood processor. This process was begun in 1954 when the company launched its own fleet of factory ships, providing onboard fish processing facilities. The company then began fishing and processing salmon and ocean trout in the northern Pacific region.

Kyokuyo's success in fish processing encouraged the company to expand its food production operations in the early 1960s. The first food production facilities were built in the Hokkaido and Miyagi regions in 1960. Kyokuyo then launched production of canned goods, and at the same time extended beyond seafood to include production of cured meats and sausages, among others.

Yet seafood remained at the heart of the company's business. In 1963, Kyokuyo set up what was to become one of its core business areas, establishing a marine products imports business. The company then launched its worldwide seafood purchasing activity, with a special focus on the Alaskan market and its highly prized salmon roe and other fish products. By 1970, Kyokuyo also had entered the frozen foods market, building a cold-storage facility in Hiratsuka, Kanagawa. The company also expanded its overall production with the opening of a new factory in Hachinohe, Aomori.

Kyokuyo's expansion into food production helped shield it from the intensifying competition and dwindling whale population in the global whaling industry. By then, the whaling industry had shifted away from its interest in small-type whaling, in favor of larger species and larger vessels. Nonetheless, Kyokuyo remained in the whaling trade into the 1970s. As part of its effort to remain competitive, the company formed a new subsidiary, Hokuyo Hogei, which began operating large-type whalers within the company's fleet.

Shift to Food Production in the 1970s

By then, however, Kyokuyo's shifting emphasis to food production led it to change its name, to Kyokuyo KK, in 1971. In that year, as well, the company added another cold-storage subsidiary, Kyoikuyo Akitsu Reizo, in Osaka, helping to expand its coverage of the Japanese market. Kyokuyo also boosted its purchasing and imports operations with the creation of Kyokuyo Shoki Co. That company began purchasing and selling not only marine products, but livestock and agricultural products as well.

Kyokuyo further solidified both its production and sales operations with the launch of its own fleet of tuna and skipjack seiners in 1973. The company's fleet sailed under the Wakaba Maru name. At the same time, Kyokuyo also entered a new shipping category, launching a fleet of refrigerated transporters, Satsuki Maru. The successful development of these lines of business, coupled with intensifying international pressure on the Japanese government to restrict, and even ban, international whaling, led Kyokuyo to exit the whaling industry in 1976.

Kyokuyo sought new expansion areas into the 1980s. In 1980, for example, the company founded a new subsidiary, Kyokuyo Shokuhin Co. in Miyagi, which began processing frozen seafood, especially shrimp and prawn. This was followed by the launch of another subsidiary, in Ehime, in 1984, which began processing crab-flavored frozen food products, such as kamaboko. In 1986, the company added to its international shipping operations with the establishment of Kyokuyo Shipping Co., which included the transport of fruits and vegetables, as well as dairy foods, in addition to marine products. Two years later, Kyokuyo expanded its frozen food activities with the creation of another production subsidiary, Sapport Foods Co., in Hokkaido.

In the late 1980s, Kyokuyo boosted its international presence with an entry into a number of foreign markets. In the United States, for example, the company set up a number of operations involved in marine products purchasing, fish paste marketing (on the East Coast), and the oversight of a seafood processing company. The company also entered the South American market, notably through the operation of a fish-paste processing vessel. In 1991, the company expanded that business through the creation of a joint venture with fellow Japanese company Mitsui & Co. The joint venture took over Kyokuyo's fish-paste processor, with production levels slated at 6,000 tons per year. By January 1992, the company had expanded its partnership with Mitsui to include another joint venture, together with local partner Harengus, the leading fish-exporter in Argentina, to process surimi for the Japanese market.

Company Perspectives:

In keeping with our mission "growing along with society as we contribute to a healthy and abundant lifestyle and diet" our entire group of companies will continue to strive to the utmost to keep the satisfaction and trust of our business partners and consumers by supplying safe and secured food. We look forward to a continuance of your support and cooperation.

Key Dates:

1925:: The whaling company Ayukawa Hogei is established.
1937:: The company changes its name to Kyokuyo Hogei KK.
1954:: The company enters the fish processing business with the launch of a fleet of factory processors for salmon and ocean trout.
1960:: The company launches food production with factories in Hokkaido and Miyagi.
1963:: The company begins marine food products purchasing and imports operations.
1970:: Production of frozen foods begins.
1971:: The company changes its name to Kyokuyo KK; cold-storage operations are launched in Osaka.
1973:: Kyokuyo launches a fleet of purse seine vessels for tuna and skipjack.
1976:: The company abandons the whaling industry.
1980:: A frozen shrimp and prawn subsidiary is established in Miyagi.
1984:: A new frozen crab-flavored food products facility is opened in Ehime.
1988:: Kyokuyo expands its frozen food activities with the creation of another production subsidiary, Sapport Foods Co., in Hokkaido.
1991:: The company abandons deep-sea trawling and liquidates its trawling fleet; a research and development laboratory is established in Shiogama, in Miyagi.
1994:: A new factory is opened in Shiogama.
1996:: Kyokuyo America Corporation is established.
1997:: The company launches Kyokuyo Suisan Co., operating purse seine fishing vessels.
1999:: A new factory is opened in Hitachinaka, Ibaraki.
2004:: The company launches a ship-owning subsidiary in Panama.
2005:: Kyokuyo forms the K&U Enterprise joint venture with UFP in Thailand.

The continued development of its food production wing encouraged Kyokuyo to abandon its deep-sea trawling business at the beginning of the 1990s as well. By 1993, the company had discontinued its operations in this area, selling off most of its fleet. Nonetheless, the company remained involved in fishing, and continued to operate a small fleet of tuna seiners into the mid-2000s.

Major Japanese Seafood Company in the 2000s

Kyokuyo took the lead in the establishment of new food quality and hygiene control standards, especially the internationally recognized HACCP system. As part of this effort, the company launched its own research and development laboratory in Shiogama, in Miyagi, in 1991. Miyagi remained the focus of continued expansion by the company, with the establishment of a second plant in Shiogama in 1994. That facility received HACCP certification the following year.

The year 1995 also saw the addition of a new subsidiary to the ever expanding Kyokuyo group, with the creation of Hachinohe Seafood Co., in 1995. That company launched processing operations for various marine products, including cuttlefish and salmon. Further development of the group's Japanese production facilities continued into the 2000s, including the opening of a new factory in Hitachinaka, in Ibaraki, in 1999. That plant received HACCP certification in 2003.

Yet Kyokuyo also had begun efforts to develop its international operations as well. This led the company to found a new subsidiary in the United States, Kyokuyo America Corporation, in 1996. That company served as the group's marine products purchasing agent for exports to Japan. Kyokuyo also returned to international fishing waters with the establishment of a new purse seiner subsidiary, Kyokuyo Suisan Co., in 1997. That subsidiary not only operated its own tuna and skipjack fishing vessels, but also provided processing and sales operations and cold-storage warehousing facilities. In 2004, the company opened a new shipping subsidiary in Panama, Kyokuyo Shipping Panama.

Kyokuyo moved to boost its presence in the Japanese sushi market into the mid-2000s. This led the company to form a strategic alliance with Thailand's Union Frozen Products Co. (UFP), one of that country's leading suppliers of sushi products, which was then making an effort to penetrate the Japanese market. The two companies had long conducted business together, starting in the mid-1980s. The companies moved toward a more formalized alliance in the early 2000s, as Kyokuyo, which relied on UFP for the bulk of its sushi products, sought to head off competitors. This effort resulted in the creation of a joint venture between the two companies in 2005.

The new company, called K&U Enterprise, was based on UFP's supply of raw product and Kyokuyo's expertise in sushi production techniques and technology. K&U began marketing its products under a number of brand names, including Kyokuyo in Japan, Prantalay in Thailand, and K&U and UFP elsewhere. In this way Kyokuyo emerged as a leader in the Japanese sushi market. As it moved into the 21st century, Kyokuyo had completed its transition from whaler to dedicated seafood processor.

Principal Subsidiaries

Kyokuyo America Corporation; Kyokuyo Suisan Co., Ltd.; Kyokuyo Shoji Co., Ltd.; Kyokuyo Shokuhin Co., Ltd.; Hachinohe Seafood Co., Ltd.; Kyokuyo Foods Co., Ltd.; Sapport Foods Co., Ltd.; Kyokuyo Akitsu Reizo Co., Ltd.; Kyokuyo Shipping Co., Ltd.; Kyokuyo Shipping Panama S.A.; K&U Enterprise Co., Ltd.; Kyokuyo Sougou Service Co., Ltd.

Principal Competitors

Antarktika Fishing Co.; Mar Fishing Company Inc.; ENACA; Maruha Group Inc.; Unilever Deutschland GmbH; Mavesa S.A.; Mukorob Fishing Proprietary Ltd.; Hanwa Company Ltd.; Nichiro Corporation.