Nissin Food Products Company Ltd. Business Information, Profile, and History

Company Perspectives:

The Philosophy of Nissin Foods

Nissin Foods was established in 1948 by the visionary Mr. Momofuku An do, who foresaw the rise of the fast-paced modern lifestyle in our po st war society. Our daily habits were being streamlined for speed and efficiency, and that included our eating habits. Based on this, he f ounded Nissin Foods and put his heart and soul into developing the in stant food industry.

Through innovation and the continuous search for excellence, the deli cious taste of Nissin Foods was quickly accepted by consumers all ove r the world.

Nissin Foods is still the No. 1 manufacturer of instant food in Japan and is gaining huge popularity overseas. Mr. Momofuku Ando can truly be called a great man in the food industry, as he brings great taste s to the world!

History of Nissin Food Products Company Ltd.

Nissin Food Products Company Ltd. is the world's leading producer of instant ramen noodles. The Osaka-based company controls more than 40 percent of the Japanese market, despite competition from some 500 oth er noodle-makers, and some 9 percent of the worldwide market. Nissin founder Momofuku Ando is credited with inventing the instant noodle, considered by many to feature among the most important Japanese inven tions of all time. The company produces a large range of instant nood le flavors, introducing some 100 new flavors each year. Since the 199 0s, Nissin also has expanded its business to include fresh and frozen noodles, and other products, such as cereals. The company has respon ded to increasing consumer demand for ready-to-eat meals by launching its own line of fresh and frozen prepared foods. The company was als o the first in Japan to launch retort-packaged foods. Nissin's produc ts reach more than 100 countries worldwide. In support of its interna tional business, the company operates some branches and subsidiaries, including manufacturing facilities, in ten countries, including the United States, Germany, The Netherlands, Hong Kong, the Philippines, Thailand, Singapore, and China. Nissin is listed on the Tokyo Stock E xchange but remains controlled by the Ando family. In 2005, Momofuku Ando announced his decision to retire as company chairman at the age of 91.

Japanese Food Revolutionary in the 1950s

Momofuku Ando started his career as a wholesaler for foodstuffs in th e Osaka area. Ando also became managing director of a credit union. Y et in the aftermath of World War II, the credit union went bankrupt a nd Ando lost all of his assets. The loss of his livelihood, coupled w ith the extreme scarcity of food in postwar Japan, led Ando to recogn ize the importance of food--and to decide to begin a new career in fo od production. In 1948, Ando founded a new company, Chukososha Co., L td.

Ando was inspired by the sight of the long lines of people waiting to purchase ramen noodles on the black market. Noodles, however, remain ed difficult to produce, time-consuming to cook, and especially diffi cult to preserve. Ando set up a small laboratory in his home and bega n experimenting with the production of a new type of noodle that coul d be preserved indefinitely and cooked easily. As a basic ingredient, Ando chose to use wheat, instead of the traditional rice flour. The introduction of wheat, in the form of U.S. aid shipments, had already begun to transform the Japanese diet, and schools had begun to serve bread to children. Ando, however, saw a greater nutritional benefit from transforming wheat into noodles, which then can be used in soups along with other ingredients.

By 1958, Ando had succeeded in developing a method for creating the w orld's first instant noodle soup. Consumers had only to add water, wa it two minutes, and stir. Ando's method involved salting and seasonin g the noodles themselves, then deep-frying them in order to dry them. Frying the noodles also introduced pores in them, further facilitati ng the rehydration process.

Ando named his first, chicken-flavored instant soup "Chikin Ramen" an d set up a sales booth in a department store in Tokyo, providing samp les to customers. The noodles, despite being several times more expen sive than ordinary noodles, quickly caught on with Japanese consumers , earning the nickname "Magic Ramen." Always eager to embrace new nov elties, the Japanese market was especially ripe for Ando's instant so up. As the Japanese economy entered its extended boom period in the 1 950s and through the 1960s, "Magic Ramen" became a symbol of sorts of the country's industriousness.

Ando relaunched his company as Nissin Food Products and began develop ing additional recipes. By 1961, the company was selling some 500 mil lion packets of soup per year. Just five years later, that figure had leapt to 2.5 billion--and by the mid-2000s had soared to more than 4 7 billion annually. Supporting the company's growth was its early dec ision to go public, placing its stock on the Tokyo and Osaka Stock Ex changes in 1963.

Success in a Cup in the 1970s

Nissin faced a great deal of competition, however, as an increasing n umber of companies sprang up with their own instant noodle recipes. N issin responded to the competition by staying one step ahead, introdu cing new recipes and noodle types. Among the company's new products w as the launch of "Nissin Yakisoba" in 1963, which was the first ramen soup to include a separate flavoring packet. The company introduced the so-called "pillow" type of noodle, which floated at the top of so up, in 1968. That brand, Damae Ramen, became Nissin's strongest selle r in the Japanese market. Nissin's market share remained strong into the next century, and by the mid-2000s the company continued to claim some 40 percent of the Japanese instant noodle market.

Nonetheless, the Japanese market for instant noodles began to soften toward the end of the 1960s. This led Nissin toward two very importan t developments that not only solidified Nissin's position as Japan's dominant instant noodle producer but also established the ramen noodl e as a global fast-food phenomenon. The first of these was the decisi on to introduce its instant ramen noodles to an international market, starting with the launch of a subsidiary in the United States in 197 0.

The move into the United States proved fortuitous in another way. Dur ing his visits to the United States, Ando had been introduced to the country's fast-food industry, and particularly the widespread use of paper cups and containers. Ando recognized the potential for developi ng a new type of packaging for his company's instant soup. By 1971, t he company had prepared to launch what was to become the other import ant component of Nissin's growth: the Cup o' Noodles brand (later ren amed as Cup Noodles) of soup. Nissin's packaging was something of a r evolution in the global food industry, presenting a food product that could be distributed, cooked, and eaten all in the same container.

Cup Noodles paved the way for the company's expansion throughout the world. The company entered South America with the establishment of a Brazilian sales subsidiary in 1975. At the same time, Nissin added ne w factories in Kanto in 1971, Shiga in 1973, and Shimonoseki in 1975. In 1978, Nissin launched production in the United States, with the c ompletion of its first U.S. plant in Lancaster, Pennsylvania. The com pany added to its overseas production capacity with the opening of a Brazilian plant in 1981. In that year, as well, Nissin entered Singap ore.

Through the 1980s, Nissin's international expansion continued. The co mpany entered Hong Kong in 1984, launching production there the follo wing year. Nissin also expanded through acquisitions, acquiring a fro zen and fresh noodle operation in Hong Kong in 1987 and adding U.S. f rozen burrito maker Camino Foods in 1988. The company returned to Hon g Kong the following year, buying up Beatrice Hong Kong and 74 percen t of Winner Food Products there. In 1991, the company entered India, forming a joint venture with Brooke Bond to produce noodles for that market.

Diversification in the 1990s

Nissin entered the European market in the 1990s as well, starting wit h the creation of a sales subsidiary in The Netherlands in 1991. The company launched production in that country in 1993, and later expand ed its European operations to include a subsidiary in Germany as well . Other markets followed through the 1990s, including Thailand, Indon esia, and the Philippines, which the company entered through local jo int ventures. Nissin also entered the mainland Chinese market for the first time. For this expansion, the company chose to form its own ne twork of wholly owned subsidiaries, establishing its first production plant in Guangdong in 1994. That was followed by plants in Shanghai in 1996, then Beijing in 1998. By the early 2000s, the company operat ed some 12 subsidiaries in the Chinese mainland. Yet the company's de cision not to enter China through local joint ventures was credited w ith the group's relatively slow penetration of the vast Chinese marke t. In contrast with its strong share of the global market, some 9 per cent worldwide, the company barely managed a 3 percent market share i n China into the 2000s.

Global Noodle Leader in the 2000s

At the same time as it built its international network, Nissin backed up its increasingly global business with a continued commitment to p roduct innovation, as well as a drive toward diversification. As earl y as 1986, the company entered the frozen foods business. That unit w as boosted with the acquisition of frozen foods specialist Pegui Food s Co. (later renamed as Nissin Frozen Foods) in 1991. The company als o entered the breakfast cereals market with the purchase of Cisco Co. That company had been the first to introduce breakfast cereals in Ja pan in 1963; under Nissin, the Cisco unit developed a "cup" version o f its breakfast cereals, which proved popular with Japanese consumers .

Nissin also maintained its tradition of innovation. In 1988, the comp any became the first to develop new food preparation technology based on retort pouches. This led to the launch of LL cup noodles in 1992, which quickly became one of the company's hottest sellers. By 1995, the company had launched its SpaO brand of retort pouch spaghetti. In the meantime, Nissin also had solved an important obstacle in the de velopment of the fresh noodle market, that of preservation. In 1992, the company launched the first of its long-life noodle products.

Nissin took steps to correct its slow growth in China at the beginnin g of the 2000s, merging its 12 Chinese subsidiaries under a single ho lding company in 2001. The company also continued to seek out new foo d areas. In the early 2000s, the company entered the "functional food " category, receiving approval to market a new line of health-promoti ng soups containing psyllium dietary fibers. The company also launche d a dedicated Food Safety Research Institute in 2002.

Nissin's acquisition of a stake in Hebei Hualong F&N Industry Gro up in 2004 allowed the company to claim the global leadership positio n in the instant noodle soup category that year. Nissin also continue d to seek ways of building its brand name. Starting in 1996, for exam ple, the company's billboard, of a bowl of soup putting out real stea m, had become a fixture in New York's Times Square. By 2005, the comp any had set its advertising sights still higher, launching a newly de veloped zero-gravity "Space Ram" for Japanese astronaut Soichi Noguch i's trip into space aboard the Discovery. In that year, as well, Niss in, now led by Koki Ando, announced that Momofuku Ando was retiring f rom his position as chairman of the board. Ando was by then acknowled ged as one of the most influential figures in the 20th-century global food industry.

Principal Subsidiaries: Accelerated Freeze Drying Co., Ltd. (I ndia); Camino Real Foods, Inc. (U.S.A.); Guangdong Shunde Nissin Food s Co., Ltd. (China); Indo Nissin Foods Ltd. (India); Miracle Foods Co ., Ltd. (Hong Kong); Nissin Cisco Co., Ltd.; Nissin Food Products Co. , Ltd. (Mexico); Nissin Foods (China) Holding Co., Ltd.; Nissin Foods (HK) Management Co., Ltd. (Hong Kong); Nissin Foods (Huabei) Co., Lt d. (China); Nissin Foods (Thailand) Co., Ltd.; Nissin Foods (U.S.A.) Co., Inc.; Nissin Foods B.V. (Netherlands); Nissin Foods Co., Ltd. (H ong Kong); Nissin Foods GmbH (Germany); Nissin Frozen Foods Co., Ltd. ; Nissin Plastics Co., Ltd.; Nissin-Ajinomoto Alimentos Ltda. (Brazil ); Nissin-Universal Robina Corporation (Philippines); NITEC (Europe) B.V. (Netherlands); NITEC (H.K.) Ltd. (Hong Kong); NITEC (U.S.A.), In c.; P.T. NISSINMAS (Indonesia); Sapporo Nissin Co., Ltd.; Shandong Ni ssin Foods Co., Ltd. (China); Shandong Winner Food Products Co., Ltd. (China); Shanghai Nissin Foods Co., Ltd. (China); Winner Food Produc ts Ltd. (Hong Kong); Zhuhai Golden Coast Winner Food Products Ltd. (C hina).

Principal Competitors: Toyo Suisan Kaisha Ltd.; House Foods Co rporation; Nong Shim Company Ltd.; Tingyi Cayman Islands Holding Corp oration; Asia Food and Properties Ltd.; Ottogi Corporation; Myojo Foo ds Company Ltd.; Tokatsu Foods Company Ltd.; Bing-Grae Company Ltd.

Chronology

• Key Dates:
• 1948: Momofuku Ando founds the Chukososha Co. in Osaka and beg ins developing a method of producing instant noodles.
• 1958: The company changes its name to Nissin Food Products and launches Chikin Ramen, the first instant ramen soup.
• 1963: Nissin goes public on the Osaka and Tokyo Stock Exchange s.
• 1968: Nissin launches "pillow" type of noodles.
• 1970: The company establishes its first international subsidia ry in the United States.
• 1971: Nissin launches Cup o' Noodles (later Cup Noodles), whic h becomes an international hit.
• 1975: A sales subsidiary is established in Brazil.
• 1978: Nissin launches production in its first U.S. plant.
• 1981: The company launches production in Brazil; a subsidiary is established in Singapore.
• 1984: Nissin enters the Hong Kong market.
• 1986: Production of frozen foods begins.
• 1988: Nissin acquires frozen burrito maker Camino Foods in the United States; the first retort pouch products are launched.
• 1991: Nissin establishes its first European subsidiary in The Netherlands; the company acquires frozen foods specialist Pegui in Ja pan.
• 1992: The first long-life fresh noodles are launched.
• 1994: Nissin enters the Chinese market with a subsidiary in Gu angdong.
• 1999: The company launches production in India.
• 2001: The Chinese subsidiaries are consolidated under a single holding company.
• 2004: Nissin becomes the world's instant noodle market leader through a stake in Hebei Hualong F&N Industry Group.
• 2005: Founder Ando retires from the company.