TOKYO — As it begins its 125th year in business, Nippon Flour Mills Co. Ltd., which began operations in 1896 as Japan’s first modern-equipped flour milling company, is rebranding itself.
To more accurately reflect its diversification into the production of food ingredients and health care products, the Tokyo-based company on Jan. 1 officially changed its name to NIPPN.
“The change of our company name takes place for the first time since our founding, and we consider it as a refreshed startup that will make us fully reborn,” said Akiko Kimura, managing director and general manager, business development and support, for NIPPN’s international business division. “We are aiming to accelerate the diversification of our business — which started in flour milling and has expanded to food, ready-made meals, and health care — and the expansion of our business in growth areas by sending the symbolic message with the company name change.”
In an exclusive interview with World Grain, a sister publication of Milling & Baking News, Ms. Kimura said the company’s decision to diversify and rebrand itself was driven by significant demographic, sociological, and dietary changes taking place in Japan.
She pointed to an aging population, a declining birthrate, more women entering the workforce, and an increase in double-income and smaller households as well as growing demand for ready-made meals and more health-conscious consumers as factors that have influenced the company’s direction.
“Sales in our food business have increased and are now twice as much as that of our flour milling business,” Ms. Kimura said. “We have decided to change our company name in order to clarify our determination to achieve further growth in this segment in the future.”
In fiscal year 2019, NIPPN posted sales of ¥335.3 billion ($2.65 billion), with 58% of that total coming from the food segment, 31% from flour milling and 11% from its “Other” business segment, which included health care products and pet food.
The company’s wide-ranging food business includes: food ingredients, which manufactures premixes; the processed food business, which manufactures pasta and home-use groceries; the frozen foods business, which primarily manufactures frozen dough and frozen pasta; and the nakashoku (ready-made meal) business, which manufactures box lunches and deli foods.
“Recently, sales of home-use frozen food have especially been expanding,” she said. “Needs for food for a single person and convenience led to the increase in demand for it. Our home-use frozen food not only seeks deliciousness but also expands its product lineup to meet various needs. We are selling many products, particularly in the frozen pasta category, and the authentic pasta series with enhanced premium features and quality and big-size pasta series are growing.
“In addition, frozen meal packed in a tray, which allows us to enjoy staples and a main dish at the same time, has become popular as food products other than frozen pasta. We use an environmentally friendly paper tray as a container of the product, which is receiving a favorable reception from our customers.”
Although Ms. Kimura said the former company name that expressed the specific business of flour milling “no longer fully describes the company or the group,” flour milling will remain a significant part of the NIPPN portfolio. Although the food segment has higher sales, it was the flour milling segment that in the 2019 fiscal year, which ended March 20, 2020, accounted for 51% of the company’s operating income, compared to 44% for food.
She noted that one of the reasons NIPPN’s food segment has been flat in terms of operating profit was the company continues to make large capital investments to address future growth in that area.
NIPPN is one of the “big four” flour millers in Japan, along with Nisshin, Showa Sangyo and Nitto Fuji, which combine for nearly 75% of the country’s flour milling market share. In recent years, NIPPN has consistently garnered between 22% and 24% of the flour milling market share in Japan and it continues to upgrade its seven flour mills that have a combined daily milling capacity of 5,440 tonnes.
“We have promoted consolidation to the coastal mills, which are advantageous for procurement of raw materials from abroad, and construction of additional raw material silos,” Ms. Kimura said. “For example, we installed an additional line for flour milling and established a new raw material silo at Kobe-Konan Mill in 2012, and we built an additional raw material silo at Chiba Mill in 2014.”
Ms. Kimura noted that per capita annual wheat consumption has been flat in Japan at around 33 kg, while rice, for many decades a staple in the Japanese diet, has been trending downward in recent years. She noted that the rate of cooking rice at home is undergoing a particularly steep decline, although demand for rice flour has been increasing.
Most milling wheat is imported from the United States, Canada or Australia, but Ms. Kimura said, “demand for made-in-Japan products are increasing and the need for Japanese wheat is growing as more products made from domestic wheat are being launched.”
In October 2020, NIPPN, which has been in the premix business since 1959, completed construction of a new premix plant at its Fukuoka mill. It already has premix plants at its Ryugasaki plant in eastern Japan and the Kobe-Konan mill in western Japan.
“After the completion of this new premix plant at Fukuoka Mill, there will be three plants for our premix business and it is expected that the company will increase production capacity and have a more efficient production and logistics system,” Ms. Kimura said.
NIPPN has continued to grow its footprint outside of Japan and now has business operations in China, Thailand, Indonesia and the United States.
“Overseas business is one of the growth areas for NIPPN, which will be intensively promoted into the future,” Ms. Kimura said. “We are currently focusing on rapidly growing markets in Asia and North America. In Asia, we conduct local promotion and sales activity mainly of premix at three business locations in China and two business locations each in Thailand and Indonesia. We are actively making investments in these areas to expand business activities.”
In 2020, NIPPN completed a new frozen dough production plant in Thailand and is currently building a new premix plant in Indonesia. In 2018, NIPPN built a new premix plant in China and installed an additional line at its premix plant in Thailand.
In the North American market, NIPPN California, Inc. and Pasta Montana LLC are operating as affiliate companies of NIPPN.
Pasta Montana, which was founded in 1997 and acquired by NIPPN in 2000, uses the high protein and high gluten durum grown in what is known as the “golden triangle” in the north central region of Montana. It manufactures more than 70 types of dry pasta.
NIPPN California, established in 2005, provides a broad range of customized premixes to meet customers’ requests, which includes premixes based on Japanese food, Ms. Kimura noted.
“NIPPN California also supports product development of customers comprehensively by offering wheat flour for noodles and bread as well as a variety of auxiliary materials,” she said.
Among its recent expansions in its North America business was the installation of an additional production line at its pasta plant in the United States.
NIPPN’s diversification strategy has led the company to branch out beyond producing food for human consumption. In what is labeled its “Other” business category, NIPPN draws upon its many years of grain-based research to manufacture heath care and pet food products.
“The health care segment is a promising field as more people have become health conscious with the progression of an aging population,” Ms. Kimura said. “We currently handle flax oil and flaxseed products such as grained flaxseed, flaxseed powder and dressing with flaxseed oil, ceramide (a skin moisturizer), maslinic acid and others.”
Ceramide has become a high-demand product. The company notes that all NIPPN’s ceramides are extracted from plants and purified so that only traces of impurities that may affect the color, taste and smell remain.
“They have excellent processing stability, which enables their application in a wide variety of products,” the company said.
In 2014, NIPPN developed the world’s first technology for continuous industrial production of high-purity ceramide from rice bran in collaboration with the National Agriculture and Food Research Corporation and Organo Corporation.
NIPPN said the “Other” business segment accounts for about 5% of its annual consolidated operating income.