What is the secret of Japan's top player in prepared dishes, Nichirei?#
#Omnivore
Highlights#
R&D ⤴️ ^8b1e8b9e
This is the truly important part
Nichirei also possesses the necessary conditions to enter the frozen food market—freezing equipment, technology, and refrigerated transportation. ⤴️ ^fcb8f5b4
Later, Nichirei shifted its target market for frozen foods to the B-end, and it has accurately captured the key nodes of market development almost every time. ⤴️ ^c21f6e3c
Only by seizing opportunities and riding the wave can one achieve twice the result with half the effort
In the 1970s, home refrigerators with insurance and refrigeration functions began to become popular in Japanese households. Against this backdrop, Nichirei began to promote frozen staple products like "hamburgers" and "dumplings" in retail channels. ⤴️ ^228db5ff
Keeping pace with the times is essential; old products can find new scenarios, or products originally for B2B can have opportunities in B2C.
At this time, the market underwent new changes—microwave ovens began to become popular in households. ⤴️ ^3fbef2ca
Indeed, this timing was perfect; families could have new kitchen tools for quickly handling frozen products.
And it would not affect the crispy texture ⤴️ ^d80489f0
This is the power of R&D.
Investing heavily in R&D, upgrading technology ⤴️ ^e4b2c496
This article is from the WeChat public account: FBIF Food and Beverage Innovation (ID: FoodInnovation), author: Abby, editor: Bobo, original title: "What did Japan's top player in prepared dishes 'Nichirei' do right with its best-selling hamburgers for 56 years and fried rice for 23 years?", cover image from: Visual China
Japan's leading prepared dish company Nichirei has successfully created several evergreen flagship products, such as authentic fried rice and Dekara fried chicken, through R&D innovation and technology upgrades. Nichirei has maintained its position as the top seller in the frozen food market for nearly a century.
• 💡 Nichirei invested heavily in ==R&D==, developing the advanced "three-step frying method," which brought an ultimate taste to authentic fried rice.
• 💡 Nichirei continuously innovates technology and upgrades products, maintaining keen insight into consumer preferences, allowing its core flagship products to remain competitive in the market for a long time.
• 💡 Nichirei is adept at leveraging its strengths to seize market opportunities and continuously expand the application scenarios of frozen foods, achieving dual-driven growth in both B-end and C-end markets.
In 2015, a frozen fried rice sparked a "war." Major Japanese frozen food companies like Nichirei, Ajinomoto, and Maruha Nichiro participated in this "fried rice war," launching products like "New Authentic Fried Rice," "The★Fried Rice," and "Grilled Meat Fried Rice."
This was the most famous "war" in the history of Japanese frozen foods. Notably, in this "fried rice war," companies did not win through "low prices" or "marketing," but instead invested heavily in R&D and upgraded fried rice technology, triggering a revolution in fried rice technology that advanced the entire Japanese frozen food industry.[1]
Ultimately, Nichirei, which spent 3 billion yen to develop the "three-step frying method," stood out, and its "New Authentic Fried Rice," launched in spring that year, secured the top position in the sales of frozen fried rice in Japan.
Nichirei also designated "August 8" as "Fried Rice Day," reasoning that around the beginning of autumn, when the heat is oppressive and people feel lethargic and lack appetite, they often choose to eat a bowl of fried rice to replenish energy.
The frequency of fried rice appearing on the dining table compared to average temperature. Image source: Nichirei official website
In fact, since its launch in 2001, "Authentic Fried Rice" has been a hit, maintaining its position as the top-selling product in the frozen fried rice category for over 20 years. In 2017, "Authentic Fried Rice" achieved annual sales exceeding 10 billion yen. In 2021, "Authentic Fried Rice" was certified by Guinness World Records as the top-selling product in the frozen fried rice category for the year.
In addition to "Authentic Fried Rice," Nichirei has several other flagship products that have been popular in the market for years. For example, the frozen mini hamburgers launched in 1968 and frozen chicken nuggets launched in 1988 are still popular today. Products like Authentic Fried Rice, Dekara Fried Chicken, Pink Shrimp Shumai, and Crispy Spring Rolls have consistently ranked first in sales for many years.
Thanks to these enduring flagship products, Nichirei's market share has consistently ranked first.
Founded in 1942, Nichirei initially started with frozen seafood and began to enter the frozen food industry with the rise of frozen foods in Japan. Frozen food is essentially a type of prepared dish that we are more familiar with. Today, Nichirei's business covers three major sectors: frozen seafood, frozen foods, and cold chain logistics.
Nichirei's frozen food business has been successful in both B-end and C-end markets. According to the 2021 financial report, the revenue from prepared dishes in the B-end and C-end accounted for 55% and 45%, respectively.
In 2020, Japan celebrated the 100th anniversary of frozen foods, while Nichirei marked its 78th year. Nichirei published a corporate brand advertisement in the "Nihon Keizai Shimbun"—a poster documenting all the frozen foods Nichirei has launched over the past 80 years, totaling over 800 products.
As a representative frozen food company in Japan, it can be said that Nichirei has witnessed the development of the Japanese frozen food industry from its infancy to maturity.
After reading this article, you will understand:
- How did Nichirei expand from frozen seafood to frozen food business?
- How did Nichirei achieve simultaneous development of its frozen food business in B-end and C-end markets?
- What is the secret to the longevity of Nichirei's flagship products?
Nichirei, which started in the frozen seafood business, began making frozen hamburgers for McDonald's.
Looking back at the development history of enterprises over the past century, it is not difficult to find that one of the main reasons they can thrive for a century is their ability to seize opportunities in line with their strengths.
Nichirei is no exception. Originally known as "Teikoku Suisan" (hereinafter referred to as Nichirei), it was a company focused on the frozen seafood business, primarily selling frozen fish and ice-making.
Thus, ==Nichirei also possessed the necessary conditions to enter the frozen food market—freezing equipment, technology, and refrigerated transportation.==
Having met these conditions, in 1946, Nichirei decided to "test the waters" in frozen foods.
Nichirei set up a simple laboratory in a corner of a factory to begin developing frozen foods. However, at that time, Nichirei's focus was still on seafood and ice-making, and due to inadequate experimental facilities and equipment, this initial foray ended three years later.
In the early 1950s, Nichirei found that previously frozen strawberries, oranges, and other fruits had poor sales and difficult inventory turnover, so it decided to juice these frozen fruits and sell them as frozen juice. When frozen juice appeared at a market at Seishin Women's College in Tokyo, it received positive feedback.
From then on, Nichirei shifted its attention back to frozen foods and began developing frozen seasoned foods. Like domestic prepared dish companies, Nichirei also started with "famous dishes" from its own country, such as "tempura" and "chawanmushi."
In 1955, Nichirei attempted to launch frozen dishes that could be eaten after heating, such as "tempura" and "chawanmushi," in department stores. However, at that time, the frozen food market in Japan was just beginning, and consumers believed that "frozen foods are of poor quality and not tasty."
This made it difficult for Nichirei to promote its products at retail. To break this ingrained impression, Nichirei actively held cooking lectures and tasting events in various locations, such as the "Aoyama Nichirei Cooking School" opened in Tokyo in 1961 (closed in 1977).
Although the frozen foods launched by Nichirei gained some attention at that time, they did not contribute significantly to the company's revenue. Suddenly, a new opportunity appeared before them.
From July 1957 to December 1958, a global scientific initiative called the "International Geophysical Year" was launched, and Japan organized several teams to participate in Antarctic expeditions. Nichirei's task was to prepare food for these teams. According to records, Nichirei provided 69 types of food, including sushi sets and grilled eel, totaling about 20 tons of frozen ingredients and dishes.
==Later, Nichirei shifted its target market for frozen foods to the B-end, and it has accurately captured the key nodes of market development almost every time.==
In 1964, the 18th Olympic Games were held in Tokyo, Japan. At that time, 7,500 athletes and officials from 94 countries gathered in the Olympic Village, along with many media personnel. How to quickly serve a large number of meals while satisfying the tastes of athletes from different countries became a challenge.
After multiple discussions, Nichirei proposed a solution: combining the menu provided by the Olympic chefs with standardized frozen vegetables, fish fillets, and other high-quality frozen ingredients to achieve quick meal service.
Thanks to this performance during the Olympics, the frozen food industry began to attract the attention of the hotel and catering sectors.
By the 1970s, when McDonald's entered the Japanese market, Nichirei seized the opportunity to gradually take on related business from McDonald's, becoming one of its early suppliers.
Nichirei's recognition in the B-end market gradually opened up, and the proportion of frozen food business in its total revenue also gradually increased. In 1968, frozen food sales exceeded 2.5 billion yen, accounting for 5% of Nichirei's total sales. By 1973, frozen food sales reached 22.6 billion yen, rising to 17.4% of total sales.
From the chart, in 1973, the total sales of the Japanese frozen food industry amounted to 95.676 billion yen, with Nichirei's sales at 22.6 billion yen, estimating Nichirei's market share at about 23%.
At that time, companies like Ajinomoto and Nippon Suisan also gradually entered the frozen food sector, primarily targeting the B-end market. Due to the limitations of cold chain infrastructure in the early stages of the industry, the entry points and product differentiation led to a situation where multiple leading companies advanced simultaneously in the Japanese frozen food sector. However, Nichirei consistently ranked among the top with nearly a quarter of the market share.
Despite the expanding market size for frozen foods, Nichirei was still in a state of loss at that time, stating, "The red font system remains a business issue for the company." Nichirei wrote in the book "Nichirei 75-Year History."
2. The Making of a "Model Student" in Frozen Foods#
From the beginning, Nichirei attempted to deeply integrate frozen foods into family scenarios, moving towards the C-end market. However, constrained by limited market awareness and household preservation technology, Nichirei's focus remained on the B-end market for a long time.
==In the 1970s, home refrigerators with insurance and refrigeration functions began to become popular in Japanese households. Against this backdrop, Nichirei began to promote frozen staple products like "hamburgers" and "dumplings" in retail channels.==
As the variety of frozen foods gradually increased, in 1974, Nichirei launched the "Green Belt" brand, focusing on family frozen dinner sets, sold in the frozen food section of supermarkets.
However, this was just Nichirei's initial foray into the C-end market; the real push into the C-end market began in 1985.
In fact, another important reason for Nichirei's entry into the C-end market was due to losses. Around 1980, influenced by the oil crisis, Nichirei faced an internal management crisis. Long-term losses and fierce competition in the B-end market led Nichirei to turn its attention to the nascent C-end market.
In 1985, to enhance brand recognition among consumers, Nichirei officially changed its name from "Nihon Reizo" to "Nichirei," adopted a new logo, and strengthened advertising. Subsequently, Nichirei began marketing around family scenarios. Nichirei was also the first company in the industry to segment categories for frozen family foods.
From then on, Nichirei began to cater to consumer tastes, launching one flagship product after another, successfully "entering" the C-end market.
In the year of the name change, Nichirei released a product under the concept of "ready to eat anytime in 24 hours," the "24hr" series. Shortly thereafter, Nichirei discovered that influenced by Japan's bento culture, mothers needed to wake up early every day to prepare lunch for their children, and using frozen chicken nuggets and beef patties could save a lot of trouble. Thus, Nichirei launched a bento series targeting kindergarten, middle school, and high school students.
==At this time, the market underwent new changes—microwave ovens began to become popular in households.==
Nichirei seized this point and began to vigorously develop retail products centered around microwave cooking. In 1994, Nichirei launched the first frozen meatballs that could be cooked in a microwave, ==without affecting the crispy texture==, marking a significant event in the history of frozen foods. It subsequently introduced several high-quality retail products that could be cooked in a microwave, such as fried spring rolls and meat patties.
By the late 1990s, Japanese women were gradually emerging in the workplace, and with the fast-paced lifestyle, consumer demand for convenient foods increased, shifting away from a singular pursuit of gourmet dishes to a focus on cost-effectiveness and convenience.
Against this backdrop, in 2001, Nichirei launched "Authentic Fried Rice." At that time, there were also many frozen foods made from rice on the market, such as rice balls and fried rice, but these products simply mixed rice with seasonings.
To launch the Authentic Fried Rice product, Nichirei dedicated four years to R&D, ensuring that the fried rice maintained good taste while utilizing freezing technology for preservation.
As a result, Authentic Fried Rice became an instant hit upon its launch, becoming one of Nichirei's core flagship products and consistently ranking first in the frozen fried rice category. In 2017, "Authentic Fried Rice" achieved annual sales exceeding 10 billion yen.
After 80 years of development, Nichirei has entered the era of dual-driven growth in its frozen food business. In 2021, the revenue from B-end and C-end accounted for 55% and 45%, respectively. Among them, retail products primarily focus on differentiated high quality as core competitiveness, while catering products mainly focus on high-cost performance chicken as the core category. Nichirei's chicken, fried meatballs, and hamburger products achieve a balance between B and C, with market shares ranking among the industry's leaders.
3. The Secret to the Longevity of Flagship Products: ==Investing in R&D and Upgrading Technology==#
To date, Nichirei has launched nearly a thousand frozen food products, but the ones that consistently dominate the category in sales are still "Authentic Fried Rice," "Dekara Fried Chicken," "Pink Shrimp Shumai," and "Crispy Spring Rolls."
"Authentic Fried Rice" has been on the market for over 20 years, "Crispy Spring Rolls" for over 30 years, "Dekara Fried Chicken" for over 40 years, and the even earlier "Mini Hamburgers" are still popular in the market, having been released over 50 years ago.
Nichirei's flagship products have long lifecycles. What is the reason? R&D.
Nichirei's dedication to R&D can even be traced back to the 1950s. When it first entered the frozen food sector from the seafood business, it established a research and development laboratory.
In 1991, when Nichirei "entered" the C-end market, it built a research and development system centered around consumer experience, integrating development, planning, and feedback. The company established a Food Development Research Institute and a Taste Evaluation Office, forming a three-tiered R&D organization consisting of "Comprehensive Research Institute and Analysis Center," "Food Development Research Institute," and "Production Department."
A typical example is Authentic Fried Rice.
Authentic Fried Rice was able to become a hit upon its launch because it spent four years on R&D. To ensure taste, Nichirei used special frying equipment to coat each grain of rice with egg liquid, and the egg coating and penetrating oil prevent the rice from sticking together, presenting a distinct grain effect, even when heated in a microwave.
Subsequently, Nichirei has conducted multiple iterations and upgrades on Authentic Fried Rice, either by adding ingredients or upgrading flavors.
In 2015, a significant reason for Nichirei's victory in the fried rice war was its technological upgrades to enhance the taste and quality of Authentic Fried Rice.
Nichirei invested a staggering 3 billion yen to develop the "three-step frying method" technology and applied for a patent for it. This technology uses a layered heating method to precisely control heating time and temperature, ensuring the rice grains achieve a chewy texture. Compared to traditional fried rice, the rice produced by the "three-step frying method" is fresher, and the flavor of the sauce is maximally released, creating an exquisite taste comparable to hand-fried rice.
Nichirei continues to invest heavily to ensure the position of its core flagship products surrounding Authentic Fried Rice. In 2022, Nichirei invested approximately 11.5 billion yen to build a new factory in Fukuoka Prefecture, Japan. This factory is said to have the latest frying technology, capable of expanding the production capacity of authentic rice by 150%.
Looking back, the reason Nichirei has been able to stand firm in the rapidly changing market for a century is not only due to seizing opportunities but more importantly, its ability to capture opportunities, maintain keen insight into consumer preferences, and continuously innovate technology and upgrade products, allowing the company to remain undefeated in fierce competition.
References:
[1] 100th Anniversary Special of Frozen Foods - The Journey of Frozen Foods
[2] What the "Fried Rice War" Brought to the Industry, December 2016
[3] August 8 is "Fried Rice Day"®!
[4] Nichirei's "Authentic Fried Rice®" Certified by Guinness World Records™ in August 2021
[5] Series on Overseas Company Tours - Japan's Leading Frozen Prepared Dish Company Nichirei, September 2021, Anxin Securities
[6] Nichirei 75-Year History
[7] 100-Year History of Frozen Foods
[8] Exclusive Interview with the Chairman of Nichirei China | The Prepared Dish Giant Launches a New Brand, Expanding into the Chinese C-End Market! August 2022, New Ingredients
[9] How Can the Booming Prepared Dish Industry Go Further? June 2022, Hongcan Network
[10] Nichirei Foods Invests 11.5 Billion Yen to Build a New Rice Factory in Fukuoka, Establishing Two Bases in East and West
This article is from the WeChat public account: FBIF Food and Beverage Innovation (ID: FoodInnovation), author: Abby, editor: Bobo