オエノンホールディングス株式会社代表取締役社長 長井幸夫インタビュー
Liquor maker taps spirited trend
More Japanese savoring the good life, high-quality drinks
By SHINICHI TERADA
Staff writer
Yukio Nagai, president of a major Japanese alcoholic beverage manufacturer and retailer, is happy to see a new trend among drinkers -- a refinement of tastes when it comes to high-quality alcohol, with no second thought to prices. Nagai plans to jump on the wagon to take advantage of the trend and focus on his company's lineup of profit-reaping products.
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| Yukio Nagai, president of Oenon Holdings, Inc., displays the company's flagship product, Tantakatan (The Legend of the Tantaka). The framed painting depicts the legend in which the flatfish, or "tantaka" in the Ainu language, traveled to the highlands in a time of crisis to find a healing herb to help his fellow fish. This herb was "shiso," or beefsteak plant, one of the ingredients in Oenon's Tantakatan. |
What's more, Nagai says, "consumers have become more attuned to enjoying life and are learning to balance their work and leisure time." This has, naturally, been helped in part by the increase in disposable income.
Oenon Holdings is comprised of 12 subsidiaries and operates businesses dealing with not only alcohol, but enzymes and pharmaceuticals, food and real estate. Its alcoholic beverage business includes sake, wine, and its pillar product, "shochu," a vodka-like distilled alcohol.
Though the shochu market may actually be stalled, Nagai's company is zoning in on the new breed of connoisseur and targeting them with new products to match their needs.
There was a time when Japanese employees were labeled "corporate soldiers." For them, work was "something to live for," Nagai explains. But, he finds, "these days, more and more Japanese seem to be feeling that work is just one way to get enjoyment out of life."
And one of the other ways to enjoy life is to enjoy a higher quality of life. This can, and apparently does, take the form of enjoying higher-quality drinks. It also takes the form of finding a favorite brand and sticking to it, a way of exercising one's power of choice in a small, but enjoyable and easily doable way. "It may represent the so-called gap-widening society in the beverage market," Nagai says. "Some regular drinkers look for cheap alcoholic beverages such as third-category beers (beer-like drinks that have lower-than-usual levels of malt or may not even use certain ingredients such as barley or hops) and other drinkers seek high-quality, high-priced beverages or brands."
Nagai has observed at a Tokyo restaurant operated by Oenon "consumers snapping up bottles of shochu or fine wines without looking at prices." He believes they do such because they want to savor a particular flavor or aroma only to be had with a particular product.
Tadashi Saito, a 26 year-old banker, agrees. "I used to only drink beer to start with after work on Fridays, but one sip of 'Tantakatan' (one of Oenon's products) changed my drinking style. Now, this is all I drink on Friday nights," Saito claims.
Nagai says this is the kind of customer his company is wooing now. "Our focus is not so much on the quantity of sales or its market size," he claims. "It's all about giving our customers what they want -- high-grade shochu -- and about whether that will produce profits."
Japanese are becoming quite the connoisseurs of shochu and other alcoholic beverages, Nagai observes. More and more lovers of shochu want to know the source ingredient or other special ingredients of the shochu and from which region of Japan the water comes. Nagai believes it is attention to such ingredients that captures its most loyal customers.
The source ingredient of shochu, which usually contains 25 percent alcohol, can be sweet potatoes, rice or barley. "Honkaku," genuine shochu, or "otsurui" shochu is distilled only once. This process retains the aroma of the source ingredients as opposed to "korui," or multiple-distilled varieties.
Oenon's flagship "Tantakatan" is flavored with "shiso," or beefsteak plant, from Shiranuka on the northern island of Hokkaido. It is made with water from Mt. Taisetsu. In another of its key shochu, "Katsumi, Gyokuro Shochu," a particular type of high-quality green tea is used. "The consumer is seeking these specific products," Nagai says. "If we use other sources of the ingredients, we cannot produce the same taste, aroma or flavor."
Oddly, these two products were not immediate hits, Nagai says. Rather, sales are even now experiencing "gradual" and "steady" growth over a long period of time. In his opinion, these are the truly popular products, not the ones that are only temporarily popular.
The general shochu market does indeed look stalled. According to the Japan Sake Brewers Association, the shipping volume of otsurui shochu rose only a mere 0.3 percent in fiscal year 2005 compared with the year previous. It had earlier enjoyed two-digit growth.
In fact, Oenon cut unprofitable products in the alcoholic beverages division that had been generating about 90 percent of its sales. With a slimmer portfolio, the company increased its operating profits three percent over the previous year to 1.9 billion yen in fiscal year 2005 ended last December.
"The move, focusing on earnings not sales, should help the company maintain brand strength in an extremely competitive beverage environment and declining alcoholic beverage markets," Nagai says.
Still, consumers' tastes may change from product to product. Thus, Oenon is updating its products and offering different versions or different quality levels of products, Nagai explains. "Many consumers often have one brand they stick to and they want to have a variety of products from this one brand. That's something we're aiming to provide."
Oenon aims to post a 3.6 billion yen operating profit on sales of 80 billion yen in fiscal year 2006 ending in December. This is supported by its alcoholic beverages and another emerging business enzymes and pharmaceuticals. Nagai says the company is producing lactose-splitting enzymes, which make dairy products digestible for people who are lactose intolerant. He says this business firmly supports its earnings, adding that its growth is being driven by more international acceptance of the enzymes. He also says this sector's operating profit margin is in excess of 20 percent as opposed to about 3 percent in the alcoholic beverage division in the fiscal year 2005 ended last December.
The better balance that Nagai sees the average Japanese consumer enjoying between work and leisure is something reflected in his own business life. He finds the key to enjoyment is being able to switch on and switch off between work and leisure, more easily done, admittedly, by those, like himself, in control of the buttons.
The 61-year-old president likes to play the piano, paint and watch soccer. "I believe a person is capable of concentrating well for 90 minutes. I work for 90 minutes and then kick back and paint or read sheet music," he says.
Working toward achievements, he believes, is also vital to enjoying a higher quality of life. He incorporates this belief in the way he runs his company and in the way he treats his employees as well. "In the end, it's achievements that will lead you to your happiness."
