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Aggressively expand in the nutritional health-related food market. |
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Increase presence in high-potential retail markets overseas. |
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Build on global leadership in bulk ingredients. |
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Expand pharmaceutical business through R&D and alliances.
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Nutritional Health-Related Food Products Are Growth Drivers
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In developing Kenko Sarara, Ajinomoto conducted applications research concurrently with basic research to make sure the product would meet consumer requirements. |
The overall retail market for nutritional health-related food products in Japan is estimated at ¥4 trillion. Within it, the retail market for products that carry the Ministry of Health, Labour and Welfare designation “Food for Specified Health Use” is estimated at ¥400 billion. During the course of the new three-year management plan, Ajinomoto expects to capture a significant share of this market with functional foods. Amino Vital sports supplement and Kenko Sarara cooking oil are representative of successful new products we have introduced in the nutritional health-related food market and we are aggressively developing additional products to complement them.
| New varieties of hit product Amino Vital and the development of new distribution channels are projected to drive solid sales growth for this scientifically engineered sports supplement drink. |
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Amino Vital: A Brand Built on Science
Amino Vital, a scientifically engineered amino acid-based sports supplement, exemplifies Ajinomoto’s approach in the nutritional health-related food product segment. Our brands in this market are built around science, rather than image. Using the scientific approach to promote consumers’ understanding of the benefits of amino acids has resulted in swift consumer acceptance, with sales of Amino Vital expanding approximately 70 percent during fiscal 2001.
During fiscal 2002, Ajinomoto has targeted additional growth of 40 to 50 percent in sales of Amino Vital. In support of this objective, we will introduce new varieties and expand distribution channels. The existing drugstore channel has proven very effective, and will remain a primary conduit. Ajinomoto will also devote additional effort to sales at sports and health clubs. Supermarkets and convenience stores present excellent potential as a means of broadening Amino Vital’s customer base. Ajinomoto is carefully preparing to market Amino Vital in these channels using methods that deepen understanding among general consumers, thus emphasizing the scientific background of this exciting product.
Kenko Sarara Cooking Oil Poised for Growth
Kenko Sarara, an edible oil that substantially reduces cholesterol deposits, received designation as a “Food for Specified Health Use” from the Ministry of Health, Labour and Welfare in December 2001. The Japanese market for healthy oils is estimated at ¥19 billion in fiscal 2001, and Ajinomoto expects to generate sales of ¥2.5 billion of this product in fiscal 2002.
Kenko Sarara has moved quickly from laboratory concept to commercialization, exemplifying Ajinomoto’s drive to accelerate time to market. Applications development took place even while basic research was still in progress to ensure strong market linkage. |
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Science and new ideas drive health-related product development.
The Health Services Development Department and the Research Institute for Health Fundamentals will work with Ajinomoto’s internal and Group companies as well as outside organizations to support rapid development of new health-related products. These organizations will help ensure that Ajinomoto creates new, interdisciplinary product concepts based on thorough science that will excite consumer interest. |
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A Framework to Support Expansion
The creation of the Health Services Development Department in March 2002 will support achievement of our objectives by promoting the development and effective management of nutritional health-related brands. Established within the Corporate Division, the department will work with Group companies to create new materials and products based on a clear scientific foundation, thus strengthening Ajinomoto’s overall presence in nutritional health-related segments.
Created in 2000, The Nutritional Health Science Research Project Department was reorganized into the Research Institute for Health Fundamentals and became part of Ajinomoto’s Corporate Laboratories in March 2002. It will serve as the Group’s primary research organization in the field of nutritional health-related products. Its staff plays a key role in generating product ideas by undertaking applications research in cooperation with Ajinomoto’s internal and Group companies and outside organizations.
Ajinomoto aims to generate new health-related products every year. Dietary approaches to good health and appropriate responses to changes in the body over the life cycle are key development themes in working to develop popular products.
Growing Presence in Retail Markets outside Japan
The market for food products in Japan is mature, making growth challenging. Ajinomoto is therefore expanding the presence of its powerful food product brands in high-potential markets outside Japan, with emphasis on Southeast Asia, Central and South America, and China. Moreover, during the new three-year management plan Ajinomoto will strengthen its regional product development capabilities to support increased sales in target regions. This effort will be particularly important in determining the best processed food product candidates for each region.
Ajinomoto has a potent brand lineup in Southeast Asia, anchored by AJI-NO-MOTO. With a solid presence in Southeast Asian food and seasoning mix markets as well, Ajinomoto is well positioned to succeed in broadening its product offerings and increasing market penetration. Channel development and building on our strong brand awareness among consumers will be core themes.
Central and South America offer solid potential. Having built AJI-NO-MOTO into a respected brand in this region, Ajinomoto has targeted products such as seasoning mixes and aspartame as core growth drivers, and is also further strengthening its number one position in the instant noodle market of Brazil.
In China, Ajinomoto’s overall objective is to build strong food product brands that are well suited to the sensibilities of the Chinese market. A larger share for AJI-NO-MOTO flavor enhancer in the umami seasoning market is a priority. Seasoning mixes represent another segment in which Ajinomoto intends to expand sales, and we will also promote diversification into the retort pouch curry market through an alliance with House Foods Corporation of Japan.
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| Establishment of SHANGHAI HOUSE AJINOMOTO FOODS CO., LTD. strengthens the Company’s position in China. |
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Shanghai House Ajinomoto Foods Co., Ltd. will begin production of retort food products for the Chinese market around the end of 2002, with an emphasis on high-quality, convenient retort curry products. |
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Aggressively Generating Growth in Global Bulk Ingredients
Ajinomoto is a global leader in bulk ingredients, including feed-use amino acids, monosodium glutamate (MSG), nucleotides and pharmaceutical-use amino acids. Under the new three-year management plan, we are focusing on re-orienting and expanding existing plants and equipment to manufacture the most profitable products with optimum efficiency. We are also emphasizing efficiency gains in sales organizations.
• Expansion in the Growing Feed-Use Amino Acid Market
The feed-use amino acid market is expected to grow strongly in coming years, but the intense competition among manufacturers makes cost competitiveness an essential factor in maintaining market share. Ajinomoto bases its continuous efforts to reduce costs on its superior fermentation and production technologies. As a result, in 2001 we were successful in reducing production costs of feed-grade Lysine to 43 percent of 1985 levels.
Feed-use Lysine is a 600,000-ton annual market of which Ajinomoto currently holds a 35 percent share. We expect this market to expand 7 to 8 percent annually to reach 800,000 tons by 2005, and are investing to increase production capacity from the current level of 200,000 tons to 300,000 tons annually by fiscal 2005. Capacity expansion in the United States to increase production from 40,000 tons to 50,000 tons annually was completed in July 2002, while capacity expansion in Italy from 20,000 tons to 30,000 tons will be completed in January 2003. Another program to increase production in Thailand from 30,000 tons to 50,000 tons will be completed in early 2003, rounding out Ajinomoto’s ability to stably meet growing demand.
In the feed-use Threonine market, AJINOMOTO EUROLYSINE S.A.S. currently has production capacity of 19,000 tons annually and a market share of 60 percent. Completed in June 2002, our new feed-grade Threonine plant at Ajinomoto Heartland, Inc. in the United States is an integral part of our program of increasing the Group’s total production capacity to 45,000 tons annually and raising market share to 70 percent.
Feed-use Tryptophan, the newest addition to our feed-use amino acid portfolio, is a rapidly growing market. With the goal of building a 70 percent market share, we intend to raise production to 1,500 tons annually by 2005.
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Moving to cost-competitively meet growth in worldwide demand for nucleotides used in seasonings, Ajinomoto is expanding capacity by constructing a nucleotide plant in Thailand. Existing capacity for feed-grade Lysine is also being increased. |
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• Growth in Core Products MSG and Nucleotides
The creator of the 1.5-million-ton MSG market, Ajinomoto now holds a global market share of 30 percent with annual sales of approximately 450,000 tons. Moreover, excluding the Chinese market, Ajinomoto controls a 48 percent global market share. Projecting annual market growth in the 3 percent range, Ajinomoto is strengthening its operating base in this market by further integration for efficiency and even greater emphasis on quality. In the closely related nucleotides market, Ajinomoto holds a leading share and is working to complete a new plant in Thailand by 2003 with annual production capacity of 3,000 tons.
• Realizing Additional Opportunities for Expansion
The market for pharmaceutical-use amino acids is expanding at about 3 percent annually. Ajinomoto manufactures 20 varieties at eight locations globally, and holds a leading market share of 60 percent.
Ajinomoto has built a strong number two position in the global aspartame sweetener market, with a share of 40 percent. Supported by the creation of a strong European operating base through acquisitions and consolidation, Ajinomoto is working to take the number one position in this strategic business area. Ajinomoto supplies aspartame to manufacturers in the beverage, candy and other markets, and products containing aspartame are available in more than 120 countries. Under the new three-year management plan, Ajinomoto will continue to support this business through cost-reduction and streamlining programs.
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Tightly focused pharmaceutical research generates new opportunities for growth.
Ajinomoto is leveraging its strengths in amino acid technology to develop a distinctive pharmaceutical business, with a focus on post-genomic research to analyze the functions of proteins linked to development of new drugs. These activities both support the creation of new products and make the Company an attractive alliance partner for leading global pharmaceutical companies. |
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Pharmaceuticals Fit Ajinomoto’s Skills Portfolio
The pharmaceutical business is well suited to Ajinomoto’s strengths in amino acid technology. We are emphasizing
amino-acid-related approaches to maintaining health, and strengthening overall efforts in the areas of clinical nutrition, gastrointestinal diseases and lifestyle-related diseases such as diabetes.
Ajinomoto complements its own research and development with alliances with leading companies in the pharmaceutical business, including a marketing agreement with Novartis Pharma AG covering the antidiabetic agent nateglinide. Ajinomoto also cooperates with Novartis Consumer Health S.A., and in January 2002, concluded an exclusive license to manufacture and market a leading critical care and immune system-enhancing nutrition product, Impact, in Japan. Sales began in July 2002 following studies to collect evidence of Impact’s ability to reduce risk of infection and shorten hospital stays.
Joint development with Takeda Chemical Industries, Ltd. and Aventis Pharma Ltd. has also yielded results. In January 2002, both Takeda and Ajinomoto received approval from the Ministry of Health, Labour and Welfare of Japan to manufacture risedronate sodium hydrate, an osteoporosis treatment. Ajinomoto supplies the product to Aventis Pharma for sale under the brand name Actonel.
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