Morinaga & Co. - Company History

From a two-tsubo workshop to volume production at Shibata-machi and Osaka

Morinaga & Co. starts from Morinaga Seiyo Kashi Seizosho — the Morinaga Western Confectionery Manufactory — which Morinaga Taichiro (森永太一郎) set up in August 1899 in a workshop of two tsubo (about 6.6 square metres) at Akasaka Tameike in Tokyo[1]. Taichiro had spent eleven years in the United States learning how Western confectionery was made[2], and after returning he moved the shop out to the Tameike main street eight months after founding and to Akasaka Tamachi three years later[3]. Japanese confectionery of the day had not risen above a cottage industry in which a sweet needed only to look the part[4]; Taichiro paid the closest attention to the blending of ingredients and chose the road of mass-producing cheaply a “confectionery for children” that gave nutritional value to what had been no more than a luxury[5]. At the end of the founding year he made the first caramel in Japan[6]. In 1904, out of concern for hygiene, the firm was the first in the trade to put its workers in uniform[7], and in 1905 it registered the Angel mark as a trademark[8].

In January 1905 Matsuzaki Hanzaburo (松崎半三郎) joined as manager and took charge of the business as a whole[9], and the Morinaga–Matsuzaki partnership was born. In 1907 a new plant was built at Shibata-machi and the firm moved there; an Osaka branch followed in 1908[10]. In February 1910 Morinaga Shoten Co. was incorporated with capital of ¥300,000 and Morinaga Taichiro became its president, and in April of the same year the capital was raised to ¥500,000[11]. In November 1912 the name was changed to Morinaga & Co.[12], and the following year, 1913, Milk Caramel went on sale[13]. Caramels were then sold loose as a matter of course, so the pocket-sized paper sack put out in March 1914 caught on[14] and spread the Morinaga name at a stroke.

In 1915 the firm began making biscuits for export[15], and in September 1918 it installed chocolate-making machinery at the Shibata-machi plant, putting the first domestically produced milk chocolate in Japan[16] on sale from October[17]. Milk Cocoa followed in 1919, and in the same year Morinaga was the first in the trade to adopt an eight-hour working day[18]. In July 1920 it merged Nihon Rennyu (日本煉乳, Japan Condensed Milk) and took over its Mishima plant[19]. Its channels ran beyond the home islands into China, Korea, Manchuria, the South Seas and India, and enlarging the plant became unavoidable[20]. In preparation, Matsuzaki Hanzaburo toured the trade in the United States and in the countries of Europe in 1918 and again in 1921, and came back having imported machinery of several new types[21].

New machinery from the Western tours, and the halving of capital after the return to gold

The imported machinery brought the Tsurumi and Tsukaguchi plants into being; after Tsukaguchi came Tsurumi, opened in June 1925, and volume production of confectionery on the newest equipment began[22]. To pay for the equipment the capital was raised to ¥3 million in May 1923 and to ¥15 million, of which ¥6 million was paid in, in May 1924[23]. In March 1923 the firm set up Morinaga Seihin Hanbai to sell its own products, and thereafter placed sales companies of the same name across the country[24]. In May of that year it began mass production of biscuits, opened a Morinaga Candy Store in the newly built Marunouchi Building and established Morinaga Shoji[25]. When the Great Kanto Earthquake struck that September it released milk and confectionery in quantity to the victims[26], and in 1928 it put the Morinaga Belt Line Stores in place as a distribution network[27].

The price of expansion showed after Japan returned to the gold standard in 1930. As the business depression deepened the company could not absorb the output its enlarged plant produced, and management ran into a crisis[28]. No dividend was paid for three consecutive periods, from the September 1931 term through the first half of 1932; in August 1933 the capital was halved to ¥7.5 million, and only from the March term of that year was a 6 per cent dividend restored[29]. After the reduction the business moved gradually towards stability, and there the strengthening of the wartime system followed[30]. Marie had gone on sale in 1923[31], and Morinaga Chewing Gum and Tap Gum in September 1931[32]. In April 1935 Matsuzaki Hanzaburo, spoken of as Morinaga Taichiro's celebrated partner, became the second president[33].

From sugar coupons to the renaming as Morinaga Shokuryo Kogyo, and the burning of Tsurumi

In 1937 the company held the Morinaga Mother's Day Festival, which spread Mother's Day in Japan[34]; thereafter the strengthening of the wartime system took away the freedom to trade. Sugar rationing by coupon began in May 1940, and in October of the same year company accounting, the use of bank funds and wages all came under control[35]. In June 1941 the sale of wheat and barley passed into state management, and once the country entered the Pacific War the conditions of production — raw materials, power and labour — were constrained across the board[36]. In October 1942 the company merged four firms, Morinaga Nyugyo, Morinaga Shokuhin Kogyo, Tokai Seika and Morinaga Kansai Gyunyu, and took over the Chukyo and Oyama plants[37]. In November 1943 the corporate name too was changed, to Morinaga Shokuryo Kogyo (森永食糧工業, Morinaga Food Industries)[38].

In April 1945, late in the war, about 60 per cent of the Tsurumi plant was lost to fire in an air raid[39]. In 1946 Morinaga Tahei (森永太平) became the third president, and with economic controls still running the company restarted from the dairy division first[40]. After the war it put its strength into the turn from a controlled economy to a free one, into repairing war damage and into restoring productive capacity, and first installed emergency equipment to raise output at the Tsukaguchi plant, which had escaped the bombing[41]. Capital went from ¥15.2 million to ¥50 million in September 1948, and to $277,778 (¥100m) by a doubling in October 1949[42]. With sugar, starch syrup and flour returning to free sale and general purchasing power recovering, results improved year by year[43].

Spin-off, listing and restored name in six months, and the making of the postwar staples

Within six months of 1949 the company established Morinaga Milk Industry in April, listed on the Tokyo, Osaka and Nagoya stock exchanges in May, made its sales division independent as Morinaga Shoji in August, and in October transferred the dairy division to Morinaga Milk Industry and changed its name back to Morinaga & Co.[44] The name forced upon it in 1943 was thus restored after six years. The newly independent Morinaga Shoji set up eighty branches and sales offices in the main cities of the country and handled the sale of every product[45]. This decision to narrow the company's resources onto confectionery was carried out under the third president, Morinaga Tahei[46]. The restoration of the name coincided with permission for the free sale of caramels, and the company applied itself to volume production and volume selling[47].

Total sales of $6.7M (¥2bn) in the September 1949 term, the term in which the free sale of confectionery was allowed, grew to a little over $19.7M (¥7bn) by the March 1955 term[48]. Importing the newest machinery from the United States, Britain, Germany, France and Switzerland, the company established itself as first in the industry across its four main products — caramels, chocolate, biscuits and drops[49]. The money put into this expansion of plant reached $4.2M (¥2bn)[50]. In July 1952 an integrated caramel production line was installed at the Tsurumi plant[51], and in July 1954 the retail-outlet division was separated off as Morinaga Candy Store[52]. Capital was built up as well, to $555,556 (¥200m) by a bonus issue in March 1952, $1.4M (¥500m) in October 1953 and $2.1M (¥750m) by a further bonus issue in October 1955[53].

The staples of the shop floor came together across the 1950s and 1960s, and in April 1953 a globe-shaped neon tower was raised over Ginza[54]. The company widened into frozen confectionery in 1956 and pancake mix in 1957[55]. In April 1960 the Mishima plant came on stream and the instant-food division was enlarged; a capital increase in October 1963 took the capital to $8.3M (¥3bn)[56], and the following year, 1964, Hi-Crown Chocolate went on sale[57]. In December 1961 the company took a capital stake in Taiwan Seika (台湾製菓股份有限公司) and from 1962 began manufacturing in Taiwan[58]. In March 1965 it established Yamato Shokuhin, and in August of the same year Morinaga General Mills, a joint venture with General Mills of the United States[59].