Morinaga Milk Industry - Company History

Nihon Renyu, founded as a substitute for imported condensed milk

In September 1917 Morinaga Seika bought Aikoku Renyu Gomei Kaisha 愛国練乳合資会社, a condensed-milk partnership in Awa District, Chiba Prefecture[1], and established Nihon Renyu Co., Ltd. as its affiliate at Tamachi in Shiba Ward, Tokyo, with capital of ¥300,000[2][3]. Morinaga Milk’s dairy business traces back to that dairy-farming venture in Chiba[4]. Matsuzaki Hanzaburo (松崎半三郎) became its first president[5] and set about building the dairy arm up. The following year, 1918, the Nishikida plant opened in Tagata District, Shizuoka Prefecture[6]; competition for raw milk in Chiba was fierce at the time, and in March 1919 Nihon Renyu consolidated its Yoshio and Katsuyama plants into Boso Renyu 房総練乳[7]. In May 1919 it launched Morinaga Milk, a small-can condensed milk[8]. Nihon Renyu went on widening its scale through repeated amalgamations and separations[9].

In July 1920 Nihon Renyu was merged into Morinaga Seika and became that company’s livestock products division[10]. At the end of the same year the Nishikida plant began Japan’s first machine-based production of milk powder[11], put on sale from November 1921 as Morinaga Dry Milk[12]. Domestic manufacture of infant formula starts here, and by the end of 1922 the average daily intake of raw milk, affiliates included, had reached 100 koku 石 (a traditional measure of volume)[13]. In the Great Kanto Earthquake of September 1923 damage to the head office and the plants was slight, and the company served milk in Hibiya Park and Shiba Park[14], served neighbours and passers-by at the Shibatamachi and Osaki plants, and from the Mishima plant served those crossing the Hakone pass while carrying the elderly and the young by lorry[15]. Half-year sales in the last years of the Taisho era came to a little over ¥1.3 million[16].

In 1924 plants were completed at Hiratsuka, at Sorachi in Naie, Hokkaido, and at Notsukeushi in Tokoro District, Hokkaido, and large-scale manufacture of powdered and condensed milk began[17]. Staff who had finished a Dry Milk selling tour of Kyushu went straight on to open up the Hokkaido market[18]. In the months right after the earthquake trade was brisk enough that caramels were handed out against tickets, but once the consumption inflation passed sales fell away sharply[19]. To break the deadlock a milk sales campaign corps was organised, touring the country with sample cases and showing motion pictures as it went[20]. Each unit was a team of three — the driver doubling as projectionist, one man delivering a speech on encouraging home production and keeping imports out, and another serving as the benshi narrator for the silent film[21] — and they worked outward from Aichi to Kumamoto, Kagoshima and Miyazaki[22].

Morinaga Renyu spun out, then absorbed into the Hokkaido Kono Kosha

From the end of the Taisho era into the first years of Showa, Morinaga Seika was in difficulty: capital increases and plant investment weighed on its finances, and the world slump came on top[23]. Out of that double bind came the decision to separate confectionery from dairy[24]. In April 1927 the company launched Morinaga Chorus (森永コーラス), a nutritional drink, with a large campaign to popularise drinking milk[25], and on 15 September that year Morinaga Renyu Co., Ltd. was founded with capital of ¥1.5 million[26][27]. Morinaga Taichiro (森永太一郎) became president, Matsuzaki Hanzaburo senior managing director, and the managing directors were 中村芳三, head of the livestock division, and 伊藤律太郎, recommended by 瀬下清, president of Mitsubishi Bank[28]. Six plants — Notsukeushi, Sorachi, Mishima, Hiratsuka, Fukusaki and Imari — came across from the confectionery company[29].

After the separation Morinaga Renyu relied on canned condensed milk and milk powder, but when the Hiratsuka plant began bottling milk at the end of 1929 the company opened a milk division[30], and from March 1930 sold liquid milk in Tokyo for the first time[31]. The range widened — Morinaga Milk in December 1929[32], Morinaga Cheese in September 1933[33], Morinaga Yoghurt in July 1937[34] — so that liquid milk, cheese and fermented milk were all in place before the war. From the middle of 1933 the company imported the newest machinery from Switzerland, Britain, the Netherlands and other advanced dairying countries[35]. Morinaga Tohoku Nosan Kogyo, begun in 1936 and completed in 1937, was a cannery for milk, meat and fruit established in Fukushima with local capital added[36]; the site was chosen because controls by the Hokkaido dairy co-operative federation had made it impossible to build plants in Hokkaido, and because the company wanted to help revive farming villages in the Tohoku region[37].

In 1940 Morinaga transferred all its Hokkaido plants, milk-collection rights and sales rights in kind to the Hokkaido Kono Kosha 北海道興農公社, a public corporation for agricultural promotion[38], and its Tokyo liquid-milk business to Tokyo Nyugyo 東京乳業[39]. Production at the time was split seven to three between Hokkaido and the main islands for both Morinaga and Meiji[40], and both companies objected strongly; the amalgamation was settled by the decision of president Matsuzaki Hanzaburo after an approach from Governor 戸塚 of Hokkaido[41]. The corporation began operating on 1 April 1941 and lasted until its organisation was changed in 1950 under the deconcentration law[42]. In May 1941 Morinaga Renyu was renamed Morinaga Milk Industry Co., Ltd.[43], but the following year, in October 1942, it was merged into Morinaga Seika and became the second production division, the dairy division[44]; in November 1943 Morinaga Seika itself was renamed Morinaga Shokuryo Kogyo Co., Ltd.[45]

Re-established after the war, and listed in Tokyo in 1954

Morinaga Seika’s dairy division launched Morinaga Ice Cream in June 1947[46]. As the post-war economy recovered it became necessary to rebuild the dairy business as an independent concern, so Morinaga first took back the Meguro plant from Tokyo Nyugyo[47] and then, on 13 April 1949, established Morinaga Milk Industry Co., Ltd. with capital of $27,778 (¥10m)[48][49]. Matsuzaki Hanzaburo became president[50]. The company started out producing liquid milk at Meguro alone[51], raised its capital to $194,444 (¥70m) that September, and in October took over the dairy division, business and all, of Morinaga Seika — which had reverted to that name from Morinaga Shokuryo Kogyo[52]. In October 1950 it bought outright the plant assets it had been leasing from Morinaga Seika[53], and over this period acquired or built plants in Hokkaido and elsewhere to begin an integrated dairy-products business[54].

On 1 April 1954 capital reached $1.3M (¥465m)[55], and on 1 September that year the shares were listed on the Tokyo Stock Exchange[56]. At the listing the company counted twenty-four plants: eight in and around the six largest cities making liquid milk and ice cream, and sixteen regional plants in the dairy-farming districts making dairy products[57]. It employed 1,442 people[58]; the president was Morinaga Tahei (森永太平) and the senior managing director Ono Isamu (大野勇)[59]. Measured by production cost, dairy products made up 71 per cent of the mix — powder just over 42 per cent, condensed milk 20 per cent, butter 8 per cent[60] — and that weight of powder earned the company the name Morinaga of the dry[61]. Its Dry Milk infant formula accounted for about half of all national output[62].

Morinaga had created and launched a vitamin-enriched dry milk in November 1940, the first of its kind[63]. After the war, in 1952, it put out a vitamin-enriched homogenised milk as a new liquid-milk product[64]. Rocket milk plants — ultra-high-speed powder-making equipment — were installed at both the Hiratsuka and Matsumoto works, bringing infant formula into volume production[65], and in December 1953 the company completed Beta Dry Milk, a vitamin-enriched formula matched to breast milk[66]. It contained lactose that had been heated and converted into beta-lactose, and it turned the white stools seen in thirty to forty per cent of infants fed on conventional powder to yellow[67]. Sales for the year to March 1955 reached $12.5M (¥5bn), and the plants numbered twenty-seven across the country[68].

The 1955 milk-powder poisoning and the compensation talks

In the summer of 1955 poisoning was caused by Morinaga’s infant milk powder[69]. At the Tokushima plant disodium phosphate had been used as a milk stabiliser on a trial basis from July 1950 and in earnest from April 1953[70], but it was added by rough measure without any prior quality inspection[71]. The consignment delivered in April 1955 was labelled disodium phosphate yet was in fact a different substance containing arsenic[72] — waste generated in aluminium production at Nippon Light Metal, which had reached the plant after passing through several traders[73]. Ten months before the incident, in October 1954, Shizuoka Prefecture had asked the national government whether this waste fell within the poisons control law, but it was in circulation before any answer came[74].

On 24 August 1955 Professor 浜本英次 of the Okayama University medical faculty held a press conference at the request of the Okayama prefectural health department[75], and the department announced that infant milk powder made at the Tokushima plant was the cause[76]. That plant supplied mainly the Kansai region and areas further west, and because the area was so wide the harm spread[77]. The Health and Welfare Ministry’s tally of February 1956 gave 131 dead and 12,159 poisoned[78], and the disodium phosphate delivered in April 1955 contained arsenic at 4.2 to 6.3 per cent by weight, against a harmful level of 0.3 per cent[79]. The employees’ union gave up its pay rise and its bonuses, suppliers deferred payment, and bills for raw milk ran two months late[80].

The compensation talks were difficult, and Morinaga asked the Health and Welfare Ministry to mediate, pledging to leave the terms entirely to it[81]. A five-member committee of lawyers and doctors was formed[82] and drew up a compensation opinion, taking as precedents the settlements in the Japan Air Lines Mokusei-go crash, the National Railways fire at Sakuragicho, and the sinkings of the Toya Maru and the Shiun Maru[83]. Talks continued along the lines of that opinion, and it was also laid down that the authorities and medical institutions would carry out follow-up examinations, which were held in 1956 on the ministry’s instruction[84]. On the criminal side two managers at the Tokushima plant were prosecuted, and were acquitted at first instance[85]. Immediately after the case was made public the government amended the ministerial ordinance on milk and milk products, in 1957 substantially revised the Food Sanitation Act to tighten the regulation of food additives, and from 1960 published an official compendium of food additives[86].

Rebuilding after the incident, and the turn to mass production

In 1955 Morinaga stood first in the industry in both sales and profit[87]. After the blow of the poisoning, Ono Isamu resolved to resume the plant construction that had been suspended, obtained land from Nippon Kentetsu, then in bankruptcy liquidation, and broke ground in 1956 on the Tokyo plant at Katsushika, completing it in 1957[88]. The site ran to 23,500 tsubo 坪, larger than the 4,000 tsubo of Meiji’s Karasuyama works, reckoned at the time the biggest in Japan[89], and it was built as a single integrated plant rather than separating liquid milk from dairy products[90]. To win back public trust the company brought in Dr 前野正久 of Hokkaido University as director of its research laboratory[91], and in the spring of 1956 Ono Isamu resigned as senior managing director to make his responsibility plain[92]. The recruitment took a winding course, and Maeno moved across knowing he might never return to a university chair[93].

Working from the arguments he brought back from a study tour of Europe and America in 1956, Maeno developed Morinaga G-Dry, containing galactose, in-house[94]. Between about 1957 and 1958 the Tokyo plant adopted mass-production methods, the first attempt of the kind in Japanese dairying[95]. In Japan, where the districts producing raw milk were scattered across the country, both the industry and the responsible ministries doubted that large-scale production could be concentrated on one site; Morinaga did it anyway and got it running[96]. In Hokkaido it built the Urahoro plant in Tokachi under the guise of an extension to the town assembly chairman’s timber mill[97], and put up a liquid-milk plant at Eniwa near Sapporo openly, in direct competition with Snow Brand[98]. It took over Nihon Seinyu in Yamagata from the Tokyu group, and in Shikoku bought Tamamo Foods and made it Shikoku Morinaga Milk[99].