Megmilk Snow Brand - Company History

The company begins with a refusal. Hokkaido dairy farmers sold raw milk to processors who set the price, so a good season did nothing for them; when the slump following the 1923 Great Kanto Earthquake broke the dairy market, the answer was to pull processing and selling onto the producers’ own side. In May 1925 Utsunomiya Sentaro, who had studied dairying in the United States, and Kurosawa Torizo, who led the farm movement he had trained, founded a limited-liability dairy processing and marketing co-operative in Sapporo. Butter production started two months later in a makeshift plant borrowed from a farmyard, and selling began in October. Almost every other Japanese dairy company was created by capital; this one was created by the farmers who supplied it.

Kurosawa gave the enterprise its creed — kendo kenmin, “healthy soil, healthy people”: a coined phrase arguing that Hokkaido agriculture could only be rebuilt by keeping cattle and returning manure to the land rather than farming crops alone, and still cited today as the founding spirit. In December 1926 the federated co-operatives fixed a single trademark, Yukijirushi (“Snow Brand”), a snow crystal crossed with the pole star, and Snow Brand Hokkaido Butter was born. Exports to Shanghai and Dalian followed in 1927, ice-packed rail cars carried volume to Honshu from 1930, and a prefectural inspection ordinance let buyers choose on grade; by 1932 the co-operative made about 75% of all butter produced in Japan. Film stars advertised it and recipe leaflets taught households what butter was for — selling the food culture and the product together.

By 1935 the federation collected more raw milk than Meiji or Morinaga and stood first in the country. Then wartime control took the enterprise out of the farmers’ hands: in 1941 it was reorganized as Hokkaido Kono Kosha, a state-policy company, and the mechanism by which producers set their own price and found their own market was lost. Renamed Hokkaido Rakuno Kyodo in 1947, it ran almost all of Hokkaido’s milk collection and butter and cheese output — and that very scale made it a target of the Occupation’s deconcentration law. A quarter-century after its founding, the organization that had become the name of Hokkaido dairying was ordered to break itself in two.

In June 1950 the company was cut in two by antitrust order, and one half was incorporated as Snow Brand Milk Products, keeping the Yukijirushi mark; the other became Hokkaido Butter, later Clover Dairy. Two months after incorporation the new company listed in Tokyo and Sapporo. A farmers’ co-operative had passed through a wartime state company and an Occupation break-up to become a listed corporation. Vitamilk in 1951 started the move from a butter-and-cheese maker toward a full-line dairy, and once the Occupation ended and the policy that forced the split expired, the split was undone: Clover Dairy was absorbed in 1958 and the pre-war production base put back together.

Then, in March 1955, the flag the company stood under was betrayed. Skim milk powder from the Yakumo plant — raw or half-concentrated milk left standing after a machine failure and a power cut, colonized by Staphylococcus aureus — poisoned school lunches in nine Tokyo primary schools: 1,579 cases among 7,638 children. President Sato Mitsugu circulated a letter titled “To all employees” demanding the company start over on quality, and it was handed down as the origin of Snow Brand’s quality control. The company’s own verdict today is that the memory was not kept: letting the lesson of Yakumo fade is what it holds responsible for the outbreak of 2000. Between the two, the same organism went unremembered for forty-five years.

The growth years produced the shelf that Japanese households still recognise — 6P Cheese mass-produced from 1954, camembert and sliced cheese in 1962, Snow Brand Coffee in 1963, Neo Soft margarine in 1968, Natsure plain yoghurt in 1979, string cheese in 1980 — while a co-operative-linked milk distributor set up in 1972 built the farm-federation route into the drinking-milk market. From the 1980s the company pushed outward from milk technology: a biological science laboratory of some 130 researchers opened in 1983 to enter pharmaceuticals, and the man who built it, Katayama Sumio, became president in June 1993 with dairy liberalization approaching in the Uruguay Round. In the late 1990s calcium-fortified milk turned into a hit, and putting a health function on the front of the pack became a method the company would reach for again and again.

On 27 June 2000 the Osaka health office logged the first report of food poisoning from Snow Brand low-fat milk. The chain ran back to a power failure that March at the Taiki plant in Hokkaido: contaminated skim milk powder had been redissolved, dried again, and shipped to Osaka as an ingredient. Staphylococcal enterotoxin sickened 13,420 people — the largest mass food poisoning in postwar Japan, caused by the same organism as Yakumo forty-five years earlier, and this time in the milk that reaches the table every morning.

The response made it worse. Recall and public notice were late, the company said everything but the low-fat milk was safe and then added two more products, contradicting the staff already out visiting victims, and President Ishikawa Tetsuro ended the late-night briefing of 4 July with “I haven’t slept” — footage replayed until it settled the verdict. He resigned on 6 July and Nishi Kohei, from sales, took over, closing eight plants and cutting 1,000 jobs, 15% of the workforce. Recovery had barely begun when, on 23 January 2002, the subsidiary Snow Brand Foods was found to have relabelled cheap imported beef as domestic to claim subsidies under the BSE buy-back scheme. A second failure in eighteen months, and this one a fraud: the subsidiary was dissolved that April, the parent’s sales fell again, and ten days after the report Nishi decided to take in outside capital.

Nishi wanted Nestlé as the lead shareholder; the agriculture ministry pushed instead for the drinking-milk business to be merged with the farm federations Zen-Noh and Zenrakuren, and the rescue that emerged was co-operative-led, with Zen-Noh as largest shareholder and Itochu also subscribing. Infant formula went to Nestlé, pharmaceuticals to the Otsuka group, ice cream to Lotte — a dismantling by business line in all but name, leaving the parent a cheese and butter maker. The milk business was spun out in January 2003 as Nippon Milk Community under the red Megmilk pack; it lost $113.9M (¥13bn) at the operating line in its first year and fell into negative net worth, returned to profit in fiscal 2004 after closing plants, and cleared the deficiency in 2006 with support from Norinchukin. Snow Brand, profitable again from fiscal 2003 on cheese, had done the same on its own side. In October 2009 the two combined under a joint holding company, Megmilk Snow Brand, listed in Tokyo and Sapporo — combined fiscal 2008 sales of $5.1B (¥525bn) put it within reach of second-placed Morinaga. Snow Brand president Takanose Tadaaki called it “not a return to the old Snow Brand but a starting point for the next generation,” and said of the incidents: “we must not let them fade. We will carry them for ten years, twenty years.”

In April 2011 the holding company absorbed both operating companies and became an operating holding company itself, with consolidated sales of $5.7B (¥504bn) in its first full year. Earning power was the problem: the beverages and desserts segment, milk included, barely paid, and operating profit for the year to March 2015 was $88.8M (¥9bn) on a margin in the low single digits. Nishio Keiji, president from 2014, restructured that segment for a $33.1M (¥4bn) improvement inside a year and then shifted to investing in what worked. The two chosen fields were cheese and functional yoghurt: a Gasseri SP strain yoghurt was launched in 2015 as a Food with Function Claims on a visceral-fat reduction claim, and about $49.6M (¥6bn) went into a small-bottle drinking-yoghurt line at the Kyoto plant so that supply could finally keep up with the television and in-store promotion the company had been unable to run. With price revisions improving the mix, consolidated operating profit recovered to $173M (¥19bn) for the year to March 2018, and proprietary ingredients — MBP for bone metabolism, the Helve lactic acid bacterium — were built into a functional-foods business on the same pattern.

What would not improve was milk itself. A long-range vision drawn up in 2017 aimed at an operating margin near 5% and ROE above 8%; the 2019 medium-term plan’s $201.8M (¥22bn) operating profit target was missed at $165.1M (¥18bn) as yoghurt growth stalled and cheese prices were competed down, and the following plan’s goal of cutting the milk deficit by a third was missed too. Milk is hard to differentiate and easy to make a loss leader, so the red ink is structural rather than cyclical, and it could only be worked down slowly through line consolidation and item-by-item review. Through the pandemic — school and foodservice demand gone, household demand up, functional yoghurt spiking on immunity claims and then falling back — the company still held operating profit at $185.4M (¥20bn) for the year to March 2021, put about $65.6M (¥7bn) into a new string-cheese line at Taiki, took infant-formula maker Snow Brand Beanstalk fully in-house in 2021, and moved to the Tokyo Prime market in 2022.

Sato Masatoshi, president from 2021, made “the sustainability of food” the axis of the 2025 medium-term plan: in a country importing roughly 40% of its dairy, keeping supply stable is the company’s job, and a contribution-to-food-sustainability measure was written into how the portfolio is judged. Then, in its centenary year of 2025, the company published a six-year plan, Next Design 2030, whose core is an “asset transformation” — restructuring 20–30% of domestic production sites through alliances, M&A, contract manufacturing and internal consolidation — alongside a dividend payout target raised from 30% to 40% and a 6% ROE goal met partly by unwinding cross-shareholdings. Execution moved quickly: by May 2026 production had been scheduled to end at Kobe, Okoppe and Kawagoe, about 13% of the way to the target, while the Hong Kong base was closed and infant formula made fabless to clear loss-making overseas operations, leaving MBP exports as the growth line. In the year to March 2026 the group ran on three segments — dairy products, beverages and desserts, and feed and seed — with 5,844 employees and operating profit of $122.3M (¥18bn). A co-operative that began with one product, butter, now has to answer a question its founders never faced: not who sets the price of milk, but whether there will be enough dairy farmers, and enough people drinking it, to need the plants it built.