Company history

ITO EN did not begin in tea. Honjo Masanori, born in Kobe in 1934 and put through Waseda law school by his own wages after his father’s business failed, became the top salesman at a car dealership — 407 cars in a year — and in August 1964 spent the savings on a grocery and seasonings wholesaler, Nihon Family Service. The company counts that year as its founding. The wholesale business failed, but it left a piece of information: of everything the firm handled, the highest margin was on packaged tea leaf. In 1966 the brothers set up Frontier Seicha in Shizuoka, the direct predecessor, and began selling tea to retailers themselves.

The trade would not have them. Every shop already had a supplier, and in an industry that ran on old names a newcomer had nothing to offer. So Honjo bought a name. In May 1969 he paid ¥2,000,000 for the trading name of a long-established Ueno tea house — Ito En — and renamed the company after it. Money had all but run out; the office was a shack ringed by bamboo on the edge of Kawaguchi, Saitama, and the staff numbered five, including his younger brother Honjo Hachiro, who took sales and product development while Masanori took the finances. A ¥40 million bill fraud nearly finished them; in 1970 a ¥5 million investment from Obuchi Keizo, a junior from Waseda newly elected to the Diet, helped keep the company alive.

The weapon was the packet itself. Tea was sold loose by weight, and supermarkets — the rising channel — would not stock leaf that went stale in three days. ITO EN sealed it in aluminium foil, got it onto the shelves, and ran a direct-from-the-growing-region, cash-settled route-sales operation built for volume. Television advertising, an industry first in 1968, carried the name. Just over eleven years after entering the trade, in 1976, it was the leading seller of packaged tea in Japan. It then pushed upstream: a factory at Sagara in Shizuoka in 1974, and from 1976 a programme that turned abandoned farmland into contracted tea gardens — an unheard-of attempt to hold both ends, field and shelf, that would later become the company’s procurement base. A 1977 visit by a Chinese delegation led to an oolong import agreement in 1979 and, with it, the exclusive Japanese rights to Fujian oolong.

At a board meeting early in 1981, ten of ITO EN’s twelve directors voted against launching canned oolong tea. Canned drinks then were sweet — cola, coffee — and no one believed a consumer would pay ¥100 for unsweetened tea they could brew at home for nothing. The two votes in favour were the brothers’. What made the risk bearable was arithmetic rather than conviction: the cans were made under contract, so no plant had to be built, and a total failure would cost about $1.4M (¥300m) a year against roughly ¥400 million of recurring profit the year before. Behind it was a harder fact — household green-tea consumption had been falling since its 1973 peak of 2,024 grams, and a leaf merchant sold nothing through the hot months.

The drink went national in March 1981 in a deliberately black can, aimed at young buyers rather than the summer-drink market. Sales were slow until Suntory entered ten months later and made the category visible; by 1989 more than a hundred makers were in it and the market approached ¥200 billion. ITO EN then turned on its own core product. Green tea had been considered impossible to can — its tannins oxidise and throw off a baked-sweet-potato smell — and it took eight years of work under Hachiro to shut out the oxygen. The world’s first canned sencha launched in February 1985, to open laughter from inside and outside the trade. Renamed Oi Ocha in 1989 after a phrase its own commercials had made famous, and put into the world’s first PET bottle of green tea in 1990, it caught a change in how people lived — cars, working couples, convenience stores — and carried the teapot outdoors.

In 1988 Masanori handed the presidency to his brother and became chairman, answering the obvious criticism by saying he had chosen Hachiro not as a brother but as the subordinate he trusted most. Sales that year were ¥37.5 billion, split four-tenths green tea, four-tenths oolong, two-tenths other drinks: the leaf merchant had become a beverage maker. In May 1992 the shares were registered over the counter with the Japan Securities Dealers Association, twenty-eight years after founding. Joint ventures in Zhejiang and Australia followed in 1994, and a vending-machine operation in which one salesperson both took orders and restocked let the company tune the assortment machine by machine.

ITO EN listed on the Tokyo Stock Exchange’s second section in September 1996 and moved to the first section in October 1998, posting record profits for seven straight years to the April 1998 term. What paid for that record was a deliberately light structure: the leaf came from farmers under direct contract and was processed in ITO EN’s own plants, but the brewing and filling — the capital-hungry end — was contracted out to 43 partner factories across the country, saving both freight from a central plant and the investment in one. “Raw material and technology are our core,” Hachiro said, and everything else was rented, entered lightly and exited fast.

The challenge came from a competitor with no history in tea. Kirin Beverage’s Nama-cha, launched in March 2000 on a fresh, cool flavour profile and a star-led campaign, hit its first-year target in three and a half months; other soft-drink majors followed, and by May 2001 ITO EN’s share of the seven-major green-tea market had fallen from above 40% to under 30%. Hachiro admitted to a level of alarm he had not felt before, and read the attacker’s weakness correctly: a drink sold on coolness would fade in winter. In October 2000 the company brought forward by a full season the industry’s first hot-only PET bottle, screening 300 leaf varieties for ones that would not develop an off-smell when heated, and installed free heated cases in retailers until more than 50,000 stores carried them by the end of 2003. Seasonal editions from 2001 and region-specific blends from 2003 followed, and share returned to the 40s. The procurement network — roughly 30,000 growers supplying crude tea — was what made that speed of variety possible.

With the core recovered, the company widened. Canned coffee arrived in 2003 and the vegetable drink Ichinichibun no Yasai in 2004, both still made under the founding rule of no added flavourings or seasonings. Consolidated sales rose from ¥204.7 billion in the April 2002 term to ¥310.2 billion in April 2007. In October 2006 ITO EN bought the operator of Tully’s Coffee in Japan, taking a café chain rather than building one, and in September 2007 listed non-voting Class 1 preferred shares on the first section — a rare piece of Japanese capital policy that raised equity without issuing a single new vote.

Honjo Daisuke, the third of the family to lead the company, became president in 2008 and met the financial crisis at once: recurring profit for the April 2009 term fell to ¥10.4 billion from ¥18.2 billion. With the domestic drinks market mature, ITO EN bought its way into adjacent channels — a mineral-water joint venture with Itochu in 2008, the Hiroshima dairy Chichiyasu in 2011, the vending-machine operator Neos in 2012 — adding milk products and a machine network that did not depend on tea. Consolidated sales passed ¥400 billion in the April 2013 term, but operating margins stayed below those of the food majors, and profitability remained the group’s standing problem.

The stated ambition, from a 2013 medium-term plan, was to become a world tea company. A regional holding company in Singapore (2012) was followed by ventures across Southeast Asia, and in February 2015 by the purchase of Distant Lands Trading Co., a US coffee and tea roaster, which added ¥11.8 billion of goodwill. At home a dedicated matcha plant and a new Kobe factory opened in 2016. In May 2019 Oi Ocha was certified by Guinness World Records as the best-selling natural healthy RTD green tea in the world, thirty years after the brand took its name; sales that year reached ¥504.2 billion — the ¥500 billion the company had once promised for 2012, arriving seven years late.

COVID-19 struck exactly where the group was exposed, in vending machines and cafés: sales fell to ¥446.3 billion by the April 2021 term and the food-service segment went to an operating loss. Price rises and returning footfall brought operating profit back to ¥25.0 billion in the April 2024 term. For its sixtieth anniversary the company set a five-year plan to April 2029 aiming at a parent operating margin above 8.5% and the globalisation of the Oi Ocha brand, opening subsidiaries in Germany and Vietnam in 2024 and announcing a group restructuring in June 2025 that folds the vending business into Neos and consolidates regional units. The tea-garden programme begun in 1976 now underpins one of Japan’s largest leaf-procurement networks — the upstream half of a company that spent sixty years persuading the world to buy what it could have made at home.