ITO EN - Company History
- Founding
- In August 1964 Honjo Masanori 本庄正則, who had sold 407 cars in a single year as a car salesman, used what he had saved to set up Nihon Family Service, a food wholesaler. The wholesale trade itself ran into a dead end, but of all the goods it handled the highest margin was on packaged tea, and in August 1966 he founded Frontier Seicha in Shizuoka with joint funding from BA Shokai. Retailers would not deal with a firm that carried no old and established name, so in May 1969 he bought the trade name ITO EN from a tea merchant in Ueno, Tokyo, for $5,556 (¥2m) and moved into a shack in Kawaguchi, Saitama, with five employees. Tea leaves that were conventionally sold loose by weight he sealed in aluminium foil, and by shipping direct from the growing areas and running route sales on cash terms the company opened up shelf space in the supermarkets, taking first place in the packaged-tea industry in 1976.
- The Decision
- What the company changed was not how tea was sold but how tea was drunk. In April 1976 it started a growing-area development programme that took it back up the chain to contract cultivation, and in August 1979 it signed the first import agency agreement in Japan with the China National Native Produce and Animal By-Products Import and Export Corporation, taking exclusive rights to sell oolong tea from Fujian. Using those leaves as its raw material, in March 1981 it entered the beverage business, selling in cans the unsweetened tea that people had until then made at home. Ten of the twelve directors were against it, but the canning was outsourced so no plant investment was needed, and even if nothing sold at all the loss would come to $1.4M (¥300m) a year, absorbable by the previous year's recurring profit of $1.8M (¥400m), and that arithmetic capped the downside. In February 1985 it put out the world's first canned sencha, and in September 2007 it listed non-voting Class 1 preferred shares on the First Section of the Tokyo Stock Exchange, thickening its equity without diluting the founding family's voting rights.
- Today
- Earnings are still gathered into a single segment, tea leaves and tea drinks. Of consolidated revenue of $3.2B (¥473bn) in the year to April 2025, the leaf and drinks business accounted for $2.8B (¥420bn), 89 per cent of the total, and of operating profit of $153.7M (¥23bn) that same segment generated $127M (¥19bn). The food-service business, which the company took on with Tully's Coffee when it acquired FOODX GLOBE in October 2006, stopped at $292.7M (¥44bn) in sales and $23.4M (¥4bn) in operating profit, and it turned to an operating loss in the year to April 2021 when people stopped moving about. Extraction and filling are contracted out to partner plants across the country, and what the company holds itself is only the procurement of crude tea from contract farmers and its tea-leaf works. That division of labour, which keeps the assets light, is what has held the operating margin at around 5 per cent even through higher raw-material costs and price rises.
- Competition
- In the green-tea drinks market it opened up itself, the company is now the one being chased. When Kirin Beverage launched Nama-cha in March 2000, the share ITO EN had held above 40 per cent among the seven major players fell below 30 per cent by May 2001. Reading that rival products sold on their cooling refreshment would be weak in winter, in October of that year it brought forward by a full season the industry's first hot-only PET bottle, and by layering seasonal and regional editions on top of it worked its way back into the 40s. Suntory came in with Iyemon in 2004, and a three-way contest continues with Coca-Cola (Japan), which has the greater number of vending machines. The source of competitive advantage is not the brand name but the procurement network that gathers crude tea from some 30,000 growers nationwide.
Timeline
1964–1980From car salesman to tea merchant: route sales, packaged leaf, and the top of the trade
- 1964Honjo Masanori founds Nihon Family Service, a food wholesaler
- 1966Frontier Seicha established in Shizuoka; green tea route sales begin
- 1968The tea industry's first television commercial
- 1969The trade name ITO EN is bought in Ueno and adopted
- 1970Green tea operations transferred in from Honjo Shoji and B.A. Shokai
- 1974Shizuoka Sagara plant built, integrating leaf to sale
- 1976Tea-region development begins; top of the trade in packaged tea
- 1977First directly run shop, Chajittoku Hiyoshi, opens in Yokohama
- 1979Japan's first oolong import agency contract signed with China
1981–1995Canned oolong and canned sencha: an unsweetened drinks market made against common sense
- 1981Canned Oolong Tea launched nationwide; ten of twelve directors had opposed it
- 1985Canned Sencha, the world's first green tea drink, launched
- 1986Central Research Laboratory built at the Shizuoka Sagara plant
- 1987ITO-EN (USA) INC. established in Hawaii
- 1988Honjo Hachiro succeeds his elder brother as president
- 1989Renamed Oi Ocha; the New Haiku Contest begins
- 1990World's first green tea drink in a PET bottle
- 1992Shares registered over the counter with the Japan Securities Dealers Association
- 1994Ningbo Shunyi Tea Industry founded in Zhejiang; sales arm set up in Australia
1996–2007The exchange listing and the green tea war: the shock of Nama-cha, and winning the share back
- 1996Listed on the Second Section of the Tokyo Stock Exchange
- 1998Designated a First Section issue; a seventh consecutive record profit
- 1999Royal Spencer absorbs Genmaiya; shares in Kansai Chagyo acquired
- 2000Kirin launches Nama-cha; ITO EN answers with the first hot-only PET bottle
- 2001Share falls below 30 per cent; Oi Ocha Shincha and a New York sales arm
- 2002Founder Honjo Masanori dies
- 2003Canned coffee launched; regional editions of Oi Ocha follow
- 2004Ichinichibun no Yasai vegetable drink launched
- 2006Mason Distributors and Food X Globe (Tully's Coffee Japan) acquired
- 2007Non-voting class 1 preferred shares listed on the First Section
2008–2026The third generation under Honjo Daisuke: acquisitions, and the road to a world tea company
- 2008Honjo Daisuke becomes president; Itochu mineral water joint venture set up
- 2011Chichiyasu acquired; radioactivity testing of tea leaf put in place
- 2012Singapore regional holding company established; Neos acquired
- 2013Plan set out towards the vision of the world's tea company
- 2015Distant Lands Trading Co. acquired in the United States
- 2016Matcha Kobo plant and the new Kobe plant built
- 2019Oi Ocha certified by Guinness World Records
- 2021Business alliance with Eisai on healthy longevity
- 2022Moves to the Tokyo Stock Exchange Prime Market
- 2024Subsidiaries in Germany and Vietnam; the sixtieth-anniversary medium-term plan
- 2025Group restructuring: vending integrated with Neos, Hokkaido ITO EN with Tsuchikura
Founding Story
1964–1980From car salesman to tea merchant: route sales, packaged leaf, and the top of the trade
The company that would later put Japanese green tea into a bottle began as a food wholesaler that failed. What the Honjo brothers carried out of that failure was narrow and durable — tea earned the best margin of anything they handled — and the trade they walked into would not talk to newcomers at all, so they bought an old shop's name, sealed the leaf in foil and drove it to the shops themselves.
The brothers who sold cars, and the failure of Nihon Family Service
ITO EN's founder, Honjo Masanori (本庄正則), was born in Kobe in 1934. His father's business collapsed and the family lost its assets, so he worked his way through the law faculty of Waseda University, joined a car dealership, and in his fourth year became its top salesman with 407 cars sold in a single year[1]. In August 1964, using what he had saved, he set up Nihon Family Service Co., a wholesaler dealing in foodstuffs and seasonings[2]. ITO EN dates its founding to this year, 1964[3]. The wholesale business itself ended in failure, but of all the goods it handled, the one with the highest margin was packaged tea sold in pre-measured packs. That margin is why the brothers turned to tea alone.
In August 1966, jointly funded by Nihon Family Service and the limited partnership B.A. Shokai, Frontier Seicha Co. — ITO EN's direct predecessor — was established in Shizuoka City, Shizuoka Prefecture[4]. Route sales, taking tea directly to retail shops, began here. The customs of the tea trade were thick, however: retailers already had their suppliers, and a newly arrived tea processor was simply ignored. The younger brother, Honjo Hachiro (本庄八郎, born in Kobe in 1940, a 1963 graduate of the law faculty of Waseda University)[5], was 24 at the time and joined his brother in the founding; from then on the elder handled finance and the younger sales and product development[6].
Buying the ITO EN name, and route sales of packaged tea
Convinced that in a tradition-bound tea trade no route to market would open without an old-established name over the door, Honjo Masanori bought the trade name ITO EN (伊藤園) from a long-standing shop in Ueno, Tokyo, in May 1969 for $5,556 (¥2m), and renamed Frontier Seicha as ITO EN Co[7]. The money was all but gone: the office was a rented shack ringed by bamboo on the edge of Kawaguchi, Saitama Prefecture, and the staff numbered five, the younger brother included[8]. In this period the company was also defrauded of $111,111 (¥40m) in promissory notes, and with the banks reluctant to lend, in 1970 it took a $13,889 (¥5m) investment from Obuchi Keizo (小渕恵三), a Waseda junior who had just been elected to the Diet[9]. In June of the same year it took over the green tea operations of Honjo Shoji (the former Nihon Family Service) and B.A. Shokai[10], securing a production arm.
Its weapon in trade was packaged tea — leaf divided into small sealed packs at a time when tea was sold loose by weight. The supermarkets then rising did not stock leaf, because it went damp within three days on the shelf, but ITO EN succeeded in getting packs sealed in aluminium foil onto those shelves[11]. It pushed into volume retail with route sales shipped direct from the growing region and settled in cash, and in 1968 it ran the tea industry's first television commercial[12]. By 1976, a little over eleven years after entering the business, it had secured the top position in the industry in packaged tea. The company then had 580 employees with an average age of 25. Its glass-walled
personnel appraisal — salesmen rated four times a year against 140 items, with the result feeding straight into their pay — drew attention as the mechanism supporting that rapid growth[13].
Joining making to selling: the Sagara plant, tea-region development, and the China connection
Once the sales network was in place, ITO EN began investing upstream. In May 1974 it built the Shizuoka Sagara plant in Sagara-cho, Haibara-gun (now Makinohara), Shizuoka Prefecture[14], putting in place an integrated chain from leaf production to sale. In April 1976 it launched its tea-region development business, converting abandoned farmland and similar ground into tea gardens[15], and moved into contract cultivation with farmers — an integration of making and selling with no precedent in the trade at that time[16]. In June 1977 it opened its first directly operated retail shop, Chajittoku Hiyoshi, in Yokohama, Kanagawa Prefecture[17]. Holding both ends, the retail shelf and the tea field, would later become the foundation of its raw-material sourcing strength in the beverage business.
The next product was carried in by a delegation from China. In November 1977, not long after the normalisation of relations between the two countries, a Chinese delegation on food-processing technology and machinery visited the tea factory in Shizuoka, and president Honjo Masanori spent half a day showing them round. At that meeting they recommended oolong tea from Fujian, and from this ITO EN began importing tea leaf on the order of $778,210 (¥200m) a year[18]. In August 1979 it signed Japan's first oolong import agency contract with the China National Native Produce and Animal By-Products Import and Export Corporation, taking exclusive distribution rights for Fujian oolong[19]. The oolong boom that began in 1979 enriched the leaf business, and a position was established of which Honjo Masanori could say that his company handled more than 60 per cent of all oolong leaf in Japan[20].
1981–1995Canned oolong and canned sencha: an unsweetened drinks market made against common sense
Within a decade and a half ITO EN twice sold Japan a drink nobody had asked for: unsweetened oolong in a can, and then green tea in a can that took eight years of laboratory work to make possible. By the time it went public in 1992 the tea merchant had become a beverage maker, and consolidated sales reached $839.4M (¥86bn) in the year to April 1994.
The canned oolong that ten of twelve directors opposed
At a board meeting early in 1981 the question was put of whether to launch canned oolong tea. Of the twelve directors, ten were against. The only two in favour were president Honjo Masanori and his younger brother, executive vice-president Honjo Hachiro, who was in charge of development[21]. Canned drinks at the time were all sweet — cola, coffee and the like — and nobody imagined a consumer paying 100 yen for unsweetened tea that could be made at home in a moment. Behind the decision to go ahead all the same lay a structural limit: household consumption of green tea had peaked at 2,024 grams in 1973 and had fallen every year since[22], and, as the saying in the trade went, from June to September, through the hot months, tea does not sell. ITO EN was by then the first company in its industry with sales of $44.1M (¥10bn), but its business was still nothing but the production and sale of Japanese tea[23].
In March 1981 the nationwide launch of the unsweetened tea drink Canned Oolong Tea began, and ITO EN entered the canned drinks industry in earnest[24]. It set its target on young people, from whom new demand could be dug out, and, against every convention for a summer drink, adopted a jet-black can. Because can production was outsourced, no capital investment was required: even if the product sold nothing at all the loss would be about $1.4M (¥300m) a year, absorbable by the previous year's ordinary profit of roughly $1.8M (¥400m) — the arithmetic that satisfied the board[25]. Sales were slow at first, but when Suntory entered ten months later, awareness rose sharply and the market expanded fast. By 1989 more than 100 manufacturers had entered and the market was approaching $1.4B (¥200bn)[26].
Eight years to can sencha, and the renaming to Oi Ocha
The next target was the core business, green tea. Tannin, the compound that gives green tea its astringency, oxidises easily in the air inside a can and produces a smell resembling roasted sweet potato, and for that reason canning green tea had been held to be impossible. Developing the technology to shut out oxygen and remove the odour took eight years and an enormous development budget, and throughout that time president Honjo Masanori scarcely interfered with the research division, the work being led by his brother Hachiro[27]. In February 1985 the nationwide launch began of Canned Sencha (缶入り煎茶), the world's first green tea drink[28]. It was an age, Honjo Hachiro recalled later, in which few people would pay money for tea sold as a drink, and people inside and outside the industry laughed that a thing like this could never sell[29].
In February 1989 Canned Sencha was renamed under the brand Oi Ocha (お〜いお茶)[30]. The name took as a product name the phrase that television commercials, running since 1968, had spread across the country. In November of the same year the company started the ITO EN Oi Ocha New Haiku Contest, printing entries on its packaging, and in 1990 it launched the world's first green tea drink in a PET bottle[31]. The idea of carrying the tea of the teapot out of doors coincided with changes in daily life — the spread of the car, the rise of households in which both partners worked — and green tea drinks widened their distribution to supermarkets, convenience stores and vending machines. In July 1987 the company established a subsidiary in the state of Hawaii[32], laying the first footing for overseas expansion.
Elder brother to younger, and the over-the-counter listing
In 1988 Honjo Masanori handed the presidency to his brother Hachiro and became chairman[33]. To those who asked whether he was making the man president because he was his brother, Masanori replied that he had chosen him for no other reason than that he was the subordinate he could trust most. Sales that year were $292.7M (¥38bn), up 17 per cent on the previous term, made up of green tea at 40 per cent, oolong at 40 per cent and other drinks at 20 per cent[34]; the shift from tea shop to beverage maker was advancing in the figures as well. In May 1992 the company registered its shares over the counter with the Japan Securities Dealers Association[35], going public 28 years after its founding. It was reported that the shares held by Obuchi Keizo, who had put in $13,889 (¥5m) in 1970, became a considerable fortune with this listing.
It laid stones overseas too. In September 1994 it established Ningbo Shunyi Tea Industry Co., a tea-leaf processing joint venture in Zhejiang Province, China, and a sales subsidiary in the state of Victoria, Australia[36]. At home it pressed on with adding vending machines, and refined an operating method — under a sales system of its own in which a single representative both took orders and restocked the machines — of varying the product mix finely from one location to the next[37]. With unsweetened green, oolong and black tea at the core, joined by black tea products and vegetable drinks, the ITO EN of the mid-1990s was turning into a comprehensive tea beverage maker under the banner of a company selling the world's three great teas[38]. The credit and the capital obtained through the over-the-counter listing underwrote its mass-production investment in tea drinks and its move overseas.
Notes
- Nikkei Business, 14 September 1998↩
- Nikkei Business, 22 May 1989↩
- ITO EN official website, 沿革 (corporate history)↩
- ITO EN, annual securities report, corporate history section↩
- Nikkei Business, 22 September 1997↩
- 財界 (Zaikai) Online, 23 September 2024↩
- ITO EN, annual securities report, corporate history section↩
- Nikkei Business, 14 September 1998↩
- Nikkei Business, 14 September 1998↩
- ITO EN, annual securities report, corporate history section↩
- Nikkei Business, 22 September 1997↩
- Nikkei Business, 22 May 1989↩
- Nikkei Business, 10 May 1976↩
- ITO EN, annual securities report, corporate history section↩
- ITO EN, annual securities report, corporate history section↩
- Nikkei Business, 10 May 1976↩
- ITO EN, annual securities report, corporate history section↩
- Nikkei Business, 22 May 1989↩
- ITO EN, annual securities report, corporate history section↩
- Nikkei Business, 22 May 1989↩
- Nikkei Business, 22 May 1989↩
- Nikkei Business, 22 May 1989↩
- Nikkei Business, 22 May 1989↩
- ITO EN, annual securities report, corporate history section↩
- Nikkei Business, 22 May 1989↩
- Nikkei Business, 22 May 1989↩
- Nikkei Business, 14 September 1998↩
- ITO EN, annual securities report, corporate history section↩
- Nikkei Business, 1 March 2004↩
- ITO EN, annual securities report, corporate history section↩
- ITO EN official website, 沿革 (corporate history)↩
- ITO EN, annual securities report, corporate history section↩
- Nikkei Business, 14 September 1998↩
- Nikkei Business, 22 May 1989↩
- ITO EN, annual securities report, corporate history section↩
- ITO EN, annual securities report, corporate history section↩
- Nikkei Business, 22 September 1997↩
- Nikkei Business, 22 May 1989↩
References & sources
- Nikkei Business (Nikkei BP): 10 May 1976; 22 May 1989; 22 September 1997; 14 September 1998; 1 March 2004.
- ITO EN Co., Ltd. (annual securities reports), including the corporate-history section, and the company's results briefing materials.
- ITO EN Co., Ltd. — the corporate history on the official company website.
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