Successive price revisions and the shift to “value pricing” (2023)

The test is product strength that can keep raising prices

The point of this decision is that Ajinomoto did not let its response to soaring raw-material costs end in a defensive price increase, but built it as an offensive strategy that matches price to the value of the brand. That President Fujie had experienced price revision as an everyday management decision in overseas markets such as Brazil likely encouraged a pre-emptive move within a Japanese food industry that is cautious about raising prices. Reading a headwind that faces everyone — high input costs — as an opportunity to re-examine product value and lift earning power is where the character of this decision shows.

That said, price increases always sit back to back with falling volume and a heavier burden on households, and it is hasty to assume that passing costs through leads straight to higher profit; in fact, signs of buying restraint were noted in parts of the household-use market. How to keep the product strength and the brand that keep you chosen even after raising prices — the true worth of the “value pricing” Ajinomoto has shown will be tested precisely after the run of high input costs has passed.