Kewpie Tamago and the move into fine chemicals — by-products as functional materials (1981)

Choosing to go deeper into the raw material

To read this decision as a story about recycling waste is to mistake its character. The founding of Kewpie Tamago in 1977 was a design for distribution — leaving egg processing to a specialist company and selling it outside — and the 1981 entry into fine chemicals was a decision by a food company to enter another industry as a supplier of raw materials for cosmetics and pharmaceuticals. What the two share is the view that competitiveness lies in how deeply you can handle your principal raw material, and the reading that even when the market for finished goods matures, untouched territory remains on the materials side.

It took a long time for results to show in the numbers. Hyaluronic acid took nine years from the start of development in 1983 to food-grade sales, and twelve to pharmaceutical grade. That is a pace hard to justify against quarterly assessment, and it was research that could be sustained only because a core business kept consuming eggs in quantity. A business built on by-products is protected by the scale of the core — and, by the same relation, the supply of its material thins if the core shrinks. How far a choice to go deep into the raw material can become an earnings source independent of the core business is a question that still sits in the company’s portfolio.