House Foods Group — Company History

From wholesaling to making curry powder, until the war cut it off

In November 1913 Urakami Seisuke (浦上靖介) opened Urakami Shoten (浦上商店), a dealer in medicinal and chemical raw materials, on Matsuyamachi-suji in Osaka. A drug wholesaler of that era traded in spices alongside Chinese herbal medicine, and the shop's shelves carried pepper and chilli. Urakami Shoten supplied curry ingredients to sauce makers — Shiratama Sauce (白玉ソース), Chuo Sauce (中央ソース), Haguruma Sauce (羽車ソース) — standing not as a maker of curry but as the party that handed materials to those who made it. The market for finished goods already had its first movers: in Kansai Metal Curry, Hachi Curry (蜂カレー) and Tsukibijin Curry (月美人カレー) were on sale, and in Kanto the known names were Noble Shokai (ノーブル商会) and Azumaya (東屋), maker of S&B Curry.

In 1926 Urakami Shoten absorbed Home Foods (ホーム食品), a sole proprietorship, put up a plant in the city of Fuse (today part of Higashi-Osaka) and began manufacturing and selling curry, pepper, chilli and other spices. The brand it entered under was Home Curry, but Kotobukiya (today Suntory) objected that the name infringed its own, and it was changed to House Curry. The registered trademark was a drawing of a house with the words In Every House inside it, and the House that survives in the company name today comes from that renaming. In 1930 the firm was reorganised as an unlimited partnership and its trade name changed to Urakami Seisuke Shoten.

In 1934 it launched hayashi rice (ハヤシライス), widening from the manufacture of a single curry powder into instant foods for the home. The gap with the first movers did not close quickly, however, and Urakami Ikuo (浦上郁夫), later the second president, recalled that the company in its founding years seemed to have struggled a great deal. Sales spread from a Kansai base into the Chugoku, Shikoku and Kyushu regions, building roots in western Japanese households rather than in the Tokyo market, where the old houses were strong. As the Second World War advanced, curry ingredients became controlled goods and male employees were taken for military service, leaving the company short of hands, and production ceased altogether. In 1945 its premises burnt down in an air raid and it moved into the Fuse plant.

Incorporation, and the choice to avoid pure curry powder for instant curry

Operations had been suspended through the war and the years after it for want of raw materials, and the conversion into a joint-stock company was the fresh start from that point. In June 1947 Urakami Ryoshoku Kogyosho Co., Ltd. was established with capital of ¥197,500, and in January 1949 the pre-war brand was taken into the trade name, which became House Curry Urakami Shoten Co., Ltd. In May 1950 it absorbed House Foods Co., Ltd. Yet when the controls were lifted around 1952 and it resumed making and selling instant curry, S&B Foods had already started production ahead of it, and Urakami Ikuo said the domestic market felt as though it had been painted over entirely in S&B Curry.

On resuming after decontrol, the company put its strength not into pure curry — curry powder — but into instant curry. Urakami Ikuo explained that it had been able to reach the head of the industry precisely because S&B Foods' ground in pure curry was so solid that House turned early to a different field. The launch of a fried-rice seasoning mix (炒飯の素) in 1958 opened the way into assorted instant foods, and in November 1959 a curry factory was completed at the Higashi-Osaka plant. In 1960 it launched Indo Curry (印度カレー), and that November the trade name changed to House Foods Industrial Co., Ltd. As a result of this choice, demand in the instant curry sector reached roughly $63.9M (¥23bn) a year by 1971, of which the company held 47 to 48 per cent.

Vermont Curry, launched in September 1963, sold $20.8M (¥8bn) as a single product in the year to November 1970 and became the company's mainstay. Instant foods for the home followed almost yearly: Purin Mix (プリンミクス) in April 1964, stew in 1966, Shavic (シャービック) in 1967, Java Curry in 1968, and a milk-shake mix and gratin in 1969. In June 1970 it set up the joint venture Sun House Foods and launched the retort-pouch product Kukure Stew (ククレシチュー), adding Kukure Curry (ククレカレー) in April 1971. That March it had launched Blend Special Curry as a premium line.

Distributors and registered dealers, television advertising, and the listing

Distribution ran through 167 contracted wholesalers (305 accounts) and, beyond them, the secondary agents the company called registered dealers, reaching supermarkets and small retailers nationwide. For sales promotion it combined television-led advertising with shelf-round calling on wholesale and retail storefronts, live demonstration selling by demonstrators, and a rebate policy. Some 200 female sales-promotion staff were assigned to branches and sales offices as demonstrators and put to running cookery classes in stores. Until the first half of the Showa 30s (the early 1960s) S&B Foods and Oriental Co., Ltd. held larger market shares than House, but from the second half of that decade these measures took hold and the order was reversed.

In the year to November 1970 the company's market shares reached 47.7 per cent in instant curry, 93.7 per cent in instant stew and 71.4 per cent in instant pudding. Sales of $54.7M (¥20bn) and after-tax profit of $3.3M (¥1bn) in that year were 11.6 times and 23.2 times the figures of the year to November 1960. Against S&B Foods, House's sales over the previous five years had grown 3.4 times to S&B's 1.6, and its profit 5.6 times to 2.7. The Kanto region came to account for 29.0 per cent of sales, shifting the weight of a business that had leant on western Japan towards the east.

In June 1966 Urakami Ikuo, eldest son of Urakami Seisuke, became the second president at the age of 28, and that same month the Nara plant at Yamatokoriyama in Nara Prefecture was completed. A research laboratory followed in Higashi-Osaka, Osaka Prefecture in March 1970, the Kanto plant at Sano in Tochigi Prefecture in May, the joint venture House Haiso in August, and the Ideac Center (イデアックセンター) in November — production, logistics and training sites in quick succession. In July 1971 the shares were listed on the second sections of the Tokyo Stock Exchange and the Osaka Securities Exchange. The public offering was 4 million shares at an offer price of ¥480, and at listing the largest shareholders were House Kosan with 34.6 per cent and Urakami Ikuo with 22.6 per cent.

The 1970s, when thirty new products a year widened the range

At the time of listing the workforce was 1,353 — 673 salaried staff and 680 factory workers — with three plants at Higashi-Osaka, Koriyama and Kanto and eight branches and sales offices around the country. The main raw materials — refined beef tallow, milk powder, wheat flour, sugar and spices — were heavily dependent on imports and volatile in price, so the company secured them under long-term contracts with trading houses such as Tomen and Toshoku and specialist traders such as Kobayashi Katsura (小林桂), Kyokuto Foods and Snow Brand Shoji. At the interim results of May 1972 it held shares of 52.7 per cent in curry, 67.4 per cent in pudding and 93.4 per cent in stew, with half-year sales of $43.8M (¥13bn). In April 1973 its shares were transferred to the first sections of both exchanges.

Between the 1971 listing and 1978 the company put 70 new products into the world, and it recorded rising ordinary profit for seventeen consecutive years through the year to November 1977. The fields it entered were wide: paste spices in March 1973, instant noodles that June, snack foods in June 1977, with the Fukuoka plant at Koga in Fukuoka Prefecture completed in April 1976 and the Shizuoka plant at Fukuroi in Shizuoka Prefecture in December 1982. As of May 1978 its market shares were 62 per cent in curry, 82 per cent in stew and 80 per cent in pudding, followed by 46 per cent in prepared curry, 25 per cent in potato crisps and 17 per cent in instant ramen. President Urakami Ikuo said at the time that his company, being of Kansai origin, faced a narrower market than Tokyo firms and could not make a living by specialising in a single product.

The expansion carried costs. Advertising expenditure in the year to November 1977 was $34.9M (¥9bn), or 10.5 per cent of sales. Selling, general and administrative expenses came to 36.4 per cent of sales that year, up 5.7 points in the two years from the year to November 1975. The range of entries widened further: into chilled foods in 1980, and into beverages in 1983 with the mineral water Rokko no Oishii Mizu (六甲のおいしい水), which opened up the domestic market for household mineral water. In December 1983 it set up the joint venture House Foods & Yamauchi in California in the United States and went into local production of tofu.

The sudden death of the founder's son, and new products losing their force

The 1983 financial year, coinciding with construction of the large Shizuoka plant, brought the first fall in both sales and profit since listing, and in November 1984 extortion letters from the case designated No. 114 by the police (警視庁指定114号事件) arrived and results worsened further. On 12 August 1985 President Urakami Ikuo died at 47 in the crash of Japan Airlines Flight 123, and that September Otsuka Kunihiko (大塚邦彦), the executive vice-president, became president. Otsuka described his state of mind at the time as that of a caddie who had been going round the course with a professional and was suddenly told to play. Born in 1933, he had joined the company in 1955 and become representative vice-president in 1979.

In the years after the handover new products lost their force: the contribution of new products in the year to March 1989 was 4.5 per cent, down from a little over 7 per cent before. Over those three years the company put out about seventeen new products a year, fewer than in the period when the number had exceeded thirty. Sales in the year to March 1989 were about $1.1B (¥150bn) and operating profit about $79.7M (¥11bn), up 2.4 per cent year on year; by division, curry roux at $339.2M (¥47bn) was flat with a rise of 1.2 per cent, snack confectionery at $77.5M (¥11bn) fell 8.0 per cent and ramen at $130.5M (¥18bn) fell 5.0 per cent. Advertising as a share of sales kept climbing, from 9.47 per cent in 1984 to 10.2 per cent in 1989, so that the method of heavy selling through heavy advertising was still in place.

The test for leaving a business it could not run with the leaders

In 1988 President Otsuka reworked the product manager system introduced in 1969. Until then a unit reporting directly to the president had carried end-to-end responsibility for a product from development through to sales and had decided both launches and discontinuations, but its effort had tilted towards immediate sales promotion and distinctive products had stopped appearing. He created the post of marketing manager inside the sales headquarters, giving it the nurturing and promotion of new products, and left the product managers to concentrate on development one step ahead. Screening too was rebuilt in two layers: a new-product development committee examining taste, packaging and price from the consumer's side, and an executive-level new-product review meeting examining investment and profitability from the company's side.

At the end of 1991 President Otsuka decided to withdraw from the chilled-food business. It had been entered in 1980, and against a background of demand for foods closer to fresh the market had been growing at close to double digits every year; but the company had no delivery network of its own, and sales in the last two or three years had stayed at around $14.9M (¥2bn). The reason given for the withdrawal was the judgement that a business in tune with the times means nothing if there is no prospect of running in the top group of its field. Few voices supported the proposal, and Otsuka went about explaining that when starting something new one must hear everyone out, but that when withdrawing the top must be allowed to have his way. New businesses were given five years as a standard term, and the company pulled out of two in 1990 and one in 1991.

The policy reached down to the level of individual products: of roughly 750 items excluding food-service lines, 55 were discontinued in the 1989 financial year and 76 in 1990. The internal rules for launching new products were narrowed to three — be first to market even at some risk, take only products with distinctiveness, and aim at premium quality rather than a low price — and anything that did not fit would not be launched. The narrowing was not accepted at once: the industry murmured that House had gone strange lately, criticism came from trading partners, and the stagnation lasted four or five years. Even so, the returns rate fell from close to 7 per cent to 0.47 per cent, and Rokko no Oishii Mizu grew by 1991 into sales of $66.9M (¥9bn) and a leading household share of nearly 50 per cent.

The move to two head offices, and shifting research to Chiba

In October 1993 the company name changed from House Foods Industrial Co., Ltd. to House Foods Corporation, and the Tokyo Head Department was renamed the Tokyo Head Office, moving the company to a two-head-office structure alongside Osaka. Ahead of that, in March 1988, the financial year-end had been changed from 30 November to 31 March. In April 1989 the subsidiary S-Pack (today House Ai Factory) was established, and in March 1993 the Somatech Center was completed at Yotsukaido in Chiba Prefecture, shifting the base of research there. The move had been announced in 1986 but drew resistance from the researchers, core staff resigned one after another, and the date originally set for 1989 slipped to 1991. Vice-president Kono Takashi (河野隆) said that, for reasons of management strategy, there had been no help for the fact that the move could not be disclosed outside. In August 1993 the subsidiary Sun Supply was established.

Sales, which had been about $586.9M (¥140bn) when Otsuka became president in 1985, reached an estimated $1.7B (¥190bn) in the year to March 1993. In January 1992 Otsuka said he wanted to lift sales from $1.3B (¥164bn) to ¥200bn by 1994, while adding that what mattered was becoming less the scale than how many products ran at the head of their category. The subsidiary Hi-Net was added in July 1997 and the Tokyo head office building in Chiyoda-ku, Tokyo in August of the same year. That April the American subsidiary Curry House America was absorbed into House Foods America, taking the company out of the American restaurant business it had begun in April 1989 after eight years.

Health foods as a third pillar, and letting go of the water business

Black soybean cocoa, launched in September 2003, sold $46.2M (¥5bn) within a year and took second place behind Morinaga & Co. in a cocoa market the company was entering for the first time. The health-food department that developed it worked by starting not from a product category but from consumers' anxieties and from ingredients, and Ukon no Chikara (ウコンの力) came out of the same department. It launched Ukon no Chikara in May 2004, formed a business alliance with Gaban Co., Ltd. that August, and in October acquired the shares of Asaoka Spice Co., Ltd., making it a subsidiary. In April 2006 it acquired shares in House Wellness Foods Corporation, a joint venture with Takeda Pharmaceutical, making it a subsidiary, and after the joint-venture term expired in September 2007 it bought out Takeda's holding to own it outright.

Rokko no Oishii Mizu, launched in 1983, had opened the household market, but Suntory, which entered in 1990 with Minami Alps no Tennensui, overtook it in 1997, and by 2003 it had slipped to third. Because the water was drawn in a built-up part of Nada-ku in Kobe, it had to be carried by tanker lorry to the plant at Yamatokoriyama in Nara Prefecture for filling, a structure that piled on cost. In the year to March 2005 a new Rokko plant built at a cost of $72.6M (¥8bn) began operating with annual capacity of 18 million cases; in the same year the company adopted impairment accounting early, booked an impairment loss on fixed assets of $49M (¥5bn), and withdrew from the dairy business. In May 2010 House Foods transferred the mineral water business to Asahi Soft Drinks.

At its results briefing of May 2010 the company explained the transfer by saying that selection and concentration had been a pending question since the first mid-term plan and that it had decided to sell the water business from that standpoint. It added that the theme of the third mid-term plan was sowing seeds for the future and that it was contemplating no further sales or withdrawals. Looking back in 2016, Urakami Hiroshi (浦上博史) said that as markets matured and a leading firm emerged in each field, the company had begun selection and concentration around 2003, citing the switch of the instant noodle Umakacchan (うまかっちゃん) from national to regional sale and the handing of Rokko no Oishii Mizu to Asahi Soft Drinks as examples. A company that does anything wherever there is a need, in his explanation, cannot make a living trying to please everybody.

Spreading curry in China, and the tofu business in the United States

In China in 1997 the company opened a curry restaurant, Curry House, in Shanghai to test whether Japanese-style curry would be liked. China at the time used curry as a seasoning, but curry rice — curry poured over white rice — did not exist. In November 2000 it set up the subsidiary Taiwan Curry House Restaurant (today Taiwan Ichibanya). Encouraged by the response, in October 2001 it formed the joint venture Shanghai House Ajinomoto Foods with Ajinomoto, and in 2002 launched the retort-pouch home curry 味都都, allowing for a stage of simply getting people to learn what a dish of curry rice is. In January 2004 it set up the subsidiary Shanghai House Foods, and from February 2005 began producing curry roux in Shanghai.

At the opening ceremony in late March 2005, President Oze Akira (小瀬昉) said the curry made in Shanghai had been given a taste that Chinese people would call good. The Shanghai plant was owned 60 per cent by House, 30 per cent by Ajinomoto and 10 per cent by Mitsubishi Corporation, with first-year production set at 1.3 million units and a sales target of $9.1M (¥1bn). The Chinese version of Vermont Curry was coloured yellow, had star anise from Chinese cooking added, and was priced at 10 yuan a box. The means of spreading it were wide — introduction into school lunches, parent-and-child cookery classes, supply to the canteens of Japanese-affiliated companies, and cooking instruction for the ayi housekeepers — and the tastings in the street and in stores, on which it put the most effort, were planned at 30,000 sessions a year in 2016. In November 2006 the Jiading district of Shanghai asked the tenants of the Jiading Industrial Park South Zone to vacate, forcing a site less than two years old to relocate.

Household penetration in Shanghai passed 30 per cent, the Chinese curry business turned profitable in the 2012 financial year, and its share exceeded 90 per cent. In May 2016 the company established Zhejiang House Foods, investing about $45.9M (¥5bn) in a third production site after Shanghai and Dalian. In June 2010, on the liquidation of the joint venture Shanghai House Ajinomoto Foods, the Chinese retort business was consolidated into Shanghai House Foods; House Foods (Shanghai) Commerce and Trade followed in April 2011, House Foods Vietnam in January 2012 and El Burrito Mexican Food Products in October of that year. In the United States the origin was a meeting Urakami Ikuo had, while touring Los Angeles, with a Japanese-American tofu maker, and in 1983 the company began making and selling tofu through a joint venture. It offers six grades of firmness, matching firm products to Western customers and soft ones to Korean customers. Tofu sales in the 2015 financial year were $79.3M (¥10bn), with a share above 30 per cent and first place in the American tofu market.

The move to a holding company, and an interest in going downstream

In 2009 Urakami Hiroshi, a grandson of the founder, became president. Born in 1965, he had joined Sumitomo Bank in 1991, moved to House Foods in 1997, and served as head of the corporate planning office among other posts. In 2010, the year after he took office, the water business was transferred, and in May 2013 the company acquired the shares of Vox Trading, an importer and exporter of agricultural produce, strengthening its raw-material sourcing. In December 2011 it closed the Higashi-Osaka plant and consolidated spice manufacturing into the Nara plant. Using House Foods Split Preparation Co., Ltd., established in April 2013, as the receiving vehicle, it moved to a holding company structure that October, changing its name to House Foods Group Inc. and transferring the spices and seasonings business to House Foods Corporation and the health-food business to House Wellness Foods Corporation.

The point of the holding structure was to create a form in which each business would be run by its own operating company while the centre concentrated on acquisition strategy. In Japan in the early 2010s, output of retort-pouch curry was rising while solid roux fell, and curry was moving outside the home. House Foods Group's sales turned upward from around 2012, but operating profit kept declining, the biggest cause being weakness in the domestic curry business that accounted for about half of sales. President Urakami Hiroshi said that the externalisation of eating had advanced from home cooking after the Great East Japan Earthquake, when distribution was thrown into confusion and convenience stores restored their assortments first, and that this was a headwind for a company handling many products premised on cooking at home.

The relationship with Ichibanya began in 1974, when Munetsugu Tokuji (宗次徳二), adding curry to a coffee shop he had opened in Nagoya, bought up roux at nearby supermarkets, compared them by taste and chose the House Foods product. In 1998 House Foods acquired shares in Ichibanya, and in 2002 it took over part of the founding family's holding to become the second-largest shareholder. In July 2015 Ichibanya's president Hamashima Toshiya (浜島俊哉) called on House Foods to convey that the founder intended to sell his shares. Munetsugu had stepped back from management in 2002 at the age of 53, and said of the sale that he felt neither hesitation nor attachment but a sense of having done all he could — and above all, that there was a good successor.

Taking in the restaurant business by tender offer, and the weight of goodwill

On 30 October 2015 House Foods Group resolved on a tender offer for Ichibanya shares. The price was ¥6,000 a share for 5,021,100 shares, a maximum of $248.9M (¥30bn), over a period running from 2 November to 1 December, designed to raise the holding from 19.55 per cent to 51.00 per cent while keeping Ichibanya's listing in place. At the time of the acquisition Ichibanya had 1,380 outlets at the end of December 2015 — 1,228 in Japan and 152 abroad — and in the year to May 2015 had posted record sales of $363.6M (¥44bn) and record net profit of $22.3M (¥3bn), with an average spend of ¥895 per customer. Munetsugu and his wife tendered into the offer, disposing of the whole of their 23.17 per cent holding for about $165.3M (¥20bn).

The offer succeeded on 1 December 2015 and Ichibanya became a consolidated subsidiary. Chiefly through valuation gains on the shares held before the offer, the forecast for consolidated net profit in the year to March 2016 was raised from the previous $73.5M (¥8bn) to $205.8M (¥22bn), and the outturn was $207.6M (¥23bn), more than triple the year before. Consolidated sales that year were $2.2B (¥242bn) with operating profit of $99.2M (¥11bn), and in the year to March 2017, with Ichibanya's sales carried for a full twelve months, sales grew to $2.5B (¥284bn) and operating profit to $109.7M (¥12bn). The plan for the 2016 financial year, however, looked for sales of $2.6B (¥289bn), up 19.5 per cent, while operating profit was put at $90.9M (¥10bn), a fall of 5.3 per cent, the reason given being the increase in goodwill amortisation arising from the consolidation of Ichibanya.

The buying did not end there. In June 2016 the group took over the shares of Gaban, a major supplier of spices to the food-service trade, from Ajinomoto, making it a subsidiary and gaining both raw-material procurement through its spice processing plant in Penang, Malaysia and a sales channel into hotels and restaurants. Ichibanya UK followed in March 2017, Malony Co., Ltd. in August of that year, Ichibanya International USA in September 2020 and Daikoku Shoji Co., Ltd. that December. House Restaurant Management (Beijing) and House Restaurant Management (Guangzhou), established in September and November 2013, completed liquidation in December 2018 and November 2019 respectively. President Urakami Hiroshi said of the overseas business that the roles were divided — manufacture and sale of roux by House Foods, operation of restaurants by Ichibanya — and that Japanese-style curry would be spread not only in China but across the countries of South-East Asia.

The mid-term plan missed, and the narrowing to the spice chain

Consolidated sales in the year to March 2021 were $2.3B (¥250bn) with operating profit of $176.7M (¥19bn), and in the same year the company wrote down $82.9M (¥9bn) of the goodwill that had arisen when Ichibanya was consolidated, in the wake of the coronavirus pandemic. The restaurant segment booked an impairment loss of $87.4M (¥10bn) that year. The overseas share of sales stood at only 10.8 per cent at the end of the 2015 financial year, far from the target of 20 per cent by 2020. In September 2022 the group acquired the shares of the American plant-based food maker Keystone Natural Holdings, making it a subsidiary, but it booked impairment losses in the overseas food business of $33.4M (¥5bn) in the year to March 2025 and $47.4M (¥8bn) in the year to March 2026.

The eighth mid-term management plan, begun in the year to March 2024, sets out four value chains: spice, functional ingredients, soy, and new domains in South-East Asia. From January 2025 the American operations were reorganised into a business-by-business management structure, working on the competitiveness of the tofu business and on improving the earnings of the plant-based food business. By segment in the year to March 2026, spices and seasonings earned sales of $801.7M (¥127bn) and operating profit of $80.9M (¥13bn), most of the group's operating profit of $115.1M (¥18bn). The restaurant business had sales of $413.5M (¥65bn) and operating profit of $21.5M (¥3bn), the overseas food business $397.7M (¥63bn) and $21.5M (¥3bn), and the health-food business $103.1M (¥16bn) and $9.5M (¥2bn) — the profit contribution from the businesses added by acquisition was limited. For Delica Chef, the chilled-deli subsidiary established in August 1985, the group announced a transfer of the business in May 2026, indicating that it expected to book a gain on transfer of $16.4M (¥3bn) and gains of $29.7M (¥5bn) on the sale of strategically held shares.

At the results briefing of May 2026 the company said that the widening gap against the original plan, two years into the eighth mid-term plan, was the largest background to its heightened sense of crisis, and explained that against an initial operating profit target of $170.7M (¥27bn) the forecast for the final year, to March 2027, was $117M (¥19bn). All three value chains were short of their targets, and for the soy chain a return to profit in the year to March 2028 was set as the criterion for withdrawal. Estimating its cost of capital at about 6 per cent and not yet having reached it, the company adopted a policy of improving shareholders' equity as well as profit, setting out a share buy-back of $164.4M (¥26bn) and a dividend on equity ratio of 3.0 per cent or more for the year to March 2027. On organisation, it said it wanted to resolve a structure in which functions and businesses had become separated, head-office costs kept rising, and the operating companies stood in parallel beneath the group holding company, producing the ills of optimisation for each company alone.