Buying Dole’s packaged-foods and Asian produce businesses (2012)

Seeking the next earnings pillar in a brand, not in resources

The core of this acquisition is that Itochu deepened its own strength one notch further along a path apart from the trading houses’ royal road of vying for record profits on resources. For a company that had earned in non-resources like textiles and food, taking hold of one of the world’s largest fresh-produce brands was a choice to stretch the food value chain upstream — into production and brand — not just downstream distribution. In an age when resource prices decide a trading house’s rank, the deliberate act of pouring $1.685 billion into the upstream of food throws the outline of Masahiro Okafuji’s non-resource strategy into sharp relief.

That said, fresh food is easily buffeted by weather, market conditions and exchange rates, and owning a brand does not by itself promise stable profit. In the decade-odd since the acquisition, Dole has become a name that represents Itochu’s food division, while another Dole — the one handling fresh produce in North America and elsewhere — listed under separate ownership, so the same signboard remains split across two companies. On which business a trading house that does not lean on resources should place its next earnings pillar — this decision to buy an entire slice of a global brand can be read as one answer to that question.