Bringing trust back to frozen food in Japan

[Sidney Vianna]

http://www.dnv.com/resources/publica...frozenfood.asp

Leading Japanese frozen food producer Katokichi has responded with force to the nationwide food scandals that has troubled Japan recently. The company is leaving no stone unturned to find solutions to improve their food safety management and rebuild customer trust.

At the beginning of this year, frozen dumplings made in China and imported to Japan were discovered to be tainted with pesticide, causing those affected to experience a temporary illness. The dumplings were produced by a supplier of JT Foods, the food division of Japan Tobacco, which also owns Katokichi. Food scandals such as this one have had severe effects on the whole frozen food market in Japan.
“The misconduct that caused this and other scandals has made the customer focus more severe on the whole industry. Customer trust fell dramatically, and sales fell by 40% for the entire frozen food sector in Japan following the scandal. For Katokichi, the reaction caused a sales decrease of about 85% for a time,” says Kazuo Kobayashi, Executive Vice President for Katokichi Co. Ltd.

Balancing costs and quality
Handling the risks of food production, especially after such scandals, is a challenge. Katokichi’s response is to strengthen their focus on quality in every link of the supply chain to reduce risk.
“Risk is a broad word. For us the subject is the balance between quality and the cost of the raw material. That is the main challenge. And, while we won’t compromise on quality, the cost of food has gone up, so this has become more difficult. In addition, the competition is tough, so we cannot increase our prices,” says Mr Kobayashi.

Food safety management
What Katokichi, now merged with JT Foods, has done is to contract DNV to assess and certify their production plants according to the food safety management system standard ISO 22000.
“The certification is an improvement for Katokichi. However, we feel this is not enough, and have added further safety measures. We have hired additional people to control and improve the quality. We have invested in equipment to check the food materials for contaminates, which is very expensive, and also we have decided to use a third party which can go deeper into the quality situation,” says Mr Kobayashi.
DNV was also chosen to perform several second party food safety audits. About 50 audits of manufacturing factories and suppliers in Asia and Europe are underway, based on Katokichi’s own quality management plan and protocol. Also, DNV will certify 20 of Katokichi own plants in Japan to the ISO 22000 standard by the end of 2009.

Cause for scandal unknown
The cause for the dumpling scandal has not yet been discovered.
“It’s still unclear to us what happened. At the time, there were many problems in China, especially with how to control food production. JT Foods informed us through­out, as Katokichi handled some food from the same factory in China. Immediately, we stopped selling all foods from that factory, and issued a nationwide food recall of the affected products. We also issued a press release, stating what our counter measures were. The openness in this event was dictated by our number one concern, which is the health risk to customers,” says Mr Kobayashi.
Still customers in Japan are doubtful of imported food, and the recent baby milk formula scandal in China will do little to build trust. However, Katokichi’s actions have been met with positive reactions both in the industry and among the public.

Food industry trends
According to Mr Kobayashi, the food producers in Japan are now looking for safer foods in order to survive in the market. Smaller companies may not have the resources to follow this trend.
“The investments we have made in the quality assurance of every aspect of food production are expensive. Small companies cannot invest in these measures, which means that in this severe market they cannot survive,” says Mr Kobayashi.
Of course, as Katokichi and JT Foods are merged under the ownership of Japan Tobacco, the new company is larger and stronger than ever. Mr Kobayashi points out that one of their main strengths now is purchasing.
“We can purchase food materials and make many different types of products, and we have a strong sales presence in the market for our products. JT Foods is also strong within the development of new food products, and as JT Foods and Katokichi have merged under the Katokichi brand name we find that our two product lines have good synergy; there are no conflicts between the two product selections. With these synergies, we believe that we will be the number 1 company in Japan within frozen food,” says Mr Kobayashi.

Expansion
While the main market certainly is Japan, Katokichi now eyes expansion possibilities. “We want to expand to oversees markets, but are still not sure which area is most profitable; Europe, USA or Asia,” says Mr Kobayashi.
So you can expect Katokichi products to hit the frozen food section of your local supermarkets quite soon, and behind those products there is an unflinching commitment to quality.