History of Kikkoman

A Special Exhibit - The History of Soy Pioneers Around the World - Unpublished Manuscript

by William Shurtleff and Akiko Aoyagi

©Copyright 2004 Soyinfo Center, Lafayette, California

Worldwide, and especially in the Western world, the most widely used and well-known food made from soybeans is soy sauce. In the West the Japanese style soy sauce, called shoyu, is especially popular. The largest shoyu manufacturing company in the world, and the one most responsible for introducing shoyu to the West is Kikkoman, which has been making fine shoyu for over 300 years. The constancy of Kikkoman's efforts and the excellence of their product and marketing have combined to make Kikkoman shoyu the traditional Japanese branded product to have become popular worldwide. And today Kikkoman is the oldest of Japan's largest 200 industrial companies (Fruin 1983).

Several key works have been invaluable in writing this chapter. Fruin's Kikkoman: Company, Clan, and Community, which focuses on the history of the company more than on the shoyu, itself, contains a wealth of original information and penetrating analysis, and is the only substantial work in English. We have drawn on it heavily. There are three voluminous "official" company histories issued by Kikkoman (in Japanese) and written or edited by their long-time employee Morio Ichiyama. The Twenty-Year History of Noda Shoyu, Inc. (1918-1938; published in 1940), the Thirty-Five Year History of Noda Shoyu, Inc. (1955), and the History of Kikkoman Shoyu (1968) are especially interesting. While these books do have weaknesses (they lack the impartiality and objectivity of histories written by an outsider, and the author, only a high school graduate, is not an historian), still they are packed with information and early photographs.

In this chapter, we will first trace Kikkoman's history in Japan, and then its history in the West.

Kikkoman in Japan

The First Two Centuries (1661-1886). The origins of Kikkoman can be traced back to the year 1661, when Takanashi Hyozaemon XIX, whose descendants help manage Kikkoman today, began to brew shoyu in the town of Noda, in today's Chiba prefecture, about 30 miles northeast of Tokyo.

The earliest mention of the town of Noda dates from 923 AD. The first soy sauce in this area was made in about 1560 by Ichirobei Iida, but it resembled tamari more closely than shoyu, in that it contained little or no wheat in the soybean fermentation. In 1600 the shoguns had declared Edo (today's Tokyo) as the new capital of Japan, which initiated a period of enlarged population growth. A number of firms formerly making soy sauce in the Kyoto-Osaka area moved to the town of Choshi, northeast of Edo, and began making shoyu?? there in the early 17th century. Higeta shoyu was first made there in 1616, Yamajo in 1630, and Yamasa in 1645. By the mid-1600s Choshi was the center of shoyu manufacture in the Edo (also called Kansai) area of eastern Japan.

In 1661 Hyozaemon Takanashi XIX, the first of the families that would later form the Kikkoman Shoyu company, began to make shoyu in Noda. During the first year, using 20 workers, he produced 3,000 gallons of shoyu. In 1662 Shichizaemon Mogi, head of another family that would later form Kikkoman, began to make miso. In the late 1600s rechanneling of the Edo River that flows by Noda gave Noda improved (one-day) access to Tokyo and also to other agricultural products, making it a major center of commerce in the area.

The first member of the Mogi lineage began to make shoyu in 1764, over a century after the Takanashis had started. The first Mogi is said to have arrived and settled in Noda in 1630. This was Shichizaemon Mogi I, founder of the Mogi clan and main lineage, from whom all later Mogis descended. (Kikkoman labels now state that the company was founded in 1630, but there is no proof of or even reason to suggest such an early date.) The Mogi's involvement with shoyu stemmed from an interesting inferfamily marriage. The oldest son of Hyozaemon Takanashi, now the XXII, married the daughter of Shichizaemon Mogi V. As was often the case when marriage was tied to business, he married into her family, taking up her family's name (he was now called Shichirouemon Mogi) and occupation. In the year of the marriage, 1764, the adopted son-in-law and his bride established a shoyu plant on the advice and with the financial support of the bridegroom's natural family, the Takanashis, who had been making shoyu in Noda since 1661. Two years later the bride's father, Shichizaemon Mogi V, head of the Mogi clan and main house, switched from making miso, which his family had begun in 1662, to shoyu. Also in 1764 Monjiro Horikiri, from nearby Nagareyama, began to make shoyu. In 1768 Shichirouemon Mogi's marriage was recognized as a separate branch household, the Kashiwa household, in the Mogi line. In 1772 Shichirouemon Mogi, head of the new household, had acquired enough experience and capital to separate himself from the paternal Mogi household and establish himself as an independent shoyu manufacturer.

A number of factors combined to attract new companies into the new shoyu industry. The new Tokyo-style shoyu, whose recipe containing equal parts soybeans and wheat had been standardized by 1716, was becoming increasingly popular at the new capital; by the mid-1700s?? imports of tamari shoyu from the Kyoto-Osaka area had begun to decline. At the same time, the population of the burgeoning capital had passed one million, creating a huge and concentrated market. In 1781 a shoyu manufacturing guild was established in Noda with seven members, two of which were Mogis. In 1782 Saheiji Mogi, head of the Mogi-sa branch?? of the Mogi lineage (established in 1688)??, switched from selling cereal grains and making miso to making shoyu. That year?? he gave his shoyu the brand name Kikkoman, a term composed of three characters: ki, the character for "tortoise, represents longevity and good luck;" ko means "top quality;" and man mean "ten thousand." Thus the name might be translated as "good luck and fine quality for 10,000 years." Kikko, however, can also refer to the octagonal marks on the turtle's shell; thus the Kikkoman logo or symbol was chosen to be an octagon with the character for "ten thousand" inside it. Saheiji Mogi could surely not have imagined at the time how appropriate, even prophetic this new name would prove to be. After 1821 Saheiji Mogi's Kikkoman shoyu was brewed in a modern plant, later known as Factory 4; thereafter his plants were famous for their state-of-the-art technology. By 1822 two more Mogi families had joined the Noda shoyu guild, establishing a five-family Mogi majority. From that time on, the Mogi family was the dominant one in the control of the various enterprises that later became the Kikkoman company. All of the eight presidents of Kikkoman have been Mogis. The Takanashi family emerged as the second most influential, followed by the Horikiri and Ishikawa families. In the late 1700s or early 1800s the Mogis established a family constitution institutionalizing their cooperative effort to concentrate talent and experience in shoyu manufacture at Noda. Among other things the short document noted:

Sincerity first and profits will follow. Neglect neither . . . Avoid luxury and cultivate simplicity and earnestness . . . Attend to your health. Eat simple foods no different than those taken by your employees . . . Twice a year call a family meeting; praise family members according to their character and not according to their profits. (Ichiyama 1940, translated in Fruin 1983).

During the 1800s the Kashiwa branch house of the Mogi line invested more in shoyu manufacture than any other, in part because of its connection with the Takanashis; the next most involved as the Mogi-sa branch. Of course, not all Mogi households get involved with making shoyu (Fruin 1983).

By the early 1800s the Noda guild was the largest shoyu maker in Japan, although it probably had only 2-4% of the highly decentralized total national production. In the burgeoning capital at Tokyo over 98% of all soy sauce consumed was the new-style shoyu; imports of the tamari shoyu from the Kyoto-Osaka area had virtually vanished by 1820. At about this time a Tokyo Shoyu Manufacturers Guild was formed and by 1821 some 120 of the largest shoyu makers in the area, including many from Noda and Choshi, belonged to it. The fact that the supremacy of the Tokyo-style shoyu was officially recognized by the Tokugawa shogunate during the Tempo Period (1830-1843) by exempting it from price controls, further aided the product's image. In 1836 there were 18 shoyu makers in Noda, but famine and general economic instability reduced the number to 11 by 1938. The two largest of these were Shichirouemon Mogi and Saheiji Mogi. While the former attempted to expand his market share by a carefully planned program of interfamily marriage alliances, the latter took a different course. In 1838 he petitioned for and received central government registration of his family's brand name Kikkoman, first used commercially in 1782. With this he unknowingly began a long crusade that would eventually result in this private label becoming the world's most popular brand of shoyu. Also in 1838 Kikkoman was designated as the brand of shoyu to be supplied to the Tokugawa shoguns.

Between 1855 and 1877 three more Mogi families began shoyu production in Noda, bringing the total to eight. These eight Mogi families now dominated the Noda shoyu guild, and domination increased as each family successfully passed its shoyu business from father to oldest son and expanded the number of Mogi families by wedding kinship with business via household branching and marriage alliances.

By about the 1850s a major change in the yearly cycle of shoyu production began to take place as the larger companies shifted from once-a-year to year-round (except summer) production. In the 1840s the three largest plants (those owned by Saheiji Mogi, Shichirouemon Mogi, and Hyozaemon Takanashi) were each producing between 188,000 and 197,000 gallons (712-746 kiloliters) of shoyu a year; this was 3-10 times more than that of the other individual makers in town. Noda's total shoyu production in the 1840s averaged 985,000 gallons (3729 kl) a year. Largely because of the new production schedule, it rose to 1.4 million gallons (5,300 kl) a year during the 1850s, then jumped to a peak of over 2 million gallons (7,570 kl) a year in the 1860s.

By the 1870s two new problems had arisen: dealing with the possibility of overproduction and finding secure outlets, via distributors, for the increased production in the growing Tokyo market. The distribution of shoyu (as well as sake and vinegar) was controlled by the Alcohol Products Guild, one of ten guild distributors in Tokyo, which had been established by the shogunate. In 1871 three distributors within the guild, two of which were prime distributors of Noda shoyu to Tokyo, combined to form an amalgamated distributing company, which now had the potential of blocking the Noda shoyu maker's access to the Tokyo market. While two of the major Noda shoyu makers were attempting to deal with this threat through marriage alliances with the distributor families and through diversification into Tokyo warehousing and wholesaling, Saheiji Mogi, owner of the Kikkoman brand decided on another course of action to secure access; he began heavy promotion of his brand. In 1872 and 1873 he entered Kikkoman in two World's Fairs, first in Amsterdam, then in Austria. Kikkoman was awarded a letter of commendation for excellence at the Austrian fair; thereafter Saheiji Mogi redoubled his efforts to promote the Kikkoman brand. In 1877 and 1881 Kikkoman shoyu won a second-place and then a first-place medal at the All-Japan Industry Promotion Fair. To protect its trademark in an era before legal trademark registration, Kikkoman ordered very complex and detailed printed gold labels from Paris and put these on its shoyu kegs. In 1879 Kikkoman was registered in California as a legally recognized brand name; it acquired the same legal protection in Japan in 1885 and in Germany in 1886. Finally in 1883 Kikkoman achieved international fame by being awarded a gold metal at the World's Fair in Amsterdam. Kikkoman's new heightened reputation created new demand in Japan, and this was translated into higher prices. Exports were increased, especially to California, where Japanese immigrants were increasing in number.

While all these efforts were partially successful in securing Noda shoyu's access to the Tokyo market, by 1881 it became clear that something more forceful and direct would have to be done. In that year most of the Noda shoyu makers joined together to form their own distributing company, called the Tokyo Shoyu Co. A mighty struggle ensued between the two groups, which forced the formerly rather independent Noda shoyu companies to work concertedly with one another for their common cause. In 1887, in the midst of their struggle with the distributors, to strengthen their efforts and formalize their new sense of cooperation, the Noda shoyu makers formed a new organization, the Noda Shoyu Cartel, which became the forerunner of today's Kikkoman.

The Noda Shoyu Cartel (1887-1917). In 1887 roughly 12 owners of as many as 19 different family-owned shoyu plants in Noda banded together to form a cartel, the Noda Shoyu Manufacturers Association (Noda Shoyu Jozo Kumiai), which resembled a loose partnership. This was one of Japan's earliest manufacturing cartels. The Tokugawa guilds before that time had served a related function by determining market prices and production quotas for their members. But the cartel went further in promoting competition and compromise for mutual benefit. After 1887 the members purchased raw materials collectively (including soybeans from Manchuria and salt from Germany) and standardized the amounts and costs of raw materials purchased, shipping schedules, wage rates, and (most important) the prices of the finished shoyu. They did not share brand names, production techniques, or personnel. This cooperation did not completely eliminate competition among members, especially in the urban markets. At this time roughly 60% of the cartel's products was sold in Tokyo (Edo), 20% to other nearby commercial towns, and the remaining 20% outside the greater Tokyo or Kanto area, including Hokkaido. The cartel's big three shoyu makers were Shichirouemon Mogi, Saheiji Mogi, and Hyozaemon Takanashi. In the pre-cartel period, the owners of the shoyu plants did not manage them; they entered them only twice a year (January 8 and June 20) in full ceremonial dress and ritually inspected the various stages of brewing. Now, however, they became more active in management. The cartel provided the foundation for the emergence and development of a modern shoyu industry. Its history is recorded in a remarkable 350-page handwritten, unpublished, undated, and anonymous document entitled Noda Shoyu Jozo Kumiai-shi ("History of the Noda Shoyu Brewers Assoc.").

One of the first objectives of the cartel was to strengthen their 6-year old distribution company and to try to get increased access to the Tokyo market. Yet even with their collective power they were no match for the entrenched Tokyo distributors and in 1889 the cartel's Tokyo Shoyu Co. was forced to declare bankruptcy, a major defeat early in the game. During the 1890s the cartel slowly rebuilt its distribution ties.

The early 1900s were a period of major developments in the areas of research and of the application of new technology. The introduction of science and microbiology to Japan in the late 1900s revolutionized Japan's fermentation industries and greatly stimulated new research (see Chapter 33). During the late 1800s Shichirouemon Mogi and Fusagoro Mogi had built what might be called small research laboratories. Then in 1904 the cartel members decide to fund and build their own research and development laboratory, using the results for the benefit of all members. This was the first known institutional R&D lab in Japan and one of the first in the world. Large amounts of money were spent on this project and the results proved to be well worth it, in helping to analyze, improve, and (to some degree) standardize the members' shoyu quality. By 1905 the lab, to these ends, was charged with analyzing the chemical composition of the shoyu, providing a uniform quality koji starter to members, analyzing the chemical changes occurring during shoyu fermentation, and considering ways of mechanizing the production process. By 1907 the lab had a staff of five and the four major brands made by the cartel members (Kikkoman, Kihaku, Kamigata, and Kushigata) had been chemically analyzed. Specific gravity ranged from 1.183-1.208, solids from 30.49-32.92%, and total nitrogen from 1.097-1.201. The shoyu makers and their brewmasters or plant foremen met with the laboratory staff every two weeks. The strong commitment to research initiated at this early period has continued to characterize Kikkoman up to the present.

Out of the research work and the growing introduction of Western technology to Japan, plus the challenge of the maverick shoyu maker Tosaburo Suzuki, who had opened two huge, modern shoyu plants in 1907, there grew a strong interest in mechanizing shoyu production at Noda. Noda was one of the first areas in Japan to begin such mechanization??. The first partially mechanized shoyu plant at Noda was built in 1909 by the Noda Shoyu Goshi Co., whose founders were not among the larger producers. Using state-of-the-art technology, they were able to reduce the fermentation time to 16 months, the shortest considered possible for good quality?? In 1911 boilers were installed for cooking the soybeans. In 1912 the first concrete vats were introduced, and by 1919 the equipment was linked by electrically powered conveyors and elevators. By this time the possibilities of mass production using new technology were increasingly apparent to all.

While research and mechanization at Noda made it possible to mass-produce high quality shoyu, the arrival of the railroad in Noda in 1911 revolutionized transportation and provided mass distribution. The Noda cartel was one of the first groups to switch from water to rail, which gave them a huge distribution advantage over their rivals at Choshi, and allowed them to expand from a regional to a national organization. The combined advances in the areas of research, technology, and transportation led to dramatic increases in output of Noda shoyu; during the decade from 1904­1913 it increased from 3,869,000 to 6,558,000 gallons (14,645-24,824 kl). It was probably at the beginning of this period that Noda passed Choshi as the leading shoyu producing area in Japan.

Outside forces began to change Noda, as Japan adopted a rural-centered process of industrialization. Large, integrated factors were laid out at Noda along the Edo and Tone rivers. Shoyu manufacturing passed farming as the most important occupation at Noda, as the rhythms and color of the seasonable agricultural cycle were replaced by the more mechanized and monochromatic character of industrial life in a factory town.

After Japan's victory in the Russo-Japanese war of 1904-05, Japan had assumed control of Korea as a protectorate. In 1905 the Noda cartel had established a shoyu factory in Inchon, Korea, and in 1910 another factory at Pyongyang (in today's North Korea). The shoyu made at Inchon was called Kikkoryu and sales increased from 36,600 kegs (each 18 liters) in 1912, to 85,000 in 1937, jumping to a peak of 175,000 in 1942. After 1925 Kikkoman brand shoyu was also sold in Korea. From 1912 on, the cartel also sold miso in Korea and in Fengtien, China.

The period after 1912?? was one of excessive and damaging competition within the shoyu industry. The cartel, which in its heyday had 22 families, fell to 12 in 1917. During 1915-16 three shoyu makers at Noda met to discuss building a large modern plant. Shichirouemon Mogi was convinced to join the group, just as he was about to leave for Europe to launch his Kihaku brand in competition to the Kikkoman brand. In September 1917 a meeting of the heads of the five major Mogi-Takanashi families was held at the home of Shichirouemon to discuss the issue of amalgamation. All went well except that Saheiji Mogi demand a huge sum of money in compensation for allowing the new company to use his now famous Kikkoman brand. However by late 1917 an agreement had been made and now eight families (seven Mogis and one Takanashi) withdrew from the cartel and, in December, formed a corporation, the Noda Shoyu Co. Ltd.

The Noda Shoyu Co., Ltd. (1918-1945). The Noda Shoyu Co. began operations on 1 January 1918. The original eight families (later nine) were all related by descent or marriage. At this time the company enjoyed a 7% share of the national shoyu market and a 25% share of the Tokyo market; it was making 8,284,000 gallons (31,357 kl) of shoyu a year. Its sales ranked it, remarkably, as the 70th largest industrial company in Japan. It had 15 factories. The former cartel also continued to operate, with 7 members in 1918; two of these were still making shoyu in 1981. Although the corporation had taken a giant step toward closer cooperation, some competition among brands and families still persisted, making it more akin to a partnership or a loose confederation than to a true corporation.

At the time of the new corporation's founding, the two largest shareholders were Saheiji Mogi (with 28.4% of the total stock) and Shichirouemon Mogi (27.0%), for a combined total of 55.0%, based on assets contributed to the corporation. They were followed in size of ownership by Hyozaemon Takanashi (14.1%), Shichizaemon Mogi (12%), and Fusagoro Mogi (7.1%). Thus the top five of the eight (later nine) families owned 88.6% of the corporation's stock. The first president of Noda Shoyu was Shichirouemon, whose shoyu production was actually the largest in the group, roughly 20% larger than Saheiji Mogi's, and probably the largest of any single person in Japan. Born in 1860 Shichirouemon Mogi assumed headship of the Kashiwa family branch in 1889, then became the most influential director of the Noda cartel. After 1900 he was probably the most widely known and respected shoyu maker in Japan. A noble gentleman with a lofty Confucian philosophy and a simple, almost austere lifestyle and spiritual practice, he was revered by his co-workers, workers, and the Noda townspeople. An inspiring tribute and eulogy to him, written by his personal secretary and administrative assistant, appears in Fruin's work on Kikkoman. Shichirouemon Mogi's prime interest in life was making shoyu. Though immensely successful, he gave much of his profit to charity. He treated most people in his company as if they were members of his own family, and he always dealt kindly with his competitors and debtors. During his lifetime the company underwent the change from entrepreneurial to managerial capitalism.

The corporation began, it was later realized, severely undercapitalized, with 7 million yen, and with more than 200 brand names and trademarks. These were reduced to 34 in 1918 and to 16 in 1923. The remaining brands were advertised heavily, especially the Kikkoman brand. Yet it was not until 1964 that this brand became the name of the company itself. Major efforts were also made to further standardize shoyu quality and improve distribution. The entrenched position of the Tokyo distributors had been the main block in preventing the cartel from more fully linking mass production with mass distribution. New, more mechanized production methods were also introduced; in 1921 concrete vats began to replace their traditional cedar counterparts; in 1922-23 bottles began to replace the former 18-liter wooden kegs and hydraulic presses to replace lever or screw presses. More important the nature and structure of the work was transformed with production schedules, quotas, and a general tightening of operations. In 1923 the first strike in the company's history took place, largely in protest to the new pace and structure of the work; it lasted for one month, ending in a compromise.

In 1925 the company underwent a major reorganization and recapitalization. Five companies specializing in the production of shoyu, sake, and miso were joined with four others in the field of transportation and finance to form a giant rural zaibatsu (def??), coordinated by a holding company. The new company, called Noda Shoyu Brewing Co., had assets of 25 million yen and a capitalization of 21.2 million yen, making it by far the largest shoyu manufacturer in Japan. The company was diversified in product lines, with manufacturing and sales facilities in Japan and overseas, it had interests in banks and railroads, yet it was characterized by family control and ownership as well as centralized planning and coordination. It was now the 48th largest industrial company in Japan and the 9th largest food and beverage company (Fruin 1983).

In April 1926, using its new capital, Noda Shoyu opened what was probably the largest and most mechanized shoyu plant existing in Japan. Called Factory 17 (and later Factory 7), it boasted a floor space of 48,501 square meters and a production capacity of 6,720,000 gallons (25,437 kl). Then in 1929 the even larger Takasago plant was built in western Japan, near Kakogawa, about 45 miles east of Osaka. This signalled the ambition of Noda Shoyu to expand from a regional to a national enterprise.

In the midst of this dizzying growth and technological change, a second major strike hit Noda Shoyu. The main issues were pay and benefits. This Great Noda Strike (as it came to be known) lasted for 7 months, and was one of the costliest, largest, and most important strikes in pre-World War II Japan. More than 3,500 individuals were involved and 2,300 of these were discharged, although nearly two-thirds of the latter were later allowed to return. During this 1927-28 strike, remarkably, Noda Shoyu ran at nearly full capacity, partially because the workers in the huge new Factory 17 had signed an oath at the time of hiring not to join the union, and partially by hiring 300-500 new workers. The strike ended in a total victory for Noda Shoyu; the union was crushed. This victory ushered in an era of labor-management accord that has continued to the present, as the company adopted a new paternalistic attitude toward both its workers and the town. After work resumed in 1928, the company had 2,000 employees. During the period from 1923-1936 Noda Shoyu dramatically increased its share of the Japanese shoyu market from 5.1% to 14.5% (see Fig. ??). Starting in 1930, as effects of the worldwide Depression began to be felt, Noda Shoyu worked out a quota system for manufacturing and sales with Yamasa and Higeta, its two major rivals from Chiba prefecture; this reduced competition.

One important factor that helped Noda Shoyu's growth in market share was its switch from wooden kegs to bottles and cans. Although a small amount of shoyu had been bottled in the early 1920s, the first factory built exclusively for bottling shoyu did not open until March 1930. By 1934 over 40% of the company's shoyu was sold in bottles, and by 1941 over 54%. Other shoyu makers were slow to shift to bottling.

Market share grew in other ways as well. In December 1936, for example, the Manshu Noda Shoyu Co. was established in the Japanese colony of Manchuria to make Kikkoman soy sauce and Homare miso. This factory complemented the Nihon Shoyu Co., which Noda Shoyu had operated in Korea since 1918. The period from 1932 to 1939 saw huge increases in Japanese shoyu exports, as Japanese imperialism expanded in East Asia. By 1939 roughly 10% of Noda Shoyu's production was exported; 56% went to East Asia, especially Manchuria and North China, 22.1% went to the US, and 19.6% went to Hawaii. In 1939 2,375 metric tons of Japanese shoyu were exported to the US, over 99% of this was made by Noda Shoyu (Kikkoman). Market share in Japan grew by acquisition as well as exports. In April 1937 Noda Shoyu Co. purchased 80% of the outstanding shares of Higeta Shoyu Co. in Chiba, one of its oldest and largest rivals. Then in 1938 and 1939 Noda Shoyu purchased three more smaller shoyu breweries.

Several other important events occurred during the 1930s. In 1933 Food Manufacture magazine ran the first US article about Kikkoman shoyu, with photos and details of the production process. In 1935?? the company built the Goyo Gura, a traditional shoyu making plant, still in operation in the 1980s, that until 1946?? used traditional, natural methods and technology to make shoyu especially for the emperor and to preserve traditional methods. In 1936 the company added Worcestershire sauce (containing about ??% shoyu) to its product line.

The period during World War II was an extremely difficult one for Noda Shoyu Co. Its market share dropped to a mere 8% in 1946. (Why??). The company did extensive research on alternative methods for making shoyu. In 1944 it was granted a patent on chemical soy sauce (Shinshiki #1), and in 1948 it was granted a patent on semichemical soy sauce (Shinshiki #2, which combined chemical hydrolysis and fermentation)(Refs??); it made both these patents available to all shoyu makers, free of charge. In 1965 Noda Shoyu stopped using these chemical processes entirely, and returned to making only fermented shoyu. In 1945, just after the war, the company's capital was increased more than four-fold to 30 million yen.

The Postwar Period (1946-81). In 1946 Noda Shoyu Co. went public,and its stock first began to be traded on Japan's major stock exchanges. This step was necessary to raise the large amounts of capital needed for planned postwar expansion. For the first time in history, people outside the Mogi-Takanashi families owned a part of the company. In 1948 capital was increased to 80 million yen, then to 200 million in 1950, 400 million in 1952, and 1,200 million in 1958. Although the Noda Shoyu Co. did not change its name to Kikkoman until 1964, we will use the latter name hereafter, for the company had now entered the modern era.

The American-led Allied Occupation of Japan from 1945-1952, directed by the Supreme Command of the Allied Powers (SCAP) strongly influenced the destiny of Kikkoman. The major goals of the Occupation were land reform, demilitarization, zaibatsu busting, support of labor unions, democratization, and transformation of the industrial structure of Japan. Democratization, especially, affected Kikkoman, but by the 1960s internationalization became an even stronger factor. In 1951 the Occupation forces FTC?? held antitrust hearings. Kikkoman and three other shoyu manufacturers were found guilty of price fixing among competitors. Kikkoman was made to divest itself of Higeta, acquired in 1936. Because of these problems Kikkoman worked to break out of its old distribution channels with a new sales and marketing campaign, which was extremely successful. After its disastrous years of 1946 and 1947, Kikkoman's production and market share began a spectacular and prolonged rise that continued unabated into the 1970s (see Fig. ??). In 1949 Kikkoman produced only seven branded products: Kikkoman Shoyu, Kikkoman Sauce (a thick, sweet sauce), Manjo sake, Manjo tsuyu (clear soup broth), Menmi (noodle broth), shochu (distilled spirits), and whiskey. The number of such products began a steady increase, until by 1975 Kikkoman was selling over 36 branded food and food related products.

In 1949 Japan's and Kikkoman's exports had resumed, and by the late 1950s Kikkoman was putting new energy into expanding its export market. In 1957 Kikkoman International Inc. was established in San Francisco, beginning a new chapter in Kikkoman's international operations, as described in the next section. Starting in the early 1960s two new trends began which further stimulated Kikkoman's internationalization and diversification. First, per capita consumption of shoyu in Japan began to drop as Western diets became popular. And second, Noda politics was increasingly dominated by Socialist politicians, most of whom were supported by Kikkoman's labor union. The first socialist mayor of Noda was elected in 1962. Others held office from 1966 to 1976; the Socialist party, which was anti-big-business, dominated the city government thereafter. To counter the first trend, Kikkoman systematically began to create a new image for shoyu, both in Japan and around the world, transforming it from a traditional Japanese seasoning to a modern international one. In Japan, for example, starting in the early 1960s, Kikkoman began to sponsor such television?? programs as the "International Cooking School for Housewives," in which shoyu was used in the preparation of new, international dishes. To counter the second trend, Kikkoman looked increasingly outside of Noda for its future.

But much deeper changes than these seemed needed. Throughout its history, Kikkoman had been characterized by bold innovation on many levels. Starting in the early 1960s a new round of creative innovation as the company set out to develop a new business strategy to match the changing times. Heretofore Kikkoman had been basically a one-product company. Management had pursued the objectives of producing the highest quality shoyu possible at competitive prices, and of obtaining a dominant market share. Now it would have to break out of this limited role and out of the constraints which bound it but did not bind the giant urban zaibatsu. The new strategy established three new programs to broaden the company's product and marketing base through diversification and internationalization. These involved (1) developing new markets for shoyu; (2) diversifying into production and distribution of new food products; and (3) developing new products based on Kikkoman's existing technological expertise (McGinity 1974).

The United States was seen as the most desirable new market for shoyu. Exports to the US (and to Europe) were expanded and in 1972 Kikkoman began construction of its own shoyu plant in Walworth, Wisconsin, as described in the next section.

Product diversification moved ahead rapidly. In 1961 Kikko Foods Corporation was established as a packer of fruits and vegetables. In 1963 Japan Calpak Co. was established jointly with Del Monte and Mitsui to pack and sell Del Monte brand products in Japan. In 1962 Mann's Wine Co. was established and started producing wine near Tokyo, and Tone Coca-Cola Bottling Co. was established to bottle Coca-Cola and Fanta. In 1964 the company changed its name from Noda Shoyu Co. to Kikkoman Shoyu Co. Ltd. In 1966 Kikkoman, using its excellent distribution network, began to distribute and sell the products of the Higeta Shoyu Co., Japan's third largest maker of fermented shoyu, on a consignment basis. By 1974 there were 11 products bearing the Kikkoman brand, three Manjo brand products (mirin, shochu, plum wine), Yomonoharu brand sake, and a line of Kikko Disney fruit juices.

In developing new products based on its existing technological expertise, Kikkoman established Seishin Pharmaceutical Co., Ltd. in 1961. Two key products have been Molsin, a proteolytic enzyme, and Stalase, an amylolytic enzyme, both now widely used pharmaceutically as digestive enzymes, often with antibiotics.

In the late 1960s, in the midst of these many new changes and a rapidly expanding market share, Kikkoman was hit with a new set of antimonopoly?? hearings concerning pricing and marketing agreements with distributors. These prompted Kikkoman to develop its own strong marketing system, a network of wholly owned distributors. It then began even more intensive advertising of its products.

As a result of this expansion and diversification, Kikkoman's sales climbed rapidly, almost tripling (increasing by a factor of 2.98) between 1960 and 1970, while the price of shoyu increased by only 44%. In the 1950s virtually all of Kikkoman's income was derived from sale of shoyu. By 1970 only 76.8% of its total $128 million was from shoyu sales, and by 1979 shoyu represented only 57% of sales, with projections for the late 1980s showing shoyu to account for only 50% of sales.

Kikkoman entered the 1970s as by far the dominant shoyu maker in Japan. In 1974 it controlled 35% of the total Japanese shoyu market; its nearest competitor had only 7% and its four largest competitors only 17% total. Moreover, it controlled more than 50% of the urban market (McGinity 1974) and employed more than 4,300 people. The 1970s were a decade of consolidation and expansion of innovations introduced during the 1960s. The firm continued to be highly research minded, as it had been since 1904. In 1972 about 2% of total sales was invested in research and development; over 300 specialists worked in the Central Research Laboratory at Noda, including 30 with PhD degrees. In 1979??, in accord with its new diversified character, Kikkoman Shoyu, Inc. changed its name to Kikkoman Corporation.

By 1980 Kikkoman had sales of about $590 million, including $27 million sales in the US. This ranked Kikkoman about 150th among Japanese companies and would have placed it in 437th place on Fortune magazine's list of the 500 largest US industrial corporations.

Kikkoman's accomplishments in the period following World War II have been great. We feel that history will judge the most significant of these to be the introduction of fine Japanese shoyu to people throughout the world who formerly had known only or primarily nonfermented chemical soy sauce. Transforming a traditional Japanese seasoning into an international bestseller was no small task, yet one worthy of a firm that could trace its progress and continuity unbroken through eight generations of Mogis and ten generations of Takanashis back to the small rural town of Noda in 1661.

Kikkoman in the West

In 1973, when the Kikkoman Shoyu Company opened the first modern shoyu plant in the Western world at Walworth, Wisconsin, the company already had over a century of experience in providing fine shoyu to Europe, America, and Hawaii. As early as 1868 the first Japanese immigrants to Hawaii had taken kegs of Kikkoman-brand shoyu with them. 1874?? As we saw earlier, in 1872 and 1873 (1874??) Saheiji Mogi had entered Kikkoman in World's Fairs in Amsterdam and Austria; in Austria it had won an award for its ability to enhance the flavors of other foods. In 1879 the Kikkoman brand was registered in California, in 1886 in Germany, and in 1906 in the US as a whole. In 1883 Kikkoman was awarded a gold medal at the World's Fair in Amsterdam. From the late 1800s until World War II, Kikkoman exported its shoyu to many parts of the world, mainly in response to demand from Japanese emigrants.

Preparing to Establish Roots (1949-1972). When postwar exports of shoyu from Japan resumed in 1949, demand spread rapidly to a new market, Caucasian Americans, who began to discover what Japanese Americans had always known--that there was a world of difference between the flavors of American-made chemical soy sauce and real fermented shoyu. Between 1949 and 1954 exports of Kikkoman shoyu to the US ranged from 213,000 to 305,000 gallons, representing from 50-92% of Kikkoman's total exports, and about 85% of all Japanese shoyu exports to America. Kikkoman's first real attempt to reach the international market can be dated from the US presidential elections of 1956, when the company bought television time to advertise its product to the non-Japanese audience in the midst of election coverage. Shortly thereafter certain Safeway stores on the West Coast began to carry Kikkoman shoyu.

By 1957 Kikkoman's US shoyu sales had grown to such an extent that a new sales company, Kikkoman International Inc. (KII) was set up in San Francisco to streamline import and distribution of Kikkoman shoyu to America. Branches were established in Los Angeles in 1958, New York in 1960, and Chicago in 1965. When, in the early 1960s, Kikkoman headquarters in Japan decided to initiate a broad program of diversification and expansion, the US was chosen as the most desirable new market for the company's products. And, indeed, between 1960 and 1972, KII's sales in America grew faster than those of the parent company (5.4 vs 3.6-fold increase).

In 1968, after a decade of 20-30% rates of increase in annual sales, Kikkoman contracted, on a commission basis, with Leslie Food Company, a subsidiary of Leslie Salt Company, in Oakland, California, to bottle Kikkoman shoyu and to blend and bottle Kikkoman teriyaki sauce. This greatly improved operating efficiency, for the shoyu was shipped from Japan in stainless steel bulk containers. This arrangement lasted for four years.

Meanwhile, Kikkoman began to expand its import and distribution network. In 1969 it acquired controlling interest in Japan Food Corporation (JFC, est. in 1968), the largest importer and distributor of Oriental foods in the US. In 1970 Kikkoman acquired majority interests of Tokyo-based Pacific Trading Co. (est. in 1928 in Tokyo), a leading importer-exporter of Oriental foods to America and the primary supplier of JFC. Kikkoman also began an active program of developing new products aimed at the US market: powdered teriyaki mix, powdered soy sauce, dehydrated miso soup, etc.

In 1972, in response to a steadily growing demand for quality shoyu in America, Kikkoman headquarters established Kikkoman Foods Inc. in Walworth, Wisconsin, and began to build their most modern plant there to make Kikkoman shoyu and teriyaki sauce for the American market. Locating in America was timely, for the rapidly depreciating dollar was increasing the price of Kikkoman's imported shoyu, yet increasing the purchasing power of Japanese currency in America. The transportation and other expenses of shipping soybeans and other raw materials to Japan then shipping the finished shoyu back to the US amounted to roughly 30%?? of the finished product costs. Having a plant in America would eliminate all these costs, give a more secure supply of soybeans (in 1973 the US embargoed soybean sales to Japan), and, if successful, probably boost Kikkoman's image in Japan and the use of shoyu there in Western-style diets. Walworth was chosen because of its proximity to sources of soybeans, wheat, and salt, its easy access to transportation networks, and its dependable rural work force at reasonable wages.

At Home in America (1973-1980s). Kikkoman's sparkling new plant at Walworth began operations in June 1973. Incorporating the state-of-the-art fermentation technology and latest production equipment, it had a starting capacity of 10,000 kiloliters (2.6 million gallons) a year, cost $6-10?? million to build, and initially employed 100 people. In 197?? an expansion was completed, which doubled the plant's capacity, and by 1981 it was operating at near the new full capacity of 5.2 million gallons a year.

Before Kikkoman entered the US, soy sauce was sold strictly as a seasoning for Oriental foods. But starting in the mid-1950s, Kikkoman began to take a new approach, marketing its savory sauce as both all-purpose and all-American, with emphasis from attractive television and color print media ads on American-style recipes featuring meat, fish, and poultry. In 1973 Kikkoman published The Kikkoman Way of Fine Eating (later renamed The Kikkoman Cookbook) in full color with many such recipes plus a few Japanese recipes. Soon their shoyu and teriyaki sauces were appearing in supermarkets nationwide--and not in the Oriental foods section.

Kikkoman made two difficult marketing decisions upon introducing its product to America. The first was to change the name of the product from "shoyu" to "soy sauce." The advantage of the new term was that it was the standard term in America; the disadvantage was the difficulty in getting Americans to understand that Kikkoman's product was fundamentally different from and unquestionably superior to its domestic competitors, which were made quickly by hydrochloric acid hydrolysis, and also called "soy sauce." It would have taken extra effort to introduce the new product as "shoyu" but would have been very easy to explain that shoyu was fundamentally different from soy sauce. The second decision was to use a chemical preservative (sodium benzoate) in the shoyu, rather than a more natural alcohol ethyl alcohol preservative as was used after 1978 in Japan. The sodium benzoate was used instead of alcohol for various reasons: Kikkoman considered it to be safe; it was less expensive than alcohol; alcohol had a poor image in America; and some people who did not drink alcohol objected to its use. Yet the preservative made it impossible for Kikkoman to sell its shoyu to the US natural- and health-food trades, and gave the product a bad name among many people interested in natural foods or concerned about food additives.

Because of Kikkoman's excellent flavor backed by an ongoing, effective marketing campaign, sales rose rapidly. In 1970 Kikkoman was the third largest selling soy sauce in America, with about 26% of supermarket sales. In 1971 Kikkoman passed Chun King soy sauce (made by Del Monte's RJR Foods) and in 1976 Kikkoman passed La Choy (made by Beatrice Foods), to become America's best-selling soy sauce. By January 1979 Kikkoman shoyu and teriyaki sauce had garnered about 45% of the US supermarket sales, compared with 34% for La Choy and 17% for Chun King. In northern California Kikkoman had 75% of the market. In 1980 Kikkoman made 16,500 kiloliters (4,359,000 gallons) of shoyu. Between 1976 and 1981 sales grew at the rate of 15-20% a year. It is even more impressive to realize that while Kikkoman's share of the market was growing rapidly, the market itself was growing even more rapidly. In 1956, when Kikkoman first began to advertise seriously in the US, the total soy sauce market amounted to only $1 million, and per capita soy sauce consumption was 1 tablespoon (15 ml) or less per year. By 1981 the market size had grown to $100 million and per capita consumption had reached 10 tablespoons (5 fluid ounces or 148 ml) a year. It is interesting to note, however, that this was still less than 2% of the consumption of 340 fluid ounces (2.65 gallons or 10,000 ml) per person in Japan. Moreover Kikkoman's production of 20,000 kiloliters in America was only about 5% of its production in Japan (Kikkoman 1973, 1977; New York Times 1981).

By 1981 Kikkoman was marketing a variety of shoyu-based products in America; regular shoyu in sizes ranging from a 5-ounce table dispenser up to 1-gallon cans; teriyaki, sukiyaki, tempura, steak, and sweet-and-sour sauces; and a low-salt shoyu (containing 8% vs. the regular 16% salt) marketed as "Milder Soy Sauce" primarily at health food stores. The salt is removed after fermentation and pressing but before heating by the electrical ion exchange membrane method. This product contains no preservatives. Kikkoman's work in America has demonstrated vividly the international character and appeal of fine shoyu. For Kikkoman, the American market for shoyu is still in its infancy. In time, shoyu could easily become as widely used as ketchup.