Mitsubishi Monitor 0408 NTERVIEW

The Mitsubishi Monitor talks with Masaharu Goto, President of Ryoshoku, the largest wholesaler of packaged food products in Japan, about the role to be played by distributors, planned business developments, and changing trends in Japanese food culture.

Your company connects food producers and retailers. How have the functions of the middleman changed?

Our role has been to deliver food producers' products at low cost and with as much precision as possible. We have invested heavily in logistics. We believe it is becoming necessary to return some of the focus to our product procurement and development potential aside from logistical capability. These jobs were handled by wholesalers in the past, when individual retailers were smaller, and they depended on the product capability of wholesalers. That changed as retailers grew in size.

We anticipate that sweeping change in society from Japan's declining population will have a major impact on our business. For example, due to the aging of the population, the per-meal food volume will decrease, and the demand for high volume at low prices is being replaced by demand for high quality with wide variety. Accordingly, the need will be for smaller volumes of a great many items. That will make it increasingly important to procure products and provide new variety with sensitivity to the viewpoint of consumers. In a nutshell, the role of the wholesaler will have come full circle.

Where is your company currently putting emphasis amid such changes?

In line with the trend toward fewer children, the aging population and working wives, dining styles in the home are changing. As the number of full-time housewives decreases, demand has grown for take-out and ready-to eat meals, which come to the table with only minimal preparation. Also, eating out has increased, leading to intensified competition between restaurants. In response, we extended our operations to all food categories. We began handling alcoholic beverages and supplying restaurants, as well as refrigerated food deliveries. Subsequently, we spun off these operations as separate enterprises. We also set up a separate company to serve the confectionery sector. Accordingly, we now display our overall potential as a group to offer a full line of foods and food products with superb merchandising capability backed by excellent logistic support.

In addition, we are prepared for the coming age of direct delivery to individuals. We recently built and now manage a home delivery center for Co-op Kobe, the largest co-op in Japan, and we operate an online shopping network that deals in wine. Even as long as 10 years ago, we began developing a network of distribution centers for subdividing delivery goods into small portions, so, we are prepared to enter the field of home delivery at any time.

What are the strengths of Ryoshoku?

Aware of the importance of information technology, we incorporated it into an advanced management system that, among its many benefits, has made possible strict freshness control and highly precise delivery. Furthermore, we are building a three-party supply-chain management system, made up of manufacturers, intermediate distributors, and retailers, to share information and enhance efficiency through mutual cooperation. Our goal is to realize a distribution setup that starts with the consumer.

What are your thoughts about Japanese consumers' extreme sensitivity about food safety?

Safety is a problem for which standards can be established. What we ought to do is to endeavor to meet or surpass the standards. However, Japanese consumers demand to –feel at ease.” This is a subjective matter, and there is no objective gauge for it. To put consumers at ease, we believe it is important to disclose informationãby thoroughly ensuring traceability and revealing the producer and processor, as well as their quality assurance setups and quality assurance during transport.

What will emerge from the Long-term Management Plan launched in 2002?

–EVOLUTION 21,” our Long-term Management Plan, calls for attaining sales of ¥1.5 trillion, recurring profit of ¥20 billion, and shareholders' equity of ¥100 billion as early as possible before 2010. We would like to see the wholesaling industry establish itself globally. Although our goal is not to grow larger but to become the best company possible, a certain business size is required to achieve such recognition. Our EVOLUTION 21 targets were set as minimum standards for achieving that objective and we are striving to accomplish our targets.