Supply Chain Council of European Union | Scceu.org
Operations

Kewpie to feed growing Chinese appetite with extra mayo factory

TOKYO — Kewpie, the Japanese company behind the squeeze bottles of mayonnaise with the baby logo, will open a 214 million yuan ($32.7 million) factory next month in China, where it hopes to seize on growing demand at both home and restaurant kitchens.

The new plant in Guangzhou will produce 12,000 tons of mayonnaise and salad dressing a year, scaling up the company’s capacity in China by around 20% to 72,000 tons.

The move is part of increased focus on international markets for the Japanese household name, particularly China and Southeast Asia, where consumers are eating more salad.

After tumbling during the coronavirus lockdown, Chinese consumer spending has made a sharp recovery ahead of other countries. Gross domestic product grew 4.9% in the third quarter following 3.2% expansion in the second quarter.

Kewpie’s Chinese sales, in both the retail and commercial segments, rebounded in July and have been rising about 10% on the year since September.

The company debuted in China in 1994 and has established itself in Chinese pantries, boasting a 90% share in the retail market in Beijing. It also has a 70% slice of the Guangzhou market and 55% in Shanghai. The company has condiment manufacturing units in Beijing and Hangzhou.


A Kewpie tasting event in China, a key market for the company. (Photo courtesy of Kewpie)

Chinese sale are growing on an annual basis. Yet international operations as a whole still contribute only a small part in Kewpie’s earnings. Overseas sales of 50.5 billion yen ($490 million) accounted for just 9% of the total in the year ended November 2019, with China providing 20.3 billion yen.

This contrasts with other Japanese food brands’ international success. Seasonings maker Ajinomoto raked in more than half its sales abroad, while soy sauce purveyor Kikkoman is more than 60% reliant on markets outside Japan.

Kewpie aims to lift international sales to 58.8 billion yen in the year to November 2021, 24.3 billion yen of which is projected to come from China.


Kewpie’s new plant in Guangzhou will produce 12,000 tons of mayonnaise and salad dressing a year. (Photo courtesy of Kewpie)

With a rapidly graying population at home, Japanese food producers are shifting resources to tap sustained growth in China.

Meiji acquired a 25% stake in AustAsia Investment Holdings, the operator of seven dairy farms in China, in July for about 28 billion yen to gain stable milk supply. It will open production lines for dairy and other products in Suzhou, Tianjin, Guangzhou and Shanghai over the next several years through 2024.

Meiji will pour roughly 70 billion yen in investment into China between 2020 and 2024, and these are just projects that the company has announced so far.

China is set to achieve 1.8% economic growth in 2020 and a 8% expansion in 2021, predicts the Organization for Economic Cooperation and Development.

Related posts

Brooks Brothers shutting down shirt factory in Garland, NC

scceu

VW’s Accra Factory Starts Production, & Toyota & Nissan Also Set To Open Plants This Year. We Hope They Add EVs Soon!

scceu

Jay Golden: Smart Factory at WSU will diversify the economy

scceu