Seafood firms in disaster areas exploring new sales channels

March 15, 2018

Sendai, Miyagi Pref.- Eager to rebuild their businesses, some seafood-processing companies devastated by the March 2011 tsunami in northeastern Japan are exploring new sales channels, such as mail order and exports to other Asian markets.

Many companies in coastal areas in Iwate and Miyagi prefectures have yet to see their sales recover to predisaster levels, even seven years after the catastrophe, although the central government and local business groups have strengthened support for reconstruction.

Sales remained short of levels before the disaster at about 70 pct of affected fishery and seafood-processing companies, according to a survey released in autumn last year by the industry ministry's Tohoku Bureau of Economy, Trade and Industry. The survey covered small companies in Aomori, Iwate, Miyagi and Fukushima prefectures that utilized state subsidies designed to help businesses that resume operations in a group.

On reasons for the lack of recovery in sales, many cited harmful rumors and losses of old customers.

By contrast, about 20 pct of companies that have restored their sales to predisaster levels cited the acquisition of new customers by developing new products and services as the main reason for recovery.

The survey suggests that the development of new sales channels is the key to business reconstruction.

Changing Business Models

Ono Foods Co., a Kamaishi, Iwate-based company that makes and sells frozen foods, lost sales ties with wholesalers handling products for business use after all three of the company's factories were heavily damaged by the tsunami, triggered by a 9.0-magnitude earthquake. Sales to such wholesalers accounted for 60 pct of its overall sales before the disaster.

"We were replaced by another company when we were unable to supply products in the aftermath of the disaster, and we were unable to restart business transactions with our old customers," said Akio Ono, president of the company.

Scrapping operations to supply products to restaurant and hotels, Ono Foods decided to shift its business focus to a mail order service that the company started about a year and a half before the disaster.

In the service, the company sends cooked fish to customers every month.

Although prices are relatively high, the number of users of the service is increasing, with positive customer feedback for its products.

Achieving a V-shaped sales recovery following a 50 pct plunge immediately after the disaster, Ono Foods' sales in fiscal 2017, which ends this month, are expected to be up 80 pct from the predisaster level.

The company also reformed its business structure, outsourcing product-packaging operations to a transport company.

It also received support from finance and marketing experts and a Toyota Motor Corp. <7203> group team promoting "kaizen" efforts to improve production efficiency.

"If we had continued our old business model, we wouldn't have been able to realize such steep growth," Ono said. "Support from experts also helped us a lot."

New "Sanriku" Brand for Overseas Markets

An increasing number of companies are seeking business opportunities abroad.

In 2016, seven seafood-processing companies in Pacific coastal areas ranging from Hachinohe in Aomori to Ishinomaki in Miyagi launched a project team working to export fishery products under a "Sanriku" northeastern Japan coast brand.

Using a common Sanriku logo for export products, the seven companies aim to increase brand recognition for the whole region.

With investments from members, the project team in September 2016 established a specialist trading company, which launched its first exports the following month, to the Philippines. The trader has since expanded its export destinations to include markets such as Thailand, Singapore and Malaysia.

Its cumulative exports are expected to total 85 million yen at the end of March. The number of seafood-processing firms joining the export project has increased to 11.

"Our products have won a high reputation in our export markets," said Yasuhiro Abe, president of Abecho Shoten Co., a key project member based in Kesennuma in Miyagi.

"We want to boost exports further by changing the flavors of our products to suit tastes in our export markets," he added.

Seafood-processing companies in Japan are facing significant changes in their business environment due to poor catches of saury and salmon in waters near Japan as well as fishing limits for bluefin tuna.

"Including fishing operations, we need to rebuild ourselves as a manufacturing industry in order to maintain business, instead of resigning ourselves to changes in market prices," Abe said.

Robots for Innovation

Facing severe labor shortages due to population outflows and with limited prospects for recovery, the tsunami-hit coastal areas are pinning hopes on the development of seafood-processing robots.

In May last year, the Iwate Industry Promotion Center in Morioka, capital of Iwate, began work to develop a fish-bone removal robot to process mackerel with a computer system development company in the city.

"Seafood processing is exhausting work," said Kazuhiko Asukagawa, a senior official of the center. "Operational efficiency can improve if we use robots for heavy work and allow employees more time to conduct value-added operations, such as product development and sales activities."

The center is working to develop a system to remove fish bones with robot arms from sliced mackerel.

"Utilizing camera, sensor and image recognition technologies, we hope to succeed" in developing such a system, Nariki Yamane of the center said.

The project aims to develop such a robot system by the end of fiscal 2018 for supply to a seafood-processing company in Hachinohe. The center hopes to mass-produce the robot in the future.

"Japanese food has been accepted all over the world as a healthy diet," Asukagawa said. "We want to develop robots that can resolve problems not only in the seafood-processing industry but also in the agriculture, forestry and fisheries sectors." Jiji Press