Utilising its accumulated knowhow, Athena Kogyo is producing high-quality and sustainable packaging to the world
In the last 25-30 years Japan has seen a rise in regional manufacturing competitors from countries like Korea, China, and Taiwan, who have replicated the Japanese monozukuri process, but at a much cheaper cost, thus pushing Japan out of mass production markets. However, we still see many Japanese firms leading when it comes to niche B2B fields. How have Japanese firms maintained their leadership despite stiff price competition?
It is quite difficult to express in a broad sense the many excellent qualities of Japanese monozukuri companies, so it might be more beneficial if I talk about monozukuri from our company’s perspective.
First of all, price competitiveness is where most Japanese companies are at their weakest, and to be completely honest, losing in a big way. Manufacturing labor costs here in Japan are much more expensive in comparison to countries such as Korea and China. This is a historical fact and cannot be avoided, however, what is good here is that the products we introduce are cheaper and do not require a high level of sophistication due to less production processes. In that way, we are similar to some of the countries you’ve mentioned, and in some ways, we have some more beneficial ways to introduce our products when compared to China and Korea.
Japan has the world’s oldest society and has a rapidly shrinking population. In fact, in the next 15 years, one in three people will be over the age of 65, which presents some major challenges to Japanese firms. The first is the labor crisis, as a smaller pool of talented young graduates is coming through to companies so that they can replace their older, more seasoned workers. The second of course is a shrinking domestic market. What are some of the challenges and opportunities this demographic shift is presenting for Athena?
Obviously, the shrinking population is having a drastic effect on our business, which is food packaging. The fewer people living in Japan, the less food is being consumed here. On the other hand, most companies related to the food packaging industry need to be coming up with different solutions on how to apply their features not only to the food sector but maybe other applications beyond food packaging. This is something we have done at Athena.
Companies must also consider different methods of manufacturing in order to be more flexible and speedier in production. We are finding that paper molding has recently emerged as a favorite in our industry, as well as the blow method used to create plastic bottles. We are trying to comply with all of the different ways of manufacturing.
Another problem you mentioned is the increase in elderly people, and Japan is known worldwide as the world’s oldest society. There are of course positives and negatives to this fact. On the good side, the medical industry is now increasing the number of different kinds of food packaging to serve the needs of the elderly. We have seen a big change from the one-nucleus family concept, where traditionally you would have an immediate family all live under one roof. Nowadays, however, we see a lot of single people living alone, and they tend not to cook for themselves and instead favor packaged, ready-made meals. I guess you could consider these good points coming out from our industry, and we are eager to provide ready-made meal packaging that can be easily used with a microwave. That kind of product is finding more of an audience than ever.
Export fees are definitely an issue in the times we live in. Recently it has become very expensive to export our products overseas. Our products may be cheap, and may require a lot of raw material, but because of the rising export costs it has become increasingly more difficult to export and thus we are losing overseas markets to local companies. On the other hand, we have introduced our products to America, with one example being a special cup for American coffee chains. Feedback was good overall, with the only negative comments being the fact that it had a plastic element that customers were concerned about. This isn’t the only example, and we are trying to improve our export abilities in order to introduce new products to such markets that are receptive to Japanese products.
As I mentioned just now, export fees are very high right now, and it is very hard for end users to buy Japanese-made products because the original price is quite high, and add on to that the export fees and you get a product that is unreasonably high in cost. If you compare that to Chinese and Korean products, they have similar issues. This is where the benefits of Japanese excellence come in, with companies being able to shorten lead times because Japanese companies always strive to satisfy customers’ needs both on the production side and the delivery side. If a customer wants a product tomorrow, Japanese companies will find a way of speeding up the manufacturing process and delivery. Although it may be pricey, customers will get their products on time. Needless to say that some Chinese and Korean companies are not able to comply with similar standards, and I’m sorry to say that is just a fact.
The other aspect to mention is the quality, and customers on both the production side and the end user side are very demanding. This comes with a necessity to produce better quality products and compliance with all quality standards. One example can be seen in the food packaging we have in Japan, the limit size of black dots on the inner surface is 0.2 mm in diameter. If this packaging doesn’t comply with the 0.2mm guidelines then it will be a defective product, which in Japan must be scrapped. We do have a little bit of a strange situation where products must meet strict Japanese standards, and products that don’t meet those domestic market standards go to Korea, where the Korean market is okay to receive this level of quality. This means that the expectancy of quality in these markets is less than in Japan.
Plastic is one material notorious for creating pollution, and as a result, many firms are looking for eco-friendly products and alternative materials. One notable example is cellulose nanofiber (CNF), and in your case, at Athena, you mold environmentally friendly thin-walled containers from polyethylene terephthalate (PET). However, the challenge when it comes to alternative materials that are eco-friendly is meeting customer demands because they still expect a similar product performance and functionality even when the material has changed. An example in the food industry would be maintaining food freshness, so as solutions to conventional packages are being developed, what are some of the other challenges that you foresee arising when it comes to the adoption of alternative materials?
First of all, we are not a company that produces raw materials itself, so we cannot develop in that respect. We procure raw materials and then deal with the many things that are possible after that. We have excellence in that because we can produce so many different products from this raw material such as the instant noodle container I mentioned earlier. This kind of container combines the excellent performance of plastic containers with the exterior of a paper container. These kinds of products obviously have their pluses and minuses. We try to choose raw materials that can be decreased by volume, and by that, I mean that the plastic material we use is 40% less than the conventional noodle containers. We are trying to reduce the amount of plastic we use in order to make products that are eco-friendly and contribute to the environment.
In terms of environmentally friendly products, we have three choices here; first, we can apply recycled material, next we can make products that are derived from biomass, and finally, we can utilize plastic which is more eco-friendlier than conventional types. Paper is important here too, as you can display different bits of information on that paper, but it does have a bad side because paper doesn’t have a very long shelf life. For this sake, it has to be inside the core of the plastic shell. A combination of different materials creates better solutions for the customers, meaning they have a choice of different materials, shapes, and sizes. In the end, this is creating a situation where we are satisfying the needs of the customers. An example can be seen in the packaging we make out of bamboo.
One cooking product your company offers is the La Cooker, a tagine pot that was manufactured under the advice of actor Naoki Hosaka, and we know it can be utilized in microwave ovens for cooking. How is the La Cooker superior to conventional plastic cookers in the market?
The concept is taken from the Moroccan metal pots, which are traditional pots used in Moroccan cooking. Basically, it functions like a microwave steam pot which allows you to steam, boil, cook, and store inside this pot for a long time. The concept comes from the water being vaporized from the ingredients, so you can cook things in the microwave without the use of oil. This in turn is creating healthy foods when compared to conventional oil-fried products.
Is this product only available in Japan or is it also available overseas?
It is only for the domestic market at this time and we have no immediate plan to export.
Do you have a favorite recipe when using this La Cooker?
I really like white vegetables and cabbage. Also, I really like sliced pork so you can just put those things in the pot, put on the lid, put it in the microwave and you have a delicious meal.
Knowing CPR can be very important and can be the difference between saving someone's life and not. Your company has developed a CPR practice kit called the Schooman, which is portable, practical, and durable, as well as has the ability to give back feedback to users about the strength of the compressions that they apply. What made you deviate away from food and cooking containers to develop the Schooman CPR practice kit? Do you plan on developing more products for medical purposes in the future?
To put it into simple terms it is a cardiac massage practice kit and the idea itself came from Gifu University. Students at the university worked with staff at Gifu University before approaching Athena to help manufacture these chest compression practice kits. CPR is actually quite a strenuous task and difficult to get right.
In the medical industry, there is a tendency for very expensive products and CPR practice kits are no different. Gifu University was the one that suggested that the product be cheaper when compared to conventional compression practice kits. With our experience with making food packaging cheaper, we were able to create this kit for Gifu University and the hospital.
One way to mitigate the impact of Japan’s aging demographic is to diversify into some new fields. Obviously, in the food industry, there are so many different markets and applications ripe for diversification. In the future are there any fields or markets that you would like to focus your attention on?
It would be very easy to say we are going to do this industry or that field that we have no experience in, but the fact is that it is very hard to implement. We have had success in the medical field, but I think that is based on our previous experiences. We are trying other things right now but I don’t think we are in a position right now where we are comfortable disclosing exactly what that is just yet.
Another thing to mention is the fact that the Japanese market itself has become saturated, and any new attempts at new kinds of technologies or approaches will be very hard to implement here in Japan. If anything comes out of any company brainstorming sessions it will be oriented toward the overseas market moving forward.
A common theme we hear in a lot of interviews we conduct is this idea of collaboration and co-creation in order to make new products or even penetrate new markets. What role does collaboration play in your business model, and are you currently looking for any co-creation partners in overseas markets?
Unfortunately, the company cannot say any examples of cooperation with some foreign affiliates because it is so rare. I can give one example in 1994 when the company established its presence in Malaysia, and that happened with the cooperation of a local company. I would say too that cooperation with Gifu University and the hospital is another example of co-creation.
The story with Gifu University doesn’t end there either, and we are now working with the engineering department as industrial and academic partners to develop a laser. The plan is to utilize the laser in our production site to produce laser-processed food packaging.
You had overseas operations in Malaysia in 1994 and you’ve talked about exporting your coffee cups to America as well. Moving forward, what other countries or regions have you identified for further expansion and what strategies will you employ to do so?
Personally, I like European countries and I am actually just about to go to France. I have quite an attachment to that region of the world. The simple answer to the question is that we will look to expand to the areas that I personally like, which are Europe and America.
In terms of how we will go about this, I think at this time a licensing partnership, with us giving the license for our production to local manufacturers might be the best way to go. Basically, we will be trusting them to produce a likewise product in their region and help them to procure local end users.
In 2018 a Kuwaiti company approached us about licensing our technology for deep draw containers. This company adopted the technology from Athena and now produces locally.
Imagine that we come back three years from now and have this interview all over again. What would you like to tell us, and what are your goals and dreams for the next three years of Athena?
That is a very hard question. It is a bit of a conventional issue with most of the food packaging companies' experience in choosing proper raw materials for production. It has to be eco-friendly by definition and a good example of this can be seen in Europe with how much local legislation is changing the system there. Japan is no different and there is a need to create stricter standards, and in a few years' time, we don’t think anyone is going to be using traditional plastics anymore. We believe that our R&D endeavors with new paper materials are the key to the future in this respect. Overall though, price competitiveness is going to be the defining aspect that will dictate whether we are a success or not.