US and China shine for Yakult as it gets back on track post Japanese quake

By Elaine Watson

- Last updated on GMT

Related tags: Probiotic

Yakult: Should be firing on all cylinders again in Japan by the end of the month
Yakult: Should be firing on all cylinders again in Japan by the end of the month
The US and China were the star performers in Yakult’s global probiotics empire in 2011 and are set for further significant investment in 2012, bosses have revealed.

In a Q&A in the Japanese firm’s 2011 annual report, chief executive Sumiya Hori said Yakult was enlarging plants in Guangzhou and Shanghai to meet growing demand, and was now supplying north and north east China from its new plant in Tianjin – which became operational in August.

A second plant in Guangzhou will come online in 2013.

Japanese operations to be fully restored by end of month

Yakult, which will open its first US factory in Fountain Valley, California, in 2012, should also be firing on all cylinders again by the end of this month in its home market following the devastating earthquake in March, said Hori.

“The​Yakult Honsha Fukushima Plant sustained damage to buildings and production lines, as did the Yakult Iwate Plant, a subsidiary.​Sales companies, too, suffered tremendous damage, with some on the Tohoku region’s Pacific coast witnessing the loss of buildings in the tsunami.

“Nevertheless… we were able to resume production at Iwate Plant in May and at the Honsha Fukushima Plant in June. Our goal is to fully restore operations by the end of October.”

Sales slump in Europe offset by strong growth in China, US

Although sales in Europe had slumped 11% to ¥8.6bn in the year to March 31 as competition increased and the economy faltered, sales in Asia and Oceania shot up 13.4% to ¥25.5bn, while sales in the Americas (US, Canada, Brazil, Uruguay, Mexico, Belize, Argentina) jumped up 8.6% to ¥37.6bn.

This was “due to sales growth in the United States as Yakult expanded its sales area and the number of stores that sell its products”, said the ​firm, which is now selling more than 118,000 bottles of its signature probiotic drink a day in the US (based on average sold per day Jan-June 2011) compared with 110,000 in mid-2010 and 90,000 in 2009.

Sales in the Americas for the first quarter (ended June 30) were up 7.5% to 9.908bn yen, but were higher on a constant currency basis as the strength of the yen against the dollar means the firm takes a hit when translating sales from dollars to yen.

Despite notching up “robust​” sales in Italy, the overall lackluster performance in Europe was blamed on "intensifying competition…exacerbated by severe economic conditions in the probiotics market, particularly in countries where Yakult already has a well-established presence​”.

First US factory to open in 2012

A short drive from Yakult USA’s HQ in Torrance, California, Yakult’s new US factory will initially produce 250,000 bottles of Yakult a day, but could ultimately make up to 760,000 bottles a day.

The plant is slightly smaller than the new factory in Tianjin in China, which has an initial capacity of 300,000 bottles/day but will be expanded to around 1.46m a day.

The US factory will supply stores in California, Nevada, Arizona, Texas, Colorado and New Mexico, which are currently supplied by Yakult’s factory in Guadalajara, Mexico, but will also provide a platform for expansion into new regions.

Group ambitions

The firm, which sold on average 27.494m bottles/day in fiscal year 2011 compared with 26.395m/day in 2010, is aiming for an average of 30.1m bottles per day in 2013 and 36.5m bottles a day in 2020.

Related topics: Emerging Markets, Markets

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