Hitting The Sweet Spot In Japan

Châteraisé Holdings produces and sells Japanese confectionery as well as Western-style cakes and pastries, which it produces in its own factories using local ingredients from the Yamanashi area. The business was founded by Hiroshi Saito in 1954 when he was 20 years old.

They started with one tiny confectionery store selling local specialities, but have now grown into one of the largest companies in the sector in Japan. It now has 3,000 employees and annual turnover of 63 billion yen. The business has also diversified as it’s grown, and now includes wineries, resort hotels, and golf courses across Japan, and Hiroshi is now looking overseas to achieve further growth, and positioning the company for expansion in the Netherlands and Asia.

Today, Châteraisé is a big success story, with big ambitions. But it hasn’t always been an easy ride. The company has had to adapt and reinvent itself several times over, in everything from what it makes to how it sells. Early on, for example, it struggled to compete with the selling-power of the major brands on ice cream, but fought back with a sensationally popular range of 10-yen choux puffs. Getting distribution right was challenging, too, and after several unsuccessful attempts to use existing retail channels, Châteraisé developed its own highly effective franchise sales system, which circumvents the wholesalers and allows the company to get maximum leverage from its own capital.

The real turning point came in 1984, when the company marked its 30th anniversary. Annual sales had stagnated at around 4.8 billion yen, and Hiroshi took the bold step of investing 5 billion yen to re-locate the main factory.

There were still some significant setbacks, including a fire at the existing factory, but the company’s strong culture stood it in good stead, and it has since built a powerful brand based on the use of fresh ingredients, which is the foundation for its international expansion plans. It’s using milk from Brittany to make cakes in the Netherlands, and has opened stores in Singapore, Taiwan, Malaysia, and China, with more planned in Dubai, Korea, Indonesia, and Hong Kong.

“Looking ahead, we cannot rely solely on the Japanese market, where confectionery consumption is falling as the birth rate declines and the population ages,” says Saito. “In the future I would like to increase the proportion of our sales made overseas.” Overseas sales currently account for less than 10% of the total, but Saito’s aim is to increase this to around 50% in five years’ time.

Saito believes that the secret of Châteraisé’s success has been its dedication to its three-fold founding principle: to manage the company in a way that brings joy to customers, business partners, and employees. It’s a philosophy he learned from his parents, and has passed on to the next generation – Saito’s daughter and younger sister are Executive Director and Managing Director respectively, and his nephew Makoto manages operations in the Netherlands.

Saito may be 82 years old, but he is still looking to the future, with a new 30-year plan: “I want to see through our plans for global expansion, but I’ll be 110 by the time we accomplish them,” he laughs.

This feature forms part of the PwC Global Family Business Survey 2016.

It has been reproduced with permission of PwC.