Business / Corporate

Soap maker gets healthy dose of mayo market

Some consumers unwittingly used mayonnaise to style their hair when, in the 1920s, this exotic condiment was first introduced in Japan.

At least that’s how the industry story goes.

But mayonnaise companies didn’t find it amusing when a producer of hairstyling products started marketing mayonnaise in September.

The entry of toiletry giant Kao Corp. into Japan’s 60 billion yen mayonnaise market, which has been dominated by two firms for decades, has sparked cut-throat competition. Three major players are now battling to win the hearts of Japan’s increasingly health-conscious consumers with different views on just what is healthy and what is not.

Within a month of its release, Kao’s Healthy Econa Mayonnaise gained a 12.1 percent share of the market, far beyond its initial projection of 5 percent, according to Kao sales data from 400 large stores.

Successfully launching a new mayonnaise product was expected to be extremely difficult since consumers’ loyalties have long been divided between two distinct brands.

Q.P. Corp. has historically dominated Japan’s mayonnaise market with more than a 70 percent share. The other maker, Ajinomoto Co., now holds about a 20 percent share.

Kao’s mayonnaise, which isn’t really mayonnaise because it uses Health Econa Cooking Oil, nevertheless became a hit for that very same reason: About a half of those who purchased the new mayonnaise were already loyal to Econa seasoning, Kao officials explained.

Under government food standards, mayonnaise must be made with vegetable oil. So while Kao’s new product cannot technically be marketed as mayonnaise, Kao gets around it by calling it a mayonnaise-type product.

The major maker of toiletries and detergents first began marketing a cooking oil featuring diacylglycerol (DAG) in January 1999. The firm says DAG prevents fat deposits from forming inside the human body.

To woo the growing number of consumers concerned with obesity and other fat-related diseases often associated with mayonnaise — a concoction of eggs, vegetable oil and vinegar — the firm started to aggressively publicize the health benefits of its cooking oil.

DAG oil has been approved by the health ministry as a food for specified health use. That allowed the benefits of the oil to be advertised on its packaging and to be endorsed by a national health association.

Despite the higher price — Kao’s product is about five times more expensive than other oils — the imitation quickly became popular, claiming a 12 percent share of the household cooking oil market, which is estimated to be worth around 100 billion yen.

Koji Inamura, senior marketer for Econa products, which include salad dressings, said its latest product should have the same appeal as regular mayonnaise because mayonnaise is 65 percent oil.

Kao said that retailers have welcomed the high-priced imitation mayonnaise because it has a higher profit margin in an environment where prices are sinking.

It is three times the price of the other two mayonnaise products.

Rival mayonnaise makers, while downplaying the real impact of Kao’s entry, admit that the healthy image Kao has infused into its product might make their products look detrimental to public health.

Ajinomoto officials said the challenge now is how to effectively market the healthy aspects of its products.

Having entered the mayonnaise market in 1968, Ajinomoto has established its position by differentiating its mayonnaise from that of Q.P. Instead of using only the yolk, the seasoning maker uses the entire egg in making its mayonnaise. This makes its product “milder and less sour,” company officials say.

Like Kao, Ajinomoto sees bright prospects for selling to health-conscious consumers. According to the firm, the market for low-calorie mayonnaise has grown 1.5 times in value over the past five years to 6.3 billion yen in fiscal 2001.

In July, it released an improved version of its half-calorie mayonnaise that it says is closer to regular mayonnaise in taste; it hopes to achieve sales of 2 billion yen in fiscal 2002.

Ajinomoto officials claim that some of their products actually contain lower calories and less fat than Kao’s mayonnaise.

“We have no intention of engaging in a negative campaign, but we won’t allow ourselves to be beaten in a shouting contest, either.” said Yukio Shigemune, section manager of Ajinomoto’s food products department. “We are making efforts to gain consumer understanding of (the health benefits of) our products.”

Meanwhile, Q.P. remains ambivalent about the growing popularity of low-cholesterol and other “healthy” mayonnaise products, including its own.

The firm introduced a no-cholesterol mayonnaise in February, and its sales surpassed the initial forecast of 500 million yen for fiscal 2002 in the first four months.

“We did not market such a product until recently because our stance is that cholesterol in mayonnaise is not bad for health,” said company spokesman Toshiro Hasebe. “And we will not have to sell these products once the public’s misunderstanding is solved.”

Q.P.’s founder introduced mayonnaise to Japan in 1925, and most Japanese have grown up with its thick, yolky taste.

Q.P. has solidified and sustained its grip on the market with competitive pricing, including 23 markdowns since the end of the war.

But the bad image of the product, likened to an ideal recipe for obesity, has given Q.P. the jitters.

In a rare case of counteradvertising in Japan, Q.P. passed out leaflets to the media over the summer that, while avoiding naming Econa, disputed the touted health benefits of its DAG products and urged consumers to look deeper than “healthy” labels. Similar leaflets were handed out at stores.

Q.P. explained that a flurry of inquiries prompted the action and that many people did not know that Econa mayonnaise is not actually mayonnaise under Japanese agricultural standards.

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