TOKYO -- Calbee will increase its granola production capacity by 40% in 2018 and launch full-scale exports to China to capitalize on growing health awareness in Asian markets.
The company will invest some 7.5 billion yen ($67 million) to add a production facility for its Frugra fruit granola cereal in Kyoto Prefecture. It will break ground this summer with the aim of having the factory running by August 2018.
Frugra is currently produced at a factory in Tochigi Prefecture, and production is to begin this August at a Hokkaido plant. These two factories combined can turn out 38 billion yen in granola annually. The addition of the third facility is projected to boost capacity to about 53 billion yen.
Once the new plant is in operation, most of its output will be sold to China via cross-border electronic commerce. Calbee does not currently export Frugra to China, but the product is a draw for shopping sprees by visitors to Japan, who have helped it gain a certain level of name recognition back home.
As a result, the company has determined that there is ample room to cultivate that market, leading to the decision to boost output. The package size and price of products to be sold in China have yet to be determined.
With income levels rising in China, health consciousness is increasing as well. Consequently, food items like Yakult Honsha's probiotic dairy drink Yakult have been well received. In addition to having great appeal to such consumers, Frugra will also meet the growing need for shortening the time spent on housework.
Calbee's sales of cereals -- including Frugra, its main product -- appear to have risen 28% year-over-year to 30.9 billion yen in the year ended March 2017. The company stopped making corn flakes in March, underscoring its shift to granola.
Granola is a class of cereal that typically includes grains such as toasted oats and rye mixed with dried fruit. A good source of dietary fiber, it has gained popularity as a third breakfast alternative alongside rice and bread.
The Japanese market for granola has expanded rapidly in recent years. Industry-wide shipments climbed 23% to 45.3 billion yen in 2016, according to the Japan Snack Cereal Foods Association, but the growth rate has been slowing.
Other food companies are turning their eyes overseas as well. Nissin Foods has launched test sales of granola in Hong Kong. If the cereal is well received, Nissin will consider local production in the future as well as possible expansion of sales into mainland China.