TOKYO -- Ajinomoto plans to put aside nearly 500 billion yen ($4.43 billion) for growth investment, setting its sights on becoming one of the world's top 10 food companies by fiscal 2020.
"Over the next three years we are going to pour over 150 billion yen into M&A," President Takaaki Nishii said Friday at a press conference. The Japanese seasonings and frozen-food purveyor unveiled a new three-year business plan through March 2020 the same day. Its growth investments, including capital spending, will total nearly 500 billion yen over that span.
The next three years likely will mirror the fiscal 2014-2016 period, when Ajinomoto struck a series of large-scale M&A deals, including the acquisition of U.S. frozen-food maker Windsor Foods. The company paid roughly 87 billion yen for Windsor in 2014.
Ajinomoto eyes overseas manufacturers and biomedical companies as potential targets. The Tokyo-based company aims to strengthen its presence in Southeast Asia. In Europe, it is also seeking an acquisition on a par with the Windsor deal.
Behind the proposed M&A drive is a sense of crisis within Ajinomoto's executive ranks. The company rakes in more than half its sales from overseas markets and is known as one of Japan's leading multinationals. But on the international stage, it is dwarfed by global leader Nestle of Switzerland, which is 10 times bigger.
The lesson here is that standing atop the Japanese market is not enough. Nishii named Nestle, Mondelez International and Unilever as Ajinomoto's potential rivals.
The Nishii-led team appears resolved to take on this challenge and also prepared to nip trouble in the bud. Nishii called the animal feed amino acid business the company's "largest miscalculation" after it was largely responsible for a downgraded earnings outlook for the year ending next month. Improving the balance sheet has been a goal since the years of predecessor Masatoshi Ito. Amid low-price offensives by Chinese producers, Ajinomoto still faces an uphill battle.
The new medium-term plan also calls for drastic structural reform. Ajinomoto plans to consign production of lower-priced products to overseas manufacturers, saving in-house production for high-function items.
The next three years will determine whether Ajinomoto can break out of the Japanese mold and grow into a truly global competitor.