TOKYO -- Japan's largest flavor and fragrance company, Takasago International, is building a new production and research center in Singapore as it looks to capitalize on growing markets in Southeast Asia.
Although overseas sales already account for nearly half the company's sales, Asia outside Japan accounted for only 17 billion yen ($166 million) or slightly more than 10% of global sales in fiscal 2013.
"It is important to cater to local palates," said Satoshi Masumura, who became president of Takasago in May. He said no place in the world rivals Southeast Asia when it comes to the diversity of consumer preferences, which makes the region an ideal testing ground.
The company in March opened a new 4.8 billion yen plant in Singapore that combines research and production to turn out products better suited to local tastes. The plant has an annual production capacity of 30,000 tons, roughly three times that of the company's old facility in Singapore. The new factory makes both flavors for food and drinks, and fragrances for cosmetics and consumer products.
Takasago formulates flavors and fragrances for Asia in Singapore and Malaysia. The Singapore factory serves as an export base to China, India and Oceania, in addition to other countries in Southeast Asia. Its sales offices around the region gather data on local preferences, which the company uses to develop new products.
Creating flavors and fragrances often means coming up with novel combinations of ingredients. Technicians need to be able to identify different flavors and aromas and reproduce them. Takasago puts local employees in charge of making flavors and says most of the employees at its Singapore plant are local hires.
Takasago tailors its products for each market. Thais are famous for their love of spicy food, while Filipinos prefer sweet flavors. In Vietnam, many foods have coffee influences. Products for Malaysia and Singapore are certified as halal, or compliant with Islamic dietary laws.
Masumura said the company is "considering production in each of the Southeast Asian countries," to better meet local demand.
Of course, Takasago does not have the Southeast Asian market to itself. Switzerland's Givaudan, the world's largest scent and flavor maker, in June spent 24 million Swiss francs ($26.7 million) on a new production center in Indonesia. The company plans to open a hub for research and production in Singapore later this year. T. Hasegawa, Japan's second-largest flavor and fragrance company, set up a sales office in Indonesia in June. It says it also plans to build a production base in Southeast Asia.