Tom Yoshimura says he always carries a Spanish dictionary with him. It’s his best weapon in Southern California’s Asian noodle battleground.
Yoshimura is general sales manager for Irvine-based Maruchan Inc., a unit of Japan’s Toyo Suisan Kaisha Ltd. Amid technology companies in the Irvine Spectrum, Maruchan cranks out those little boxes of inexpensive instant noodles that are a staple for college students and budget-conscious consumers alike.
These days, Hispanics,both here and in Mexico,are Maruchan’s fastest-growing market. In the crossroads of Asia and Latin America that is OC, Maruchan’s managers are Japanese while most of the company’s 650 workers at two Irvine plants are Hispanic. In fact, Yoshimura says, the company’s Hispanic workers are some of his best market researchers.
Maruchan employees tasted the company’s new jalapeno cheddar noodles before they hit the market, Yoshimura said. Their feedback helped determine how spicy to make the dish, he said. Hispanics also work in Maruchan’s quality control department.
Nearly all of Maruchan’s Japanese managers speak some Spanish. “Mucho trabajo cansado? (Lots of work, are you tired?)” Yoshimura says to make his point. “I also try to smile a lot,” he said.
While popular with Hispanics here, Maruchan is big in Mexico, too. The company enjoys double-digit sales growth with an 80% of market share, according to Yoshimura.
“A typical Mexican lunch of two tacos and a Coke costs more than $1,” he said. “Our product is only 50 to 60 cents.”
Along with the bargain price, some Maruchan varieties include shrimp, giving Mexican consumers a “deluxe” feeling, Yoshimura said.
But, just as in the U.S., competition among Asian noodle makers is getting tougher in Latin America. Mexican pasta maker Alimenticias La Moderna SA de CV has completed an Asian noodle factory and is ready to start production any day. Maruchan says it may start operations in Mexico, though the company doesn’t have any concrete plans yet.
The company’s key rival here and abroad is Gardena-based Nissin Foods USA, a unit of Tokyo’s Nissin Food Products Co. Together, the two companies dominate the U.S. market, with an estimated 90% share, according to Yoshimura. Other competitors include South Korea’s Union Foods, which has its U.S. base in Irvine.
Maruchan’s Tokyo-based parent Toyo Suisan Kaisha counted about $1.7 billion in revenue last year, though the company declines to disclose U.S. sales.
The company is seeing a price war in what some claim already is the cheapest fast food in the world.
“Honestly speaking, five for $1 does not generate any profit,” Yoshimura said.
Maruchan’s low-price, high-volume business model has made the company as frugal as some of its customers.
“Please look at the ceiling of this meeting room,” said Yoshimura as he looks up and points to the overhead lights. “We took out some florescent lights to save electricity costs.”
Sure enough, two out of three bulbs are gone. The scene is the same across Maruchan’s Irvine offices where a lot of lighting isn’t necessary. Similar strategies are applied to parts of the factory.
For in-house documents, only recycled paper is used. Maruchan has no Web site, so there’s no need for people there. Marketing and public relations departments don’t exist.
Instead, Yoshimura and other executives visit grocery stores once a week to do their own research. They avoid Asian markets and seek out American and Hispanic consumers, according to Yoshimura. The Irvine factory doesn’t ship products to Japan, but locally made American-style noodles can be found at Costco Wholesale Corp. stores in Japan.
Among the flavors Maruchan came up with after visiting stores: creamy pesto, cheddar cheese and creamy Alfredo, all of which feature thicker noodles.
“We noticed that the noodle shelf was expanding,” Yoshimura said. “The most popular item was cheese flavor.”
The noodles made in Irvine are shipped throughout the U.S. and Mexico. Maruchan boasts 55% of the ramen noodle market in the U.S. Americans are said to consume more than 75 million Maruchan soups every month, according to the company.
Maruchan’s biggest U.S. market is in its own backyard. Consumers in California are estimated to eat 20 portions of ramen a year, while people in the South are said to eat only four portions, Yoshimura said.
Maruchan got its start in Orange County with a 35,000-square-foot Irvine facility in 1977. The Los Angeles Olympics in 1984 were a turning point for the company when its ramen became the official noodle food of the games.
The $3 million licensing pact ended up spreading this “Styrofoam thing,” Yoshimura said.
In 1993, Maruchan paid $14 million for a 32-acre parcel and built its second Irvine plant, a 400,000-square-foot facility. The company ranked No. 13 on this year’s Business Journal list of foreign-owned companies here. n
