One of Japan’s oldest candy companies, with its U.S. base in Irvine, plans to more than double domestic sales in the next seven years with new product offerings and further efforts to expand distribution.
Morinaga America Inc. is the U.S. corporate division of the original Morinaga & Co. in Japan—better known for creating the Hi-Chew candy in the 1950s.
While the parent organization first started in 1899 in Tokyo, Morinaga America was established in 2008 and then opened a production facility in North Carolina in 2015.
“It has taken about 15 years for Hi-Chew to explode,” Chief Executive Teruhiro (Terry) Kawabe told the Business Journal.
Kawabe, a longtime Morinaga executive, took over as U.S. CEO in 2022.
“During this time, we’ve made the candy distribution nationwide,” he added.
Before setting up U.S. operations, Hi-Chew candies were stocked only by specialty distributors. Products now can currently be found in 700 retailers nationwide, including Walmart and 7-Eleven stores.
Its Irvine headquarters houses approximately 45 employees while its North Carolina facility employes 235.
Morinaga’s Mover
Kawabe began as a sales representative at Morinaga in 1991 and worked a variety of positions, including the top role at Morinaga Asia Pacific, a unit based in Bangkok, where he tripled the unit’s sales volume.
He helped the firm establish operations in new international markets such as New Zealand, Australia and South Africa.
Kawabe, who became the company’s chief U.S. representative in February, aims to make the corporate name stand out in the confectionary market.
While in Bangkok, he came to believe the candy could become a success in U.S. as well.
In most of the company’s business meetings, he and the team would bring samples of the candy to share with buyers.
He noted that in most overseas divisions the professionals would take one or two but with U.S. partners, the candies would all be gone by the end of the meeting.
“The volume [of consumption] is larger than other markets,” he said.
Hi-Chew U.S. sales grew to more than $100 million in 2021—10 years ago Morinaga reported sales of $8 million.
The goal now is to more than double sales to $250 million by 2030.
Baseball’s Favorite Candy
As of 2023, there are over 200 recipes for the Hi-Chew candy in Japan and 30 of those are distributed in the U.S. The most popular flavors are original strawberry, watermelon and mango.
The executive remembers there only being three different flavors of Hi-Chew when he was a kid in Japan.
“We’re looking to create the same story in the U.S.,” Kawabe said.
The turning point for delivering Hi-Chews nationwide was changing the distribution strategy, according to Kawabe.
Back in 2008, the chewable, fruit-flavored candies were originally found in Hawaii and in specialty Asian stores and wholesalers which made availability limited. It was found in shelves next to the seaweed and wasabi snacks, Kawabe noted.
Morinaga found its major break in baseball.
Japanese baseball players like New York Yankee Hiroki Kuroda and Boston Red Sox Junichi Tazawa introduced the candy to their respective teams around 2014 and its popularity started to intersect with their fans.
This allowed Morinaga to move from distributing mostly within the Asian demographic into the broader retail and candy markets.
The Hi-Chew maker then entered partnerships with the Boston Red Sox, Chicago Cubs and Minnesota Twins to sell the candy in the stadiums, which helped Morinaga later land its first nationwide drug store partner Walgreens in the teams’ respective areas.
Morinaga “wanted consumers to be able to find the candy in the stores, outside of the stadium,” Kawabe said.
The sports affiliation helped connect the candy to the community and investment in turn helped build trust, he added.
“It was a very niche product, but now it’s in Target and Walmart and Kroger’s” next to the Starburst, Kawabe said.
The candy company has continued its relationship with Major League Baseball by partnering with more teams each year including the St. Louis Cardinals, Tampa Bay Rays and Detroit Tigers.
The West Coast is Hi-Chew’s largest market in the U.S. Morinaga’s next steps will be to grow awareness in the Midwest and central U.S.
There are also plans for a new U.S. research and development lab to accelerate product development and merchandising. The company is investigating possible locations.
For All Ages
Candy consumption trends are high among all ages in the U.S., which has been the biggest difference from its home market, according to Kawabe.
While Gen Z is a main target, Kawabe believes the family approach is also important.
This marketing is done through the baseball teams and in establishments such as Chuck E. Cheese restaurants and theme park Six Flags.
“The passion has only grown stronger,” Kawabe said.
Last year marked the introduction of brand-new Morinaga products in the U.S., overseen by Kawabe. The manufacturer debuted Chargel, an energy gel drink made in Japan, and Fi-Being, a healthier hard candy option.
These additions are meant to establish the candy company in the wellness space, another market that Morinaga considers vital in its U.S. expansion.
The American division will continue to bring unique products like Hi-Chew and other technology from its parent abroad, but Kawabe believes that introducing new product lines such as Chargel and Fi-Being will further its domestic footprint.
The more nutritional options also point to the start of developing original products locally.
“In the future, we’ll have the production ability to create different product lines … in order to expand our business model,” Kawabe said.
