The `Boneheads' Who Obsessed About Sesame Oil for 160 Years

(Bloomberg) -- On a small island known for olives and wild monkeys in western Japan, Rika Onishi spends her days tasting and sniffing sesame oil. She's one of a small group of Kadoya Sesame Mills Inc. employees who make sure the oil always has the same taste and aroma. “We're getting customers to eat this, so we need to take it seriously,” she says.

Founded in 1858, Kadoya imports sesame seeds from Africa and turns them into the edible oil commonly used in Japanese and other Asian cuisines. Generations of families have worked at Kadoya's sole plant on Shodoshima island, meticulously producing thousands of tons of oil a year.

Kadoya is the epitome of smaller Japanese companies' ability to obsess over one niche business, repeating and refining their process over centuries. While little-known outside their spheres, they're frequently among the biggest global players within them. And more often than not, they don't make a fuss about their achievements.

“We're boneheads,” laughs Jiro Ozawa, Kadoya's 80-year-old president. Kadoya is “only good at doing one thing," he says. And “160 years isn't actually a big deal.”

Maiko Kyogoku, who owns the Japanese restaurant Bessou in New York, begs to differ. She uses Kadoya's oil in most dishes, on everything from udon noodles to Romaine lettuce, for a Japanese twist on Caesar salad. Her father swore by it in his restaurant. “I guess he always knew the good stuff,” she says.

Massage, Medicine

Sesame oil is filled with nutrients and has a distinct fragrance and flavor. As well as being used as a cooking oil and condiment in oriental cuisine, it's popular as a massage lotion and in alternative medicines.

Kadoya gets Japanese commodities trading houses to import sesame seeds from countries including Nigeria, Tanzania and Burkina Faso, and then roasts them to give the oil its toasty aroma. Kyogoku of Bessou says Kadoya's oil is nuttier than other brands and has a particularly powerful scent.

"Kadoya is a master of the art of sesame oil," says Yasuyuki Kamata, president and founder of Kamakura Investment Management Co., a shareholder. "It has a loyal customer base because of products that outclass those of its competitors."

Kadoya's shares have more than doubled since June 2016. When asked about this surge, Ozawa initially expresses bewilderment. “I wonder why,” he says, before correcting himself. “It's because of our earnings,” he says.

Only about one-fifth of the company's shares are freely traded. And while Kadoya is listed on the Tokyo Stock Exchange's main board, no analysts cover the stock, according to data compiled by Bloomberg, even though it has a market value of more than $550 million.

While investors such as Kamakura value Kadoya's immutable artisan qualities, there's also another side to the company, one of remarkable change.

There are two notable examples. When Ozawa's father-in-law Naohei took over as Kadoya's chief executive officer in 1957, sesame oil wasn't used by Japanese households, the company says. It was an institutional cooking oil sold in large vats mainly to tempura restaurants. When Naohei visited the U.S., he noticed different types of edible oils on grocery-store shelves, including canola, olive and coconut, and decided to try to popularize sesame oil in Japan.

“Everyone in the industry thought he was crazy,” Ozawa says of Naohei's move. “They said no one would buy it.”

Naohei designed a yellow-capped, hourglass-shaped bottle that's simply labeled “Sesame Oil,” made to be easily held by people with oil on their hands, and went store to store urging retailers to sell it. Eventually, the founder of what was one of Japan's largest supermarket chains agreed to stock the oil, and sales took off, according to Kadoya. Sesame oil soon became commonplace in Japanese household kitchens.

Later, in the 1970s, Kadoya decided to move beyond Japan. This time, Naohei Ozawa targeted the U.S., particularly its Asian-American communities, betting that Kadoya sesame oil would catch on with customers other than Japanese people.

Today, Kadoya has more than half the market for Japanese sesame oils sold in the U.S., according to the company. “You can't get a robust, roasted sesame flavor from other brands,” says Joe Isidori, chef and owner of Black Tap Craft Burgers & Beer in New York. "All the rest fall flat."

New Plant

Ozawa says he cares about Kadoya's share price but doesn't obsess over it in the way his Shodoshima staff do about the quality of the oil. In any case, he's busy leading the company through its next big change. Because Kadoya only has one factory, some customers are insisting on having contracts with other manufacturers, just in case there's a supply problem.

So after many decades making the oil only on Shodoshima, Kadoya is finally opening a new plant, in Chiba, not far from Tokyo in eastern Japan. While that raises questions of how the company will fare without the generations of tradition it has built on Shodoshima, Ozawa -- perhaps not surprisingly -- is adamant the transition will be fine. Kadoya will rely more on mechanization at its new plant, he says. And ultimately, the product will stay the same.

“The sesame oil used by your grandmother's generation, your mother's generation and your generation is exactly the same," Ozawa says. "It has never changed."

To contact the reporter on this story: Shoko Oda in Tokyo at soda13@bloomberg.net.

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Tom Redmond, Sarah McDonald

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