Pigeon, founded almost 60 years ago, sells about 100
million bottle teats a year and has a more than 80 percent share of
the Japanese market. As the country's birth rate declines, the
company has moved overseas and ex-Japan sales will this year for the
first time account for more than half its total revenue.
Its main target market is China, where parents aspire to quality
Japanese bottles to feed their babies. Pigeon, which has a workforce
of close to 3,500, hopes to have 50 percent share of the baby bottle
teat market in all major international markets by around 2020,
according to a note by Shared Research.
At its 15,400 square meter (165,800 sq ft) facility at Tsukubamirai,
some of the more than 100 researchers involved in product
development place ultrasound devices under suckling babies' chins to
monitor how their tongues move.
That's a step forward from when they used to place cameras under the
bottles to monitor how babies drink milk, and a giant leap from the
company's founder's research methods.
In a Japan recovering from World War II, Yuichi Nakata spent six
years traveling around the country asking lactating mothers if he
could drink from their breasts. He sometimes offered to pay, and is
said to have drunk the breast milk of around 1,000 women - from
hostesses to total strangers - to learn more about their nipples.
"My grandfather was even slapped by women after he made the
proposal," said Yusuke Nakata, the late founder's grandson who is
now managing director at Pigeon's Singapore office. "Our final goal
is to make a teat as close as possible to a real mother's nipples."
Pigeon today has 200 mother and baby paid volunteers who take part
in the research.
"Babies can't tell us if they're comfortable with the bottles. For
babies who can't drink from the bottle well, we can't ask what's
bothering them, so we came up with using ultrasound devices," Nakata
Babies are born with a natural reflex to help them find and latch on
to the mother's nipple which, when it touches the roof of the baby's
mouth, triggers rhythmical cycles of sucking - called the
peristaltic movement - in which the tongue compresses the nipple.
While the World Health Organization promotes breastfeeding as the
best source of infant nourishment, many mothers opt for
bottle-feeding for a variety of reasons.
"When a difficult baby drinks using our prototype teats, we're
thrilled," said Satoru Saito, who has worked at Pigeon's R&D center
for 17 years and is now general manager.
Pigeon's first teat was made from rubber, but these tended to crack
easily and have now been replaced by softer, stretchable
Teats and baby bottles account for around a quarter of Pigeon's
A PIGEON OF PEACE
Reminiscing about how the company started, Nakata, 42, says his
grandfather wanted to be in a business that made the world a more
peaceful place after the war.
[to top of second column]
Yuichi worked in a department store and on an apple farm in
Manchuria, before being shipped off to Siberia in 1947 by the Soviet
Union. A year later, he returned to Japan and met a Chinese
businessman who started a firm selling baby bottles.
"The Chinese partner left as sales struggled, but my grandfather
stayed, convinced there would be strong demand for baby bottles,"
Yusuke Nakata said. "Japan was trying to recover from the war-time
devastation, and he thought there would be more women in the
workforce in the future."
Meaning to call his company "Dove" because of its association with
peace, he mistranslated the Japanese word, and Pigeon has stuck to
Recognizing the importance of product development, Nakata recalled
how his grandfather's product manager was one of the few Japanese to
own a car at the time. "He thought a manufacturer can make money
only when it has goods ready to sell, so the product management's
key person got special treatment."
Valued at more than $1.8 billion, Pigeon had sales of 77.47 billion
yen ($762 million) in the year to end-January, with operating profit
jumping more than 46 percent to 10.37 billion yen. Overseas sales
were 38.54 billion yen, with around 60 percent of those in China,
where Pigeon's high-margin baby and health products compete against
the NUK brand of Germany's Mapa GmbH and Philips Avent.
Current year operating profit is likely to increase more than 15
percent, according to analysts surveyed by Thomson Reuters. The
company expects profit to rise almost 12 percent.
Pigeon is almost 50 percent foreign-owned, in a country where
average foreign ownership is just 28 percent. Its share price has
tripled over the last two years, but foreign investors say they're
keen to hold the stock for the long term.
"The China business has been the driver, with margins higher than in
Japan, and where new products like diapers have been introduced,"
said Kabir Goyal, equity analyst at Wasatch Advisors in Salk Lake
City, which owns close to 3 percent of Pigeon.
"Going forward, we're excited to see Pigeon aggressively enter new
markets, such as the United States, Europe and India," he said.
($1 = 101.6650 Japanese Yen)
(Editing by Ian Geoghegan)
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