Kanro Achieves Record Performance in FY 2023

Founded in Japan's Yamaguchi Prefecture in 1912, Kanro has consistently focused on realizing the unique potential of sugar, driven by knowledge and passion. In the 2023 Fiscal Year (FY), the company achieved significant milestones in the second year of its Medium-term Corporate Strategy 2024, laying the groundwork for Kanro Vision 2030. The company exceeded its targets, setting new records with net sales of USD 200.13 million (JPY 29.0 billion) and an operating profit of USD 23.46 million (JPY 3.4 billion). The success was driven by solid performance in its core business areas, such as hard candy, gummies, and other sugar-based confectionery. This is supported by the growth of Japan's candy market, now exceeding USD 2.06 billion (JPY 300 billion) annually. Key segments, including hard candy and gummies, saw substantial year-on-year (YoY) growth of 13.3% and 24.1%, respectively, with the Kanro brand, particularly its Nodoame throat candies, gaining strong consumer support.

A relatively recent addition to the Japanese market with popularity rising over the past 40 years, the gummy segment is expected to grow and become the leading category in Japan's candy market. Recognizing this potential, Kanro identified gummies as a key growth driver and proactively invested in expanding production capacity, becoming the first manufacturer to do so. This strategy has significantly contributed to the company's success. Kanro is expanding its gummy production facilities, with the new areas expected to be operational by Oct-24, increasing production capacity by approximately 14% compared to FY 2023. The company aims to achieve gummy sales growth that surpasses the market rate. However, despite strong growth in its core business, Kanro is concerned about the slower-than-expected progress in new business domains, particularly in global expansion. The company plans to prioritize expanding these new businesses in the short term and the next medium-term corporate strategy.

Figure 1. Candy market from Jan-23 to Dec-23 YoY change by type.

Kanro Prioritizes Global Expansion, Production Capacity, and Human Resource Development in Medium-Term Strategy

In the next medium-term, Kanro will prioritize global business development, expanding production capacity, and recruiting and training the necessary human resources to achieve its vision. The primary targets for overseas expansion are China and the United States (US). Due to regulatory restrictions on gummy exports to China, Kanro is developing hard candy products tailored to the Chinese market, though demand has been challenging to stimulate. Exports to Taiwan, Hong Kong, and the US have shown promise, but differing quality and safety standards across regions require product specification adjustments, posing a significant barrier. In addition, growing domestic demand limits the production capacity available for exports. To overcome these challenges, Kanro is considering establishing overseas production operations by 2030 and is actively searching for suitable sites. The company aims to identify and address these challenges in 2024 to accelerate business development abroad.

Kanro's ongoing goal is to achieve sustainable growth by innovating the candy market and reaching consumers worldwide. Targeting 2030 as a milestone year for its vision, the company has restructured its organization in early 2024 to create the momentum needed for this transformation. This new structure aims to enhance flagship brand value through brand-centric management and strengthen collaboration between core and new businesses. Recognizing the challenges on its path to sustainable growth, Kanro focuses on energizing its workforce, fostering flexibility, and driving innovation. Central to this effort is the company's commitment to its purpose, which will guide the development of new businesses centered around sweetness. Through the "Sweeten the Future" initiative in Kanro Vision 2030, the company aspires to introduce new products and services globally, sharing the unique strengths it has cultivated in Japan.

Hard Candy

Kanro has consistently developed product brands of lasting appeal, including the enduring Kanro Ame, innovative Kenko Nodoame, and Kinno Milk, Japan's leading milk candy brand. In 2023, the company saw robust sales from its sugarless Non-Sugar series and continued strong performance from Nodoame products, driven by heightened demand for hay fever remedies and self-care solutions following the COVID-19 pandemic.

Figure 2. Kanro Ame, Kenko Nodoame, and Kinno Milk.

Gummies

Kanro's leading brands in the gummy category include the Puré Gummy series, Japan's top-selling gummy brand in 2023, Candemina Gummy, known for its chewy texture and distinctive shape, and Marosh marshmallow candies, which feature a unique aerated texture. Sales of Kanro's gummy products are growing alongside the expanding Japanese gummy market.

Figure 3. Puré Gummy series, Candemina Gummy, and Marosh.

Healthy Snacks

Kanro offers a variety of healthy snacks made from high-quality ingredients. Notable offerings include Marugoto Oishii Hoshiume, which features sour plums with pits removed for convenience; Nori no Hasamiyaki, which combines ingredients between roasted seaweed slices using a unique method; and Puchi Pori Natto, a freeze-dried natto snack.

Figure 4. Marugoto Oishii Hoshiume, Nori no Hasamiyaki, and Puchi Pori Natto.

Kanro's FY2023 Achievements and Strategic Outlook: Record Performance, Global Expansion, and Innovation Focus

In FY 2023, Kanro exceeded targets with record net sales and operating profit, driven by solid performance in core segments like hard candy and gummies. The company's strategic expansion in gummy production and planned global growth reflect its commitment to leveraging market opportunities. Potential overseas production and tailored product development are addressing challenges in international markets and regulatory barriers. Kanro's reorganization aims to enhance innovation and global reach, aligning with its "Sweeten the Future" vision. Overall, Kanro is well-positioned for continued growth and global expansion.