Thursday, December 1, 2011
No. 9: The ability to integrate production, distribution, and marketing is the key to prosperity (December 1, 2011)
Itami city in Hyogo Prefecture is famous as the birthplace of refined sake, or simply sake. Before the debut of sake, only white murky unrefined sake was available. Sake was born in Itami city thanks to technological innovation, and it got a burst of popularity in Edo (currently Tokyo). Founded as a drug seller in Itami city in 1550, Konishi Brewing is now famous nationwide for its Shirayuki (White snow) brand sake. Konishi’s sake got a burst of popularity in Edo despite its high price, and the family head decided to focus on sake brewery in 1612, withdrawing from the drug sales business completely.
However, Itami’s prosperity did not last long because Kobe also succeeded in producing sake. Kobe was in a better position than Itami to ship sake to Edo because it is a port city. Actually, sake brewed in Kobe took the Edo market by storm, replacing Konishi. Konishi formulated various measures to overcome the hard times. It opened a sake wholesaler in Edo in 1694 to expand the nation’s largest market even more seriously. Actually, it is the first sake brewery that entered into the wholesaling business. At the same time, it started the transportation business and established a business model that covers production, distribution, and marketing. Because Konishi’s rivals had to pay margins to such middlemen as distributors and wholesalers, Konishi successfully maintained competitive edge and secured a high profit margin even in the panicky selling. And it loaned the accumulated capital to lords and retailers of the shogun across the country.
In the Meiji Restoration in 1869, the head of the 11th generation started the banking business and railway construction business in addition to building two sake-brewing plants in China. Konishi started to market Belgium beer in 1988. The head of the 15th generation became president in 1991. Under his leadership, Konishi is aggressively expanding the beer business. Beer sales currently account for only 10% of Konishi’s total sales, but it is trying rather hard to increase beer sales. Diversifying into different business fields is accompanied by risks, but Konishi tries to develop a new field without sacrificing the spirit of protecting the tradition. The principle of fluidity and immutability always exists in the sprint of Konishi.