Dow Jones | December 27, 1999 | Yumiko Ono
NARUTO, Japan - At his family's tiny factory in the heart of Japanese soy-sauce country, Mamoru Otaka has, according to this story, brewed up trouble.
Bottles of his soy sauce are sporting a garish green sticker these days.
"NonGMO," it declares. And though Mr. Otaka has labeled only a small part of his output this way, he is roiling the soy-sauce business, stating, "We're throwing a stone into calm water."
The story says that soy sauce is one of the oldest products in Japan, an integral part of its cuisine since the 13th century. Now this ancient industry is grappling with the most modern of controversies: gene-splicing, which has led authorities to order labeling for 29 categories of foods if they have any bioengineered ingredients.
The soy-sauce world thought it would dodge this. The government exempted soy sauce from labeling, because experts concluded it was impossible to tell whether the sauce contained genetically modified ingredients. That is because the fermentation process by which soy sauce is made soybeans, wheat, salt and water But suppose somebody labels his soy sauce anyway, calling it GMO-free?
Small soy-sauce producers here have a tough go of it. The story says that thousands have folded in the past 50 years, and a few giants now dominate the $2.1 billion business. In search of a competitive edge, or just a way to survive, a few small producers have decided to play the genetics card.
This greatly troubles the soy-sauce establishment. Tetsuya Konagai, director of the Japan Soy Sauce Association was quoted as saying, "Consumers' level of trust is very high with soy sauce. We don't want to lose that over something like this." The group is urging brewers to hold off on labeling while it tries to come up with rules.
No one is, the story says, more establishment than Kikkoman Corp., Japan's biggest soy-sauce brewer. Kikkoman advocates acting as Japanese industries often strive to do at times of disturbing change: in harmony. Even though Kikkoman has a line of organic soy sauce that would qualify as non-GM, it has made a point of refraining from such labeling. To renegades like Mr. Otaka, "we're telling them that it's better to follow" the group, says Yuzaburo Mogi, the president of Kikkoman, which traces its origins to a business set up by the widow of a samurai around 1630.
Mr. Otaka's firm has some history itself. Otaka Shoyu Co. was founded by his great-great-great-grandfather, Shoemon Otaka, in 1804. Much of the time since then, the company, with less than $6 million in annual sales, has struggled in the shadow of mighty rivals. Its brewery is in the middle of Chiba Prefecture, east of Tokyo, where it is surrounded by major soy-sauce companies, including the original piece of Kikkoman.
The story goes on to say he knows he can't compete with the likes of Kikkoman, which use high-tech machines to control fermentation and, he says, have soy sauce "down to perfection." But when the restaurant clients started calling to ask if Otaka Shoyu's soybeans were genetically modified, Mamoru had a revelation: If he could prove they weren't, there was a market waiting.
In any case, he was annoyed that suppliers had shifted to supplying genetically modified beans without telling him, and that the sauce industry was pressuring everyone to keep mum. "There's a perception out there that you're supposed to keep quiet," he says. "If it serves as advertising, you should be able to advertise it."
Sitting in a cramped conference room with a little altar to the Shinto god of soy sauce, and dressed in a purple warm-up suit, Mamoru explains how he started with his line of organic sauce. He asked the Japanese branch of an Iowa gene-testing company to inspect his organic soybeans to make sure they weren't bioengineered. Then the testing company examined the entire manufacturing process for potential "contamination" with bioengineered beans. It provided a stack of bright-green "Non-GMO" stickers, which Mamoru slapped on bottles of organic soy sauce. He packaged them with other condiments in boxed sets for Japan's winter gift-giving season and sent them off to department stores, where they are selling well.
He also changed soybean suppliers for the soy sauce Otaka Shoyu sells to restaurants, switching to U.S. beans that aren't grown from gene-spliced seed but cost 50% more. He plans to leave prices unchanged, figuring no one wants to pay more for soy sauce.
That strategy puts pressure on other small producers. "I wish they wouldn't do such a needless thing," grumbles Hansuke Takahashi, president of Fujihan Shoyu KK. "If someone starts labeling, then we may all have to label, and that raises the price. But soy sauce isn't the kind of thing you could sell at a higher price."
Another tiny rival is unhappy with Mamoru's move for a different reason.
Kondo Jozomoto already uses non-GM soybeans, grown locally, and markets high-end sauces. But it fears that a non-GM trend would bid up the cost of its raw materials.
The story says that Japan's brewers rely mostly on lowcost, protein-rich soybeans from America, known here as IOM More and more of those are genetically modified. In 1999, U.S. farmers planted about half of their soybean acreage with seeds altered so the plants could stand being sprayed by a potent weedkiller. That has stirred the ire of environmentalists, some of whom contend one can't be sure the beans are safe to eat.
Thanks to their campaign, Japanese consumer groups are calling for labeling on all soy sauce. One big supermarket chain has recently started labeling for GM ingredients in its store brand. Restaurants are exempt from labeling, but some have begun touting non-GM dishes.
And so, quietly, some small brewers are preparing for a possible soybean war. A brewer called Taihei Co. is producing a non-GM sauce at the request of a Tokyo food cooperative and has displayed its sauce at a trade fair with a discreet non-GM sign. That's as far as it dares go for now. It hasn't pasted on labels, whispers a plant manager, because "there may be pressure" from the soy-sauce association not to.
In Naruto, Mamoru Otaka points to a thick, dark liquid bubbling away in a 30,000-liter steel tank. It's the first batch of soy sauce made from his new non-GM soybeans, he says excitedly. Inquiries are coming in, such as from trading companies proposing to sell his soy sauce in the United Kingdom.
As for playing the genetics card, he has no regrets. "We've been preserving a traditional industry in Japan," he says. "It's the Otaka way to keep making soy sauce the way it always was."
