Confectionary maker tastes sweet success

With a cornucopia of new flavors every few months, each bite-size morsel wrapped in whimsically designed packaging, popular Tirol brand chocolates are a particularly tasty example of Japanese innovation.

More than 40 years after first rolling off the production line of Matsuo Confectionary Co. in Tagawa, Fukuoka Prefecture, the distinct square-shaped chocolates are still winning over new fans.

They have survived the evolutionary shift from the dagashiya traditional neighborhood candy store to the convenience store, where they have cemented their hit status.

Once a regular sight in corner candy stores in western Japan, today the sweets sell about 900 million pieces a year nationwide. Every year, between 20 and 30 new flavors are introduced--including less conventional flavors like maccha (ceremonial green tea), and kakigori (shaved ice covered with syrup).

Each piece measures 3 centimeters square, weighs about 10 grams and sells for around 20 to 30 yen apiece. Along with the standard "milk chocolate," "coffee nougat" and "white (cream) and cookies," customers can find three or four limited edition flavors that pop up every few months.

"With customers literally snatching them up, you could call them the 'ultimate convenience store product,'" said Yayoi Sugihara, a spokesperson for convenience store operator Lawson Inc.

Sugihara explained that at any given time, a Lawson outlet will have more than 3,000 products with about 100 products being replaced with new ones each week, a marketing ploy aimed at whetting consumers' appetite to spend.

Tirol chocolates, which take up little space and constantly come in new flavors, fit perfectly into that strategy, Sugihara said.

In fact, the history of Tirol chocolate's meteoric ascent coincides with the advent and spread of the convenience store.

The first convenience store appeared in Japan in the 1970s. By 2008 the sector had grown into an 8-trillion-yen market.

Tirol chocolates were first manufactured by Matsuo Confectionary in 1962. The chocolates enjoyed immense popularity among children at dagashiya for their affordable price of 10 yen a piece.

However, with the arrival of the 1980s and the subsequent disappearance of the corner candy shop, due partly to the aging of shopkeepers and rising land prices, sales of Tirol chocolates sagged.

It was under the instruction of the third generation and current president Toshihiko Matsuo, who assumed the helm in 1991, that the chocolates started their path to sweet success. Matsuo targeted the convenience store.

"With stores popping up everywhere, and adults the main customers, we knew that we also had to target age groups other than the kids," said Matsuo, referring to the decision as a "sink or swim" situation.

Two years later, Matsuo began renovating plant facilities and changed the size of each morsel, which measured about 2.5 centimeters square at the time, to the current size of roughly 3 centimeters square.

The enlarged size was to allow space on the wrapper for a bar code, which became the medium at convenience stores for checking prices at the cash register. The trick worked, and soon Tirol chocolates won a reputation as a fast-selling product at major convenience store chains.

Then in 2003, a phenomenal hit product propelled Tirol chocolates into a new dimension. Their candies flavored like kinako-mochi (rice cakes coated with soybean flour) were snatched up by Seven-Eleven Japan Co. and raked in 340 million yen in sales in just five months at the convenience store chain.

Sensing success, Matsuo made kinako-mochi a seasonal product, marketing the candy every fall, and it has gained such a following that some fans have even resorted to buying whole cartons, or have hopped from store to store hoping to buy up stock.

Three years after its introduction, kinako-mochi was raking in sales of over 2 billion yen in just six months.

The convenience stores soon were clamoring for "a second hit like kinako-mochi" and various orders flew in. Convenience stores and food manufacturing companies began asking Matsuo Confectionary to produce custom-made chocolates to match the season, or to match regional themes at food fairs.

The new attention prompted Matsuo to set up a new planning and marketing entity called Tirol-Choco Co. in Tokyo in 2004.

Since then, the marketing routes have diversified not only into traditional outlets such as supermarkets, but even into the field of game-arcade prizes and web-based mail order sales.

With the success of Tirol chocolates, Matsuo Confectionary and Tirol-Choco have seen their combined annual sales exceed 10 billion yen.

A team of 10 employees at the planning company is tasked with product development

"As soon as we come up with an idea, we go to work right away and try to create a new flavor," said Yoshitada Tsuji, a member of the product development group.

"We make it a rule to let our imaginations run wild."

Sometimes that imagination does not translate to a winning product. Several years ago the team toyed with the idea of creating unagi-no-kabayaki (Eel broiled with a sweet sauce) flavored chocolate, but the sweetness of the sauce ended up being repulsive.

The group had to abandon that plan after Matsuo the president spat the sample out in disgust. Similar flops included tonkotsu (pork broth) ramen and takoyaki (grilled octopus dumplings) flavored chocolates.

The company has shifted emphasis on collaborating with companies with brand-name products to come up with new flavors, such as an orange-flavored "Pom Juice" chocolate jointly with juice maker Ehime Beverage Inc., among others.

Matsuo acknowledged that there may be certain limits to using the shock element.

"People are getting tired of the new flavors," Matsuo said, adding that he intended to take some time to rethink strategy and train personnel accordingly.

Matsuo confided that Lawson Inc. had begun changing the way it displayed new products.

The convenience store chain is also reviewing its lineup of "mainstay" products, as consumers have started to become choosy, particularly during the economic doldrums.

"What kind of corporate image will we project after that? That is what we are thinking about hard," Matsuo said.(IHT/Asahi: November 14,2009)