ITO EN“We want to bring unsweetened tea to the world – and create a healthier market.”

Founded in 1964, the Japanese tea company ITO EN, LTD. has grown from a small packaged-tea seller into a global group with a 37 percent market share for green tea beverages in Japan. Pioneering the world’s first ready-to-drink green tea in 1984, the company has proven to be effective in conquering new markets for unsweetened tea. Along the way, ITO EN developed over 200 patents, built a route sales network with 170 branches across Japan, and was recognised in Fortune magazine’s Change the World List in 2016 for supporting tea farmers and recycling used tea leaves. In March 2024, ITO EN began operating its first European subsidiary. Akito Suzuki, Managing Director of ITO EN Europe GmbH, spoke with J-BIG about the company’s history of innovation, its global expansion from Hawaii to New York to Germany, the challenge of introducing unsweetened tea to European consumers, and why he believes the market shift is already underway.

J-BIG: ITO EN is a relatively new player in Germany, but a traditional player in Japan. Tell us more about the company’s history. What is ITO EN’s origin story?

Akito Suzuki: For a Japanese company, our story is not exceptionally long. There are other Japanese beverage or tea companies who predate us by quite a bit. Our story begins in 1964, when our founder Masanori Honjo started his own business. After two years, he decided to expand and established a company specialised in tea. At the time, people still bought tea at specialty stores, sold by weight, which required customers to visit these stores specifically to make a purchase. Masanori Honjo’s groundbreaking idea with his new company was to change that by packaging tea leaves in smaller quantities so they could be sold conveniently at supermarkets and grocery stores. The company was renamed ITO EN in 1969. Two factors really accelerated our growth. The 1970s were the time modern retail chains started to boom, which was a big help for ITO EN in the early stage to establish itself as a brand. Secondly, ITO EN developed new breakthrough methods for preserving the freshness of tea leaves using vacuum processing and double packaging.

J-BIG: What happened after ITO EN started packaging tea leaves?

Akito Suzuki: ITO EN contributed to the oolong tea market in Japan. In 1979, we signed a three-year contract with a Chinese national company to import oolong tea, which caused a boom. And in 1980, ITO EN developed the world’s first canned oolong tea drink.

This inspired our next milestone: Ready-to-drink green tea, which was developed in 1984. After a total of 67,200 prototypes using varying raw ingredients and processing and brewing methods, ITO EN succeeded in developing the world’s first canned green tea which was later renamed Oi Ocha in 1989. What makes Oi Ocha groundbreaking is that it is unsweetened. Making sweetened green tea is easy, because sugar and additives mask the true flavour. Green tea is very sensitive to oxidation, so preserving its natural aroma is a challenge. What ITO EN achieved was creating a ready-to-drink tea with a real green tea flavour. That was a big innovation.

Later milestones include our Natural Clear production method, patented in 1996, which uses microfilters to remove sediment from green tea while preserving its original aroma and flavour in clear PET bottles. And in 2000, we became the first in the industry to launch green tea in a heatable PET bottle – solving the challenge of oxygen permeability in plastic containers to allow hot tea to be sold in winter.

J-BIG: You started to sell ready-to-drink unsweetened tea about 40 years ago. Was it an immediate hit, or did it take time for people to open up to it?

Akito Suzuki: As you can imagine, creating a new market is very tough. At that time ITO EN was still a rather small player in the beverage industry. And naturally, there wasn’t much demand for a product that was new and unknown. We cooperated with other beverage companies to slowly build that demand and shared our innovations with them. Even during the 1980s, the market was still rather small. But today the unsweetened green tea market in Japan is worth almost 3.5 billion USD.

J-BIG: Has ITO EN also tried to produce sweetened tea in the beginning?

Akito Suzuki: I don’t think so. ITO EN has been focusing on unsweetened tea from the start. Japanese people like unsweetened drinks. The most successful beverages in Japan are a water brand, then two coffee brands, then in fourth place our green tea Oi Ocha. Coca-Cola is only in fifth place. In other countries Coca-Cola is usually more successful, often it is even the most successful beverage. But Japan’s market is a little different.

J-BIG: How big is ITO EN today and what does the product portfolio look like?

Akito Suzuki: The total consolidated revenue of the ITO EN Group is 3.1 billion USD for the last fiscal year. We have 8,000 employees working globally across 44 group companies, of which 13 are located outside Japan.

When we look at the sales breakdown, 90 percent of our revenue in Japan comes from beverages, and 10 percent from tea leaf products – which includes tea bags, matcha, and instant green tea powder. Within beverages, 70 percent is green tea drinks, and 30 percent comes from barley tea, water, and other beverages like vegetable juice, fruit juice, and others. We own the licensing agreements for TULLY’S COFFEE in Japan and have also established a joint venture with ITOCHU Corporation for the exclusive distribution of Evian water in Japan. Additionally, we operate several café chains and even a yoghurt company. But tea remains the core of our business.

J-BIG: How does ITO EN maintain its position against major competitors?

Akito Suzuki: Our key brand Oi Ocha is the most popular green tea drink with a market share of 37 percent last year. The market has grown considerably in the past years, hence it is natural that other beverage companies started to produce similar products. Coca-Cola has a competing product called Ayataka which is our closest competitor. Suntory, Kirin, and Asahi also always try to take a share of the market.

Thanks to our route sales network and 170 branches across Japan, we are able to gain a competitive advantage. Compared to our competitors, we have lower advertising costs and invest more in sales personnel. Our route sales department consists of around 4,000 full-time employees who introduce and deliver products and negotiate business from all over Japan. They suggest product combinations based on the location of vending machines and sales floors, such as offices, shops, parks, tourist attractions, construction sites, schools, nursing homes and hospitals, while taking the target audience into account. We are also in constant contact with distributors and customers to identify new market demands and trends. Information collected through our route sales system is then used to develop new product proposals.

We also focus on dedicating our efforts to quality control and R&D. We are quite confident in that regard. I already mentioned how sensitive green tea is and that it’s quite difficult to preserve its natural flavor because it oxidates easily. That’s why it’s extremely important to eliminate oxygen from the packaging and the filling process. We hold over 200 patents that cover the whole production process for ready-to-drink tea, which allows us to offer the best product. Our experience is key. Many competitors have origins as beer or alcohol companies. We are, and have always been, a tea company.

J-BIG: What kind of innovation potential is there in green tea? What does R&D mean for ITO EN?

Akito Suzuki: Our R&D has three work areas: palatability, health and environment. We want our products to taste good and maintain their taste as long as possible, we want them to be healthy, and we want to develop environmentally friendly containers and new technologies for waste reduction and recycling.

The results are real and tangible. We have published studies about the health benefits of green tea and matcha. One example: catechins, which are polyphenols found in tea, have many health benefits, like reducing body fat. We use this knowledge in a product called Bold Green Tea, a strong green tea, that we market by mentioning its health benefits on the packaging. On the environmental side we have been operating a Used Tea Leaves Recycling System since 2000, in which used tea leaves from our beverage production are converted into fertiliser, animal feed, paper products, building materials, and resins – without dehydrating them, which saves oil resources and reduces CO2 emissions. This initiative was recognised in Fortune magazine’s Change the World List in 2016.

J-BIG: When did ITO EN first enter the international market, and how has this evolved?

Akito Suzuki: The first market was not Asia but Hawaii. ITO EN established ITO EN Hawaii in 1987 and began distributing and producing there, because Hawaii was a very popular tourist and emigration location for Japanese people and is culturally close to Japan. After that, we started a business in Australia, and a joint venture in China in 1994. But the real highlight for our overseas business was the 2001 launch of ITO EN North America in New York City. We had realised that there was a potential market for healthy food and drink in North America and decided to accelerate the overseas business.

J-BIG: How has ITO EN developed in the US since 2001?

Akito Suzuki: It was tough to build a business from scratch. It the beginning, sales were slower than headquarters had expected. ITO EN North America also launched other tea products containing sugar and flavours to adapt to the US market. But interestingly, after years of investment in advertising and marketing, the best-selling item is now our unsweetened Oi Ocha green tea, even in the US.

J-BIG: When did ITO EN start looking at Europe, and how did the decision to establish a European office come about?

Akito Suzuki: ITO EN Europe is very new – we were established in March 2024. But we actually started distributing to the German market in 2018, through a German partner who was distributing our PET bottle products to Asian channels. In these years demand continuously increased, which was very pleasant to notice.

The turning point was Anuga 2023 in Cologne. I was based in Japan at the time and responsible for European sales, so I came over for the fair. We had a booth and received so many inquiries for green tea and matcha. This strong interest surprised us, and we concluded that there had to be a bigger market for our products. Therefore, we decided to open a European office.Initially, ITO EN North America attempted to establish a market for unsweetened tea beverages with ‘TEAS’ TEA’, a product developed specifically for the US market. It came in a variety of flavours, including chocolate and vanilla. I heard many stories about the difficulties senior colleagues encountered as unsweetened tea was not widely accepted or recognised as a legitimate product category. But as time went on, health and a healthy diet became mainstream and we started to notice that foreign people would also like what we offer. At that time, Japanese food culture was growing in the US, sushi was becoming popular, and there was a lot of critical press coverage around fast food and sweetened drinks.

J-BIG: Why was there the need for a European subsidiary when you were already successful with the sales through your distribution partner?

Akito Suzuki: The reason for this is a new EU regulation: Since July 2024, bottle caps must be permanently attached to the bottle. Therefore, it was not possible anymore to just export our products from Japan. Additionally, we had trouble finding a copacker who could produce PET bottles with attached hinge caps. Luckily, we found a company in Niedersachsen, Germany, who could produce unsweetened green tea in Tetra Pak packaging with attached hinge caps. We started production in March 2024, at the same time our office in Duesseldorf was established. ITO EN has been using Tetra Pak in Japan before, so we already had some experience with the format.

J-BIG: After two years, are you satisfied with the Tetra Pak format? How has the market responded?

Akito Suzuki: Yes, I think so. I had been worried about two things. One was the packaging itself. Tetra Pak has the image of sweetened juice, fruit juice, or dairy products. The other concern was the retail price. But sales show that consumers have accepted both the packaging and the taste. Sales are growing and have almost doubled compared to last year.

J-BIG: What is your current strategy in Europe?

Akito Suzuki: So far we have been focusing on Asian channels, because the consumers who go to Asian supermarkets are already interested in Asian or Japanese food and drink – most of them already know our product. And there are also consumers who visit Asian supermarkets by chance, discover our product, and try it. In parallel, we have had a booth at events like DoKomi and AnimagiC, because the visitors to those events are also interested in Japanese culture. We were selling our beverages at these events. We also sell our products through some Rewe stores already, particularly our teabag range.

J-BIG: What is the next step in terms of market expansion?

Akito Suzuki: It is not easy to get into German mainstream supermarkets. I know it takes a lot of time. We are thinking to expand our marketing strategy beyond the Asian channels, focusing next on the health and wellness category. Matcha and green tea are already recognised as healthy. That is very positive for us. Our product, although still new and unique for the European market, can hopefully find many customers that want something that is equally convenient and healthy.

It is obvious that the market trend is shifting from sweetened to unsweetened beverages. We faced a similar situation in the US and in Asian countries. The German consumer is highly health-conscious, as far as I can tell. I think it’s reasonable to assume that mainstream supermarkets, and especially the organic and bio supermarket chains, have an interest in selling our products.

J-BIG: In Germany, is the sales mix similar to Japan with mostly ready-to-drink beverages?

Akito Suzuki: Actually it is the opposite, which is very interesting to me. Matcha is trending strongly right now, and when we look at the ratio of our sales in Europe, matcha powder is currently bigger than the beverage. We also supply matcha to coffee chains who use it to make matcha latte, which has become a major trend drink in recent years.

J-BIG: ITO EN Europe is currently a team of six people. How do you work together with headquarters in Japan?

Akito Suzuki: ITO EN Europe is like a player on a team, and the headquarters in Tokyo is the head coach. Because our responsibility is the European market, we think and act locally. Headquarters gives us the fundamental direction but a lot of freedom otherwise. The only major thing to consider is that Oi Ocha specifically is an established global brand and customer expectations of it are rightfully high. Headquarters manages the global branding and communicates with each subsidiary to keep the brand strong and consistent.

J-BIG: What does the product range for Europe look like over the next few years?

Akito Suzuki: We are planning to add new products to our current range this year. Currently in Europe we have the Oi Ocha green tea in Tetra Pak, produced locally in Germany, as well as tea bag products, a matcha powder range and a Matcha Latte product, which are made in Japan and distributed through ITO EN Europe. The Matcha Latte is very popular right now. Although it is not the most health-focused product, it is a good entry point into the market. And we will expand from there.

J-BIG: If you look at ITO EN in Germany and Europe over the next five years, what are your goals?

Akito Suzuki: Although there are certainly many challenges ahead of us and unsweetened ready-to-drink tea is still unusual in Europe, there are also many opportunities. The market for healthy food and drink is growing. People are increasingly concerned with health and healthy nutrition, especially since COVID-19. We have an amazing product, but we need more awareness for it. Then we can be part of this shift and contribute to a healthier beverage market with our unsweetened tea, also in Europe.