Sweet industry turning sour

Press, 12 March 1985, Page 19

Sweet industry turning sour

From

PETER McGILL

in Tokyo

Almost one year after the “Monster with 21 Faces” first rose out of the mists to terrorise the Japanese business world, the small gang of poison-extortionists appears not a penny richer but has succeeded in reducing one of the country’s largest confectionery companies to near collapse. The No. 2 confectioner, Morinaga, reports that it is now losing $114,000 a day despite Governmentbacked promotion campaigns for the public to buy its sweets. After achieving net profits of $16.12 million for the previous year, brokers now predict that Morinaga will end the current financial year with a net loss of $7.7 million - or “maybe more.” The Morinaga chairman, Heihachi Ino, finally succumbed to the “Monster” and resigned last month. In mid-January, an aggravated cold had forced him into hospital, but the real reason for the 79-year-old chairman stepping down was a “weak heart,” a Moringa official explained. “He felt responsibility. Ino quit just in time. February is Japan’s peak season fe>r chocolate saes when girls givCTtheir sweethearts a chocolate Valentine. On

February 14, the gang struck again. Ignoring the 40,000 police guarding supermarkets and stores, they distributed 13 chocolate bars, eight containing fatal doses of cyanide, at railway stations, the doors of newspaper offices, restaurants, and post offices in Tokyo and Nagoya. As well as chocolate produced by the Fujiya company and Ezaki Glico (the gang’s first victim last March), products of Meiji Seika and Lotte were targeted for the first time. A factory-sealed $3.80 pack of Morinaga sweets specially produced to thwart the gang's extortion attempts, had been opened and poison inserted. In a St Valentine’s Day letter to the “Mainichi” newspaper, the “Monster” admonished sweettoothed Japanese lovers for their “foolishness” and advised: “Real lovers should commit suicide instead, with the help of our chocolates laced with, cyanide.” Unlike the J&Jjnson and Johnson case of poisoned Tylenol tablets in

the United States, the Japanese “Monster” has yet to kill anyone. Yet the gang has succeeded in a far more complete mass media hijack than their American counterparts. The gang’s notoriety has spawned many feeble imitations. Not just the fake Mars bar poisoning in England, but an unemployed Japanese man and his wife threatened to poison the beer of Asahi Breweries; two Japanese schoolboys who tried to “extort” $2.50 from a restaurant by poisoning the soya sauce; a copycat South Korean who was promptly arrested and confessed to Seoul police; and a 13-year-old Taiwanese boy now facing juvenile court in Taipeh for attempting a similar feat. In March. 1984. Katsuhisa Ezaki, president of the Osaka-based Ezaki Glico candy empire, was kidnapped by the gang at gunpoint from his bathtub. The gang demandipd $3.78 million ransom and 100 kilograms in gold

but did not get it. After 65 hours Ezaki “escaped,” or more likely was released. In May, the gang informed newspapers that they had placed potassium cyanide in Glico products and in a wave of panic shopowners across Japan pulled Glico sweets off the shelves.

Fortunately, Glico was targeted in summer, a time of low consumption, and the conservativelymanaged firm had built up strong reserves. The scare campaign has still dealt a shattering blow to the company’s previously solid finances.

Sales this fiscal year ending this month are expected to show a 23 per cent fall to $351 million. Pretax profits will fall 82 per cent to $B.B million according to Yoshio Miyauchi at Yamaichi Securities, the major underwriter for Ezaki Glico and Morinaga. From a January. 1984, high of $2.84, Glico’s share price now hovers between $1.94 and $2.26. The annual dividend will be cut by two to four yen. ■ Having laid waste to Ezaki Glico but apparently failing to extort any money, the '“Monster" turnfid its sights' last October to Morinaga

and wrought worse devastation. Winter was also a bitter season for candy sales. This time the gang carried out its threat and distributed cyanide-laced Morinaga bars on store shelves.

Hermetically sealed packets that cannot easily be tampered with and an aggressive policy of street sales by Morinaga employees has slightly eased the firm’s woes. Last December, the “Monster”’ threatened Fujiya, Ltd, and demanded the company scatter $76,325 in banknotes from “high rise buildings” in Tokyo to show its “sincerity.” Fujiya refused. Altogether 31 Japanese firms have refused threatening letters from the gang. It has produced a general mood of ‘“candyphobia” and the tight police security of chocolate counters in stores has tended to frighten customers away, and has taken a toll on chocolate importers. For Japanese makers alone, a Government study points out that in the last two months of 1984 the scare by the handful of extortionists has cost $102.3 million in lost production. — Copyright London Observer Service.