TED Case Studies
Number 762, 2004
by Risa Ciccone

 

©1996-2004 AJINOMOTO CO.,INC. All rights reserved.

Pork-Enzyme

©1996-2004 AJINOMOTO CO.,INC. All rights reserved.

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©1996-2004 AJINOMOTO CO.,INC. All rights reserved.

I. Identification

1. The Issue

 

In 2000, Indonesia moved quickly to contain a scandal unleashed by the discovery that pork products were used in the production of one of the country's most popular flavor enhancers; the scandal involving the rich and powerful Japanese company and its very popular product the AJINOMOTO. The product used a taste enhancer which called Monosodium Glutamate (MSG) that is allegedly tainted with pork enzymes. The news of the discovery caused massive protests in Jakarta and other Indonesian cities. This popular taste enhancer had been recalled and taken off the shelves across the country. Muslims do not consume pork or any of its derivatives, as it is considered forbidden by Islamic law. About 90% of Indonesia's 210 million people are Muslims who follow Islamic dietary laws that prohibit the consumption of pork.

2. Description

1) What is AJINOMOTO?

The original seasoning AJINOMOTO was introduced into the market more than 90 years ago. In 1908, Professor Kikunae Ikeda, who specialized in physical science at the University of Tokyo at the time, discovered the secret behind the great taste of yudofu (bean curd boiled with kelp) when he identified glutamic acid found in the "broth" made from kombu (a type of seaweed) as the source of this delicious taste. Professor Ikeda subsequently found that glutamate had a distinctive taste different from that of sweet, sour, bitter and salty, which he named "umami." Given his concern for improving the nutritional balance of Japanese people, Professor Ikeda had a strong desire to help improve Japanese people's physiques as well as contribute to enriched dietary habits through the appetite-enhancing “umami” taste of glutamic acid. (1)

As a means of promoting the widespread use of AJINOMOTO, public relations activities in the early days of the Company included the adoption of a new logotype depicting a woman wearing an apron, poster advertisements in commuter trains and newspaper advertisements. Concurrent efforts were also directed toward establishing a domestic sales agent network and expanding sales into Southeast Asian markets. As a result of these activities supported over several years following its initial launch, AJINOMOTO gradually became popular.

 Since then, we have continued efforts to cultivate new markets, and today, AJINOMOTO has become a major product sold in more than 100 countries worldwide. Additionally, the collective achievements realized through research and production technologies related to AJINOMOTO have culminated into Ajinomoto's innovative amino acids technology. These developments have supported efforts to promote business diversification, and ultimately contribute to significant advances in Food and Health for people throughout the world.

AJINOMOTO advertising in the U.S.A.

Original business location established in Kyobashi-ku, Tokyo (1909)

Street corner promotion
of AJINOMOTO by a chindon-ya publicity band

2) What is the key raw material?

Appetite-enhancing “umani” was made from a variety of agricultural products around the world. In Asia, sugarcane is the basic ingredient of appetite-enhancing “umani,” in the US, corn is the main and in some parts of world, wheat grains are ingredient essential for produce the taste enhancer.

3) The foods with AJINOMOTO

AJINOTO is appetite-enhancing “umami” taste of glutamic acid such as “umami” from kombu, bonito and shiitake (a kind of mushroom). It is said that Japanese love these three tastes so much just like the American like butter or sugar.

Some never use AJINOMOTO because they claim that is an artificial flavor and tastes something like synthetic, the others use AJINOMOTO for every meal. The latter people add the seasoning to ANY kinds of foods to make them taste better. They can add it to cook anything by boiling, baking, flying, steaming, etc. They, in deed, add AJINOMOTO to not only Japanese food but also Chinese, French, Italian, Mexican, etc.

Although the following dishes, Japanese, Chinese, French, Italian, Mexican and Vietnamese foods, are included AJINOMOTO, on the exterior we cannot identify whether it is added or not. Can you imagine what they taste like? Can you feel the taste of AJINOMOTO?

3. Related Cases

  1. Halal: The Islamic Regulations on the Import of Meat; Beef
  2. Indbeef: India's beef and meat exports to rest of the world
  3. Japrice: Japan Rice Trade
  4. Jpshrimp: Japan and Shrimp
  5. Madcow: Mad Cow Disease
  6. Orang: Indonesian Orangutan Extinction
  7. Pig-Virus: Outbreak of Japanese Encephalitis (Pig-Virus) in Malaysia
  8. Pork: Pork Imports in Korea (PORK)
  9. Saudpork: Pork Imports and Saudi Arabia
  10. Spice: Arab Spice Trade and Spread of Islam
  11. Tilapia: Tilapia and the Environment

The US fast food giant MacDonald's had a similar case with some beef showing up in vegetarian French Fries.

Since early 1990s, the MacDonald's was said to have used its tallow-flavored French fries like beef. In June 2002, the fast food giant was sued by the US-based group of vegetarians and Hindus. Then, a judge has certified a $10 million settlement between McDonald's Corp. and a group of plaintiff vegetarians and Hindus plaintiffs that requires the restaurant chain to publicly apologize for falsely claiming its tallow-flavored French fries had no meat products. The court approval means that McDonald's will pay the money to the class-action litigants and offer both an apology and its food ingredients. The specific distribution of the cash remains undecided by the court.

     

4. Author and Date

Risa Ciccone (December, 2004)

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II. Legal Cluster

The Japanese company Ajinomoto was forced to withdraw from the market a condiment that is normally found in every household in Indonesia because the Indonesian Council of Ulemas (Council of Religious Experts) ruled that it was Haram, forbidden to Muslims, since the condiment concerned was made with an enzyme obtained from pigs.

1) What is defined as pork in Islam?

Islam began approximately 1,400 years ago in Arabia. Its primary scriptures, called the Koran, are revelation from God given to the Prophet Muhammad.

Dietary laws for Muslims are very strict and clear.  Muslims are forbidden from consuming pork, alcohol, blood, meat dedicated to false gods, etc. When eating meat, Muslims may only eat from meat that has been slaughtered in the name of God, and meets stringent dietary requirements. Such meat is called pure, or Haral . Islamic law prohibits a Muslim from eating pork, monkey, dog, cat, any carnivores, and several other types of animal, as these animals are Haram (forbidden).

In Indonesia, almost all food products are described the mark of Haral in both English and Arabic alphabet .

2) What is Halal and Haram?

Halal is an Arabic word meaning permitted or lawful. The opposite word of Halal is Haram, that means prohibited or unlawful. The both words enable to apply to all faces of Islamic life. The Koran has numerous injunctions, instructing Muslims to choose and consume good and wholesome foodstuffs.

While many food products are clearly Halal or clearly Haram, others are often referred to as Mashbooh, which means questionable. Foods considered Haram are; (2)

  • Swine / pork and its by-products
  • Animals improperly slaughtered or dead before slaughte ring
  • Alcohol and intoxicants
  • Carnivorous animals, birds of prey and land animals without external ears
  • Blood and blood by-products
  • Foods containing any of the above products

 

Foods containing ingredients such as gelatine, enzymes, emulsifiers, etc. are doubtful and questionable (Mashbooh) because the origin of these ingredients is not clearly identified with the symbol.

An MSG plant got a harsh warning with possibility to be closed down since it changed one ingredient in its production process, i.e. enzyme used in mollases fermenattion, since it is produced from porcine in order to cut production cost. Thus, I believe that the Ajinomoto is put not as Halal, but put as doubtful and questionable (Mashbooh).

 

Official Name: Republic of Indonesia
Religions: Islam 87%, Protestant 6%, Catholic 3%, Other 3%

5. Discourse and Status:

Agreement and Completed case

Japanese food seasoning giant Ajinomoto apologized to Indonesia in several major newspapers over the use of pig enzymes in its flavour enhancer product.

The apology comes even though President Abdurrahman Wahid had said scientific evidence showed Ajinomoto's MSG products were safe to be consumed by Muslims, and called on people not to overreact. He also had been reported as saying that PT Ajinomoto Indonesia's contentious seasoning product contained no substances extracted from pigs, and was therefore quite "halal", or appropriate for consumption by Muslims. (3) But the Indonesian Council of Ulemas (MUI), or Muslim religious leaders, remains steadfast in its view that the product should not be consumed by Muslims because a pork extract was used to cultivate the bacteria that produces the enzymes for MSG production.

6. Forum and Scope:

Forum: Indonesia
Scope: Bilateral

7. Decision Breadth:

Two Countries: Indonesia and Japan

8. Legal Standing:

Law (scripture, called the Koran)


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III. Geographic Clusters

9. Geographic Locations

  1. Geographic Domain: Asia
  2. Geographic Site: South Asia
  3. Geographic Impact: Indonesia

10. Sub-National Factors:

No

11. Type of Habitat:

Tropical

Indonesia lies between the mainland of South-East Asia and Australia in the Indian and Pacific oceans. It is the world’s largest archipelago state. Indonesia is made up of five main islands – Sumatra, Java, Sulawesi, Kalimantan, and Irian Jaya – and 30 smaller archipelagos. In total, the Indonesian archipelago consists of about 17,500 islands; 6000 of these are inhabited and stretch over 3000 miles, most lying in a volcanic belt with more than 300 volcanoes, the great majority of which are extinct. The landscape varies from island to island, ranging from high mountains and plateaux to coastal lowlands and alluvial belts.

 

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IV. Trade Clusters

12. Type of Measure:

    Import Ban

13. Direct v. Indirect Impacts

Direct

In Indonesia, imported food and drink products tend to deviate from Government Regulation No. 69/1999, especially as their number in the market place is increasing. An increasing number of imported products in the market, especially in modern supermarkets, do not have valid and proper labeling since the regulation on labeling came into effect. The main violation was that the products did not attach labels in Indonesian. If there is no action taken against this violation, it will lead to unhealthy rivalry and will complicate business and commercial Law.

Most food and beverage products violating the code are from China and Japan with the original language and writing which Indonesian consumers do not understand. However, based on the labeling regulation, all products sold in Indonesia should display the label in Indonesian.

A regulation on imported food products stipulates that importers should report details of the product, its certificate and product safety to the Directorate General of Food and Drug Supervision. After approval, the products can enter Indonesia and the Regional POM (Purchase Order Management) will supervise their marketing. It would be possible to smuggle in the products without reporting them to the Directorate General. However, its officials would immediately recognize the smuggled products because they would not have any kinds of ML code. The ML code applies to imported food products while the MD applies to domestic food products. The government would issue a directive on the regulation to encourage the importers to do better business.

It is expected that strict control of imported and domestic food and drink products will save society from deception, breach of religious law and health threats

 

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: Yes, Spice

b. Indirectly Related to Product: Yes, Pork

c. Not Related to Product: No

d. Related to Process: Yes, Culture

15. Trade Product Identification:

Spice; AJINOMOTO

16. Economic Data:

1) History and Diverstification of Food Products in Indonesia

Year  
1969 PT Ajinomoto Indonesia established.
1970 PT Ajinomoto Indonesia, Mojokerto Factory commences operations.
1970

AJINOMOTO ("umami" seasoning) launched.

1978 PT Janur Gading established.
1986 AJI-PLUS (seasoning mix) launched.
1987 PT Ajimex International established.
1989 PT Ajimex International, Mojokerto Factory commences operations.
1989 MASAKO (chiken and beef flavor sesoning mixes) launched.
1993 PT Ajinomoto Sales Indonesia begins operations.
1994 PT Ajinomoto Calpis Beverage Indonesia established.
1995 CALPICO launched.
1996 CALPICO SODA launched.
1998 CALPICO WATER (bottle) launched.
1999 SAJIKU (seasoning mixes) launched.
2000 BIRDY COFFEE launched.

AJINOMOTO AJI-PLUS

Masako

Calpico Soda Caplico Water

Sajuku Birdy Coffee

(source: "Business Outline of Ajinomo Group," Global Network, AJINOMOTO Co., Inc. )

2) The Damage

AJINOMOTO CO. INC. the Japanese seasoning giant suffered serious damage to its corporate image because of Ajinomoto Haram (Islamically forbidden) issue in 2001. The withdrawal of AJINOMOTO continued across the country, Indonesia. According to INDONESIA-NEWS, JKTP, 3,000 tons of the products are being recalled. It was also effecting the company’s other taste enhancers like MASAKO. At the same time, 20.4 tons of Ajinomoto and 1.8 tons of MASAKO had already been withdrawn from the market. The INDONESIA-NEWS, JKTP also says some 100 tons of AJINOMOTO were sent to North Sumatra. The Ajinomoto Co., Inc. had allocated some 5 million Rupiah for the recall including refunds. Some 60.2 tons of AJINOMOTO from central Sulawesi were also being shipped back to East Java the product’s factory is located. Most of AJINIMOTO were collected from provincial distributor PT Tompotila Raya and the rest from 234 shops and kiosks across Palu. (4)

3) No Damage?

However, the Ajinomoto Co., Inc. accounts for about one third of the global MSG market. The Indonesian sales were a minor segment. Its business performance is booming rather than experiencing rapid declines. The Nikkei Business provides the fact; (5)

Year
Amout of Sales
business profit
 
(unit; billion Yen)
(unit; billion Yen)
1999
76
62
2000
78
63.5
2001
80
66
2002
90
68.5

The data says that the Ajinomoto Co., Inc. has not left serious aftereffects on the Haral issue in 2001. Instead of the badly legacy of the case, the company’s sales have been growing. The President and Chief Executive Officer (CEO), Kunio Egashira mentions that we sometimes can see children in Indonesia shout “AJINOMOTO” as soon as they find out Japanese. That is, Ajinomoto is a sort of synonymous with “well-liked” Japanese. Though the Haral issue has led to a 10% decrease in sales of the “umami” seasoning in Indonesia, the Ajinomoto Co., Inc. are currently promoting, at the same time as the President said, “we (the Ajinomoto Co., Inc.) are reinforcing our capabilities to achieve and maintain a strong number one position in our markets.”

17. Impact of Trade Restriction:

High Impact

Japan is a major trading partner and investor in Indonesia.

18. Industry Sector:

Food; Spice

19. Exporters and Importers

Japan and many Asian Countries


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V. Environment Clusters

20. Environmental Problem Type:

Culture

21. Name, Type, and Diversity of Species:

NA

22. Resource Impact and Effect:

Low and Technology

23. Urgency and Lifetime:

Low and 5-10 years

24. Substitutes:

Not applicable

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VI. Other Clusters

25. Culture:

Yes

26. Trans-Boundary Issues:

Yes

The Ajinomoto case has attracted nationwide attention in  Japan, not only from major media organizations, but also from politicians and the business community. There also seems to be growing concern here that the case could trigger anti-Japanese sentiment, not only in Indonesia but also in other predominantly Islamic countries.

27. Rights:

Yes

See Legal Clusters.

28. Relevant Literature

(1) Agriculture and Agri-Food Canada , Halal Food Products Market Report , 2002 , January 1, [ http://atn-riae.agr.ca/africa/e3281.htm#2.2%20What%20is%20Halal?]

(2) AJINOMOTO JAPAN [http://www.ajinomoto.co.jp/]

(3) Asia Times, January 11, 2001 [http://www.atimes.com/se-asia/CA11Ae01.html]

(4) Gus Dur, "Ajinomoto Is 'Halal',"INDONESIA-NEWS, JKTP, January 09, 2001 [http://www.hamline.edu/apakabar/basisdata/2001/01/09/0035.html]

(5) The Nikkei Business , 2002, July 1, pp. 58-63. [http://nb.nikkeibp.co.jp/nb/nbshare/news_o/8.pdf]

 

 

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©Risa Ciccone 12/15/04

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