Yakult Honsha, a Japanese maker of yoghurt-like drinks, plans to start output in the United States by 2012 to meet growing demand, the head of the company's overseas business said on Thursday.

Yakult also expects its business in China to remain profitable despite costs of expanding in the fast-growing economy, Yoshihiro Kawabata, senior managing director in charge of international operations, told Reuters in an interview.

"We are planning to expand our business in the United States, starting sales of our products on the East Coast, in the north and in other areas in the near future," Kawabata said. Yakult's U.S. business has been limited mainly to the West Coast.

Currently it imports products to the United States from plants in Mexico, but Kawabata said it plans to build a U.S. factory that will likely begin production in 2012. He said the location is undecided. Yakult's products are currently sold by all major U.S. retail chains, including Wal-Mart and Safeway, Kawabata said.

The firm, one-fifth owned by French food group Danone, was one of the earliest Japanese food companies to go abroad, starting with Taiwan in the 1960s. Outside of Japan, it sells about 20 million bottles of its sweet-tasting lactic acid drink every day, with Mexico and Brazil among the largest of its more than 30 overseas markets. The company is aiming to cover 45 countries in the future, he said.

In Japan and some other markets it relies on direct sales by thousands of "Yakult Ladies", who sell the drinks door-to-door and in office buildings. For the year to March 31 the company has forecast an operating profit of 17.5 billion yen ($191 million), up 4.5 percent from the previous year. It expects revenues of 288 billion yen, a 1.9 percent decline. It has also said its overseas operations will likely be dented by unfavourable currency rates, including a weaker Mexican peso versus the yen.

A stronger yen is a negative for Japanese firms that do business abroad, as it eats into the value of overseas earnings. But Kawabata said currencies movements have been more favourable than expected, and overseas businesses have been showing solid growth.


China is rapidly becoming an important market for many Japanese food makers, which increasingly target the country's growing number of affluent consumers. Yakult has also seen strong growth in China since it began operating there in 2002. Daily sales volume jumped 44 percent in in January-June 2009 from the same period a year earlier.

The company, which is planning to build a third factory in mainland China, has said its business in China is likely to post its first profit in the year to March, with an operating profit of about 1 billion yen.

The Chinese business has now reached the point where profits from existing operations will more than offset expansions costs, Kawabata said. Yakult is also considering expanding production capacity in other fast-growing Asian markets such as Indonesia and the Philippines, and is eyeing the Middle East, Kawabata said. ($1=91.56 Yen) (Guardian)