Chapel Hill News

Japanese candy maker to open plant in Orange County

Masao Hoshino's strawberry Hi-Chew.
Masao Hoshino's strawberry Hi-Chew.

The top-selling candy in Japan, which for the past five years has been available to U.S. consumers with a sweet tooth, will soon be produced at a facility in Mebane.

The U.S. subsidiary of Morinaga & Co. announced Tuesday that it plans to invest $48 million in a 120,000-square-foot candy plant in Orange County that is expected to create 90 jobs over three years. The company is eligible to receive hundreds of thousands of dollars in state and local incentives if it meets hiring and investment goals.

The U.S. sales growth of Hi-Chew – a fruit-flavored, chewable candy that is in many ways similar to Starburst – triggered the decision to build a plant in North America, said Masao Hoshino, CEO of Morinaga America.

Hoshino declined to provide sales figures but said that Hi-Chew sales are expected to double this year after nearly doubling in 2012. At that pace, he added, the company is on track to experience shortages unless it expands its manufacturing capacity.

Steve Brantley, director of Orange County’s economic development department, said that Morinaga officials visited Orange County about a dozen times since the beginning of last year. He added that company officials inspected sites in at least a dozen North Carolina counties.

“We’re very excited in a huge way,” he said. “Their standards are very high.”

The Mebane plant is expected to begin production in mid-2015.

Employees will be paid an average wage of $37,969, according to N.C. Department of Commerce spokesman Joshua Ellis. That’s just below Orange County’s average annual salary of $38,310, a number that includes the salaries paid by Chapel Hill employers.

“The fact is,” Brantley said, “we have a lot of people who don’t have Ph.D.s, who don’t work at Carolina and Duke.”

Building the Mebane plant is contingent on finalization of the state and local incentives.

State grants include $264,000 from the One North Carolina Fund, which are contingent on Morinaga meeting its job and investment targets. Ellis said he also anticipates that the state will provide a Community Development Block Grant of as much as $400,000 for infrastructure improvements to the site.

The Mebane plant is planned for a site facing Interstate 85-40 near the boundary between Orange County and Alamance County, near the Tanger Outlet mall. Hoshino said that Mebane’s central location vis-à-vis the rest of the United States was a decisive factor in the company’s decision, and that it also considered sites in Georgia, Oregon and Canada.

Brantley said that the successful recruitment of Morinaga is the product of the county’s decision to diversify its tax base and recruit more companies in the wake of the recession. In November 2011, Orange County voters approved a one-quarter-cent sales tax, with half of that money going to economic development each year for the next decade.

Morinaga began distributing Hi-Chew on the West Coast in 2008 and now sells it along the East Coast as well. By the end of the year the company expects the candy, which is currently imported from a manufacturing plant in Taiwan, to be available throughout the continental United States.

The company initially launched Hi-Chew in Asian grocery stores in the United States, but has been expanding into the mainstream. In the West, Hi-Chew candy is sold by retailers such as Costco, 7-Eleven and Ralph’s, a supermarket chain owned by Kroger, according to Hoshino.

Brantley said he has seen Hi-Chew candy for sale at the IT’SUGAR store at The Streets at Southpoint in Durham.

Hi-Chew contains real fruit juice and has “long-lasting flavor,” a soft texture and doesn’t stick to your teeth, Hoshino said. In the U.S. market, it’s available in six flavors: cherry, green apple, grape, mango, peach and strawberry.

Hi-Chew is the No. 1 candy in Japan, and Morinaga, which was founded in Tokyo in 1899, has the largest share of the Japanese candy market. The company sells more than 40 different products – including ice cream and cake mixes as well as candy – and boasts $1.75 billion in annual worldwide sales.