By Suzi Fraser Dominy
Since Mr. Riichi Satake invented the first power driven rice-processing machines in 1896, the name Satake has been synonymous with rice milling in Japan. Over the years the company he founded has become known worldwide for its leading-edge rice milling technology and more recently has established its place as a leading flour milling engineer.
With the untimely death in October 2000 of Satake Corporation’s Chairman, Dr. Robert Satake, responsibility for the implementation of his vision and the running of the company has fallen to his co-chairperson and wife, Toshiko Satake, who is a granddaughter of Riichi. World Grain visited Satake’s Hiroshima headquarters and talked to Mrs. Satake about the company, its products and her plans for its future.
A FAMILY BUSINESS
Satake Corporation is a private, family business — and according to Mrs. Satake, it intends to stay that way.
"We have no plans to go public," she told WG, "as a private company we can better plan for the long term; we are not vulnerable to the current instability of world stock markets."
Sales turnover has varied at around US$600 million over the last 10 years. "Overall sales revenue has recently declined somewhat due to worldwide economic conditions but we have been able to maintain our profitability through increased sales efficiencies. It is not our objective to achieve volume at any cost — as with any successful business, we aim to achieve a balance," Mrs. Satake said.
In Japan, the company is operating without borrowings. "In the meantime, we are continually strengthening our financial situation as some subsidiaries still have some borrowed capital," she explained.
Rice and flour milling are the major activities but, said Mrs. Satake, where the company excels is in that its diversity is almost wholly within the cereal industries. "We have activities ranging from the agricultural sector right through to the manufacturing of food products, so they are all inter-related."
"Formerly our main activities operated separately but now we have greater integration, particularly in the overseas offices," Mrs. Satake explained. Cereal milling accounts for 60% of the company’s sales, color sorting 20%, engineering 15% and a further 5% for other activities in the environmental and specialist motor markets.
Domestic sales account for 60% of business and Satake has 17 branches and offices throughout Japan to provide sales and after sales services to its domestic customers. The main sales offices for western and southern Japan are at the corporate headquarters in Hiroshima, and in Tokyo for northern and eastern Japan.
The company exports to more than 140 countries; the main markets are Asia (other than Japan), where the company sells 55% of its exported equipment; Europe, North America and Oceania. The Americas account for 20% of exports, while Europe and Oceania account for 5% each. Satake has subsidiaries and offices in the U.S., Canada, U.K., Australia, China, India, Brazil and Myanmar. There are four manufacturing plants in Japan. In Hiroshima, the factory is organized into three lines for manufacturing a full rage of customized equipment for individual customers. Machines are also manufactured in Thailand and China, while color sorters are made not only in Japan and China but also in the U.S.
"Our latest office and manufacturing unit is in Brazil, to provide a base for our production, sales and after sales service for our Latin American market," Mrs. Satake said.
A PRESENCE IN CHINA
In China, Satake has a new wholly owned factory in Suzhou, near Shanghai, with expatriate management, a sales office in Beijing and a service center in Harbin in northeast China to service all milling sectors. It also has a software company in Shanghai.
"Our role in China is twofold," Mrs. Satake said. "Firstly it is to develop and produce machinery that complies with the needs of the Chinese domestic market at reasonable prices. As importantly, it is to provide them with engineering and consultation so that they can be competitive in international markets."
Mrs. Satake said per capita flour consumption has remained stable in China at around 80 kg per year over an extended period. "The market is probably mature, but the need has shifted from quantity to quality."
"Due to the local manufacture of a full range of equipment by ourselves and others, there has been a decline in imported equipment," she noted. "Trading conditions for the large state sector type mills are very tough due to their overheads, but smaller and medium scale plants are continuing to prosper."
DOMINANCE IN RICE
Satake has been well established as the dominant supplier to the Japanese post harvest rice market for some years, but plant investment has been declining due to government-led deregulation and excess capacity within the industry.
"Conventional milling systems are not particularly attractive to the market, which is increasingly looking to offer ‘something different from competitors.’ Satake has taken the initiative in providing consultation for the engineering of the most appropriate technology for these customers," Mrs. Satake said, citing as example the Hokuren Pearl Rice Complex. (See World Grain, April 2003; E-Archive #62209.)
"Our current strategy is to provide equipment and systems to satisfy the requirements of ‘healthy and tasty,’ ‘convenient and reliable’ and ‘environmentally friendly’ products.
To this end Satake has developed a new product line for rinse-free rice — rice which (requires no rinsing prior to cooking and) uses just the amount of water required for cooking — and it’s making a big impact in Japan. This latest development in rice milling technology is the New Tasty White Process (NTWP), which Mrs. Satake describes as a breakthrough in the production of rinse-free rice of enhanced quality in terms of both taste and appearance. (See "New Concepts for Milling White Rice," World Grain, April 2002; E-Archive #52931). The system removes residual bran, particularly from the aleurone layer, by means of recirculating safe and edible tapioca.
"There are already 131 industrial size NTWP systems operating in Japan, and the market will increase further when we introduce a compact version for use by the retail sector," she said. "Commercial systems are now also operating in the U.S. and China and we anticipate that demand will spread rapidly worldwide at the quality end of the market."
"In other Asian countries our name is very well known to the producers of premium grade rice products," Mrs. Satake said, noting the technology’s gentle handling of delicate rice varieties, such as Basmati and Jasmine, with much lower breakage rates. These techniques are now used for processing other cereals such as wheat and maize to similarly minimize breakage.
Outside Asia, Satake’s market breaks down into two categories: the mature market, where they maintain their market position by providing systems that create added value, and developing markets, where cost effective machines are supplied, mainly from their Chinese and Thai factories.
Mrs. Satake said there were still overseas markets where the company had limited penetration. "We intend to reinforce our international companies and offices to increase our market share there." This would be done through research and development leading to the introduction of new machinery and by cost reduction from manufacturing investments, she said. "We intend to introduce as many customers as possible to the benefits of our technology."
COMMITTED TO PERITEC
Satake entered the flour milling market in 1991 with the acquisition of Manchester, U.K.-based milling engineers, Thomas Robinson & Son Ltd. and Henry Simon Ltd. In 1995, it pioneered a totally new approach to flour milling based on the principle of debranning and endosperm hydration prior to milling, called the PeriTec system. Today the company remains committed to both PeriTec and conventional milling systems.
However, the company acknowledges that there has been some resistance to PeriTec due both to natural conservatism and to a certain amount of skepticism among traditional millers, particularly regarding high ash content and a perception that it consumes more power than conventional systems.
Countering these claims, Mrs. Satake argued that one of the merits of debranning is the ability to retain the aleurone layer and convert it to flour, thereby utilizing the nutritional mineral and enzyme components. "The aleurone minerals are inert in regard to baking and the enzymes are beneficial," she said.
"Since ash content is not an ideal measurement of flour quality, we have been interested in recent image analysis techniques. These provide a much better correlation to flour quality than the classical analyses so widely used in the past," she said, adding that conventional systems could still be supplied if customers required them.
As for power consumption, Mrs. Satake asserted that the power required for debranning could be offset by savings, such as the elimination of scouring and simplification of the subsequent milling and conveying systems. "In addition we usually have a significant gain in capacity, so that overall the specific power requirements are very similar."
The company is collaborating with research institutes and flour users to quantify the benefits and the underlying scientific reasons.
"It is notable that some of our competitors, having initially discredited the concept, are now also promoting debranning prior to milling. We believe this will assist the acceptance of PeriTec by a wider section of the market."
So far the company has received over 38 contracts worldwide since the system was launched. Fifteen of these are in Asia, 15 in Europe, 6 in the Americas and 2 in the Middle East. Mrs. Satake said the system is gaining increasing acceptance in the quality end of the pasta and bread-flour markets. "We are pleased to have had several repeat orders from such companies — including a South Asian miller who has been using PeriTec for three years — and expect to expand this trend in other regions," she said.
"In Canada, for example, Howsons has expanded its production of durum semolina on three occasions as their market share has grown as a result of the benefits of using PeriTec." Another success story for PeriTec is Warburtons Ltd., one of the U.K.’s leading independent bakers, who has achieved a step change in bread quality through the use of PeriTec flour and has seen its market share growing.
In China, Satake has been operating a joint venture mill called Maliando in Beijing on a semi-pilot-mill basis. "The direct profits generated by the mill are not significant but the effect as a reference is never too small," Mrs. Satake said. Satake has now established a further 14 PeriTec mills in China and believes there will be more.
PeriTec has also been successfully used for boosting capacity from existing lines and Satake is encountering increasing interest from other markets, such as Japan and China to meet specific local requirements for ‘new’ flour. "We have a vision that our success will be recognized in Japan and the U.S. and that success in pasta will lead to applications for the Asian noodle industry," Mrs. Satake said.
Satake sees PeriTec as a system for the 21st century and is finding more applications as experience is gained. "Debranning is a core technology of the company as a result of our long-standing experience in the milling of rice," Mrs. Satake explained. "Since we conceived the vertical machine, a whole family of derivatives has been developed, to a point where their performance is unrivalled. "The cross fertilization of experience and ideas over the last 10 years is probably unique in milling engineering and in bringing its rewards: VTA for rice; VCW for wheat debranning; VBF for maize degerming and RMDB for sake."
Satake also developed other equipment versions tailored for use in sectors such as lentil dehulling and barley abrading for malting. A version of the VTA is also widely used for processing wheat and barley for the brewing industry.
"Satake continues to refine the VCW debranning machine and its associated equipment as it builds up data. "No one else combines the two functions of abrasion (for primary debranning by ‘grinding’ the kernel surface) and friction (for grain upon grain peeling of the residual bran tissues and polishing of the debranned kernels) within one vertically configured machine."
MAIZE AND MORE
As part of its established strategy, Satake is also developing its maize milling business — with the objective of becoming a total food engineering company, dealing with the world’s three major cereals: rice, wheat and maize.
"Once again we have applied our core processing technology to a traditional process," Mrs. Satake said.
Many trials have been carried out in Hiroshima and Houston to develop a family of processes for different applications, such as white maize in Southern Africa, for traditional foods and in Latin America, for arepas and yellow maize and for cornflakes and ethanol production.
"We have sold about 80 VBF systems in less than 2 years to process more than three million tonnes of maize per year."
TECHNOLOGY FOR TOMORROW
Satake is heavily invested in R&D. Its engineering department at Hiroshima is responsible for the development of new machines and systems and it has pilot milling facilities in Houston and Bredbury, which allow the company to work together with customers in those regions.
Among recent introductions is the RMGS Color Sorter, which uses cameras operating in non-visible near infra-red (NIR) wavelengths to remove contaminants that may not even be visible by the human eye, such as glass.
SHD Hydrator tempering system is another Satake development for processing systems.
Due to be launched soon is the portable rapid grain analyzer, RGQI 10A, for the measurement of brown grain. The machine which is light enough to be carried over the shoulder by an operator, detects damaged grain and provides the answer via an LED display and a print out.
Satake is also continually seeking to make improvements to its range of ‘core’ machines.
In addition, Satake is making efforts to expand its business into upstream and downstream processes for flour and rice milling, with the objective of being able to engineer integrated food complexes.
The company also supports activities at the University of Manchester Institute for Science and Technology (UMIST), at Hiroshima University and other related institutions, such as Louisiana State University. "All these institutions retain their academic independence. Our support is now more directed at sponsorship of specific research projects that will ultimately provide benefits not only to our company but also to the industries we serve," said Mrs. Satake.
"At UMIST we are particularly interested in the work they are doing in primary and secondary processes of cereals and the fundamental scientific studies on PeriTec flour." "In general, the emphasis of the Centre has moved from teaching short courses and Masters degree modules towards doctorate level research."
"Sensor technology is constantly improving and we must recognize opportunities for its application," Mrs. Satake said. "We have been at the forefront of using high resolution sensors, neurofuzzy, AI and image processing for products such as dryers, the taste analyzer and quality measurement. We are going into the world of nano technology for analysis of pesticide residues and bacteria count and we have recently started services to determine rice varieties by DNA analysis."
"In the long term, we anticipate being able to monitor the operating condition of equipment in a mill from here in Hiroshima," she said. "Remote diagnosis is already well established."
"For process control, one of the main objections to the use of electronics has been the rapid obsolescence of hardware. We need to be careful to specify industry standard hardware whenever possible to safeguard future support for our customers."
One area where Mrs. Satake sees major changes is in wheat cleaning systems by the adoption of color sorting techniques. These are already used in rice mills for the removal of defective, immature and weather damaged kernels and impurities, such as stones and glass.
Safety is another important area and the requirement for HACCP and inspection impacts on the design of plant and processes.
In further support of the cereal industry, Mrs. Satake said the company was anxious to help stimulate increased grain consumption by helping raise the awareness of the many merits of cereal foods and also by supporting the "Novel Uses For Cereals" program at UMIST, noting the example of probiotic cereal-based health foods. "We also work with several starch producers who are major users of wheat for their downstream processes," she added.
Satake’s work in the exploitation of co-products from rice that can be made available through the NTWP system has application for other grains. "Wheat and maize co-products, especially those from debranning, have potential that has not yet been realized," Mrs. Satake said. "Different layers, for example, have widely varying levels of fiber and phytate, which effects digestibility. This is another area where UMIST may contribute expertise."
Principle features of the VBF maize degermer with capacities between 2 to 7 tonnes per hour.
During a recent visit to Satake Corporation’s headquarters in Hiroshima, the company’s chairperson, Mrs. Toshiko Satake, shared her views on the global flour milling industry.
"The current global situation of the milling industry is very interesting," she said. "Most of the mature markets, such as Europe, North America and Australasia, are continuing to experience great changes of ownership and therefore structure. Although these markets might seem to be saturated, those changes lead to rationalization and the need for investment in plant technology for higher quality products.
"In the developing countries, especially in the Middle East, new mills continue to be built, but these have tended to be conventional in design and equipment.
"There are major differences in market structures throughout the world. In regulated markets, prices of cereals and products are controlled, and flour specification, particularly ash content, is laid down by statute. In deregulated markets, such as the U.S. and Canada, flour is seen more as a commodity (and ash is also used as a quality criterion for setting price levels). With vertically integrated markets, such as in the U.K., a large proportion of the flour milled is used in bakeries owned by the same organization. Some countries, such as South Africa, are in the process of deregulation.
"All of these markets require careful analysis and we constantly need to build up our understanding of their different needs."
Mrs. Satake said she saw India and China as holding huge potential still, not just because of their large wheat consumption but also because of the shift towards higher quality products as living standards improved.