Loving Your Boss on Valentine's Day Lifts Japan's Candy Makers

For 25-year-old Tokyo office worker Ryoko Ejiri, Valentine’s Day is about boxes of heart-shaped chocolates. She’s not getting them from admirers, she has to buy them for her bosses.

“I’m spending more on chocolates this year than I’ve ever done in my life,” said Ejiri, who stood in line for an hour at Isetan department store to buy the confectionery for her four managers. “I’m offering them gifts to show thanks.”

On Valentine’s Day in Japan, women buy chocolates for male coworkers rather than husbands and lovers, a tradition called “giri choco,” or “obligation chocolate.” With Feb. 14 falling on a weekday for the first time in three years, analysts say that’s a boon for candy makers like Meiji Holdings Ltd., Morinaga & Co., and Morozoff Ltd.

Valentine’s Day-related revenue will rise to a three-year high of about 40 billion yen ($485 million), according to Toshihiro Nagahama, chief economist at Dai-Ichi Life Research Institute in Tokyo.

“Demand varies greatly depending on whether Valentine’s Day is a day off from work or not,” Nagahama said in an interview.

In Tokyo’s Shinjuku district at the Isetan department store, a unit of Tokyo-based Isetan Mitsukoshi Holdings Ltd., Valentine’s Day demand accounts for about 20 percent of annual revenue from chocolates, said Nao Ueno, who handles food and drinks purchasing for the Shinjuku branch and five others.

“Valentine’s Day being on a weekday is having a positive influence,” Ueno said. “We expect this year’s sales will be higher than in the past.”

Cocoa Prices

The office gift-giving may help chocolate makers temper the effect of soaring cocoa prices. Political unrest disrupted supplies of the chocolate ingredient from Ivory Coast, the world’s largest producer, and may drive prices of cocoa to as high as $3,720 a metric ton, a Bloomberg survey of six analysts showed last month. That would be the highest since January 1979.

“We expect chocolate sales to increase,” said Yuta Fukasawa, a spokeswoman in Japan for Vevey, Switzerland-based Nestle SA, the maker of Kit Kat candy bars. “We haven’t decided to raise the price of chocolates. It seems difficult to increase the price while Japan faces deflation.”

Wages in Japan fell for the first time in 10 months in December, when retail sales unexpectedly slumped 2 percent. A declining willingness to buy durable goods dragged down consumer confidence to a 10-month low in December and household spending fell 3.3 percent, the biggest slide since February 2009.

Still, Mars Inc., maker of M&Ms and Snickers bars, may follow if major chocolate makers raise their prices, said Takako Watanabe, a spokeswoman in Japan for the Mclean, Virginia-based company.

Valentine’s Chart

Investors who make decisions based on historical patterns may also take heart from Valentine’s Day this year, since Japan’s Topix stocks index has risen in 11 of the past 14 years that the celebration has fallen on a weekday. The Topix gained 1.3 percent today, the highest since April 30.

“If the custom influences people’s minds, it may also influence stock moves,” said Takaaki Yoshino at Daiwa Securities Capital Markets Co. Yoshino has been ranked Japan’s No. 1 quantitative analyst for the past five years by Institutional Investor magazine.

Meiji Holdings has risen 4 percent this year on the Tokyo stock exchange, compared with a gain of 6.7 percent for the Topix. Morinaga has climbed 5.2 percent and Morozoff has slid 1.8 percent.

Higher Consumption

Japanese Valentine’s Day sales of chocolates have jumped from about 27 billion yen in 2000 to 37 billion yen in 2010, according to Nagahama. The country ranks outside the top-20 worldwide in terms of consumption per person, according to the latest available statistics from industry group Caobisco.

“Many office workers have stopped by to buy chocolates for colleagues,” Chika Takada, an employee at Godiva Japan Inc.’s shop in central Tokyo, said today. “They usually spend about 3,000 yen for a box of chocolates for their bosses.”

Chocolate arrived in Japan in 1797 and became popular around 1925, according to the Chocolate & Cocoa Association of Japan, an industry lobby. The practice of women buying chocolates for men began around 1950, according to the group.

Giving out of duty under “giri choco” has expanded to “sewa choco,” where women give chocolates to men they respect, and to “tomo choco,” where they give chocolates to women friends. Men traditionally offer gifts to women on March 14, known as White Day, which this year also falls on a weekday.

“On Valentine’s Day, I expect many people to start giving chocolates to colleagues,” said Akemi Hayashibara, 26, another Tokyo office worker. “I made and gave chocolates to 15 male colleagues. It took me three hours to make them. The reaction from them was really good. I enjoyed Valentine’s Day.”

To contact the reporter on this story: Takako Iwatani in Tokyo at tiwatani@bloomberg.net; Kazuyo Sawa in Tokyo at ksawa3@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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