Apologizing for a price increase after 25 years

Imagine trying to read your customer’s mind, only to realize it’s less like a chess match and more like trying to guess why your cat is staring blankly at a wall. It’s the same thing for many corporate executives and entrepreneurs. Deciphering customer behavior is the ultimate corporate migraine.

However, when inflation rears its ugly head and suppliers jack up prices, businesses just pass the buck, aggressively slapping a higher price tag on everything from toilet paper to groceries and hoping you won’t notice.

But what happens when a company decides not to play the villain in the consumer’s world? Enter the ultimate masterclass in corporate guilt from 2016. Instead of quietly raising prices, Japanese ice cream manufacturer Akagi Nyugyo took to national television for a full 60 seconds.

The mission? To deeply apologize for raising the price of their popular GariGari-kun ice pops from 60 yen to 70 yen. For Akagi, it was a devastating, earth-shattering hike of about nine US cents. It was the product’s first price increase in 25 years, and the company treated it like a national tragedy.

The commercial featured top executives and employees standing shoulder-to-shoulder, solemnly bowing in front of the company’s headquarters while a somber song played, explaining that rising costs made the increase completely unavoidable.

The apology wasn’t a parody; it was a real commercial aired on national television. The ad is on YouTube.

While a historic and deeply cultural display of corporate accountability, it remains an incredibly rare practice everywhere, even in Japan.

Examples

The major point is that Akagi’s legendary commercial is seen as an excellent example in operations management and how a company’s continued waste reduction program benefits the customers.

In my research, I discovered the following examples of Kaizen and Lean Thinking – solving problems with minimal investment that gives maximum results:

1. Volume and factory automation. Akagi shifted from a premium-margin model to a massive-volume model. By the 2010s, the company was churning out over 400 to 500 million ice bars annually.

They upgraded their flagship Fukaya factory into a high-precision, automated powerhouse. By maximizing the throughput of their molding, freezing and packaging lines, they drastically reduced the per-unit labor cost.

2. Structural waste elimination. The company purchased the humble wooden popsicle sticks in bulk quantities to freeze the unit price. Also, the thickness and material composition of the plastic wrapper were re-engineered to be cost-effective as possible without compromising food safety.

The physical dimensions of their shipping cartons were highly optimized. Boxes were designed to leave zero wasted spatial footprint in delivery trucks, maximizing the number of ice bars shipped per liter of fuel used.

3. Product re-engineering. A big part of Akagi’s profitability lies in its clever dual-structure design, which inherently controls ingredient costs. The bar features a hard, thin outer shell of flavored ice that encases a core of dense, crunchy shaved ice.

Water is the primary ingredient. By masterfully perfect-freezing water mixed with localized syrups, the company limited its exposure to highly volatile commodity ingredients like dairy and fresh cream.

4. Marketing strategy. Traditional advertising eats up massive corporate budgets. Akagi bypassed heavy ad spending by making the product its own marketing campaign through wacky, buzz-worthy limited-edition flavors.

They routinely launched polarizing variants like Corn Potage (sweet corn soup), Spaghetti Napolitan and Potato Stew. The Corn Potage flavor was so wildly popular that it sold out in days, generating massive free publicity.

The aftermath

Akagi’s radical transparency and cultural humility completely flipped the typical consumer backlash. Instead of being angry about the 2016 price hike, Japanese consumers flooded social media with comments like, “Thank you for holding on for 25 years” and “I would gladly pay 100 yen!”

In the succeeding years, mounting macroeconomic pressures forced Akagi to reluctantly raise the price again to 80 yen in March 2024 — triggering yet another public campaign where they respectfully said they “bowed even deeper” this time.

Akagi proved that if you must raise prices by nine cents after 25 years, just skip the sneaky corporate memo. Instead, gather your entire executive team, queue the somber music and bow so deeply to fix the supply chain.

After all, nothing says “operational excellence” like showing corporate guilt on national TV.

Rey Elbo is a quality and productivity activist. Send your comment, question, or story to [email protected] or via Facebook, LinkedIn, X or https://reyelbo.com