Japan’s century-old businesses facing unprecedented decline as record numbers shut down in 2026
Kadoya Sesame Mills, a venerable Japanese company recognized for its sesame oil production since 1858, is poised to transition from a publicly traded entity to a privately owned firm. This shift comes as the company faces rising raw material costs and increasing geopolitical tensions, prompting a tender offer supported by the private equity firm Integral. Kadoya, which has navigated historical challenges including world wars and economic volatility, now seeks greater control over its operations amid a rapidly changing business landscape.
Japan’s long-established businesses, including Kadoya, are encountering significant hurdles as the domestic market shrinks and labor shortages become more pronounced. Industry experts have noted a troubling trend: during the first eight months of 2026, 112 companies with a history of over a century have filed for bankruptcy, a record number according to data from Teikoku Databank. In an era marked by economic uncertainty, many century-old firms, once characterized by stable profits and robust balance sheets, are increasingly alarmed at their prospects for sustainable growth.
The post-pandemic economy has exacerbated existing challenges, with rising costs and labor shortages taking a toll on profitability. As Harumi Taguchi, a principal economist at S&P Global Market Intelligence, explains, inflation has made it more feasible for companies to pass costs onto consumers than it was during Japan’s recent deflationary period. However, many businesses struggle to transfer these increased costs fully into sales prices, particularly smaller firms with weaker sales bases.
Data point to a worrying trend in bankruptcies arising from both rising prices and labor shortages. Statistics indicate that bankruptcies linked to price hikes surged by 23.8% in the first half of 2026, while those tied to labor shortages rose by 12.4%. This landscape has seen notable examples, including Sube Shoten, a tofu manufacturer founded in 1877, which recently prepared for bankruptcy due to low profit margins exacerbated by escalating raw material costs.
Additionally, the challenge of business succession is becoming more pressing, with bankruptcy cases connected to succession issues rising by 16.9% in the same timeframe. The dynamics of ownership, influenced by a weaker yen, corporate governance reforms, and increasing scrutiny from activists, are necessitating a reevaluation of strategies among family-owned enterprises.
As Kadoya Sesame Mills embarks on this new chapter, it exemplifies a broader trend affecting many historical businesses in Japan—companies must adapt to unforeseen economic pressures while addressing succession complexities, all while striving to maintain their legacy in a transforming landscape.
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