Japan’s processed food industry has been steadily developing alongside the expansion in dual-income households and lifestyle shifts requiring quick and easy meal preparation. Furthermore, considering that more people are eating at home as a result of the widening adoption of telework and other factors, we think processed foods are gaining value for their longer storage life, simplicity and convenience, leading to higher demand.

While signs of a return to pre-pandemic levels are evident, such as the recovery of dining out demand, we project that demand for processed foods will remain robust as lifestyle changes during COVID-19 continue to be adopted.

On the other hand, we believe it is necessary to pay attention to the following factors: trends in distribution channels, such as the expansion of private brand products by retailers and the restructuring of the wholesale industry; rising labor and logistics costs due to labor shortages; and fluctuations in raw material prices due to international market conditions and exchange rate fluctuations.

While our sales revenue has remained flat, the processed food category, which is our main business, has been showing a long-term growth trend. Adjusted operating profit has been stable at a certain level, except for fiscal 2020, which was affected by the COVID-19 pandemic. This is due to factors such as improved product mix and cost reductions stemming from the establishment of an optimal production system. However, in recent years, the rising labor and logistics costs due to labor shortages and impacts from international market prices and exchange rate fluctuations on raw material costs have been seen, and we believe it is necessary to continue to monitor the situation closely.

Net sales for fiscal 2023 were roughly flat year on year. While the chilled and ambient food businesses saw sales growth in foodservice products due to price revisions and the recovery of demand from the eating-out sector, this was offset by the decline in sales revenue from the bakery business transfer.

Adjusted operating profit grew by 95.2% year on year despite a steep rise in the costs of raw materials and ingredients, owing to the positive effect of price revisions in frozen and ambient foods and sales growth for industry-use products following the recovery of restaurant-meal demand.

Revenue and adjusted operating profit(JPY BN)

The processed food business defines its role as complementing the JT Group’s profit growth. To fulfill that role it has the following basic strategy.

• Further expand sales of core products that incorporate our proprietary technologies, and strengthen our capacity to develop high-value-added products to respond to changing consumer preferences.
• Implement price adjustments in response to the effects of rising costs for raw materials, ingredients and logistics, and continue efforts to improve productivity and reduce costs.
• Accelerate initiatives for business growth with a long-term view.

Our processed food business focuses on frozen and ambient foods such as frozen udon, packaged rice, and okonomiyaki, as well as seasonings such as yeast extract and oyster sauce.

We aim to address social issues related to food together with our stakeholders and create fulfilling moments with food.

We promote sustainability initiatives based on the JT Group Materiality, which identifies key issues for contributing to the creation of sustainable nature and society, and the JT Group Sustainability Targets set based on the materiality.

Specifically, we contribute to food inclusion, meaning reducing any sense of restriction among people with any dietary need or preference, reducing the environmental impact of our products and production processes, and promoting food safety, a core value in our effort to achieve our business Purpose.

Including these initiatives, below are our priorities for the processed food business.

Materiality		Target items	Targets
		Food inclusion	We will be aware of the diversifying values and interests of our consumers. Most of all so that our consumers can enjoy delicious food, we will not only exclude certain raw materials, but also develop and provide high-value-added products, such as allergy-friendly products, products that do not use ingredients derived from animals, and products that are health-conscious and satisfy other preferences.
		Emissions reduction	We will promote energy-saving initiatives and introduce renewable energy to contribute to the Group’s emissions reduction targets* and to improve our impact on the environment. * Scope 1 & 2: 47% reduction, Scope 3 Category 1: 28% reduction, both against a 2019 baseline year, by 2030
		Promoting the use of eco-friendly packaging materials	We will reduce packaging weight and utilize renewable plant-based resources to reduce the environmental impact of our products.
		Waste reduction and recycling	We will pursue waste reduction to contribute to a circular society and will aim to recycle 95% of all waste from our Japanese domestic sites (excluding waste heat recovery).
		Protecting water	We will pursue efficient water use and wastewater quality management to preserve water stewardship as a member of the local community.
		Diversity, equity & inclusion	We will promote organizational building for our diverse human resources to thrive and take active roles. In this context, we will work to empower women, with a view to contributing to the JT Group’s target for women in leadership.
		Health and safety	We will aim for injury rates to be below 0.63 by 2030, with a view to achieving zero workplace injuries.
		Sustainable supply chain	Through the JT Group Supplier Code of Conduct and supplier questionnaires, we will work jointly with, share our values and communicate closely with suppliers to realize a sustainable supply chain.
		Safe, secure and high-quality products	We will promote food safety management in compliance with global food safety standards to develop the highest level of food safety. While working on enforcing food safety and quality assurance, we will also enhance the way we communicate with consumers to provide them with safe, secure and high-quality products.

For progress of our sustainability initiatives in the processed food business up to 2023, refer to KPI progress.

Case study 1

BEYOND FREE line of foods, offering high-value-added products

Materiality

Value creation that exceeds consumer expectations

Target items

Contribute to food inclusion

The processed food business stays close to diversifying consumer needs, values and interests, and develops and markets high-value-added foods. As part of this effort, TableMark Co., Ltd. offers through its online shop the BEYOND FREE line of foods, which boasts authentic flavors without using certain food items and ingredients.

Since its inception, we have been expanding its menu ranging from staple foods like rice and noodles to side dishes and desserts that add color to your table.

We will continue to listen to the voices of each and every consumer who leads a diverse dietary habit and strive to make meals “more enjoyable and more fun.”

Case study 2

Operating a solar energy system as part of an on-site PPA

Materiality

Living with the planet

Target items

Reduce Greenhouse Gas (GHG) emissions

In February 2024, the Kanaya factory of Group firm Fuji Foods Corp. (Shimada City, Shizuoka Prefecture) started operating its solar energy system as part of an on-site Power Purchase Agreement (PPA). With this, the firm projects a reduction of GHG emissions from the factory of about 13% from pre-installation levels.

In the processed food business, we will contribute to the Group’s greenhouse gas emissions reduction targets by promoting energy-saving activities and introducing renewable energy.