Kewpie Corporation

In addition to long-term market contraction due to Japan's declining population, there is a possibility that the risk of the salad market shrinking due to vegetable price fluctuations and changes in consumer awareness may gradually expand. As countermeasures, the company is implementing flexible market response through a two-tier structure of "retail" and "commercial-use" businesses, operating the new product development and verification base "Sengawa SHIPYARD," and renewing its organizational structure into a two-headquarters system comprising the Marketing Division and the Sales Strategy Division.

In procuring edible oils, there are short- and long-term price fluctuation risks arising from soybean and rapeseed market prices, foreign exchange rates, and supply-demand fluctuations. For other raw materials as well, there are price fluctuation risks stemming from international economic conditions, supply-demand balance, exchange rate fluctuations, and geopolitical risk. In addition to price revisions of products, value addition, production efficiency improvements, and building a procurement structure through group collaboration, the company is advancing a shift toward a business structure less susceptible to fluctuations in the prices of key raw materials.

There is a risk of price fluctuations and procurement difficulties due to sudden outbreaks of avian influenza, fluctuations in the number of laying hens, and changes in long-term egg consumption trends. A severe avian influenza outbreak leading to cost increases and production cuts would directly impact profits. The company addresses this through a combination of annual volume plans, fixed-price contracts, and spot contracts primarily with major producers, establishing a nationwide procurement and egg-breaking plant network, building an overseas procurement structure, and securing inventories of raw materials and products.

Product accidents that could cause health harm to consumers, such as foreign object contamination or mislabeling, are constantly recognized as serious risks that could significantly affect the company's credibility and business performance. The company has established a quality assurance framework through obtaining Food Safety Management System (FSSC 22000) certification, cross-group quality audits, product assurance and traceability utilizing FA (factory automation), in-house monitoring, and the development of a quality specification management system for procured raw materials.

Natural disasters such as massive typhoons, heavy rain, and large-scale earthquakes could cause damage to manufacturing and logistics facilities, difficulty in procuring raw materials and energy, and shortages of operating personnel. The company has established a BCP framework including setting up a backup headquarters function in the Kansai region, developing an emergency communication network, reinforcing production and logistics equipment, establishing two-site production, procurement, and order-taking functions for key products, and conducting large-scale disaster response drills.

Sophisticated external cyberattacks could cause system outages that significantly impact business activities. The company is advancing multi-layered defense systems, 24-hour monitoring and introduction of EDR systems, regular simulation training for responding to attack emails and information security education, information dissemination through an information promotion committee, and BCP development anticipating extended system outages.

Labor shortages at manufacturing sites, harassment, declining employee engagement, and shortages of specialized personnel are anticipated as the main risks. The company addresses these through improving work efficiency, labor-saving measures, and robotization, improving the working environment for foreign national employees, utilizing telework and appropriate management of working hours, harassment prevention education, establishing an internal reporting system (helpline), and hiring and utilizing highly specialized external personnel.

In overseas expansion, risks anticipated include troubles arising from a fragile management base, information leaks due to inadequate information management, competitive harm and brand image damage from the circulation of counterfeit products, and geopolitical risk. The company addresses these through instilling its corporate philosophy and providing on-site education at overseas subsidiaries, clarifying decision-making authority, establishing various regulations, and introducing an internal reporting system, building ICT networks, eliminating products that infringe trademark rights, and preparing for country risk (measures for tangible and intangible assets, diversification of raw material procurement risk, and employee evacuation plans).

Climate change could give rise to risks such as difficulty procuring raw materials and price surges, cost increases due to stricter CO₂ emission regulations, higher energy costs, and damage to production facilities from heavy rain and flooding. In addition, if the company's sustainability initiatives are assessed as insufficient, there is a risk that its reputation could gradually decline. The company has identified "effective use and circulation of resources," "response to climate change," and "conservation of biodiversity" as priority issues, and is advancing portfolio optimization and building a procurement structure through group collaboration.

If the company's efforts toward sustainable procurement with due consideration for social factors are assessed as insufficient, there is a risk that its reputation could gradually decline. The company has formulated the "Basic Policy for Sustainable Procurement" and the "Kewpie Group Supplier Guidelines," is working to confirm the environmental and human rights impact across its supply chain, and is collaborating with the industry and government authorities on animal welfare for laying hens.