Food Business

(As of August 2016)

In the Food segment, we will position products that have strong competitive advantages and which contribute to healthy diets as core products and concentrate management resources on them.
For yogurt, chocolate, and enteral formula—which have particularly strong competitive advantages—respective businesses will take on the challenge of increasing market share.

Yogurt

Market Environment

Yogurt In fiscal 2015, Japan's yogurt market expanded significantly, growing 10.9% year on year, to ¥388.0 billion. Media coverage focused on yogurt as a food that improves gut flora, which affects health. This coverage raised awareness of yogurt's nutritional value among consumers.
 Functional yogurts drove market expansion, and sales of plain yogurts rose markedly year on year. Sales of products labeled as functional foods also increased. Further, yogurt drinks in a convenient format grew sales.

Japan’s Yogurt Market Size* and the Meiji Group’s Sales of Yogurt Products

Japan’s Yogurt Market Size* and the Meiji Group’s Sales of Yogurt Products

* Market size based on Meiji Holdings' research

Progress and Priority Strategies

Functional Yogurts Yogurt sales grew significantly, increasing 15.0% from the previous fiscal year's level. We maintained a strong market presence, with our share of the yogurt market edging up 5.9 percentage points year on year, to 48.9%*.

* Source: INTAGE Inc., SRI (yogurt market) April 2015–March 2016 market share (money amount)

Sales of Functional Yogurts

Sales of Functional Yogurts

 Functional yogurt sales were up significantly. Awareness of nutritional value increased, and functional yogurts penetrated further into the market. Sales of Meiji Probio Yogurt R-1 continued to grow strongly. Launched in April 2015, Meiji Probio Yogurt PA-3 surpassed initial sales targets and contributed to sales growth. Long-seller brand Meiji Bulgaria Yogurt grew sales year on year. An increase in the ways of eating yogurt spurred higher demand. Thanks to lineup expansion, yogurt drinks maintained strong growth.
 In fiscal 2016, our strategy for functional yogurts is to continue boosting sales of three products: Meiji Probio Yogurt R-1, Meiji Probio Yogurt LG21, and Meiji Probio Yogurt PA-3. We will grow sales of Meiji Probio Yogurt R-1 and Meiji Probio Yogurt LG21 steadily and establish Meiji Probio Yogurt PA-3 in the market. We will emphasize to consumers the nutritional value of our products.
 We will continue growing sales of long-seller brand Meiji Bulgaria Yogurt, launched more than 40 years ago. We will highlight the tastiness and nutritional value of LB81 lactobacilli by offering new value and expanding the lineup of yogurt drinks. Through these efforts, we will realize sales under the Meiji Bulgaria Yogurt brand of ¥100.0 billion early.
 For the yogurt business as a whole, we aim to achieve sales of ¥200.0 billion in fiscal 2020. We will raise market share to 50.0% and establish an overwhelming No. 1 position in the market.

Sales of Meiji Bulgaria Yogurt

Sales of Meiji Bulgaria Yogurt

Chocolate

Market Environment

Chocolate In fiscal 2015, Japan's chocolate market grew 3.6% year on year, to ¥363.6 billion. Two types of demand are driving the growth of the chocolate market. First, there has been a surge in demand for functional chocolate, which has risen 2.5 times in the past three years. Coverage of the various health benefits of cocoa polyphenols has been widespread. Heightening health consciousness—particularly among senior citizens, who have purchasing power—has provided a tailwind. Second, demand for premium chocolate with differentiated quality has increased.

Japan's Chocolate Market Size and the Meiji Group's Sales of Chocolate Products

Japan’s Chocolate Market Size and the Meiji Group’s Sales of Chocolate Products

Source (Market size):
e-okashi net (organization jointly established by Japan Confectionery Wholesalers Association and All Nippon Kashi Association)

Progress and Priority Strategies

Chocolate sales grew steadily, rising 3.0% year on year. The Group claimed a 23.9%* share of the chocolate market and maintained its No.1 position.
 Interest in cocoa polyphenols and cocoa proteins heightened, and sales of products with high cocoa content increased. Sales of the Chocolate Kouka series surpassed those of the previous fiscal year significantly.
 The chocolate snack Galbo saw a large rise in sales, partly due to a contribution from sales of a new product in the lineup.
 In fiscal 2016, we will continue concentrating on high-value-added products and long-seller brands and improving the product mix to raise the operating income margin. We will also continue emphasizing information about the various benefits of cocoa polyphenols and cocoa proteins. We will increase the number of consumers who eat bitter chocolate— rich in cocoa polyphenols—and expand the chocolate market.
 We procure cocoa beans, for which we have the in-house expertise and technology to ferment, roast, and grind to maximize their delicate flavors. This “bean-to-bar” business model integrates all stages from cocoa bean procurement through to chocolate manufacturing. We will further entrench our premium chocolate lineup's pricing in the market.
 We will stimulate demand for chocolate by developing functional chocolate that is abundant in cocoa polyphenols and caters to growing health consciousness as well as premium chocolate featuring the rich flavor and aroma of cocoa beans. We aim to achieve sales of ¥100.0 billion and to raise market share to 30.0%.

* Source: INTAGE Inc., SRI (chocolate market) April 2015–March 2016 market share (money amount)

Chocolate Kouka

Chocolate Kouka

Bean To Bar Chocolate

Bean To Bar Chocolate

Kinoko no Yama

Kinoko no Yama

Otona no Kinoko no Yama

Otona no Kinoko no Yama

Nutritional Products

Market Environment

Market Environment In the food for the elderly market, demand is rising due to increasing numbers of elderly people and nursing home residents. Enteral formula accounts for the largest portion of this market. Hospitals and nursing homes are the main sales channels for enteral formula. In fiscal 2015, nursing-care compensation was lowered, and nursing-care providers are seeking cost reductions. Due to this and other factors, price competition has become fiercer in recent years, and sales growth has softened. In fiscal 2015, the enteral formula market was worth ¥69.0 billion*, down 6.0% year on year. On the other hand, as the government encourages home care, demand for consumer products is expected to grow. Sales of enteral formula are rising at drugstores, and awareness of these products is increasing. The protein for sports use market accounted for revenues of ¥14.4 billion. As the 2020 Tokyo Summer Olympic and Paralympic Games approach, health consciousness is growing among consumers. The number of people who have just started consuming protein for sports is rising. Also, the number of junior athletes and joggers using these products is increasing. * Market size based on Meiji Holdings' reserch

Sales of Nutritional Products*

Sales of Nutritional Products

* Nutritional products: Infant formula, food for the elderly, enteral formula, etc.

Progress and Priority Strategies

Sales of enteral formula were up significantly year on year. Sales of Meiji Mei Balance Mini Cups for the consumer product market recorded a steep rise. Awareness of nutrition for seniors is increasing, and product recognition is growing.
 Sales of sports nutrition products saw a large yearon-year rise. A significant increase in SAVAS sales from the previous fiscal year's performance reflected greater demand from high-frequency users, efforts to popularize the product among high school students who participate in sports, and higher sales to people who are health conscious and have just started consuming protein for sports.
 In fiscal 2016, our strategy for enteral formula is to strengthen sales capabilities and increase sales in the consumer product market. We will advance product recognition and encourage understanding of the importance of nutrition for seniors. We will also increase sales to nursing-care providers and step up promotion activities. We will apply our experience in nutrition engineering acquired through the development of infant formula. Moreover, we will leverage original containers that make products easy to hold and drink to attract seniors.
 As for sports nutrition products, we will advance promotion activities. In addition to our existing target, athletes, we will capture demand from new users who want to become fit and healthy as well as women who are dieting. We will strengthen products and brands to suit such target groups.

Enteral Formula

Meiji Mei Balance Series

savas

SAVAS

Overseas Business

We will expand our businesses and improve profitability in China, Asia, and the United States, our priority areas.
 In international markets, we will use experience and expertise developed and accumulated in Japan to roll out a lineup of products with unique added value. Through these high-value-added products, we will grow businesses and enhance earnings.

China

Progress and Priority Strategies

Overall, the performances of businesses in China improved significantly year on year.
 The confectionery business grew sales of products for wedding gifts as well as boosted exports to Southeast Asia. Our chocolate is earning increasing support as a high-quality product. The milk and yogurt businesses introduced new products and expanded sales areas. Yogurt sales were brisk, and heightening health consciousness grew plain yogurt sales. The ice cream business began full-fledged production in January 2015.
 Until now, we have focused on laying foundations. However, we aim to lift sales to ¥20.0 billion in fiscal 2017.

Chocolate

We will leverage a favorable brand image to extend sales beyond the Shanghai area in the strong market for wedding gifts. We will increase exports from Shanghai to Hong Kong and Southeast Asia.

Yogurt

The market for yogurt is expanding. Our product lineup includes plain yogurt, fruit yogurts, and yogurt in medium-sized cups and meets local needs. We will increase the number of stores carrying our products and grow sales further.

Yogurt

Ice Cream

The market for mid-to-high-end products is growing. We will launch products that include typically Japanese ingredients, such as adzuki beans and condensed milk, to provide high-value-added “premium-quality ice cream from Japan.” We will expand our sales areas from southern China to eastern and northern regions of the country and boost sales.

Ice Cream

Asia

Progress and Priority Strategies

In the confectionery business, sales of mainstay Yan Yan chocolate snacks were favorable. We sell Hello Panda and Yan Yan chocolate snacks in more than 50 countries, and they are loved around the world. In the Middle East, sales of chocolate snacks rose. Equity-method affiliate CP-Meiji Co., Ltd., a joint venture with Charoen Pokphand Foods PCL, of Thailand, manufactures and sells yogurt and milk. CP-Meiji has established a position as the leading brand, boasting an approximately 50% share* of the chilled milk market in Thailand. As for yogurt, in January 2016 we launched Meiji Bulgaria Yogurt Drink, which is selling well. Also, sales of fermented milk drinks in Thailand grew significantly.
 The export business achieved significant yearon-year increases in sales of confectioneries and Amino Collagen to Thailand and Hong Kong. Exports of infant formula to Pakistan’s growing market were much higher than in the previous fiscal year.
 In fiscal 2016, we will continue growing sales of chocolate snacks. In the Middle East, we will expand the sales area for chocolate snacks. We will boost sales of yogurt and milk in Thailand and surrounding countries. Also, the export business will increase sales.

* Meiji Holdings' estimates

Hello Panda

Hello Panda

Yan Yan

Yan Yan

Meiji Bulgaria Yogurt sold by CP-Meiji

Meiji Bulgaria Yogurt
sold by CP-Meiji

Drinking milk sold by CP-Meiji

Drinking milk sold
by CP-Meiji

United States

Progress and Priority Strategies

Under the meiji brand, Hello Panda and Chocorooms, which are chocolate snacks distributed by Meiji America Inc., sold briskly. Combining chocolate and biscuit, our chocolate snacks have gained popularity.
 The mainstay product of D. F. Stauffer Biscuit Co., Inc., Animal Crackers is carried by major supermarkets and is popular throughout the United States.
 In the fourth quarter of fiscal 2015, we began manufacturing Hello Panda in the United States. In fiscal 2016, we will acquire customers among regional chain stores and increase sales. We will grow sales of the above meiji brand products and earnings.

Animal Crackers

Animal Crackers

Hello Panda

Hello Panda

Chocorooms

Chocorooms