INTEGRATEDREPORT

2022

Morinaga Group For the Fiscal Year Ended March 31, 2022

5-33-1 Shiba, Minato-ku, Tokyo 108-8403
https://www.morinaga.co.jp/company/english/
Inquiries
Sustainable Management Division
TEL +81-3-3456-4351 FAX +81-3-3451-3625

CONTENTS
Profile2
4
6

Sustainability Section

Corporate Philosophy
History
History of the Morinaga Group’s Value Creation
At a Glance
Financial and Non-Financial Highlights

46

Strategy Section
8
14
16
18
20
24

The Morinaga Group traces its roots back to the commitment of its founder Taichiro Morinaga to deliver highly nutritious
and delicious Western confections to the people of Japan. Beginning with caramel, which he learned about in the UnitedStates, it was his vision to bring foods from Japan to the world and create food culture beyond borders. His commitment
has been passed down over the years, regardless of changes in the times and business environment, becoming a driving
force behind the Group’s growth.

28
32
34

Message from Top Management
Sustainability Advisory Board
Value Creation Process for Achieving Our Vision for 2030
The Morinaga Group’s Materiality
Special Feature: Challenges of the Morinaga Group Aimed
at Becoming a Wellness Company
Build Business Foundation Linked with Business Strategies
24 Message from CFO
26 Message from Officer Responsible for Human ResourcesLong-Term Business Plan: 2030 Business Plan
Medium-Term Business Plan: 2021 Medium-Term Business Plan
Improve Profitability through Business Portfolio Optimization and
Structural Reforms

Initiatives for Sustainability
46 Sustainability Management
48 Provision of Safe and Reliable Products
50 Diversity and Inclusion of People
52 Achieving Sustainable Value Chains
54 Conserving the Global Environment
56 Information Disclosures Based on
the TCFD Recommendations
58 Initiatives for Human Rights

Governance Section
60
62
64
68
69

Executive Management Team
Messages from Outside Directors
Corporate GovernanceCompliance
Risk Management

Financial Section
70
72
80

The Morinaga Group’s Corporate Philosophy

11-Year Financial and Non-Financial Summary
Financial Summary
Corporate Profile/ Stock Information/
Information Disclosures System

Delicious, Fun, and Healthy
The Morinaga Group will continue to create healthy foods thatcan be enjoyed beyond generations, thereby bringing smiles to the faces of people
around the world now and in the future.
Good quality
Pursue quality with integrity

Only-one value
Create new value and inspiration

Link together
Strengthen relations of trust with stakeholders

Act globally
Expand the scope andpossibilities of activities

Sustainable society
Contribute to a sustainable society

Give first priority to customers
Altruism

Be a pioneer
Have an indomitable spirit
Value ties between people
Align our business imperatives with social challenges

The Morinaga Group’s Corporate Philosophy is composed of Our Mission, Our Visions, and Our Commitments.
Our Mission states how the Group will contribute to society, and Our Visions comprise the five visions that we will pursue toward
the future. Our Commitments represent the values that we have developed during the more than 100-year history since the foundingof the Group and will continue to uphold as our firm belief for many more years to come. To describe the essence of our Corporate
Philosophy in one expression, it is “Delicious, Fun, and Healthy.”Morinaga Group INTEGRATED REPORT 2022

Cautionary Statement about Forward-looking Statements
This report contains forward-looking statements on such matters as the Morinaga Group’s plans, strategies, and business performance. These statements are based on judgments made using information
obtainable at present. Consequently, actual performance could vary greatly from forecasts because it is subject to various risks and uncertainties. Elements affecting forward-looking statements include
the economic environment surrounding the Morinaga Group’s business domains, competitive pressures, relevant laws and regulations, changes in the development status of products, and fluctuations inforeign exchange rates. However, elements affecting future forecasts are not limited to these. Furthermore, the Company applied the “Accounting Standard for Revenue Recognition (ASBJ Statement No.
29, March 31, 2020)”, etc., from the beginning of the fiscal year (FY) ended March 31, 2022. The figures for FY2021/3 are from after retroactive application of the said accounting standard.

Morinaga Group INTEGRATED REPORT 2022

1

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

History
The Morinaga Group has been consistently providing customers with new value and inspiration, while
responding to changes of the times and those in the lifestyles of customers. Through continuing to
make food that helps to keep people’s minds and bodies healthy, from today to tomorrow and from one
generation to the next, we will continue to bring smiles to the faces of people around the world.

History of the Morinaga Group’s Value Creation
Net sales(Billion yen)

200

150

Paving the way for the modernization of Japan’sconfectionery industry

Delivering deliciousness and smiles to people
around the world

Our founder Taichiro Morinaga, who spent 11
years in the United States learning about
confectionery manufacturing technology,
founded Morinaga’s Western Confectionery Shopwith the commitment to deliver highly nutritious
and delicious confections to the people of Japan.
With the aim of modernizing Japan’sconfectionery industry, the company created afoundation for the confectionery business inJapan such as mass production with machineryand mass sales by establishment of sales
networks and advertising, and spread Western
confections nationwide in the process.

The Morinaga Group has created new values pivoting aroundtechnology developed in confectionery manufacturing withthe aim of bringing a richer and healthy diet to the people ofJapan. First, we expanded business of foodstuffs, frozen
desserts and health products focusing on Japan. In recent
years, we have also been accelerating the growth of ouroverseas business centered on HI-CHEW. In 2022, welaunched Chargel, aiming to create a market for jelly drinksin the United States. We are continuing our efforts to deliver
value to people around the world.

1905

2013
Establishes Morinaga America Foods, Inc.
Develops proprietary health ingredientTMcalled Passienol

2022

Morinaga R&D Center begins
operations as our new research center

2011
Establishes Takasaki
Morinaga Co., Ltd. as
flagship factory

1928

Registered our first symbolic trademark●

Develops Morinaga Belt Line Store(sales network)

1961
Establishes Taiwan Seika Co., Ltd.
(currently Taiwan Morinaga Co., Ltd.)

2019

100

1904

2000

First in the industry to require employees
to wear uniforms to enhance hygiene

Morinaga’s four factories in Japan obtain
ISO 14001 certification

1919

1937

First in the industry to
introduce an eight-hour work day

Morinaga’s factories in Japanand production subsidiaries
obtain FSSC 22000
certification

2008

Establishes Consumer Room(customer service departments)

Establishes Morinaga America, Inc.
Launches the “One Chocolate for
One Smile” campaign

1995

1918

50

Establishes Morinaga Food
(Zhejiang) Co., Ltd.

2018

1971

Holds the first Morinaga Mother’s Day Meeting
to popularize Mother’s Day in Japan

Establishes Morinaga
Asia Pacific Co., Ltd.

2010

Introduces Morinaga HACCP

Releases the first domestically produced milk
chocolate in Japan

2017
1915

1956

Begins manufacturing biscuits

1899
0

1899

Commences frozen desserts business

Commences direct marketing business

1912

Founded as Morinaga’s
Western Confectionery
Shop

1910

Meiji (1868-1912)

1983

Company name is changed toMorinaga & Co., Ltd.

1920

2003

Commences thehealth business

1930

1940

Taisho (1912-1926)

1950

1960

1970

Obtains Platinum Kurumin
certification, a symbol of a company
supporting childcare.

2004

1980

Establishes Morinaga (Shanghai) Co., Ltd.,(currently Shanghai Morinaga Co., Ltd.)

1990

2000

Showa (1926-1989)

2010

2020

Heisei (1989-2019)* Consolidated net sales from FY1978/3

Reiwa (2019 to present)* The Company applied the “Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020)”, etc., from the beginning of FY2022/3.
The figures for FY2021/3 are from after retroactive application of the said accounting standard.

Morinaga’s Main Brands
Brands more than a century old

1913
Milk Caramel

1919
Milk Cocoa

Brands more than 50 years old

1923
Marie

1957
Morinaga Hotcake Mix

1967
Chocoball

1971
Koeda

Brands more than 30 years old

1972
Choco Monaka Jumbo

1973
Morinaga Ramune

1974
Morinaga Amazake(canned)1975
HI-CHEW

Brands more than 10 years old

1982
Ottotto1989
Ice Box

1993
DARS

1994
in Jelly

2003
Carré de chocolat

2006
Morinaga
Collagen Drink2009
in Bar*Product names and images as of September 2022.

2

Morinaga Group INTEGRATED REPORT 2022

Morinaga Group INTEGRATED REPORT 2022

3

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

At a Glance

The Morinaga Group engages in the confectionery and foodstuffs business, frozen desserts business, “in-” businessand direct marketing business in Japan, and in the food manufacturing business overseas mainly involving the U.S.
business. Particularly, we aspire to drive the entire Group’s growth, defining the four businesses “in-” business,direct marketing business, U.S. business and frozen desserts business as the focused domain categories.

The Morinaga Group Today
Strategic Business Categories
Net Sales/ Operating Income

Main Products

Confectionery & Foodstuffs*1(Billion yen)

73.3

72.4

6.1
3.2

2021/3
HI-CHEW

Milk Cocoa

Net sales(Billion yen)Frozen Desserts Business

38.4
7.4

2021/3
Choco Monaka Jumbo

Ita Choco Ice

Net sales

2020(Billion yen)“in-” Business*1

2022/3 (FY)Operating income

40.1
4.8

2022/3 (FY)Operating income

2021

Japan

We are working to create new value aimed at “health of mind and body” throughfoods. in Jelly, which replenishes nutrition anywhere and anytime based on sports
science theory, has maintained its top share in the jelly drinks market for 27
years. Our product initiatives in the “in-” brand are meeting the health needs ofvarious lifestyles in modern society.

6.8

4.5

2021/3in Jellyin BarNet sales

Direct Marketing Business*2(Billion yen)2022/3 (FY)Operating income

Morinaga
Collagen Drink

3

Oishii Aojiru*

2021/3
Net sales

2020

Operating subsidiaries and others(Billion yen)

13.4

We support customers’ wellness life by directly bringing products with both
function and deliciousness to consumers. Morinaga Collagen Drink, which issold exclusively in the direct marketing channel, has sold more than 300 million
5
6units to date* , making it the best-selling collagen drink in Japan* .

0.32022/3 (FY)Operating income

2021
15.0
0.5

-0.7
Aunt Stella Inc. /Assorted cookies

Morinaga Market Development
Co., Ltd. / Assorted confectioneries

2021/3
Net sales

2022/3 (FY)Operating income

10.5
1.4

Overseas

1.0
2021/3ChargelNet sales

2022/3 (FY)Operating Income

Confectionery andFoodstuffs

Confectionery andFoodstuffs

Frozen Dessert BusinessFrozen Dessert Business

40.0%

18.5%

22.2%

27.4%

Morinaga Group“in-” Business

15.5%“in-” Business

38.5%

Net Sales

Direct Marketing Business

5.0%
Operating subsidiaries
and others

181.2 billion yen

Direct Marketing Business

Operating Income

Operating subsidiaries
and others

1.9%

17.6 billion yen

8.3%
U.S. Business

3.2%
U.S. Business

5.8%

8.4%

Other Overseas

Other Overseas

3.2%

1.9%
*7. Breakdown of operating income contains 0.2% as an adjustment excluding the above.

Reach of the Morinaga Group (As of March 31, 2022)*

8

Morinaga Group

North America

19 companies
Employees: 2,937

2
Employees: 213
Group companies:

Morinaga America Foods, Inc.
Shanghai Morinaga Co., Ltd.
Morinaga (Zhejiang) Co., Ltd.

4.5

5.7
0.3

0.0
2021/3

HI-CHEW (China)
in Jelly Products(Taiwan)Net sales2020*1. Products including candies, chocolates, etc., in the “in-” brand are included in theconfectionery and foodstuffs business.
*2. Including Overseas (Thailand)*3. Aojiru is a Japanese vegetable beverage*4. Including profits relating to exports to the U.S. market from China and Taiwan

2022/3 (FY)Operating income

2021

Including global expansion of HI-CHEW, we deliver products with unique texture
and taste based on our long-standing technologies cultivated in our domestic
business to customers around the world together with the Morinaga Brand and
our Corporate Message of “Delicious, Fun, and Healthy.” In Taiwan, in Jelly waslaunched in 1999, and is also sold in response to rising health awareness. It is also
sold in Hong Kong and Singapore. We are also working to tap into new markets
while expanding wellness products such as Morinaga Collagen Drink in China via
e-commerce.

*5. Including Morinaga Collagen Drink series and products before and after updating, as of October 2021
(survey by Morinaga & Co., Ltd.)*6. Source: H.B. Foods Marketing Handbook 2022 No. 1, Fuji Keizai (beauty effect/ collagen category/ 2020
results), for the Morinaga Collagen Drink series, including products before and after updating.

Morinaga America, Inc.

Morinaga Asia Pacific Co., Ltd.
Taiwan Morinaga
Co., Ltd.
Morinaga Bioscience (Thailand) Co., Ltd.

Japan
[Morinaga & Co., Ltd.]

Operating income(Billion yen)

Other Overseas

Morinaga Group INTEGRATED REPORT 2022

Aunt Stella Inc. manufactures and sells cookies and other products and operates
restaurants. Morinaga Market Development Co., Ltd. sells confectioneries andfoods to theme parks and companies as well as sells imported products. Morinaga
Shoji Co., Ltd. develops and markets commercial-use food ingredients. Morinaga
Institute of Biological Science, Inc. researches, develops, manufactures, andmarkets food allergen test kits and other products. For other businesses, we own
real estate properties and manage a golf course.

In the U.S. business, we are expanding HI-CHEW with real fruity taste and unique
texture, which has been embraced by customers in the U.S. Also, we are working
to expand the HI-CHEW brand while developing new products that provide
wellness value. Chargel, a jelly drink developed for the U.S., was released in 2022.
We are working to create a market in the U.S. for jelly drinks harnessing thebusiness foundation established with HI-CHEW.

7.2

4

Net Sales(Billion yen)

U.S. Business*4

HI-CHEW

7

9.1

7.4
0.6

We are constantly creating new and delicious food solutions pivoting around
our long-selling brands such as Morinaga Biscuits, Choco Ball, HI-CHEW, andMorinaga Cocoa. Commanding our proprietary food processing technologies
combining innovations with our traditions of more than 120 years in business,
we are working on value creation that contributes to people’s healthy and vibrantlifestyles including high cacao chocolate, cocoa drink, and amazake drink blending
deliciousness and health functions.

We continue to deliver value and inspiration to customers through products madewith the Group’s unique confectionery technologies in sub-zero temperatures suchas in our top brands of Choco Monaka Jumbo, which marks its 50th anniversary
this year, and Ita Choco Ice, featuring the shape and texture of a chocolate bar. By
concentrating management resources on mainstay brands, we are implementing
effective marketing.

28.0
23.6

Business Overview/ Strengths

Net Sales and Operating Income (FY2022/3) *Asia (excluding Japan)

5
Employees: 389
Group companies:*8. Listed consolidated companies and non-consolidated companies
accounted for using the equity method.
Employees represent total for consolidated companies.

Business locations:

1R&D center,

4 factories, and 2 supervising branches
Employees: 1,453[Group companies]

11
Employees:

882
Morinaga Group INTEGRATED REPORT 2022

5

Financial and Non-Financial Highlights

Financial Highlights
1

Net Sales*

Operating Income* /1Operating Income to Net Sales Ratio*(Billion yen)(Billion yen)

1

250.0
200.0

30.0
205.0

205.3

208.8
168.2

12

11.4
10.2

25.0

9.6

9.8

20.0

19.7

20.2

181.2

150.0

Strategy Section

(%)

9.8

21.2
19.1

8 Message from Top Management10

14 Sustainability Advisory Board

8

16 Value Creation Process for Achieving Our Vision for 2030

17.6

15.0

6

10.0

4

5.0

2

0

0

18 The Morinaga Group’s Materiality
20 Special Feature: Challenges of the Morinaga Group Aimed at Becoming a Wellness Company

100.0
50.0
0

2018/3 2019/3 2020/3 2021/3 2022/3 (FY)

24 Message from CFO
26 Message from Officer Responsible for Human Resources

1

Operating Income to Net Sales Ratio

Shareholders’ Equity/ Shareholders’ Equity Ratio*(Billion yen)(%)(Billion yen)

25

150.0

55.0

22.0

15

11.0

10.8
12.8

10.0

10.2

10.8

11.8

10.1 *2

13.4

97.8

100.0

60.7

55.7

54.8

122.7

27.7
13.2

20.0

60.5

20

30.0

32 Medium-Term Business Plan: 2021 Medium-Term Business Plan
34 Improve Profitability through Business Portfolio Optimization and Structural Reforms

3

Profit Attributable to Owners of Parent* /ROE*
40.0

28 Long-Term Business Plan: 2030 Business Plan

2018/3 2019/3 2020/3 2021/3 2022/3 (FY)Operating Income

1

24 Build Business Foundation Linked with Business Strategies

36 Direct Marketing Business

60

38 U.S. Business

130.0

40 Frozen Desserts Business

104.6

96.4

34 “in-” Business

(%)

40

42 Domestic Confectionery and Foodstuffs Business
44 For Further Global Growth

10
50.0

20

5

0

0

0

0

2018/3 2019/3 2020/3 2021/3 2022/3 (FY)2018/3 2019/3 2020/3 2021/3 2022/3 (FY)Profit Attributable to Owners of Parent

ROE

Shareholders’ Equity

Shareholders’ Equity Ratio*1 The Company applied the “Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020)”, etc., from the beginning of FY2022/3. The figures for FY2021/3 are fromafter retroactive application of the said accounting standard.
*2 Excluding impacts of extraordinary income from the sale of cross-shareholdings*3 The Company applied Partial Amendments to Accounting Standard for Tax Effect Accounting, etc., from FY2019/3, and figures for FY2018/3 were retroactively adjusted in line with thisaccounting standard.

Non-Financial Highlights*1

Ratio of Female Managers
(%)

10
8

9.4
7.7

Rate of Occupational Injury(Frequency Rate* / Total Frequency Rate* )CO2 Emissions(%)(Thousand t-CO2)

2

3

3

80

8.3

2.33

75.7
67.5

68.9

10.6

9.6

60

2
6
40
4

1.30

1
1.05

2
0

0

2020/3 2021/3 2022/3 (FY)

0.00

20

0.52
0.00

2020/3 2021/3 2022/3 (FY)
Frequency Rate

Total Frequency Rate

10.4

0

2020/3 2021/3 2022/3 (FY)4Japan Scope 1 + 2 *4Overseas Scope 1 + 2 **1. Figures are non-consolidated for Morinaga & Co., Ltd. as of April 1 of each fiscal year.
*2. Frequency of occupational accidents indicates the number of injuries / fatalities (not including sick or injured due to non-lost work time accidents) due to occupational accidents per one million
working hours. (Figures for Morinaga & Co., Ltd. factories and production-related affiliated companies)*3. Frequency of occupational accidents indicates the number of injuries / fatalities (including sick or injured due to non-lost work time accidents) due to occupational accidents per one million
working hours. (Figures for Morinaga & Co., Ltd. factories and production-related affiliated companies)*4. Consolidated basis.

6

Morinaga Group INTEGRATED REPORT 2022

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Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Message from Top Management

Looking Back on FY2022/3
The world faced a number of challenges in 2021 caused by the

expectations, foremost of which have been soaring raw material

ongoing COVID-19 pandemic and spread of variants. I would likeand energy prices and fluctuations in foreign exchange rates.

to express my sympathy to everyone affected and I would also

In April and May 2020, sales of in Jelly, one of our mainstay

like to express my heartfelt gratitude and respect to essential

products, plummeted by about half. Nevertheless, we managed

workers on the front lines. As in the previous year, we donatedto post a V-shaped recovery of net sales in just one year byapproximately 10,000 units of in Jelly to WeSupport, a food

expanding new target customers through the release of in Jelly

support platform working to address social issues, in support

Fruit Texture, in addition to capitalizing on demand for an easyof healthcare professionals. In addition, to support Ukrainian

source of energy amid the work-from-home trend. As a result,children and their parents who were forced to leave their homes

we recorded our highest ever net sales in the fiscal year ended

due to the war in Ukraine, we donated 10 million yen to Plan

March 31, 2022. This recovery was made possible because ofInternational Japan (NGO) in April 2022. Our employees andour strong technical prowess and brand power as a frontrunnerofficers also made humanitarian donations which were matchedin jelly drinks. The Group's net sales totaled 181.2 billion yen, aby the company.

new record high*. However, operating income fell 1.5 billion yen“Altruism” outlined in our Value (our commitments) in ourfrom the previous fiscal year to 17.6 billion yen. The surge in raw

corporate philosophy is the key driver supporting these initiatives.

material prices and the impact of foreign exchange rates were

I would like to continue passing down this spirit, which has

responsible for a 1.9 billion yen decrease in operating income.

formed the basis of our actions since our founding.

As various changes in the external environment are expected in

Due to COVID-19 and changes in the global situation, thebusiness environment has also undergone changes beyond ourthe future, we must further enhance our resilience to respondflexibly.
* Accounting Standard for Revenue Recognition applied retrospectively.

Meetings to Exchange Opinions for Instilling Our Corporate Philosophy

Eijiro Ota
Representative Director, President

We will continue working to become a “Wellness Company”

Since becoming President in June 2019, I have asked myself

just words, and make concrete efforts toward achieving it. Despitewhat the Morinaga Group will need to value in the future. The

the COVID-19 pandemic, I managed to hold 50 meetings, including

answer I arrived at was “permanence,” which we have achievedat Group companies, engaging 1,147 employees in dialogue.

by overcoming a number of challenges during our 120-year

After reading the comments from employees who participated,history. I have found that creating value needed by society, as

I feel that these meetings have led to a deeper understanding ofwell as growing and developing sustainably as a corporation, no

the corporate philosophy and the direction of the company, andmatter the business environment going forward, will lead to thethe meetings also promoted a real sense of being a member ofhappiness of all stakeholders.

the Group. On the other hand, I have been unable to hear from

We asked employees to voice their opinions regarding theposition the Morinaga Group wants to be in and the meaning ofsome of business sites including overseas subsidiaries, so I willcontinue to create opportunities for dialogue.

its existence. In response, we received passionate feedback fromthat pursues the enriched and glorious life of people aroundclose to 1,000 employees. The corporate philosophy formulated
in May 2021 represents the culmination of discussions by our
executive management team based on employees’ opinions. We

the world by creating highly resilient organizations capableof flexibly responding to various changes.

will increase our corporate value by keeping our Purpose (Mission)“The Morinaga Group will continue to create healthy foods thatcan be enjoyed beyond generations, thereby bringing smiles tothe faces of people around the world now and in the future” inmind during all corporate activities.
Also, we believe that organizations clearly centering around

Dialogue between the President andemployees

its corporate philosophy have a high degree of resilience. Overthe past year, I held meetings with employees to exchange views,
based on the belief that each and every employee must embrace
our corporate philosophy as their own, instead of viewing it as

8Morinaga Group INTEGRATED REPORT 2022

Morinaga Group INTEGRATED REPORT 2022

9

Profile

demonstrate to customers and other stakeholders that we are awill Change into a Wellness Company in 2030.” We broke through"wellness company that energizes," we have also revamped thethe barrier of 10 billion yen in operating income for the first time injingle in our television commercial. To achieve the 2030 Vision, we

FY2016/3, and since then, our business performance has improved

will further improve on various initiatives going forward.

Three values to provide

and the company has definitely risen to a greater stage of growth.

change to ensure that the Group continues to shine for the next 100

Under the 2030 Business Plan, we are following three basic

years. We cannot be satisfied with the status quo. Initially, there werepolicies. First is to “Improve Profitability through Business
Portfolio Optimization and Structural Reforms.” We selected four

Even during meetings with employees, I have been particularlybusinesses with high profitability and promising growth prospects

conscious of ensuring that they understand my conviction to change.

and designated these as the “focused domain.” In turn, we will

I believe that one of my roles is to expand the possibilities of ourconcentrate management resources in these four businesses,

people. We have a long history and many long-selling products, butwhich are the “in-” business, direct marketing business, the U.S.

because of that, our thinking tends to be merely an extension of ourbusiness and frozen desserts business, so that they drive thepast success. By setting bold management goals, I also wanted toentire Group’s growth.

encourage employees to take on new challenges. My motto is “YouThat is, knowing and understanding are two different things. You

that we made great progress. The focused domain accounted fortry. I myself have tried to tackle many challenges and sometimes

48.8% of the Group’s sales for the year. As a result, we achieved

failed. During the meetings, I have told employees, “Let’s take on

the target of the 2021 Medium-Term Business Plan two years

new challenges, and proud of them, even if the challenges end up as

ahead of schedule and we marked a solid start toward our target

failures.” This is because I believe that challenging ourselves helps

to increase this to 60% by 2030.
Looking at the situation of each business, first, in the “in-”business, in Jelly experienced a V-shaped recovery from thechanging into a wellness company that continuously supplies

initial impacts of the COVID-19 pandemic thanks to our efforts tothe three values of “health of mind, body, and environment” totake various measures. The number of users has grown, and thecustomers, employees, and society. There are still issues to bepurchase rate exceeded 14%*, setting a new record high. We haveaddressed, but each employee is more aware of what needs to bealso started an initiative to strengthen ties between the corporate

done to achieve the 2030 Vision. For example, this includes the start

brand and the "in-" brand. For example, we have developed aof discussions on various themes related to “health of mind” attelevision commercial that highlights the activities at Morinaga “in”

the R&D Center. I am convinced that the bold and strong message

Training Lab supporting athletes. We will increase customers trust* INTAGE Inc. SCI Market data for Jelly Drinks from April 2021 to March 2022

Financial and Non-Financial Targets for 2030
Non-Financial Targets

Customers

Employees

Society

Exploration &Research domain

Basic domain

Structural Reforms Focused on Functional Sectors

Business Foundation

Sustainable Business Management

70

Provide value of health to% or more of the Japanese population
through new initiatives aimed at becoming a wellness company *2
Ratio of employees who find their job meaningful andwho are in good mental and physical health at work:in the "in-" brand, which is symbolic of our change into a wellness

reduce costs, streamline operating expenses, and scrutinize

company, and will further grow the “in-” business through theinvestment projects.

development of not only jelly but also bars and a wide range ofother products.
Through aggressive advertising in the direct marketing

80%*3
100%

Focused domains’ sales ratio:

60%

CO2 emissions reduction:

30%*5

*4

to further strengthen the management base for human resources,
2

Oishii Collagen Drink and Oishii Aojiru recorded strong sales during

making criteria for investments clearer and are managing

the course of the year. Furthermore, we are promoting IT system

investments fully aware of capital costs while continuously

renewal and digitalization to scale up operations and strengthen

monitoring returns post investment. We will invest in growth

our business foundation. In the future, we intend to build a cross-with an awareness of capital costs in order to increase corporate

functional customer data platform that will increase customer

value over the medium to long term while continuing to invest in

lifetime value (LTV.)

intangible assets for growth such as R&D and DX. In order to further

In the U.S. business, despite headwinds such as soaring

accelerate growth, we established the Strategic Investment &personnel and logistics costs, net sales exceeded the record highAlliance Division in FY2022/3 as a standalone organization focusingof 10 billion yen, achieving the target of the 2021 Medium-Termon our inorganic growth. We place the highest priority on investing

Business Plan a full two years ahead of schedule. In this manner,in focused domains. We are currently conducting research andwe were able to achieve greater progress in terms of both growthreviews to reallocate management resources to inorganic growth.
With regard to shareholder returns, we aim to raise the dividend on
equity (DOE), which we use as an indicator for capital policy, overcompared to the previous year and while growth slowed, our sales

the medium to long term. In terms of DX, we will strengthen ourwere at 102% of the previous year in terms of amount, beating thebusiness foundation and business competitiveness by strategically1

Procurement ratio of sustainable raw materials(cacao beans, palm oil, and paper):Foundation Linked with Business Strategies," we have been working
R&D, DX* , and finance. In terms of finance, we have made decision-

market* . Going forward, we will also sow the seeds for medium- to

15% or higher

With regard to the second basic policy of "Build Businessbusiness, the number of regular customers increased, and bothIn the frozen desserts business, the market as a whole was downOverseas sales ratio:

Morinaga Group INTEGRATED REPORT 2022

environment

potential and profitability.

*1. The Company applied the “Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020)”, etc., from the beginning of FY2022/3.
*2. Scope: Products defined as Deep dive into “health of mind,” Accelerate “health of body,” and Evolve “health of mind” to “health of body.” Population percentage calculated based on INTAGE Inc. SCI
annual purchase rate (scope: consumers nationwide between the ages of 15 and 79.) Going forward, the Company will explore establishment of a vision on a global basis.
*3. Ratio of affirmative answers on the employee awareness survey.
*4. Consolidated basis. Paper covers product packaging only.
*5. Scope 1 + 2 (domestic Group consolidated basis; compared to FY2019/3.)

10

body

Values are provided forconsolidated sales came from the focused domain. This shows

never know how something will turn out until you have given it a

12% or higher

mind

Focused domain

previous year, and 11 billion yen of the 13 billion yen increase in

Operating income to
net sales ratio:

Health of

In FY2022/3, focused domain sales totaled 114% of the

won’t understand without trying.”

300 billion yen

Health of

Policy 3: Promote diversity and inclusion

perplexed voices from within the company about the word “change.”

Net sales:

Health of

Policy 1: Improve profitability through business portfolio optimization

Morinaga will be able to sustain its permanence if we evolve and*1

Financial Section

Basicand structural reforms
Policies Policy 2: Build business foundation linked with business strategies

Basic Policies Aimed at Achieving
the 2030 Vision

The word “change” was used based on my strong conviction that

Financial Targets

Governance Section

We will further evolve reliability and technology built atop our 120-year history to support
people’s wellness lifestyles in all generations worldwide.

encapsulated in the word "change” was necessary. In order to

The 2030 Business Plan is a long-term management plan for 2030
formulated in May 2021. It states as its vision "The Morinaga GroupIn addition, we are further refining each strategy aimed at

Sustainability Section

The Morinaga Group will Change into a Wellness Company in 2030.

Start of the 2030 Business Plan

both the company and individuals grow.

Strategy Section

long-term growth, such as frozen foods, in addition to strengthening
our mainstay brands with our advanced technical prowess.
Moreover, the confectionery and foodstuffs business supporting
the entire Group through improved profitability was greatly impacted
by rising raw material prices and higher depreciation expenses.
Looking ahead, as raw material prices continue to rise, we recognize
the need to revise product prices with promptness and accuracy,

introducing and utilizing digital technologies.
As for the third basic policy, "Promoting Diversity and Inclusion,"
we will sustain innovation by promoting diversity and inclusion
based on the belief of leveraging each employee’s individuality.
Below, I will share details about my thoughts on the U.S. business,
R&D, and diversity and inclusion.
*1. INTAGE Inc. SRI+
*2. Digital transformation

Morinaga Group INTEGRATED REPORT 2022

11

Profile

Expanding R&D for the Future
I believe that R&D plays a vital role in the building of a robust

Strategy Section

Sustainability Section

Financial Section

Achieving Our Purpose Begins with Sustainable Business Managementbusiness foundation. We believe that a driving force behind ourIn the world today, it is already commonplace for a company

Chocolate for One Smile,” which has been making donations to

uniqueness and customer trust cultivated over our 120-year

to contribute to realization of a sustainable society. “Bringing

resolve social issues for 14 consecutive years. Through activities

history is the technical prowess generating the texture and taste ofsmiles to the faces of people around the world now and in theto improve the educational environment for children and prevent

our products. Our emphasis on R&D will refine our strengths andfuture,” as stated in our Purpose, truly makes a difference when it

child labor in cacao-producing countries of our support partners,

differentiate us from peer companies.

comes to achieving a sustainable society. Sustainability business

Plan International Japan and the non-profit organization, ACE, theIn April 2022, we opened a new research building as the basemanagement stands as the foundation of our Purpose, and wecumulative donation amount by FY2022/3 has reached 276.79

of Morinaga R&D Center. The Center’s theme is co-creation. We

can only begin to achieve our Purpose by practicing sustainable

million yen. As a co-creative action with customers, we areincorporated the feedback of many R&D staff from the designbusiness management.

expanding the “Project to Connect Smiles to the Future.”* We will

6

stage to ensure the completed center reflects our vision for

As such, to strengthen our sustainable business management,

R&D. This includes generating new value and products for the

we created the Sustainable Management Division in 2021. We also

continue to focus on initiatives for achieving a sustainable society
in various forms.

future through co-creation with our various partners such as

established the Sustainability Advisory Board in 2022 to obtain

external research institutes and establish a system ensuring that

advice from an outside perspective. In addition, to resolve various

Shibaura Building and relocate the functions of the Morinaga headproduction engineering departments work as one to bring productssocial issues as a responsible manufacturer of consumer goods, we

office in order to provide a more employee- and environmentally

to market more quickly.

have formulated targets for 2030 and are actively working toward

friendly workplace. We will develop a work environment andWe also increased R&D spending by 1 billion yen during the

Restructuring of Overseas Strategy and Evolutionof the U.S. Businessperiod of the 2021 Medium-Term Business Plan* .

In restructuring the Group’s entire overseas strategy, we are2them. For procurement of raw materials, we have set a target
1

Aimed at the 2030 Vision, we decided to rebuild our aging

facilities for a diverse workforce and make the new head office ato achieve 100%* sustainable procurement of raw materials forcornerstone of our corporate philosophy and the 2030 Vision as a

We are moving ahead with various other initiatives such ascacao beans, palm oil, and paper. We also plan to reduce our use ofco-creative office with a lower carbon footprint.

strengthening growth strategy on “health of mind and body” inplacing utmost emphasis on the U.S. market and positioned the U.S.

plastics for in Jelly by 25%* . Furthermore, together with TerraCycle

addition to updating core technologies to realize the 2030 Vision ofbusiness within the focused domain in the 2030 Business Plan.

Japan G.K., we launched a recycling program that collects empty“Change into a Wellness Company.”

pouch-type jelly drink containers of in Jelly and others. in Jelly isPreviously, the Group’s basic overseas strategy was to expand thesoft candy brand HI-CHEW worldwide. Through various learning
experiences, however, we feel that we should focus our resourcesin the U.S. and increase the Group’s presence there.

2

popular among student athletes, and given rising awareness of thePromoting Diversity and Inclusion as a Focal Pointof Management Strategy

SDGs among the younger generation in recent years, we are first
expanding the program at schools across Japan.

In my first message as President, I declared that diversity and

Additionally, we have established a target to reduce food loss

inclusion forms a focal point of our business strategy. Whenever R&D lab in the U.S. and expanded our lineup of healthy

and waste by 70%* . We continue to promote a cycle and effective

backcasting to consider how to achieve the 2030 Vision, we foundproducts geared toward the high level of health awareness in theuse of food resources in various ways such as increasing recycling

it critical that we adapt to various environmental changes, suchcountry. Although our distribution ratio across the U.S. is steadily

rates and make donations to food banks. For climate change,

as upgrading management capabilities and promoting diversity inincreasing, our product lineup is still relatively small compared to

we have set targets for reducing CO2 emissions by 30%* on a

our workforce. Toward this end, we must commence full-fledged

peer companies. Additionally, HI-CHEW brand’s recognition rate indomestic Group consolidated basis and net-zero GHG emissions

efforts toward the promotion of diversity and inclusion as our

by FY2051/3 based on a Group consolidated basis. To achieve

To speed up product development, we established our first-

1

the U.S. is 48%* , so there is still ample room for growth.
At the same time, we will establish a business structure that

corporate strategy.
The achievement of our Purpose and the 2030 Vision will3

4

these targets, management must take the lead in following the5

recommendations of the TCFD* .

enables us to further evolve and grow our entire value chain,depend on the capabilities of our people. Ten people will have ten

including bolstering production capacity. Furthermore, I feel thatdifferent opinions, and I hope to foster a corporate culture where

we need to accelerate the global brand strategy of HI-CHEW based

cooperation of local communities and customers. The Group has

everyone listens to these different opinions. As such, managementon our target to increase the overseas sales ratio to 15% or higher

been conducting the consumer-participation campaign of “Onewill need to lead by example in promoting diversity and inclusion.

by 2030.

We are promoting various initiatives with a sense of urgency, such

In the U.S., we are exploring various possibilities besides theas diversity and inclusion training for 370 managerial staff of the

HI-CHEW brand. One example is Chargel, a jelly drink launchedGroup. To increase corporate value, we will create a diverse andin 2022. The jelly drinks popular in Japan are still relatively

dynamic organization with the strength and flexibility to embrace

newcomers to the U.S. market, but I feel they offer great potential

and utilize the distinctive autonomy of each employee. Under

given the size of the market for energy drinks and energy bars.

our approach of “leveraging each person’s individuality,” we will

We believe that Chargel offers the same potential as HI-CHEW.

accelerate our promotion of diversity and inclusion to continuously

Popularizing an all-new product is no easy task. The Group’s

create innovation.

founder Taichiro Morinaga was a pioneer who popularized Western*2. Compared to the period of the 2018 Medium-Term Business Plan

confectioneries in Japan during the late 1800s when they werecompletely foreign to the market. Following this spirit, we will
tackle new challenges to further develop the Chargel business.
*1. Survey by Morinaga & Co., Ltd.

All these activities will be made possible through theMorinaga Group INTEGRATED REPORT 2022

©ACE
Left: Collection box for the in Jelly Recycling Program
Right: Delivering ingredients for school lunches
purchased with funds from Morinaga to a school in
Ghana*1. Consolidated basis. Paper covers product packaging only.
*2. Scope: Amount of plastics used in packaging materials (intensity; compared to FY2020/3;
including replacement with biomass plastics.)*3. Domestic Group consolidated basis. Intensity; compared to FY2020/3*4. Scope 1 + 2 (domestic Group consolidated basis; compared to FY2019/3.)*5. Task Force on Climate-related Financial Disclosures*6. Activities to co-create a sustainable society with customers by addressing the current
social situations and challenges in an easy-to-understand manner, through donation-linked
campaigns and information dissemination on our website.

One Chocolate for One Smile (Japanese only) https://www.morinaga.co.jp/1choco-1smile/
Morinaga Sustainable Project to Connect Smiles to the Future (Japanese only) https://www.morinaga.co.jp/sustainability/

As a Company Growing Sustainably with Stakeholders
As we work toward the 2030 Vision, we may be exposed toworking to become a Wellness Company that can contribute toother major changes in the external environment, such as politicalthe enriched and glorious life of people around the world with oursituation and international relations, and things may not always

Purpose as a compass guiding us to grow in a sustainable manner.

go according to plan. The number of businesses in the focuseddomain and our business structure may be different in 2030.
To be a company that continuously shines over the next 100
years, we will need to become a highly resilient company that can
flexibly respond to these various changes.
Going forward, with stakeholders by our side, we will continue

12

Governance Section

Eijiro Ota
Representative Director, President

Morinaga Group INTEGRATED REPORT 2022

13

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Sustainability Advisory Board

MESSAGE
Message

Objective of Establishment and Operations
The Morinaga Group established the Sustainability Advisory

experts along with four representatives from Morinaga, including

Board (SAB) in April 2022 as an advisory body to the ESG

the President, each director in charge of the Corporate Strategy

Committee. SAB’s mission is to accurately identify and respond

Division and Sustainable Management Division and the Executive

to the rapidly changing external environment and diversifying

Officer and General Manager of the Sustainable Management

needs of stakeholders, and raise the level of sustainable business

Division. Members shared their views on the Group’s initiatives for

management. Three outside experts specializing in such fields asachieving our Purpose and the 2030 Vision.

the SDGs business, ESG investment and diversity and inclusion

By reflecting the advice and recommendations received fromparticipate in SAB to provide advice and recommendations on the

SAB in future measures and initiatives, we hope to make steadyGroup’s strategies and initiatives.

progress with the implementation of sustainability management as

SAB’s first meeting was attended by these three outside

People affected by disasters have said that they would like to have their normal everyday
confectioneries in emergency preparedness kits. This is because they felt that eating somethingfamiliar would help ease their worries compared to the rations at evacuation sites. Adding
nutritional value to these confectioneries will truly provide “health of mind and body.” When
speaking of disasters, climate change comes to mind. The early achievement of carbon neutrality
is a must. I am very pleased to see that Morinaga announced its vision as company that societyneeds in terms of resolving social issues that harnesses its own strength (business opportunities)

well as achieve sustainable growth and enhance corporate value.

and mitigating risks, simultaneously. The key is the path to achieving this vision. Today, the world
faces immeasurable uncertainty and risks in the form of DX, resource depletion and geopolitics.
The basic business of confectioneries that can bury the gap between genders and generations

Schematics of Sustainability Promotion

Representative Director of
Virtue Design

Board of Directors

Mari Yoshitaka

offer a promising solution for achieving the SDGs. I would like to see Morinaga deeply engage
customers, shareholders, business partners, employees, and other stakeholders to develop
resilient and flexible management with a long-term perspective.

Advisory Body:
Sustainability Advisory Board

ESG Committee(Chairperson: Representative Director, President)

Secretariat: Sustainable Management Division

I can identify with Morinaga’s vision of becoming a wellness company that provides the three“Health of Mind”
Subcommittee

Sustainable Value
Subcommittee

Sustainable Procurement
Subcommittee

Environment
Subcommittee

values of “health of mind, body, and environment.” The Group’s products are no doubt appealing

TCFD
Subcommittee

to customers. I would like to see Morinaga use this concept to increase its presence as theMorinaga Group.

Relevant Departments and Group Companies

The foodstuff industry in particular is closely involved in the sustainability of communities andbiodiversity through the procurement of raw materials, and health of body is an important issue
for an aging society. Moreover, in a time like today, when society is divided and peace itself isthreatened, I hope that Morinaga can deliver "moments of relief” in the form of deliciousness andFirst Meeting of the Sustainability Advisory Board

enjoyment to people around the world.
I have witnessed firsthand changes in approach and behaviors of investors during the course

The main agenda items of the first SAB meeting held in May
2022 were as follows.

President of Takasaki City Universityof Economics

Takeshi Mizuguchi

Main Agenda Itemsof close to three decades of research in ESG investment and non-financial disclosures. Today,
investors are looking not only at risk and return but also impact. I look forward to working withMorinaga to explore the impacts of its vision of becoming a wellness company.

1. Morinaga Group Integrated Report 2021 and 2030
Business Plan
2. Disclosure of Non-Financial Information

At the beginning of SAB’s first meeting, we heard from President Ota how Morinaga established

3. Promotion of Diversity and Inclusion

its corporate philosophy using employee participation. Organizational reform requires not only
the commitment of top management, but also that employees buy into it. The meeting was cordial

1. SAB praised Morinaga Group Integrated Report 2021 foryet enthusiastic, and I found that Morinaga already has both in place.

on disclosure trends in recent years, such as the TCFD

conveying information concisely to investors and establishingrecommendations and requests for disclosure of human capital.

I have promoted gender equality globally (through international cooperation), nationally (inshared understanding of the concept of “health of mind, body,

3. For promotion of diversity and inclusion, SAB members provided

government policy), and locally (with local governments and NPOs.) Gender equality is a vitaland environment.” However, SAB shared the view that certain

advice and discussed relevant international standards and theelement of such frameworks and approaches as “SDGs/ESG investment,” “business and humanimprovements can be made to the 2030 Vision; for example,

considerations that should be made with a global perspective.

rights” and “diversity, equity and inclusion (DEI.)” Following this international trend and rapid

providing greater detail regarding the initiatives to change into awellness company.
2. Regarding disclosure of non-financial information, SAB provided
and discussed the latest domestic and overseas information

changes in Japan’s demographics and lifestyles, new public policies are being developed rapidly
These valuable opinions will be reflected in the Group’s futuresustainable business management and for the Group’s new value
creation.

even in Japan, including mandatory disclosure of gender pay gaps and enhanced childcare leave
President of Gender Action Platform(NPO)

opportunities for men. Through provision of the latest information and expert knowledge on
gender, human rights and DEI, I hope to play a role in helping Morinaga to achieve its 2030 Vision.

Asako Osaki

14

Morinaga Group INTEGRATED REPORT 2022

Morinaga Group INTEGRATED REPORT 2022

15

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

PurposeValue Creation Process for Achieving Our Vision for 2030

The Morinaga Group will continue to create healthy foods thatcan be enjoyed beyond generations, thereby bringing smiles to

To achieve 2030 Vision, we will create “the three values of health of mind, body and environment,” andthe faces of people around the world now and in the future.

realize sustainable growth by contributing to people’s wellness around the world.

2030 Vision
Materiality

Evolution of Management

Contribute to healthy lives ofpeople around the world

Promote management with a longterm perspective using our current
business model as a foundation

Diversity and inclusion of people

1. Promote Purpose-

Achieve sustainable value chains

driven Management

Conserve the global environment

2. Implement the 2030

Strengthen the business
management foundation

Business Plan
See pages 28 and 46

See page 18

We Will Change into a Wellness Company.
Customer value

Social value• Provide value of health to more than 70% ofJapan’s population through new initiatives
2
aimed at becoming a wellness company*

Employee value• Ratio of employees who find their job
meaningful at work and who are in good3
mental and physical health at work: 80%*

Customer value
Shareholder value• Rising health consciousness
through food
• Socioeconomic and lifestyle changes
brought about by the COVID-19
pandemic• Declining birthrate/ aging populationand contraction of Japanese market(labor shortages)• Changes in consumer behavior andbusiness model driven by the evolutionof digital technologies• Rising world population and climatechange, etc. (unstable raw materials
procurement)• Rising needs to resolve
social issues (SDGs and ESG
investment)

Employee value

Shareholder value

Social value• Management aware of capital costs• Realize a stable and consistentshareholder return

Economic value

External Environment

See page 28• Procurement ratio of sustainable raw
4materials: 100%*(cacao beans, palm oil, and paper)5• CO2 emissions: 30%* reduction• Use of plastics for in Jelly products: 25%
6
reduction*
7• Food loss and waste: 70% reduction*

Economic value *1• Net sales: 300 billion yen• Operating income to net sales ratio: 12% orhigher• Overseas sales ratio: 15% or higher• Focused domains’ sales ratio: 60%

Transition strategy

Management Capital (FY2022/3)[Financial capital]• Net assets: 131.1 billion yen• Shareholders’ equity ratio: 60.7%• Long-term credit rating: A stable (obtained
from JCR)

Business Model[Intellectual capital]• Patents owned:
176 in Japan and 105 overseas
Trademarks owned:
8535 in Japan and 596 overseas*• R&D expenses: 2.6 billion yen[Human capital][Social capital]• Relationships of trust with various
stakeholders built over more than 120 years
in the business• Many long-seller brands• Diverse raw materials with consideration forsustainability and close quality control

16

For whom• Consumers looking for adelicious, easy, and quick
nutritional support• Consumers looking to satisfy
a craving or refresh withconfections or ice cream

Development andmarketing

Procurement andmanufacturing• Plan and develop products thatmeet constantly changing needsfrom customer’s perspective• Process healthy ingredients in a
delicious manner• Stable procurement based onstrong partnerships with suppliers• Stable manufacturing of safeand reliable products by way
of proprietary mass production
technologies and sophisticatedquality management[Value provided to shareholders]

Logistics and sales• Distribute products utilizing
a stable logistics system anddiverse sales channels• Advertising and in-store
promotions for new products withfamiliar brands“in-” Business Direct Marketing U.S. BusinessBusiness

Dividends paid: 4.4 billion yen
Share buybacks: 1.4 billion yen
Total returns to shareholders: 5.9 billion yen[Morinaga’s value]

Frozen Desserts
Business

Domestic Confectionery
and Foodstuffs Business

10• Achieved record high net sales*• Growing net sales of focused domains• Receiving higher ESG scores from outside
institutions

Strengths of the Morinaga Group
Trust(history and brands spanningmore than 120 years)

Basic research/
Ingredient research

Food processing
technologies*1 The Company applied the “Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020)”, etc., from the beginning of FY2022/3. *2 Scope: Products defined as Deep dive into “health of mind,”Accelerate “health of body,” and Evolve “health of mind” to “health of body.” Population percentage calculated based on INTAGE Inc. SCI annual purchase rate (scope: consumers nationwide between the ages of 15 and 79.)
Going forward, the Company will explore establishment of a vision on a global basis. *3. Rate of positive responses on the employee awareness survey. *4. Group consolidated basis; paper covers product packaging.
*5. Scope 1 + 2 (domestic Group consolidated basis; compared to FY2019/3.)
Morinaga Group INTEGRATED REPORT 2022

• Delicious • Fun • Healthy • Nutritional• Convenient (easy and quick)9• Employee loyalty: 80%*
• Health management:
Certified Health & Productivity
Management Outstanding Organization[Natural capital][Value provided to customers]

Fast development and mass production of products that meet customer needs
and deliver them across a broad range of channels[Production capital]• Production sites:
8 factories in Japan and 3 overseas• 1 R&D center

Value Created (FY2022/3)

Outputs

Product developing
capability

Production technologies/
Mass production
technologies

Product distribution
capabilities and information
provision capabilities

Employee-friendly
workplace environment*6. Scope: Amount of plastics used in packaging materials (intensity; compared to FY2020/3; including replacement with biomass plastics.) *7. Scope: Food loss and waste occurring from receipt of raw materials to delivery(distribution) (domestic Group consolidated basis; intensity; compared to FY2020/3.) Excludes feedstuffs and fertilizers, etc., that are returned to the food resource chain. Food disposed of by incineration or in landfills isdefined as “food loss and waste.” *8. Number of rights owned as of the end of FY2022/3. *9 Positive responses to “I feel proud as a member of this company” on the employee awareness survey. *10 Accounting Standard
for Revenue Recognition retroactively applied.
Morinaga Group INTEGRATED REPORT 2022

17

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Materiality

The Morinaga Group’s Materiality
We identified the materiality that the Morinaga Group must address in order to achieve our Purpose andthe 2030 Vision.
Materiality

Main Challenges Included in Materiality

1. Develop delicious and healthy foods

1. Contribute to Healthy
Lives of People around
the World

Main Expected Opportunity and Risks(

indicates opportunities andindicates risks)● Growing business opportunities following the rising healthconsciousness of consumers
Declining market competitiveness over the medium to long termcaused by delayed response

Long-Term Targets for 2030 and
Their Response to SDGs

Provide value of health to more than 70% ofJapan’s population through new initiatives aimed
1
at becoming a wellness company*

Main Actions Ahead of 2030

Main Actions for FY2022/3 to FY2024/3

1. Develop and supply products that contribute to“health of mind and body”• Contribute to health through existing and new
products• Enhance R&D• Communicate with consumers

2. Develop products with new value in response to
consumer needs● Growing business opportunities and improving competitiveness bytapping into latent markets
Declining market competitiveness over the medium to long termcaused by delayed response

3. Develop sustainable products● Growing business opportunities from rising awareness ofsustainability among consumers

2. Develop and supply products with sustainable
value• Consider development of products withsustainable value● Increasing social trust
Declining social trust, brand value, and corporate value

3. Supply safe and reliable foods• Carry out quality management in line withinternational standards and certification
regimes on food safety• Disclose and provide appropriate information on
products

1. Foster people, culture, and organizations toachieve our Purpose and the 2030 Vision• Spread corporate philosophy• Entrench human resources development programs• Increase workforce in overseas business2. Foster organizations that are diverse anddynamic• Spread our Diversity and Inclusion Policy

3. Build workplaces that are healthy andcomfortable, and drive motivation• Reduce total annual working hours• Thorough health checkups for all employees• Improve mental health

1. Promote sustainable raw materials
procurement• Promote sustainable procurement in Japan(cacao beans, palm oil, and paper packaging
materials for products)

2. Promote CSR supply chain management• Formulate supplier guidelines and hold briefings• Conduct assessments

4. Food security and quality assurance
5. Appropriately convey social and environmental
information about products

2. Diversity andInclusion of People

3. Achieve Sustainable
Value Chains

1. Foster human resources to achieve our vision● Securing of talent needed to contribute to realization of our Purpose
and the 2030 Vision
Declining sustainable growth capabilities due to delayed response

2. Diversity and inclusion● Improving innovation capabilities and environmental response
capabilities
Declining organizational competitiveness and social reputation due
to delayed response

1. Sustainable procurement of raw materials● Achieving long-term stable procurement of safe and high-quality
raw materials
Growing risks surrounding procurement of agricultural raw
materials due to delayed response

2. Human rights and environmental issues in the
production stage of agricultural raw materials● Reducing human rights and environmental risks
Declining social trust, brand value, and corporate value

3. Reduce food loss and waste● Lowering costs by reducing manufacturing loss and returns
Declining social reputation due to delayed response

3. Reduce food loss and waste• Control food loss and waste and promote
recycling

4. Co-exist and co-prosper with local communities● Increasing social trust
Growing operational risks at business sites, etc.

4. Co-exist and co-prosper with local
communities• Collaborate with local governments and companies• Strengthen ties with communities near ourfactories

1. Respond to climate change issues• Endorsed the TCFD and disclosures following its
recommendations• Reduce CO2 emissions and introduce renewableenergy• Crystalize adaptation measures to climate change

1. Mitigate and adapt to climate change

Growing risks in procurement of agricultural raw materials
Rising production costs due to carbon taxes, etc.
Declining corporate value due to delayed response

4. Conserve the Global
Environment
2. Eco-friendly plastic containers and packaging alongwith recycling and reuse

5. Strengthen the Business
Management Foundation

Morinaga Group INTEGRATED REPORT 2022

1) Sustainable procurement of raw materials:
2
100% (cacao beans, palm oil, and paper)*2) CSR supply chain management: implement
for 80% or more of raw materials transaction
3value*
4
3) Reduce food loss and waste: 70%*1) Reduce greenhouse gas (GHG) emissions
5• Achieve net-zero GHG emissions by FY2051/3*
6• Reduce CO2 emissions by 30% by FY2031/3*
2) Reduce plastic waste: 25% reduction of plastics
7
used for in Jelly products*● Creation of innovation through external collaboration
Declining corporate value due to delayed response

2. Promote environmental consideration incontainers and packaging• Reduce use of plastics for in Jelly products• Consider recycling for containers of in Jelly
products

3. Effective use of water resources• Identify regions with high water stress• Efficient use of water resources

1. Strengthen corporate governance● Increasing management efficiency and corporate value
Declining evaluations from capital markets

1. Build a highly transparent and efficient
governance system• Comply with Japan’s Corporate GovernanceCode

2. Globalize management foundation (strengthen basefor overseas expansion and respect local cultures,etc.)● Acquiring trust from countries and regions where we operate● Increasing ability to promote and implement management strategy

2. Promote globalization of managementfoundation• Organize requirements for globalization ofmanagement foundation• Develop infrastructure and formulate action plan

3. Reinforce human rights management• Conduct training on business and human rights

3. Human rights management

Damage to social trust, brand value and corporate value

Instead of uniform targets for 2030, we promoteresponse to individual issues as needed

4. Address next-generation food technologies (nextgeneration food services, DX and robotics, etc.)● Improving productivity● Growing business opportunities from innovation

4. Evolve business operations using DX• Streamline operations with IT• Consider data utilization system that helps
improve competitiveness5. Increase social trust and reputation throughdisclosure of ESG information● Increasing social trust and corporate value

5. Increase ESG information disclosures• Disclose information on website, etc.

*1 Scope: Products defined as Deep dive into “health of mind,” Accelerate “health of body,” and Evolve “health of mind” to “health of body.” Population percentage calculated based on the INTAGE Inc. SCI
annual purchase rate (scope: consumers nationwide between the ages of 15 and 79.) Going forward, the Company will explore establishment of a vision on a global basis. *2. Group consolidated basis;
paper covers product packaging. *3. Group consolidated basis.

18

Rate of positive responses on the employee
awareness survey: 80%
1) Morinaga Group’s contributions to building asustainable society2) Corporate growth driven by diverse workforce
3) Employee motivation and achievement of“health of mind and body”

Results of
FY2022/3 for Our
Long-Term Targets

Reviewingdetailed
requirements

P50-51

P52-53

1) P54-55
2) Reduction inconsideration

P60-69*Human rights P58*4. Scope: The data is based on domestic Group consolidated basis; intensity; compared to FY2020/3. Food loss and waste occurring from receipt of raw materials to delivery (distribution.) Food loss andwaste is defined as food product waste disposed of by incineration or in landfills, excluding food product waste that can be recycled as feed or fertilizer. *5. Group consolidated basis. *6. Scope 1 + 2 (domestic
Group consolidated basis; compared to FY2019/3.) *7. Scope: Amount of plastics used in packaging materials (intensity; compared to FY2020/3; including replacement with biomass plastics.)

Morinaga Group INTEGRATED REPORT 2022

19

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Special Feature

Challenges the Morinaga Group Aimed at
Becoming a Wellness Company

Becoming a Wellness Company by 2030
In 2021, the Morinaga Group established the 2030 Vision
to outline the position we want to be in by 2030 in fulfilling

Quest for Health since Our Establishment

Change intoa Wellness Company

our Purpose. This vision declares that we will “Change intoa Wellness Company” that contributes to a sustainable

The Group’s quest for health begins with the founder Taichiro

continue striving to provide value for customers of all generations

and fulfilling society by continuously providing the threeMorinaga’s idea to bring delicious and highly nutritious Westernand lifestyles by harnessing these capabilities as our strengths.

values of health (health of mind, health of body, and healthconfections to Japan and the statement of “rich in nourishment

Particularly, the business environment has changed in various waysof environment) to the three stakeholders of customers,/ exquisite flavor,” as written on the package of Milk Caramel.

as of late during the COVID-19 pandemic. This is increasing theemployees, and society. By achieving this 2030 Vision, we

Since then, for over 120 years, we have been striving in our basic

importance of not only "health of body" but also "health of mind.”

aim to realize sustainable growth and enhance corporate

research, food processing technology, product developing capability,

We will continue to meet changing customer needs, embracing thevalue for the Group.

production technology, and product promotion capability, in order tochallenge of further evolution while using the Group’s past research,

consistently provide customers with values over the age. Today, we

technical prowess and knowledge as a foundation.

Three values
to provide

Values areprovided for

Health of

Health of

Health of

mind

body

environment

Customers

Employees

Society

Value Provided to Customers Aimed at Becoming a Wellness Company
Basic research andmaterials research

Food processing
technology
Product developing
capability

Production technology
and mass production
technology

Product promotion andinformation provision
capacities

Functionality research on protein + E lutein*1 (effect on muscle mass from simultaneous intake)
Functionality research on collagen (impact on skin, knees, bones, etc.)
Functionality research on amazake and cocoa powder drink(health effects of continued intake: improvement of blood flow, etc.)

Research on sirtuin (long-life gene) of PassienolTM*2
Joint research with external institutions on “health of the mind”

Morinaga Group INTEGRATED REPORT 2022

Health of

mind

body

Further evolution of technologies of jelly drink, confectionery in sub-zerotemperatures, and soft candy
Deep exploration of compounding and processing technologies that balance taste
with nutritional ingredients and reduction of carbs and calories
Product development based on the changing needs of customers
Deep understanding of customers

Customers• Development of low-carbs and low-calorie in Jelly products• Development of reduced-sugar HI-CHEW• Pursuit of the great taste of Morinaga Collagen Drink and in Bar Protein• Construction of data platforms and initiatives to enhance customer experience value, etc.

Contribute to customers’ “health ofPromotion of smart factories that will realize safe, secure, and highly efficient production

mind and body” through provision of• We will combine our long-standing production technologies with digital data from manufacturing
facilities to increase the stability of operations and improve production efficiency (promote DX).

Development of mass production technology through strong collaboration between
R&D departments and manufacturing departments• Establishment of dedicated organization responsible for promoting mass production technology
development in the R&D Center and integrated management from product development to manufacturing

Enhancement of proposals to meet the health needs of customers
Increased information dissemination of protein and collagen, etc., on website and innewspaper advertising, etc.
Initiatives for co-creation with consumers towards a sustainable society• Creation of sales displays emphasizing seasonal health needs (heat stroke countermeasures)and preparations, etc., for poor health• Donation-linked campaigns (“One Chocolate for One Smile” and “Project to Connect Smiles to
the Future”)• Operation of website where visitors can easily learn about sustainability using Kyorochan*1 A type of polyphenol with strong antioxidant effect.
*2 A first-ever proprietary food ingredient developed by the Company containing extract from passion fruit seeds containing piceatannol (a type of polyphenol.)20

Health ofdelicious and sustainable values
Relax and refresh

Nutrition supplements
such as energy and vitamins

Replenishing protein

Replenishingwater and salt

Low-carbs andlow-calories

Safe and reliable“R&D” https://www.morinaga.co.jp/company/english/rd/“One Chocolate for One Smile” (Japanese only) https://www.morinaga.co.jp/1choco-1smile/“Project to Connect Smiles to the Future” (Japanese only) https://www.morinaga.co.jp/sustainability/
Morinaga Group INTEGRATED REPORT 2022

21

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Special Feature: Challenges the Morinaga Group Aimed at Becoming a Wellness Company

R&D[2030 Vision]

Health of Mind and Body of Employees
Supporting the Change into a Wellness Company[2030 Vision]

Supporting the Change into a Wellness Company
Promoting Value Creation and Co-Creation for the Future

Promotion of Health Management

Initiatives for 2030

Opening of New Research Center

Health Management

The Health Promotion Committee creates the philosophy

We will promote the following initiatives to realize health of mind

In spring 2022, we opened Morinaga R&D Center to generate new

For the Morinaga Group, employees are vital stakeholders, andand policies, analyzes issues, defines targets, and plans andand body with technology. We plan to increase R&D expenses invalue for customers aimed at the future pivoting around technology.

they will play an important role in the Company’s change into a

formulates initiatives. Under the leadership of the Chief Health

In August 2022, this facility received the New Office Promotion

wellness company by 2030.

Officer (CHO), who reports directly to the President & CEO,stages, boosting spending in FY2031/3 (single year basis) by 150%
or more compared to FY2021/3.

Award in the 35th Nikkei New Office Award program, which

1. Deep dive into health of mind

recognizes offices that are both comfortable and functional. We

We believe efforts to maintain and improve employees’ health of

we will continue to strengthen information sharing and themind and body will energize the organization, boosting productivity

coordination system involving industrial health staff and theWe will begin sensitivity research of Choco Monaka Jumbo and HI-

are committed to tackling challenges associated with the creationand increasing employee’s vitality. We are now enhancing theseMorinaga Health Insurance Society, promoting cross-functional

CHEW and work on the visualization of emotional value of eachof new value while encouraging co-creation inside and outside theinitiatives under the Morinaga Health Declaration of 2018.

initiatives for our employees to realize an enriched, glorious life.

Group and encouraging researchers to work dynamically.

While using the declaration as a guideline, we will continue to

product.

strategically promote health management, linking together our

2. Accelerate health of body
We will enhance the nutritional value of products such as via deep“The 35th Nikkei
New Office Award” logo

diversity and inclusion. By creating a workplace environment

Employee Awareness Survey

manner and the development of food with functional claim. We will

where employees are proactive and healthy, we will work towardenhance research on “E lutein,” which strengthens the function of

the Morinaga Group’s sustainable growth and continue to create“Employees find their job meaningful at work andthey are in good mental and physical health at work.”

exploration of technologies that provide protein in a deliciousTM

better value for society.

protein, along with the proprietary developed called Passienol .

Rate of positive responses:

3. Evolve from health of mind to health of body
We believe that there will be growing preference among consumers
for indulgence items to be healthy. Following this trend, we will add
nutritional elements to products and reduce carbs.
Specifically, we will develop products that contain protein andMorinaga Health Declaration

Connect Park, an open meeting area around a large
stairway connecting the third floor trial product area andfourth floor testing area. The space is flat and conducive
to discussions, which provides a backdrop to improved
communication and daily intense meetings.

As an enduring, sustainable company, we willoffer employee health programs for everyone
working at the Morinaga Group in order tocreate food that benefits a healthy mind andbody and to contribute to the realization of asustainable society where everyone can smile.

various lactic acid bacteria, develop with reduced carbs and calories,
and conduct functional research on amazake, cocoa powder drinks,
and Morinaga Ramune (glucose), etc.

1. We support each and every employee to ensure they
can increase their health awareness and independently
maintain and improve their own health.

4. Strengthen R&D functions in the U.S.
We established R&D Lab in the U.S. for speeding up localized productdevelopment, cultivating new needs in the U.S. wellness market,

2. We seek to increase employee engagement by promoting
diversity management and supporting employee efforts
and their autonomous growth.

quickly entrenching Chargel in the marketplace, and further evolving
HI-CHEW such as reduced-sugar type. Going forward, we will further
expand R&D functions.

3. We provide a work environment where our employees canwork in safety and comfort.

“MoLiving,” a test kitchen designed based on the LDK (living,dining, and kitchen) layout of a typical home. Employees
play the role of customer in preparing and sampling new
food ideas.

For the in Jelly series, we have been evolving technology byfocusing on the right texture and taste since its launch in 1994.
We change textures based on product characteristics and after
finding the right combination or blend from among countlessgelling agents tailored to concept and flavoring. We have been
pursuing blends that balance the taste and texture of eachproduct because the texture created with each gelling agent
affects flavor and drinkability.
In Jelly Multi Vitamins Zero Calories, revamped and releasedin spring 2022, feature a solid texture as a product in response
to consumers looking to satisfy a craving but with lower sugar
and calories. In addition to the fact that flavor lessens withharder textures, there are restrictions on the raw materials thatcan be used to lessen sugars and calories, and it was difficult
to bring out the deliciousness, but we managed to balance bothMorinaga Group INTEGRATED REPORT 2022

80%

In implementing health management, we have set the above
targets recognizing that each employee must play an active role
while finding their job meaningful and understanding their own
mental and physical health.
We are implementing measures for (1) health of mind, (2)health of body and (3) developing an employee-friendly labor
environment, aimed at better health management.
For “health of mind”, we maintain a stress check uptake rate of
90% or higher, carry out various measures based on stress checkanalysis results, and offer seminars that educate employees on
how to deal with stress and on health issues unique to women.
For “health of body”, we are working to reduce total annual
working hours and maintain the health checkup uptake rate at
100%. In FY2022/3, at our Health Forum led by an industrial

Health Management Promotion Structural Chart

We will Further Evolve Jelly Drink Technologies and Support Product Development
in Response to Customer Needs.

22

Targets and Initiatives

initiatives for work style reforms, increased engagement, andThe following diagram illustrates our promotion structure forhealth management.
President & CEO

physician and others, we organized a lecture on the importanceof health checkups. In addition, we hold Morinaga Calisthenics ateach business site based on an idea proposed at the Morinaga“in” Training Lab, which helps to alleviate shoulder stiffness andprevent lower back pain. We are also holding events that establish

Chief Health Officer (CHO)
Director responsible for Human Resources Division
Health Promotion Committee (Chairperson: CHO)
in Jelly Multi Vitamins
Zero Calories

Committee members: Human Resources Division, Morinaga Health
Insurance Society and general occupational health physician
Coordination

Preparing trial productthe texture and deliciousness required thanks to our blending
technology.
We will continue working to develop new products andimprove existing products so that they can be enjoyed by evenmore consumers.

Corporate Strategy Division
Sustainable Management DivisionCorporate Communications Division

Supervisors of business sites andheads of divisions
Persons in charge of healthmanagement and industrial health staff

individual goals for health promotion.
For “developing an employee-friendly labor environment,” weare working to prevent the spread of infectious diseases withstaggered working hours and working from home, washing anddisinfecting hands upon arriving at work, and maintaining social
distancing in seating arrangements.
Going forward, we plan to enhance initiatives for seniors, todevelop a workplace where seniors with greater experience andadvanced skill sets can play a more active role. We are exploring
the creation of a mechanism to encourage employees to be aware

Dissemination of health management
information to internal andexternal parties

Sharing of issues with all employees,
implementation of measures, alignmentof awareness/knowledge levelsof changes in their physical and mental functions (introduction ofphysical fitness measurement, etc.), support for maintaining andimproving these functions, and relevant training.

Morinaga Group INTEGRATED REPORT 2022

23

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Build Business Foundation Linked with Business Strategies

Message from the CFO
Policy 1. Financial Stability and Funding
Aimed at 2030
The Morinaga Group’s basic policy is to ensure a certain level ofenvironment, uncertainty in the business environment, andTetsuya Takagi

management risks increase. On top of this, financing will bemaintaining our stable financial base.

executed after comprehensive consideration of the appropriate

Director,
Senior Executive Officer

level of cash on hand, funding costs and other conditions,shareholders’ equity ratio level, and impacts on financial indicatorssuch as ROE and ROIC to reach the optimal capital structure.

2021 Medium-Term Business Plan and Review of FY2022/3

During the period of the 2021 Medium-Term Business Plan, we

In the 2021 Medium-Term Business Plan, the Morinaga Group(market value basis) to net assets declined from 29% to 8%. Goingis working diligently to realize “Build a New Foundation forforward, we will continue working to streamline our balance sheet

Dramatic Growth.” In FY2022/3, we posted record high net

further and improve capital efficiency.

are planning to create operating cash flow of around 72 billion yen
over three years while also improving CCC* and reducing inefficientand double digit growth of the focused domain designated in

2

FY2022/3

Net sales

168.2 billion yen

181.2 billion yen

190.0 billion yen

Operating income

19.1 billion yen

17.6 billion yen

21.5 billion yen

Operating income to
net sales ratio

11.4%

9.8%

11% or higher

Consequently, we will implement prompt and accurate priceOverseas sales ratio

7.0%

9.1%

9% or higher

revision, cost reduction, and improve expense management andFocused domains’sales ratio:

46.0%

48.8%

+5 points

ROE

11.8%

the 2030 Business Plan. While steady progress was made withbusiness portfolio optimization, profitability somewhat declined
due to soaring raw material prices and increased burden
from investments in future business growth. Raw material
prices are expected to remain elevated over the medium-term.

investment efficiency to address these risks.
In addition, it is the Group’s policy to reduce cross-shareholdings
from the viewpoint of improving capital efficiency. In FY2022/3, werecorded a high level of ROE at 22.0% following the extraordinary
profit from the partial sale of our stake of common stock in Morinaga
Milk Industry Co., Ltd. and others. Excluding this extraordinary profit,
ROE was still double digits at 10.1%. The ratio of cross-shareholdings

FY2024/3 Targets

22.0% (10.1%)*4

3

or higher*

10% or higher*1. Accounting Standard for Revenue Recognition applied retrospectively*2. Since the Company applied the “Accounting Standard for Revenue Recognition (ASBJ
Statement No. 29, March 31, 2020)”, etc., from the beginning of FY2022/3, the figures forresults in FY2021/3 used for year-on-year comparisons have been calculated following
retrospective application of said accounting standard.
*3. Comparison with the average during the period of the 2018 Medium-Term Business Plan
*4. When excluding the impact of extraordinary profit from the sale of cross-shareholdings

We will invest in growth to enhance corporate value over the[Shareholder Return
Policy]Main Capital Investments in FY2023/3
Category

Investment Details

investments and manage investments fully aware of capital costs

Machinery and equipment
for production subsidiaries

Support stable growth of frozen
desserts business

Focused Domain-U.S.
Business

Expansion of HI-CHEW
production line for Taiwan
Morinaga Co., Ltd.

Support accelerated growth of the
U.S. business

Increase productionof biscuits at Takasaki
Morinaga Co., Ltd.

Support accelerated expansion in thegrowth category of biscuits

Update equipment of
Chukyo Factory

Provide a stable supply of safe andreliable products

Reconstruction of former
R&D center building, etc.

Consolidate sites of Group companies(Morinaga Institute of Biological
Science, Inc. and Morinaga Business
Partner Co., Ltd.)

while continuously monitoring the investment return status post
investment.
As a target area of investment, we will prioritize investments inthe focused domain, including investments for inorganic growthsuch as business alliances and M&A, aiming for dramatic growth.

Basic DomainConfectionery andFoodstuffs BusinessBusiness FoundationTsurumi Factory

investment in intangible assets such as advertising, R&D, and DX.
Toward this end, we will enhance our financial management

Policy 3. Implementing Shareholder Return Policy

over the medium- and long-term following the three policies

proactive investments in growth and by maintaining our stable

outlined below.

financial base. Aimed at achieving the 2030 Business Plan, we

1. Financial stability and Funding

The Morinaga Group’s basic policy is to offer stable and consistent

will contribute to all stakeholders by implementing “capital cost

2. Investments in Corporate Value

shareholder returns backed by a solidified business foundation.

3. Shareholder Returns

As for shareholder returns, we will seek to raise dividend on equity

2.8%(DOE), an indicator of capital policy, over the medium- to long-term

25.3%

1
Policy for ensuring
financial security and financing

Financial risk management

Morinaga Group INTEGRATED REPORT 2022

Aim

Others: Extension of smart factory equipment as well as introduction of energy-saving andeco-friendly equipment, etc.

sustainably and achieve consistent shareholder returns using

2
Implementing financial
strategy with an awareness ofcapital costs

3• Stable and consistent shareholder returns• Raising DOE levels over the medium tolong term• Consider dividend payout ratio of around 30%• Prompt share buybacks

Focused Domain-Frozen
Desserts Businessthe basic domain for underpinning sustainability management, andRealize sustained increase in corporate value and stable shareholder returns

24[Investment
Management]

medium to long term. We clarified our decision-making criteria for

Additionally, we will create a foundation for new value creation by

The Morinaga Group’s basic policy is to increase corporate value• Secure funds in preparation for risks(appropriate level of cash on hand)• Pursue optimal capital structure• Optimize capital cost levels (WACC)• Manage capital efficiency indicators(ROE and ROIC)• Secure funding methods (preparatory
funds for investment and working capital)• Approx. 45 billion yen capital investment overthe plan’s three years• Investment in inorganic growth (M&A andalliances)• Increased investment in intangible assets(advertising, R&D and DX)

Policy 2. Investing to Increase Corporate Value

will produce the seeds of future business growth, investment inmanagement” and maximizing corporate value.

• Maintain and improve credit ratings as well as
review and tighten financing conditions

Cash Allocation*An acronym for Cash Conversion Cycle. An indicator showing the number of days frompurchase obligation to collection of accounts receivable.

increasing investment in the exploration and research domain that

Medium- and Long-Term Financial Strategy• Optimize capital cost (WACC)• Improve asset efficiency (improve CCC andreduce inefficient assets)

as well as to offer a stable and consistent shareholder return.

FY2021/3• Shareholders’ equity ratio level ensuring
financial security[Capital policy]

we will arrange financing in a way so as to undertake investments

KPIs in the 2021 Medium-Term Business Plan*• Secure funds in preparation for risks(appropriate level of cash on hand)

Funding based on
the optimal
capital structure

assets. Moreover, with an eye toward the optimal capital structure,1

sales* amid the signs of recovery from the COVID-19 pandemic

Ensuring
financial security• Create approx. 72 billion yen over the plan’s
three years (Depreciation approx. 33 billion yen)

Total of 16 billion yen

We will sustainably increase corporate value and achieve consistentshareholder returns using proactive investments in growth and by

Creation of Operating
Cash Flow

Management aware of capital costs

financial security in preparation for changes in the macroeconomic

Shareholder
returns policy

Investment activity forraising corporate value• Clarify decision-making criteria for investments
based on capital costs• Continue to follow up investment returns• Prioritize domains for investment• Pursue asset efficiency• Provide stable and consistent shareholder returns• Increase medium- to long-term DOE level• Consider dividend payout ratio and free cash flow
• Buy back share flexibly with an aware of
total shareholder return ratio

Financial governanceCash management

Shareholder Returns
3.6%

3.5%

3.6%

26.7%

33.5%

30.0%

(Excludes extraordinary
income)

41.1%

16.3%

130

59
14

87

44

43

35.3%

while considering dividend payout ratio level and free cash flow. In
addition, we will also consider prompt approaches to share buybacks

84

as needed with an eye toward the total shareholder return ratio.
In FY2022/3, in addition to paying a year-end dividend totaling
4.4 billion yen, we approved share buybacks up to 10 billion yen*,

3.6%

3.5%

(Target)DOE**Dividend on equity
Dividend payout ratio

26
50

33

36

40

66

72

80

90

90

2017

2018

2019

2020

2021

2022

Share buybacks (Billion yen)

Dividend (Billion yen)
Dividend per share (Yen)(Tentative)of which we used 1.4 billion yen. We will continue to enhanceshareholder returns and increase capital efficiency going forward.
We recognize that implementing management aware of capitalutilize valuable opinions gained through dialogue with stakeholders

costs through these financial strategies is one of our top priorities.

and IR activities to management activities in an effort to increase

Going forward, we will further enhance information disclosures andcorporate value in a sustainable manner.

*Acquisition period: March 1, 2022 to February 28, 2023

Morinaga Group INTEGRATED REPORT 2022

25

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Build Business Foundation Linked with Business Strategies

Message from Officer Responsible for Human Resources
Initiatives in FY2022/3
Aimed at 2030

We are working to achieve employee happiness by encouraging their

Masaaki Takahashi
Senior Executive Officer
General Manager of
Human Resources Division

autonomous growth based on mutual relationships of trust with the company
and to continuously generate value for society, all in an effort to achieve theCompany’s sustainable growth.

Medium- to Long-Term Strategy
Our basic human resources strategy is to balance development of

employees. The Group has positioned diversity at the center of its

human resources for achieving the 2030 Vision with the autonomous

management, and is developing a workplace that fosters the active

growth and self-sustaining career development of employees. The

participation of diverse human resources.
Looking towards 2030, we aim to disseminate our corporate

main tasks of our human resources strategy are to train future
leaders to develop leadership skills for driving the business, foster

philosophy and the 2030 Vision, and to achieve sustainable growthand secure human resources with advanced expertise and further

through continuous training of human resources who will makeincrease productivity. Additionally, we are promoting a variety ofthese a reality.

human resources measures to foster the self-sustaining career ofPlease see page 50-51 for our approach to diversity.

In FY2022/3, we implemented the succession plan for training futureand shared knowledge on how to resolve issues using case studies

leaders and improved managers’ management skills and ability

in order to improve management skills.

to develop their team members. We also strengthened efforts topromote self-sustaining career development among employees.

We launched an initiative for envisioning one’s self-image in 10

Implementation of Succession Plan

years which creates an opportunity for employees to reflect on their

We are implementing systematic training for candidates ofstrengths, weaknesses, and values. In addition, we conduct events to

executives, general managers, and group managers. We conduct

highlight each division to provide employees with an understanding

one-on-one coaching to foster new knowledge and insight asof our business operations and to consider specific career paths.

well as programs to promote inspiration and challenges between
employees of the same job position of different companies. A totalof 38 employees have participated in training for future leaders overthe previous three years. This training intends to develop candidates
for group manager positions.

Enhancement of Managers' Management Skills
and Abilities to Develop Team Members
We held a new training session for employees of all job types. The
training fostered the skills of effective coaching and development

Human Resources Strategy for Achieving Our Purpose and the 2030 Vision

Promotion of Self-Sustaining Career Development

Management skills and nurturing skills enhancement
training. Held 24 times.

Human Resources • Foster human resources aimed at achieving the 2030 Vision• Promote autonomous growth and self-sustaining career development
Strategy

Looking Ahead

PurposeMain Issues

Realization
2030 Vision• Training future leaders• Foster and secure human resources with advanced expertise• Further increase productivity

Employee
Happiness

Human Resources
Measures• Create succession plan as well as foster future leaders and humanresources with global mindset• Strengthen human resources development to enhance specialized skills• Increase skills by enhancing the human resources development system
and review operations

We will further implement initiatives to (1) achieve self-sustaining
career development for employees, (2) encourage active
participation at work from senior employees, and (3) foster andwe will clarify the required skill sets for R&D, overseas

secure human resources with advanced expertise.

business, accounting, and DX to accelerate the development of(1) To achieve self-sustaining career development of employees,

essential skills, and conduct recruitment of new graduates andwe will disseminate the Morinaga Group’s Approach to Career

mid-career personnel based on this criteria.

Development (Protean career) throughout the entire Group.

Through these initiatives, we seek to implement our human(2) In order to encourage active participation at work of senior
employees, we will develop new training programs for reskilling

Foster Human Resources Aimed at Achieving the 2030 Vision
We have identified an ideal employee profile and required skills,

both on-the-job training (OJT) and off-the-job training (Off-JT)

and are conducting skill development of employees based onwith regular evaluation of one’s skills and actions. Among these,

these criteria. We offer human resources development programs,

we have over 180 learning options in the elective training for Off-including position-specific training, elective training, as well as

JT. This initiative fosters deeper self-awareness and encourages

training to enhance the six required skills. Our human resources

a cycle of self-directed learning among employees, which in turndevelopment program offers a system to develop skills throughsupports their autonomous growth.

Ideal profile ofemployee

Employee who possesses entrepreneurial mindset and looks
outwardly, and is capable of making decisions from higher perspective

Employee who is capable of acting independently to embracechallenges without being content with the current situation

Employee who is capable of producing results byengaging others in order to achieve the Vision

Embracing challenges

Execution

Nurturing and self-development

Organization

Required skills

26

Morinaga Group INTEGRATED REPORT 2022

Ideals for self-sustaining career development• Values to honor

Can

Must

What you are capableof, what you possess

What you are expected to do• Characteristics and traits
Planning and development

growth.

Will(knowledge, skills, experience)
Problem identification

resources strategy, and further enhance the Group’s sustainable

Morinaga Group’s Approach to Self-sustaining Career Development

What you want to do/achieve
Employee who is capable of grasping and thinking throughthe essence of matters from a wide perspective

senior employees and promote their active participation.
(3) To foster and secure human resources with advanced expertise,(expectation from the company,
improvement and changes)• Barriers to overcome• Roles to fulfill

Our ideal career development—Protean career—ischaracterized by the ability to transform in the faceof environmental changes and enhance one’s skills
with the mindset that a career is individually driven.
We seek to integrate “Will, Can and Must” byensuring that employees know (identity) and change(adaptability) themselves.

Morinaga Group INTEGRATED REPORT 2022

27

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Long-Term Business Plan

2030 Business Plan
Financial and Non-Financial Targets for 2030

The Morinaga Group formulated the 2030 Business Plan as a long-term business plan aimed at 2030 in order*1

to enhance corporate value by achieving medium- to long-term growth while contributing to the realization of

Financial Targets

a sustainable society under its new corporate philosophy.

Net sales:

300 billion yen

Operating income to
net sales ratio:

12% or higher

Ratio of employees who find their job meaningful andwho are in good mental and physical health at work:

80%*3

The Morinaga Group will Change into a Wellness Company in 2030.

Overseas sales ratio:

15% or higher

Procurement ratio of sustainable raw materials(cacao beans, palm oil, and paper):100%*4

We will further evolve reliability and technology built on in our 120-year history to support people’s wellness lifestyles in all generations worldwide.

Focused domains’ sales ratio:

60%

CO2 emission reduction:

30%*52030 Vision

We formulated the 2030 Vision to outline the position we intend to be in 2030 as the Group’s goal of the 2030 Business Plan. The Morinaga
Group has cultivated its brand and enhanced its technical prowess during the course of its more than 120-year history supported by thetrust of customers. Looking ahead, the Morinaga Group will seek to achieve sustainable growth through value creation in “health of mind,
body and environment,” which will drive its change into a wellness company.

Non-Financial Targets

70

Provide value of health to% or more of the Japanese population
through new initiatives aimed at becoming a wellness company *2*1 The Company applied the “Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020)”, etc., from the beginning of FY2022/3.
*2. Scope: products the Company defines as “Deep dive into ’health of mind’”, “Accelerate ’health of body’”, and “Evolve ’health of mind’ to ’health of body’.” Population percentage calculated based on the INTAGE
Inc. SCI annual purchase rate (scope: consumers nationwide between the ages of 15 and 79.) Going forward, the Company will explore the establishment of a vision on a global basis.
*3. Ratio of affirmative answers on the employee awareness survey *4. Consolidated basis; paper covers product packaging only. *5. Scope 1 + Scope 2 (domestic consolidated basis compared to FY2019/3)

Three Basic Policies and Strategies
Policy 1: Improve profitability through business portfolio optimization

Basicand structural reforms
Policies Policy 2: Build business foundation linked with business strategies

Policies

Improve Proﬁtability through Business
Portfolio Optimization and Structural Reforms

PolicyFocused domain
category

Basic domain
category

Exploration &Research domain
category

Structural Reforms for Functional Sectors

Sustainable Business Management

Business Portfolio Optimization
High

Growth potential

Business Foundation

Strategies

1

Policy 3: Promotion of diversity

Component Ratio

Focused domain category: ~ driving growth ~“in-”

DirectMarketingU.S.

Frozendesserts

businessbusinessbusinessbusiness

40%

60%

Europe, etc.)• Digital and others

2018
Medium-TermBusiness Plan

2030

(average during term)

Contribution to “Health of Mind, Body, and Environment”

Stable Cash Generationfrom the Basic Domain

We will seek to achieve steady and high sales
growth and enhance earnings while further
increasing the added value in order to contributeto “health of mind” and “health of body” of ourcustomers.

Initiatives in the
Exploration and Research
DomainCreating new businesses and incorporating theminto our business portfolio looking toward 2030
and beyond

Improving Earnings Powerthrough Structural
Reforms Mainly Targeting
Functional Sectors

Implementing structural reforms mainly targetingprocurement, manufacturing, logistics, and sales
in order to prepare for various management
risks, aiming to further increase earning power

Human Resources
Strategy

Enhancing human resources management from a
global standpoint to realize our Purpose and 2030
Vision40%

Exploration & Research domain
category: ~ business creation ~• Global (China, Southeast Asia, Oceania,

By deploying management resources to thefocused domain in a concentrated manner, we
will drive the Group’s growth.

60%

Basic domain category: ~ cash generation ~Domestic confectionery & foodstuffs
business, Operating subsidiaries in Japan+ Taiwan

Concentration ofManagement Resources
on Focused Domain

The Morinaga Group defines wellness as “the state of realizing or pursuing an enriched and glorious life on the basis of health of mind, body, andenvironment.” By providing the three values of “health of mind,” “health of body,” and “health of environment” to the three stakeholders of customers,
employees, and society, the Morinaga Group will achieve sustainable growth.

Customers x “Health of Mind” and “Health of Body”
We are further evolving the values we provide in order to contribute to “health of mind”
and “health of body” of customers through all our products. Under “health of mind,” we will
enhance emotional values using a science-based approach to further enhance customer
satisfaction. Under “health of body,” we also address health needs through food by further
enhancing the value we provide via the development of food with functional claim.

Change intoa Wellness Company
Three values
to provide

Health of

Health of

Health of

Employees x “Health of Mind” and “Health of Body”

mind

body

environment

We will further promote work style reforms along with health management including
mental healthcare to foster an organization where employees find their job meaningful andcan share their skills dynamically.

2

PolicyR&D Strategy

28

Customers

Morinaga Group INTEGRATED REPORT 2022

Employees

Society

To achieve customer wellness, we believe it is essential not only to make our foods delicious
and healthy, but also to ensure that our manufacturing process producing these foods and thevalue chain are sustainable. Therefore, we are working to address social issues related to ourbusiness, such as food loss and waste, human rights issues, and environmental issues, aiming
to achieve an environment where customers truly feel deliciousness in the foods we make.

3

Policyfocused domain

Build Business Foundation Linked with
Business Strategies

Society x “Health of Environment”
Values areprovided for

Promotion of Diversity

Evolving highly competitive and important
technologies to underpin the growth of the

Financial Strategy

Increase corporate value by implementing
management that is fully aware of capital costs ina sustainable manner.

DX Strategy

Strategically introducing and utilizing digitaltechnologies to strengthen the managementfoundation and business competitiveness

Under the belief of “leveraging each person’s individuality,” seeking to realize
an organization where our diverse workforce can exhibit their skills, andencouraging innovation capable of creating value for customers and society

Morinaga Group INTEGRATED REPORT 2022

29

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Long-Term Business Plan

2030 Business Plan: Progress of Key Measures
FY2022/3 Activities to Achieve Targets for 2030
Net sales in the focused domain which are “in-” business, direct marketing, U.S. business, and frozen desserts business steadily grew,helping the focused domain sales ratio achieve the goal of the third year of the 2021 Medium-Term Business Plan. We worked to improvedeclined compared to the previous year due to soaring raw materials prices and depreciation expenses from capital investments.
The following table contains details of the results and progress of 2021 Medium-Term Business Plan.

the profitability of the domestic confectionery and foodstuffs business in the basic domain. However, the operating income to net sales ratio
Target State in 2030

“in-” Business

FocusedDirect Marketing Business

Aiming to become No. 1 brand among foods supporting“health of mind and body” centering around sports

Evolving into a healthcare business supporting realization ofcustomers’ wellness

DomainU.S. Business

Growth of the U.S. business through expanding the Hi-CHEW brand andcreating a jelly drinks market

Key Measures

1. Growth of in Jelly Products
2. Growth of in Bar Products
3. Creation of New Foods Leveraging the “in-” Brand

1. Evolution of existing businesses using digitalization
2. Creation of new businesses using foundation cultivated in the
direct marketing business

1. Further acceleration of growth of the HI-CHEW brand
2. Creation of jelly drink market and exploration of potential forwellness domain products

1. Evolution of freshness marketing for the Jumbo group of

Frozen Desserts BusinessStably expanding the frozen desserts business by concentrating on
differentiated products that exploit our confectionery technologies

products
2. Acquisition of customers in peripheral markets and creation of
new markets using technological advantages

Confectionery Business

Sectors

Logistics Sectors

Shifting from article-of-taste brands to health-oriented brands

1. Morinaga Amazake showed signs of a recovery in sales, despite market contraction, as it
underwent a brand renewal and efforts were stepped up to appeal its health value
2. Morinaga Cocoa was impacted by competition, but functional cocoa Senobi saw its purchase2
rate* increase[Procurement] Control of rising raw materials expense ratio byreviewing product specifications[Manufacturing] Creation of smart factories using digitalization[Logistics] Control of rising logistics costs with an eye toward
hub optimization[Sales] Optimization of sales bases and productivity improvement
looking ahead to future market changes[Procurement] Affected by soaring raw materials prices caused by sharp changes in the environment, butcost reduction measures were implemented, including review of product standards[Manufacturing] Promoted initiatives to visualize the operating status of lines, including the DARS line atTakasaki Morinaga Co., Ltd.
[Logistics] Reviewed mechanisms for more effective transport, such as active use of ships, railways andtractor trailers to rein in soaring distribution expenses[Sales] Streamlined operations from the consolidation of sales offices and increased efforts to localize
sales activities[Human Resources] Establishment and execution of plans for
maximizing human capital[R&D] Cross-functional support of business strategy by creating
new value centering around technology[DX] Reforms of business activities using digitalization andcontinued improvement of profitability[Finance] Explored optimal capital structure, strengthened
investment management system, and increased shareholder
returns aimed at the promotion of capital cost management[Human Resources] Systematically developing candidates for each position as part of the successionplan, defining requirements for acquiring and developing specialized human resources, and recruiting
both new graduates and mid-career employees that meet the requirements[R&D] Moved ahead with preparations for opening of new R&D center and began creating new value
by further revitalizing interactions within and outside the company after selecting new R&D themesfor 2030[DX] Building new IT systems to streamline product development operations[Finance] Developing management structure for capital cost management while pursuing various
measures such as sale of cross-shareholdings and share buybacks

Beating the labor shortage as well as establishing a powerful profit structure
to allow us to compete around the world

Human Resources Strategy
R&D Strategy

Foundation

DX Strategy
Financial Strategy

1. The Jumbo group of products experienced a downturn in sales due to unseasonable weather andthe recoil from strong growth in the previous fiscal year due to the pandemic, but we recorded1
the highest ever purchase rate* owing to such initiatives as delaying the moisture absorption ofmonaka.
2. Sales of Ita Choco Ice are steadily growing after the brand posted its highest-ever purchase1
rate* in its second year stemming from promotions to capture customer demand and increased
production capacity from the start of operations at Takasaki Morinaga Co., Ltd.

1. Establishment of Morinaga Amazake as health-oriented brand
2. Establishment of Morinaga Cocoa as health-oriented brandSales Sectors

Business

1. The HI-CHEW brand broke through the 10 billion yen mark for net sales for the first time amid theincrease in distribution ratio of the brand's products and strong sales in these stores, achieving
the final fiscal year target of the 2021 Medium-Term Business Plan two years ahead of schedule
2. In February 2022, sales of Chargel were launched on the direct marketing site operated byMorinaga America, Inc. in order to create a jelly drink market in the United States

Change the category portfolio so as to build a high revenue baseProcurement Sectors
Manufacturing Sectors

1. Steadily increased the number of subscription customers of Morinaga Collagen Drink and Oishii
Aojiru through proactive advertising
2. Explored the creation of a customer data platform (CDP), in order to further improve customer
convenience, through integrating customer information within the Group, for creating new
businesses

1. Improvement of chocolate business profitability and increase in
net sales
2. Stimulation of demand through invigoration of the candy
market3. Further increase of demand in the biscuit market

DomainFunctional

1. ”in Jelly” broke the previous record high for net sales as it addressed customers’ growing healthawareness and changing lifestyles, achieving a V-shaped recovery one year after the outbreakof the COVID-19 pandemic. As a result, steady progress is being made toward the 2021 MediumTerm Business Plan target.
2. ”in Bar” also recorded its highest-ever net sales because of demand growth owing to theincreased time people spent at home with snacking and it addressed growing customer
awareness toward health.
3. To further promote the health value provided by the “in-” brand, we worked on developing andfostering new “in-” product brands, such as in Cough Drops (throat lozenges) made with plasma
lactic acid bacteria.

1. Sales of Carré de chocolat and DARS, which was revamped for the first time in two decades,
struggled in the first half of the year, but net sales recovered into the second half, which is thepeak demand period, amid changes made to marketing strategy. And the efforts were madeto start-up and stabilize production at Takasaki Morinaga Co., Ltd., which features the latest
facilities
2. High earning power HI-CHEW has seen net sales exceed the previous year amid the further
evolution of its texture
3. High earning power Morinaga Biscuits recorded strong sales that even surpassed the previous
year’s strong figures made possible by market growth driven by stay-at-home demand during
the COVID-19 pandemic

Basic

Foodstuffs Business

2021 Medium-Term Business Plan: FY2022/3 Results and Progress

Establishing powerful management foundation to support the businessstrategies to increase corporate value over the medium to long term

*1 INTAGE SCI Ice Cream Market April 2021 to March 2022
*2 INTAGE SCI Coca and Health Products Category Market April 2021 to March 2022

30

Morinaga Group INTEGRATED REPORT 2022

Morinaga Group INTEGRATED REPORT 2022

31

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Medium-Term Business Plan

2021 Medium-Term Business Plan

Targets of the 2021 Medium-Term Business Plan

We aim to reach record high operating income by further enhancing
earnings power in response to the sharply changing environment

1

Financial Targets *characterized by soaring raw material cost.
Net sales

Daisuke Fujii

Operating income

Director, Senior Executive Officer
Responsible for Corporate Strategy Division

Non-Financial Targets
Results for FY2022/3

FY2024/3 Targets

181.2 billion yen

190.0 billion yen

17.6 billion yen

21.5 billion yen＜Key Performance Indicators＞

Looking Back on FY2022/3

Resultchanges in consumption styles, continuing with efforts to achieve

In FY2022/3, the “in-” business, direct marketing business, andsteady sales growth and enhance profitability.
Toward this end, we will address soaring raw materials costs,

the U.S. business drove growth, and we broke the record highOperating income to
net sales ratio

9.8%

11% or higher

Overseas sales ratio

9.1%

9% or higher

Focused domains’sales ratio

48.8%+5 points or higher*2

22.0%

10% or higher

16.3%*430%

ROE(10.1%)*3

Procurement ratio of sustainable
raw materials*

Cacao beans

FY2026/3

100%

Palm oil

FY2024/3

100%

Paper

FY2023/3

100%* Scope: Morinaga products in Japan. Paper covers product packaging only.

for net sales*. Operating income declined year on year due to the

explore possibilities for inorganic growth, and develop new

impacts of soaring raw material costs and investments to build

products that contribute to “health of mind” and “health of body”

Dividend payout ratioa business foundation for growth over the medium to long term.

of consumers.

*1. The Company applied the “Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020)”, etc., from the beginning of FY2022/3.
*2. Comparison with the average during the period of the 2018 Medium-Term Business Plan
*3. Excluding the impact of extraordinary income from the sale of cross-shareholdings*4. 35.3％ excluding the impact of the sale of Morinaga Milk Industry Co., Ltd. shares

We will continue to take the initiative in terms of both financial and

In addition, we will continue to implement structural reforms

non-financial aspects aimed at achieving the 2021 Medium-Termmainly in the functional sectors of production, logistics, and sales

Business Plan.

in order to address changes in the external environment andfurther improve our profitability.

Issues and Looking ahead

Furthermore, we will actively allocate management resources

Key Measures in FY2023/3

In the focused domain category, we will continue to concentrate

to our management foundation such as R&D, DX and humanmanagement resources, as we seek out greater growth. In the basic

resources to support the execution of our business strategies

Focused Domaincompanywide.

In the “in-” business, we will accelerate growth of in Jelly by further

Structural Reforms Focused on
Functional Sectors

domain category, we will focus on product development in line with

*Accounting Standard for Revenue Recognition applied retrospectively

1st Stage: 2021 Medium-Term Business Plan

Building a New Foundation for
Dramatic Growth2030
Visionexpanding drinking scenes and targets. Also, we will strengthen

Procurement departments will continue to enhance our efforts tobranding to symbolize our change into a wellness company. In thelower costs and improve profitability in response to soaring raw

direct marking business, we will expand sales of Oishii Collagen Drinkmaterial costs. Manufacturing departments will convert Takasaki

and work to develop products such as Oishii Aojiru that will become

Morinaga Co., Ltd., as well as Mishima Factory into smart factories

the pillars of future growth. Moreover, by striving to further increase

to visualize line operating status. Logistics departments will work on

customer convenience through a revamped direct marketingsystemization of arranging vehicles for more efficient transportation.

system, we aim to expand our business and create new value. In theSales departments will work on promotions under the key word

U.S. business, aimed at further expansion of our business activities,“wellness” tailored to the characteristics of each retailers type.

we have started to enhance product development centered on the

Efforts for further growth:
growth of exploration and research domain and inorganic growth

health value of HI-CHEW, bolstering manufacturing capabilities andBuilding a Strong Management Foundation

proactive marketing activities. Additionally, we will begin marketing

Under our Human Resources Strategy, we will continue to focus

Chargel as we create a market for jelly drinks. In the frozen desserts

on recruitment activities as well as strive for clarification of thebusiness, we will enhance promotional initiatives of Choco Monaka

required skills and promotion of skills development for acquiring

Jumbo following the 50th anniversary of its release and we will

and training specialists. In terms of R&D Strategy, we will work on

focus on product development of Ita Choco Ice, The Crepe, and othervisualizing emotional values through research on “Health of Body”

products that will become the pillars of future growth.

and texture sensitivity. Under our DX Strategy, we will encourage theintroduction of new IT systems to streamline product operations, as

Focused domain: driving growth

32

Morinaga Group INTEGRATED REPORT 2022

Basic Domain

well as strengthen security measures and build secure information

In the confectionery business, in order to improve the candy andmanagement systems. Under our Financial Strategy, we willbiscuit categories’ composition of sales which have the relatively

undertake measures for improving the system of decision-making

high profitability, we will start promoting products centered onwith an aware of capital costs, review and implement capital

Basic domain: stable cash generation“Health of Mind” and “Health of Body” among the main brands ofefficiency measures of assets, shareholder returns in line withMorinaga Ramune, HI-CHEW, and Morinaga Biscuits. In the foodstuffs

financial policy, and debt financing.

Efforts to strengthen business foundation further:structural reforms and business foundation

business, by releasing and marketing Morinaga Cocoa as a food withfunctional claim, we will seek to establish it as a healthy beverage.

Morinaga Group INTEGRATED REPORT 2022

33

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Improve Profitability through Business Portfolio Optimization and Structural Reforms
Focuseddomain“in-” Business
What we are aiming for in 2030

Results for FY2022/3 and Future Issues
Progress toward Target for 2030

Aiming to become No. 1 brand among foodstuffs

Demand for in Jelly in sports scenes declined due to the COVID-19 pandemic and sales

supporting “health of mind and body” centering

struggled in FY2021/3 as a result. However, sales grew by 3% in FY2022/3 compared

Net sales

to FY2020/3 prior to the pandemic. By addressing the need to replenish the energy to(Billion yen)“think” while working or studying and the growing need for meal replacements when

50.0

having no appetite, we have seen the number of users increase and sales grow.

40.0

in Jellyaround sports
Targetfor 2030

Minoru Sato
General Manager of
Health Marketing Department
Marketing Headquarters

Net sales 50 billion yen

Looking ahead, we will accelerate our growth strategy by stepping up promotions
in Barof in Jelly Fruit Texture targeting women and proposing a new eating scenes aimed at

30.0

50.0

23.6

28.0

20.0

further increasing targets and scenes.
Net sales of in Bar grew by 1% compared to the previous year. In response to health-

10.0

conscious snacking and the need for protein intake during muscle training, we marketed

Awareness of Business Environment

the bar-type products that can easily be consumed, which has led to net sales growth.

We released in Jelly in 1994, and since then, the Group has created

COVID-19 pandemic over the short term, we predict that customers

a new food culture of replenishing nutrition easily on the go

will become more conscious of health over the medium to longwhen playing sports or looking for a quick breakfast. With risingterm; therefore, there will be a gradual shift to an era where wehealth awareness and diversifying lifestyles brought about by the

manage our own health individually.

Competition in protein bars market is heating up and we will endeavor to further

02021/32022/32031/3（FY）
Targetreinforce product strengths.

Business Highlights

Medium- to Long-Term Strategy

in Jelly saw users increase as a product that can replenish nutrition during loss
There will be a greater necessity for exercise and adjusting
nutrient intake to avoid malnutrition or overnutrition against theInitiatives in the 2021 Medium-TermBusiness Planof appetite after a COVID-19 vaccination. We also sponsored the 71st ALSOK Cup
Osho Tournament, a shogi (Japanese chess) title match, and tapped into demand forbackdrop of an increased elderly population and concerns future

Aimed at achieving the “in-” brand vision by 2030, the “in-” businessdrinking in Jelly Energy with Glucose to promote thinking when working or studying.

contagious diseases. In the “in-” business, the Morinaga Group will

will follow three basic strategies during the 2021 Medium-Term

Moreover, we enhanced our proposals for snacking mindful of nutritional intake, such

utilize its know-how in nutrition and physique building cultivated

Business Plan, as we seek greater growth as a key driver of ouras vitamins and minerals.

through our knowledge of sports nutrition along with proprietarychange into a wellness company.

food processing technologies to respond to the needs of customers
seeking delicious and healthy eating.

Through release of in Bar Protein <Super Crunchy Chocolate> and in Bar Protein

Basic Strategies of the “in-” Business inthe 2021 Medium-Term Business Plan

By 2030, our goal is to be recognized as “the No. 1 brandBasic strategies

Details

supporting the nutrition, exercise, and deliciousness of everyone

1• Encourage people to play sports to stay healthy and respond toconvenience needs• Cultivate needs by taking increased stay-at-home hours as an opportunity• Expand target age group (children, seniors, etc.) and drinking scenes

2• Meet diversified and growing needs for protein• Meet needs in two directions for better sports performance andbodybuilding (high protein content), and for health maintenance(protein replenishment + carbohydrate restriction)from top athletes to general consumers proactively seeking to
improve their conditioning based on sports science.”
Toward this end, we will continue to evolve and provide greater
health value by growth of in Jelly and “in-” brand.

Overview of the Medium- to Long-Term Strategy forthe “in-” Business

Growth of
in Jelly Products
Growth ofin Bar Products

3

New Brands• Begin efforts to create future foods by taking advantage of
the “in-” brand<Super Vanilla White> with 20g of protein, we respond to demand for higher protein

Becoming a Wellness Company
We will support nutrition and training based on sports science,and cultivate new “in-” product brands, including combining

which forms the foundation of the “in-” brand, and accumulate

confectioneries easy to enjoy with nutrients.

know-how of nutrition and physique building. We changed thename of our training center for top athletes to Morinaga “in”

Brand Vision for “in-”No. 1 brand supporting the nutrition, exercise, and deliciousness of everyone
from top athletes to general consumers proactively seeking to improve theirconditioning based on sports science

Training Lab and held the official reopening in Odaiba, Tokyo in

Expanding Advertising to Enhance Sports
Image of the “in-” Brand

Shogi title matchproducts, which contributed to net sales growth.

Morinaga“in” Training Lab

fall 2021. We will utilize knowledge cultivated in support of top
athletes’ nutrition and training to achieve the vision of the “in-”brand.
In addition, while investing in advertising to strengthen brands,

Growth of in Jelly Products

Growth of “in-” Brands

Provide wellness value to diverse
customers in various lifestyle scenarios• Expand consumption scenes of coreproducts (energy, etc.)• Respond to new needs and targets

Provide new value to customers
using the in Bar and new “in-”products, following the success ofin Jelly, and foster the brand so thatit creates new markets

we will enhance links with the corporate brand by using a logo
mark combining our corporate mark and the “in-” brand logo.
To further promote the health value offered by the “in-” brand,
we are working to create future foods, which has included
launching in Nodoame (cough drops) made with lactic acid bacteria
We will increase the trustworthiness of our brands byincreasing the visibility that they support top athletes atMorinaga “in” Training Lab*.
* See “Becoming a Wellness Company” on page 35.

34

Morinaga Group INTEGRATED REPORT 2022

Strengthening links
between our corporate
brand and “in-” brandand in Chocolat Protein with Crispy Puff (chocolate candy). We will
expand our business activities aiming to achieve the targets for2030 by using the Group’s food processing technologies to develop

Morinaga Group INTEGRATED REPORT 2022

35

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Improve Profitability through Business Portfolio Optimization and Structural Reforms
FocuseddomainDirect Marketing Business
What we are aiming for in 2030

Koji Nagano
General Manager of
Direct Marketing Division

Results for FY2022/3 and Future Issues
Progress toward Target for 2030

We will evolve into healthcare business supporting

Through active investments in advertising, the number of subscription customers hascustomers’ wellness realization.

increased and sales of Morinaga Direct Store centered on Morinaga Collagen Drink have

Net salesgrown steadily. Net sales of our direct marketing business grew 23% compared to the(Billion yen)previous year, marking the 17th straight year of year-on-year growth. This largely beat

20.0

Targetfor 2030

Net sales 20 billion yen

the market average* at 3%. The number of subscription customers of the Morinaga
Morinaga
Collagen Drink

Oishii Aojiru

20.0

15.0

Direct Store increased by 26% compared to previous year.
We have kicked off specific activities aimed at creating experience-based value

10.0

7.4

following the establishment of the Customer Experience Management (CXM) Promotion
Office in April 2021. We believe that our challenge going forward is to further deepen

9.1

5.0

our understanding of customers using customer data and deliver an even higher quality

Awareness of Business Environment

0

customer experience.

Morinaga Direct Store supports the wellness lifestyle of eachfollowing increased consumption through online direct sales andand every customer through direct delivery of health and beauty

rising health awareness as a result of the COVID-19 pandemic.

products such as collagen drinks. The size of the direct market* Source: H.B. Foods Marketing Handbook 2022, Fuji Keizaifor health products in FY2021/3 was 593.0 billion yen*, reaching

Morinaga Direct Store (Japanese only)
https://www.morinaga.co.jp/direct-store/

119% growth in the past five years. The market is growing steadily

2021/3* Japan Direct Marketing Association: Direct Marketing Sales of “Health Products”

2031/3（FY）
Target2022/3Business Highlights
In FY2022/3, our major brand Morinaga Collagen Drink broke through the 300 million mark of
cumulative units sold and it recorded the highest net sales in the collagen drink market for
the fifth consecutive year.

Medium- to Long-Term Strategy

We have also launched a new product focused on knee joint issues called Hizakaru Collagen,based on our desire to address various health and beauty needs with products using collagenWe provide products that are both functional and delicious at thebusiness to conduct product development and provide that best

Morinaga Direct Store to support our customers’ “health of mind

supports the health of customers.

Net Sales of Oishii Aojiru, a candidate for the second pillar after Morinaga Collagen Drink,and body.”

have steadily grown with a CAGR* of 188% over the previous four years, having established aessential in order for us to contribute to “health of mind andInitiatives in the 2021 Medium-TermBusiness Planbody” through food, and as such, it is important to enhance

Aimed at the creation of experienced-based value for customers,

The continuous patronage of our products and services isingredients.

customer experience (CX.) We are visualizing customer behavior

we have established the Customer Experience Management (CXM)

and emotions through data that we can collect from various

Promotion Office in an effort to develop an organizational system for

positive reputation among customers facing issues different from collagen ingredients.

Hizakaru Collagen*Compound annual growth ratecontact points; from product recognition to after care, in order topromoting business activities. At the same time, we are developing

implement product design and customer service that are tailoredan operational structure to maximize value provision by utilizing

to each individual. This will allow us to improve CX and maintainthe huge amount of customer data. As for products, we will launch

We revamped our drink series of five products aiming to further

Additionally, we will expand the product lineup of Morinaga Direct

an amiable long-term relationship with customers. In addition, we

new products with collagen as ingredients to expand the collagengrow our major brands of Morinaga Collagen Drink and Oishii Aojiru.

Store and provide customers with a place to enjoy a novel shopping

will harness the Group’s strengths in basic research on nutrition,business, as well as enhance the sales promotion of Oishii Aojiru to

Based on our regular customers’ requests, we use stevia, a plant-

experience that goes beyond health and beauty products.

materials research, food processing technology, and raw material

develop the next potential brand for growth.

based sweetener in three collagen drink products and switched

procurement that we have amassed over more than 120 years of

Secrets behind the Success of Morinaga Collagen Drink

Becoming a Wellness Company

We will largely revamp our direct marketing system in FY2023/3,

straws to those made from environmentally conscious bioplastic. We

aiming to streamline operations and build a system for data

will enhance the revenue base through price revisions and lowering

utilization. This will enable us to create services tailored to eachcosts in response to spike in raw material costs. We will continue

individual by forecasting each customer’s situation gleaned fromwith basic research of collagen ingredients and provide new value tomassive amounts of data.

customers in accordance with science-based evidence.

Morinaga Collagen Drink, sold exclusively in our direct marketing channel, is afood with verified functional claim of collagen peptide in terms of efficacy on
skin, knee joints and bones. While it contains the highest content of collagen
peptide in the industry at 10,000 mg, it does not have the odor that is uniqueto collagen, thanks to our proprietary food processing technology, making itenjoyable and delicious.
*1 Morinaga Collagen Drink, including products before and after updating, as of October 2021. (survey byMorinaga & Co., Ltd.)*2 Source: H.B. Foods Marketing Handbook 2018-2022, Fuji Keizai (Category for beauty-oriented products andcollagen products/ 2016-2020 results), for the Morinaga Collagen Drink series, including products before andafter updating.

Total sales exceeded
1
300 million packs *No. 1 sales among
all collagen drinks
2
for the past 5 years *Morinaga Collagen Drink

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Morinaga Group INTEGRATED REPORT 2022

Morinaga Collagen Drink Premio

Oishii Aojiru

Passienol Drink

Morinaga Group INTEGRATED REPORT 2022

37

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Improve Profitability through Business Portfolio Optimization and Structural Reforms
FocuseddomainU.S. Business
What we are aiming for in 2030

Masaki Matsumoto
Senior Executive Officer
General Manager ofOverseas Business Headquarters

Results for FY2022/3 and Future Issues
Progress toward Target for 2030

Growth of the U.S. business throughWe continued to expand contact points with customers in various terms, such as

expanding the HI-CHEW brand andenhancing brand recognition through television commercials and digital advertisements

Net sales

creating a jelly drinks market

and increasing retail store turnover. We also expanded our product lineup so as to meet(Billion yen)

expectations of customers who are fans of HI-CHEW. In addition, amid the inflationary

30.0

economic environment, we revised prices in response to soaring raw material prices,

25.0

but we still managed to maintain a positive distribution ratio and retail store turnover,

20.0

sustaining powerful growth. As a result, we achieved our FY2024/3 target of 10 billion

15.0

Targetfor 2030

Net sales

30 billion yen

HI-CHEW

Chargelyen in net sales in the 2021 Medium-Term Business Plan two years ahead of schedule.
On the other hand, increasing production capacity is an urgent issue following thisgrowth in sales, and the Morinaga Group as a whole is now working to address this.

Awareness of Business Environment

10.0

30.0

7.2

10.5

5.0
0
2021/3As the U.S. candy market keeps growing, we are increasing brandsales of 10.5 billion yen and operating income by 1.4 billion yen*.

recognition rate and distribution ratio across the U.S. throughGoing forward, as an initiative to address growing global healthvarious advertising, sales measures and expanding the productawareness and environmental issues, we believe that products andlineup of HI-CHEW as well. Despite the impacts from the COVID-19

product development that contribute to “health of mind, body, andpandemic, such as rising transport cost and changes in consumer

environment” will be in greater demand.

behavior, we steadily grew sales in FY2022/3, achieving net*Includes profits relating to exports bound for the U.S. from China and Taiwan.

2022/32031/3 （FY）
TargetBusiness Highlights
HI-CHEW increased its nationwide distribution mainly in major sales channels in the U.S.
and realized steady growth in terms of both net sales and profitability. We developed andlaunched new products that utilize features of HI-CHEW such as HI-CHEW <Plus Fruit>, withreal fruit inside, and HI-CHEW <Berry Mix>, offering three different berry flavors. We willcontinue to capture various customer needs as we work to expand the U.S. business toMedium- to Long-Term Strategy

ensure HI-CHEW can be purchased anytime, anywhere, and by anyone.

We have increased the distribution ratio of HI-CHEW acrosssame time, we will develop a global supply system to match

the U.S. since its launch and we continue to expand contact

expanded sales, collaborate with manufacturing companies,

points with customers. Going forward, we will promote brandand re-establish a logistics system to ensure the steady supply

extension products aimed at further increasing net sales. At thestructure of products.

HI-CHEW production factories for the U.S. market

HI-CHEW<Plus Fruit>

HI-CHEW<Berry Mix>

Becoming a Wellness Company
As one of our HI-CHEW initiatives, we are accelerating development

seek to grow sales across the U.S. as the second pillar after HI-of the product lineup in a way that suits customer needs. We will

CHEW, contributing to our consumers’ health of mind and body.

enhance the value expected of HI-CHEW, such as real fruity taste
and unique texture, and provide greater health value from

HI-CHEW <REDUCED SUGAR>
Better-for-you-product version of HI-CHEW
addressing growing health awareness.
This product features a 30% reduction in sugarcompared to conventional products.
It delivers the same great taste of regular
HI-CHEW even with less sugar because dietaryfiber is used as a sugar alternative.

reduced-sugar and low calorie versions so as to realize oursustainable growth.
Also, we will create a market for jelly drinks that provides newvalue as we laid out in the Medium- to Long-Term Strategy. As thefirst step, we launched the new brand Chargel on our e-commercesite (https://www.chargel.com) in February in 2022. Chargel, whichMorinaga America Foods, Inc.
(North Carolina, USA)

Taiwan Morinaga Co., Ltd.
(Taipei, Taiwan)

Morinaga (Zhejiang) Co., Ltd.
(Zhejiang, China)

is caffeine-free and can quickly replenish energy in the form of ajelly drink, has been featured in multiple web media articles since
its release. This has made it a topic of conversation and earned it

With the wellness market forecast to continue growing, we

aim to create a market using jelly drinks developed specificallyreleased jelly drinks as a wellness product that contributes tofor the U.S. market. We received positive feedback throughwith sports, as it is both unique and practical. Through sampling“health of mind and body” and have been searching for products

consumer surveys conducted in limited areas and channels,

events and online advertising, we will first deliver value, and thenthat could be the third and fourth earning pillar following theand we will execute our marketing and sales strategy based on

success of HI-CHEW.

these results. Going forward, we aim to change into a wellness

The U.S. has yet to see any product such as jelly drinks which

a positive reputation from customers who are particularly familiar

Chargelcompany also in the U.S. through creating a new jelly drinks

are popular in Japan, and we believe that demand potentiallymarket while leveraging the business foundation establishedexists. As such, we will provide new value to customers andwith HI-CHEW.

<WHITE GRAPE>

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Morinaga Group INTEGRATED REPORT 2022

<GREEN APPLE><STRAWBERRY>

Chargel sampling event

Morinaga Group INTEGRATED REPORT 2022

39

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Improve Profitability through Business Portfolio Optimization and Structural Reforms
FocuseddomainFrozen Desserts Business
What we are aiming for in 2030

Kiyoshi Kawagishi
General Manager ofFrozen Dessert Marketing DivisionMarketing Headquarters

Results for FY2022/3 and Future Challenges
Progress toward Target for 2030

We will stably expand the frozen desserts business by

Although major brands Jumbo and Ice Box experienced a downturn in revenue due to theconcentrating on differentiated products that exploit

COVID-19 pandemic of the previous fiscal year and weather factors, secondary brands

Net sales

our confectionery technologies

centered on Ita Choco Ice performed well. As a result, net sales increased 5% year on(Billion yen)year for the frozen desserts business as a whole while the market diminished slightly.

50.0

Moreover, the number of retail stores carrying Pari Pari Sand grew following its major

40.0

Targetfor 2030

Choco Monaka Jumbo

Net sales 50 billion yen

Ita Choco Ice

revamping in the previous fiscal year, capturing demand for more sophisticated desserts.
We have also commenced operations on the frozen dessert lines at Factory Number

50.0
38.4

40.1

2021/32022/330.0

3 of Takasaki Morinaga Co., Ltd., reinforcing the production system underpinning our

20.0

growth strategies.

10.0

However, rising costs caused by soaring raw material prices worldwide pose an

Awareness of Business Environment

issue. In June 2022, we hiked prices in order to secure business revenue.

The frozen desserts business is expected to see market expansion

our management resources on market mainstay brands thereby

due to increased opportunities for consumption by seniors, who

conducting our business to effectively yield profits. Also, incomprise a growing part of the population, along with rising

addition to rising demand for convenience, consumption in thetemperatures due to global warming. With a focus on Jumbo as

frozen foodstuff category has also been growing amid increased

the top brand in the frozen dessert market, we are concentrating

opportunities to eat at home.

02031/3 （FY）
TargetBusiness Highlights
For the Jumbo brand, we made technological innovations to evolve the product’s
crispy texture using a new manufacturing technique for Vanilla Monaka Jumbo.
This product has established its position in the market thanks to “freshness
marketing” together with Choco Monaka Jumbo. (Jumbo brand share in theMedium- to Long-Term Strategy

entire monaka ice cream category: 56.4% from April 2021 to March 2022*)
We aim for stable business growth by concentrating on proprietaryproduct development using our long-standing confectionery
technologies in sub-zero temperatures. For our major brand Jumbo,
we will further evolve the unique value of “freshness marketing.”
We will also develop and establish the next round of major brands,
such as Ita Choco Ice and The Crepe. We will tackle the challenge of

Basic Strategies for the Frozen Desserts Business inthe 2021 Medium-Term Business Plan
Basic strategies

1

Evolving of“freshness marketing”

value creation in line with customer needs by developing productswith an eye toward such new markets as the frozen foodstuff
category aimed at greater growth over the medium to long term.
Furthermore, we will invest in equipment for the necessary

2

Capturing customers fromadjacent markets

improvement in the production system to achieve this strategy.

Details• Further evolve the Jumbo group’s
unique value “crisp texture”• Expand the target and scenes foreating the product• Capture customers from adjacentmarkets with differentiated productsthat are more like desserts• Develop new products more closely
tailored to customer needs• Meet the challenges of increasing
added value of products

Pari Pari Bar features a combination of crispy chocolate and refreshing“Chocolate Wall”
maintains the crispy
texture of monaka

vanilla ice cream, earning it broad support mainly from families. In FY2022/3,
we further expanded contact points with customers through a mash-up with
anime content.
To offer new value, in autumn 2021, we launched Choi Tabe Ice, a small
chocolate and vanilla ice cream treat that can be eaten in two or three bites.
Moonlight Cookie Dough and Chocolate Chip Cookie Dough, which challenge thestatus quo of the frozen food market, utilize classic, long-selling confectionery

Pari Pari Bar

brands to provide value from simple and delicious baking involving parent andchild.
* INTAGE SRI+

3

Initiatives in the 2021 Medium-TermBusiness Plan

Vanilla Monaka Jumbo

Creating new markets using
product development withtechnological advantages

Choi Tabe Ice• Expand applications of flavored ice
products for new market entry

We will promote business growth based on the framework of thethree basic strategies.

Becoming a Wellness Company

Tackling the Challenges of “Freshness Marketing” Which is Unusual in the Ice Cream Industry
As time passes, monaka ice cream gradually transfers the moisturein ice cream to the crispy monaka. To ensure that customers are able

Temperature Forecast (year on year difference)
June 2021

July 2021

August 2021

to enjoy the fresh and delicious crispy texture of monaka ice cream,
we continue to implement measures in supply chain management
to shorten the delivery period from our factories to retail stores.
In addition, we conduct demand forecasting using weather data incollaboration with the Japan Weather Association in an effort tofurther increase freshness with more accurate production and sales
plans. Looking ahead, we will continue our one-of-a-kind “freshness
marketing” in the ice cream industry.

September 2021

October 2021

November 2021

Above 1.5°C
Above 1.0°C
Above 0.5°C
Above 0.2°C-0.2°C – 0.2°C
Below -0.2°C
Below -0.5°C
Below -1.0°C
Below -1.5°C
Forecast of average temperature
up to six months in advance*Source: Japan Weather
Association

For Choco Monaka Jumbo, we will actively conduct various
communications strategies following its 50th anniversary in spring
2022. We will also promote collaboration between industry andacademia for research into consumers’ emotional value of crispy
texture, while continuing to evolve “freshness marketing” that
contributes to “health of mind.”
Ice Box is a product that efficiently and quickly hydrates and cools1

the body by using hypotonic quality* of ice cubes, replenishingsodium lost in sweat.
Having endorsed the “Heat Illness Prevention-Communication2

Project”* that started in 2019, we will work on additional measures

Ice Boxgoing forward.
*1 Having a lower osmotic pressure than the body’s water content allowing moisture lost fromsweating to be reincorporated quickly into the body.
*2 The project for preventing heat illness by encouraging people in a hot environment to take abreak.

40

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41

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Improve Profitability through Business Portfolio Optimization and Structural Reforms
BasicdomainDomestic Confectionery and Foodstuffs Business
What we are aiming for in 2030

Results for FY2022/3 and Future Issues/ Business Highlights
HI-CHEW

Mitsutaka Murase

Azusa Murata

General Manager ofConfectionery Marketing DivisionMarketing Headquarters

General Manager ofFoodstuff Marketing DivisionMarketing Headquarters

Changing the category portfolio so as to build a

Our response to changes in customer behaviors for snack times

high revenue base.

when working at home during the pandemic has helped to growworldwide pose a challenge. We will now steadily increase productour presence in such growth categories as biscuits. However,prices in an effort to secure business revenue.

Targetfor 2030

Operating income
to net sales ratio

Progress toward Target for 2030

10%

HI-CHEW
Morinaga Milk Cocoa

Awareness of Business Environment

Operating income to net sales ratio(%)

Results for FY2022/3 andFuture Challenges

Domestic Confectionery Business

Domestic Foodstuffs BusinessWe have led the Japanese market by refining our quality andcompany that values the founding spirit of “Delicious, Fun, andbrand image with a number of best-in-category products, including

Highlights

Healthy” through delivering confectionery products that contributeMorinaga Cocoa, the milk cocoa powder drink product manufactured

to “health of mind and body” of our customers. Consumer behaviors

and sold in Japan since 1919 and our long-standing best sellers,

Sales of HI-CHEW products with evolved textures, such as SUPPAICHEW and UMAI-CHEW were strong, contributing to net sales growth.

and consumption scenes have changed during the COVID-19

Morinaga Amazake and Morinaga Hotcake Mix.

10.0

10.0
8.0

Pouch-type products struggled, but sales of mainstay stick-type
products recovered, as overall sales of the HI-CHEW brand increased
2% compared to the previous year. Going forward, we will seek toenhance the value of texture through the further evolution of soft

Our domestic confectionery business is a fundamental part of thepandemic. As such, health needs and environmental awareness are

the rising cost of production from soaring raw material prices

8.3

6.0

4.5

4.0

candy technologies, with the aim to expand sales of the entire brand.
2.0
02021/32022/32031/3（FY）
TargetWe expect that demand for daily health care, eating at home, andexpected to continue growing in the future. In addition, production

cost cutting/stocking up sparked by various changes brought about

and transportation costs are also expected to rise due to the soaring

by the pandemic will remain strong.

cost of raw material and energy.

Morinaga Biscuits

AmazakeResults for FY2022/3 and Future
Challenges

Results for FY2022/3 and Future
Challenges
Net sales fell below the previous fiscal year. On theother hand, the downtrend of the amazake boom appears to beover. We will emphasize to customers and to the market, which has
more than doubled compared to before the boom, the deliciousness,
nutritional value and benefits of continued drinking of our Amazakeas the number one brand in the category* with the aim of restoring

Domestic Confectionery Businessand during increasingly hotter summer temperatures, for Morinaga

In the chocolates category, we will strengthen brand power by

Cocoa as a product that provides not only physical but also

In addition to mainstay products, expanded
packaging formats contributed to the top line, as
net sales increased by 8% year on year, exceeding the growth seenin the previous fiscal year. We will seek to increase growth further
by boosting manufacturing capacity. Going forward, we will also
begin efforts for high-value-added products aimed at solidifying our

promoting a communication strategy in line with new packaging

emotional nourishment, and for Morinaga Hotcake Mix as a productearnings structure.

net sales.

formats and targets centered on DARS and Carré de chocolat.

with excellent cost performance and that captures demand among

Highlights

Highlights

Sales of both long-sellers and limited-edition seasonal products grewsteadily, leading to higher net sales.

Focusing on regional characteristics, we strengthened the brand bylaunching area-specific products and carrying out sales promotions.

Medium- to Long-Term Strategy

At the same time, we will improve the net sales weighting of
categories with excellent profitability (candies, biscuits, etc.) and
improve the operating income to net sales ratio for each number ofconsumers for cost cutting.

2021 Medium-Term Business Plan

items. In particular, we aim to increase the net sales weighting ofmajor candy categories that are highly profitable, such as HI-CHEW
and Morinaga Ramune, through expanding the product lineup of

Chocolates

textures and enhancing sales promotions to improve the operating
income to net sales ratio of the entire confectionery business.

• Improve the operating income to
net sales ratio and secure a sufficientsales scale by replanning the product,sales channel, and communications
strategies

Moreover, for the biscuits category, which has been growing
in response to the demand for staying at home, we will boost
production capacity and introduce products with high added value.

Candies

Domestic Foodstuffs Business• Strengthen sales promotion efforts
for HI-CHEW and Morinaga Ramune• Develop products to meet the needs of changed lifestyles andstress reduction due to the COVID-19 pandemic

For Morinaga Amazake, Morinaga Cocoa and Morinaga Hotcake
for easily enjoying products in day-to-day life. We will achieve netthat help spark demand for Morinaga Amazake as a product for
replenishing water, glucose and salt for daily health management

Becoming a Wellness Company
For the domestic confectionery business, we will provide value toPower of Cacao, one of our cocoa products, to further strengthen“health of mind and body” available only through product groups

its health appeal and focus on sales promotions. We will work onthat are easily enjoyable. We will provide nutritional value throughcreating demand for more sophisticated daily cocoa consumption

products such as Morinaga Ramune to support school entrance

that is delicious and good for the body.

exam takers with glucose, Okashi with Supplement series including
calcium, iron and vitamin C as a product to support children’sMix, we will work on product proposals to expand opportunities
sales growth by expanding communication and sales promotion*INTAGE SRI+ survey on cumulative sales amounts in the amazake category from
April 2021 to March 2022

Biscuits• Maintain and build up demand that has
grown due to the COVID-19 pandemic• Increase production capacity anddevelop new products

healthy growth and MCT Style, chocolate that is a food withfunctional claim containing medium-chain fatty acids that reduce
fat in those with higher BMIs.
In the domestic foodstuffs business, we will increase sales
and earnings power by working on product development withenhanced functional value leveraging research outcomes on
health amassed over the years. In FY2023/3, we will rebrand,

42

Morinaga Group INTEGRATED REPORT 2022

Otsubu Ramune

Power of Cacao/ Cacao70

Morinaga Group INTEGRATED REPORT 2022

43

Improve Profitability through Business Portfolio Optimization and Structural Reforms

For Further Global Growth
Our management target for FY2031/3 is to boost the overseas sales ratio to 15% or higher.
Here, we would like to introduce our initiatives outside of the U.S. aimed at achieving this target.

Sustainability Section

Global Expansion of HI-CHEW

46 Initiatives for Sustainability

Sales of HI-CHEW are steadily growing even in regions

preferences, including passion fruit, acai and mango. We willoutside of the U.S., accepted among consumers for its real

conduct extensive research on customer preferences in each

46 Sustainability Management

fruit taste and texture. HI-CHEW is sold in over 30 countries

local market and expand HI-CHEW as a global brand throughand areas around the world including China, Taiwan, Thailand,marketing activities and product development tailored to each

48 Provision of Safe and Reliable ProductsSouth Korea, New Zealand, Australia and the U.K. The

country.

50 Diversity and Inclusion of People
52 Achieving Sustainable Value Chainsbrand features between 30 and 40 flavors tailored to local

54 Conserving the Global Environment
56 Information Disclosures Based on
the TCFD Recommendations
58 Initiatives for Human Rights

ThailandHI-CHEW<Strawberry>

China
HI-CHEW<Peach>TaiwanHI-CHEW<Passion Fruit>

Australia

U.K.

HI-CHEW ads on bus in New Zealand“Change into a Wellness Company” on a Global Basis
We are utilizing knowledge gained from the market expansion

we sell Morinaga Collagen Drink and other products throughof HI-CHEW to explore the potential for wellness products ande-commercial channel, and sales have grown steadily. We will

for future commercialization. Outside Japan, in Jelly products

continue to conduct in-depth research on local demand andhave been sold in Taiwan since 1999, followed by Hong Kong

preferences while harnessing the experience cultivated in theand Singapore. We believe that they offer great potential amid

HI-CHEW business to change into a wellness company globally.

people’s rising health awareness in recent years. In China,

in Jelly in Taiwan

in Jelly ads on bus in Hong Kong

44

Morinaga Group INTEGRATED REPORT 2022

Morinaga Collagen Drink

Morinaga Group INTEGRATED REPORT 2022

45

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Initiatives for Sustainability

Sustainability Management
The Morinaga Group has been conducting business with a strong

The Morinaga Group will enhance its overall sustainability management inorder to achieve its Purpose and the 2030 Vision with Altruism as
the foundation, a tenet valued by the Company’s founder.

We will steadily create social value and a highly resilient

conviction toward contributing to society since its inception. With

management foundation to achieve sustainable growth throughthe formulation of a new corporate philosophy last year, we willaddressing our materiality.

take a more proactive approach toward efforts aimed at realizing
a sustainable society, including achieving the SDGs as a member

The Morinaga Group’s Materialityof the global community. We believe, these cumulative efforts will
make the Group’s business more sustainable as well as lead to

Machiko Miyai

For healthy lives of people

sustainable growth and enhanced corporate value in the medium to

Director, Managing Executive Officer
Responsible for Sustainable Management Division

long term.

For achieving a diverse andcompassionate society

Identifying Materiality
The Morinaga Group has deliberated material issues for achieving

Promoting Sustainable Management Based on Our Purpose

our Purpose and the 2030 Vision in July 2020, and identified material

Currently in the global community, environmental changes, which

rapid advancement of digitization. Given this condition, we mustissues (Materiality) from both financial and non-financial aspects

are impacting business activities and increasing uncertainty toward

work more actively from a long-term perspective and follow clearly

following the approval of the Board of Directors. (See pages 18 andthe future, are taking place at an unprecedented speed. The changes

established tasks to reach the position we aim at, in order to achieve

19 for details.)

involve intensifying social issues including climate change andour Purpose and the 2030 Vision.

1. Contribute to healthy lives ofpeople around the world
2. Diversity and inclusion ofpeople3. Achieve sustainablevalue chains

For the future earth environment

4. Conserve the global
environment

Solidify a sustainable
management foundation

5. Strengthen the business
management foundation

Defining Long-Term Targets for 2030 and Contributing to the SDGs

Process of Identifying Materiality at Morinaga GroupIn order to identify our materiality, we obtained opinions on issues that
we should address with experts in the fields of sustainability, consumer
issues, capital markets and ESG investment, etc., in July 2020. Following
that, we summarized our 30 material issues for the realization of our
Purpose and the 2030 Vision based on vital issues in management andbusiness, international standards and initiatives such as SDGs, andGlobal Compact, expectations and requests from stakeholders such as
customers, business partners, and NGOs, survey items received fromsurvey organizations on CSR, ESG, and sustainability, and other factors
such as the external environmental trend that surrounds the Morinaga

Group and the food industry. These material issues are evaluated fortheir importance from the two axes of “impact on the Morinaga Group’s
sustainable growth,” and “impact on society’s sustainable development”
by 11 external stakeholders (three investors, four business partners, one
NGO, and three Outside Directors) and 10 key members of the Company.
As a result, 21 issues have been rated as important, while seven of whichhave been rated as the most important (see materiality matrix). Basedon this result and repeated discussion among officers, we have identified
five materialities.

Very important

Human rights and environmental issues in the
production stage of agricultural raw materials
Reduction of food loss and waste
Climate change mitigation and adaptation
Response to the spread of major infectious disease

Appropriate conveyance on social and environmental
information of products
Eco-friendly plastic containers and packaging alongwith recycling, reuse, etc.
Incorporating next-generation food technologies
Co-existence and co-prosperity with local communities

ImportantSomewhat important

Impact on the Sustainable Development of Society

planning, and response to issues in order to achieve our Purpose

achieve our Purpose and the 2030 Vision. Furthermore, the actions

and the 2030 Vision. The Committee met seven times in FY2022/3,

to be taken during the period of the Medium-Term Business Plan areformulating the Supplier Guideline and conducting reviews in line

formulated by backcasting. (See pages 18 and 19 for details.)

with the TCFD recommendations.

Many of these efforts are compatible with the United Nation’s

Moreover, we established five new subcommittees under the ESG

Sustainable Development Goals (SDGs.) The Morinaga Group will be

Committee. Subcommittees are chaired by a Director and comprised

taking concerted efforts as a whole in order to achieve a sustainableof members from relevant departments. Aimed at achieving thesociety in which the SDGs aim to leave no one behind.

Long-Term Targets for 2030, we will steadily implement activities
for sustainability. In April 2022, we established the Sustainability

Enhance Sustainability Management

Advisory Board, which three outside experts attended in order to

In April 2021, we newly established the ESG Committee, which

qualitatively improve sustainable business management (see pages

Developing of delicious and healthy foods
Developing of sustainable products
Food safety and quality assurance
Diversity and inclusion
Developing human resources to achieve the Vision
Sustainable procurement of raw materials
Management based on Purpose

is chaired by the Representative Director, President, and the

14 and 15 for details).

The Sustainable Management Division serves as the secretariat for

as well as build a trust relationship with all stakeholders throughDeveloping products with new value in response to
consumer needs
Strengthening of corporate governance (riskmanagement included)
Human rights management
Enhancing of sustainability management
Increasing social trust and reputation throughdisclosure of ESG information
Globalization of management foundation

the ESG Committee, with the heads of departments working to attainpresenting the Morinaga Group’s philosophy and activities. Also,

Deemed the most important issues

The Morinaga Group’s Materiality Matrix

Other environmental conservation activities (water
resource preservation, etc.)
Reduction of environmental impact in distribution

We have set Long-Term Targets for 2030 for each materiality to

Deemed important issues

The Morinaga Group will further make appropriate disclosure

Sustainable Management Division to support and promote theentire Group’s sustainability and ESG initiatives in order to promote

on our activity status and progress through integrated reports andinitiatives for sustainability and achieve the Group’s Purpose.

our company website and increase the entire Group’s transparency

our long-term targets for 2030 serving as committee members. The

we aim to refine our response to requests for ESG information

Committee reports on and shares the latest society trends related

disclosure from external survey organizations and business partners

to sustainability, as well as deliberates necessary items on policy,

and achieve enhanced corporate value for the medium to long term.

Schematics of Sustainability Promotion
Board of Directors

Corporate citizenship activities

Advisory Body:
Sustainability Advisory Board

ESG Committee
Somewhat important

Important(Chairperson: Representative Director, President)

Very important

Impact on the Morinaga Group’s sustainable growth*Only results of “Somewhat
important” and better presented

Secretariat: Sustainable Management Division

Five materialities
1. Contribute tohealthy lives of people
around the world

2. Diversity andinclusion of people

3. Achieve sustainablevalue chains

4. Conserve the global
environment

5. Strengthen the business
management foundation“Health of Mind”
Subcommittee

Sustainable Value
Subcommittee

Sustainable Procurement
Subcommittee

Environment
Subcommittee

TCFD
Subcommittee

Relevant departments and Group companies

46

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47

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Initiatives for Sustainability

Provision of Safe and Reliable Products
Initiatives for Quality
The Morinaga Group believes that its mission as a food
manufacturer is to constantly ensure excellent quality and safetyand deliver safe and reliable products and services to customers.

Our Philosophy on Quality Assurance
In realizing our Purpose and 2030 Vision, we believe that trustfrom our customers is the most important.
We have established the following quality policy in promoting
quality assurance by placing the utmost priority on excellent
product quality together with safety and reliability, which are thepremise for earning customer trust.

Morinaga Group’s Philosophy on Quality Assurance

Framework for Quality Assurance
In an effort to deliver safe and reliable products to ourcustomers, we have established a quality assurance system forall processes from product development to procurement,
production, distribution, and sales.

1. Product development
We have established a Quality Assessment System as a mechanism tocompletely remove risks in the development phase (see below for
details.)

2. Procurement of raw materials
We have prescribed strict regulations for the raw materials used in our
products, and purchase ingredients from manufacturers who can meetthese requirements.
All of our domestic production factories (four Morinaga factories andfour affiliated production companies) have obtained the FSSC 22000
certification for food safety systems and JFS-B standard certification.

4. Shipping inspection

Quality Assurance Policy
Reliable Product Quality

Satisfying Product Quality

with specified color tones, dimensions, weight, and observance ofbacterial standards (microorganism control.)5. Transportation/ Storage/ In-store management

Quality Assurance Policy

We pursue the goal of delivering products that meet our customers’ expectations, byplacing the utmost priority on excellent product quality together with safety and reliability.
Food safety, food defense, compliance (with laws andcorporate regulations), acquiring/ maintaining customers’
trust, information disclosure, etc.

Reliable Product Quality

Satisfying Product Quality

We conduct shipping inspections as the final check to ensure the qualityof our products. These inspections verify the product’s flavor, alignment

Customers’ viewpoint/
Compliance awareness

Taste, aroma, texture, unexpected surprise, inspiration, funplan, ease of handling, etc.

We set rules and request our business partners in the value chain to

Our overseas production sites (Taiwan Morinaga Co., Ltd.,
Morinaga [Zhejiang] Co., Ltd. and Morinaga America Foods, Inc.)
abide by the Morinaga Group Quality Policy, and based on local
situation, have acquired international food safety management
system certifications FSSC 22000 (in Taiwan and Zhejiang) andSQF Codes Edition 9* (in the United States), ensuring they
manufacture safe products.

follow them.

Quality Assurance System

We manage tracking data of product and raw material history at eachstage, spanning from raw material procurement to manufacturing,storage, and delivery.

(Other departments)

Logistics departments

Legal affairs departments

Customer service departments

Domestic Group Companies

Production Headquarters(Domestic Factories)

Quality assurance departments

Customer Service Center

Manufacturing departments

Sales Headquarters

Production Technology departments

Quality Assessment
Quality Rules
Quality Standards
Quality Audit

Overseas Business
Headquarters

Overseas Group Companies

Quality Assessment System

R&D departments

Logistics Division

Quality
Assurance Division

Improvement of
products andservices

Inquiries, opinions andsuggestions

Customer Service Center
Information sharing on
products, services, etc.

Sharing of information of customer
requirements and issues, submissionof proposals

Customer Relations Committee
Chairperson: Officer responsible for the Customer Service Center
Committee members: heads of Quality Assurance Division, Production Headquarters,
Marketing Headquarters, Sales Headquarters, R&D Center, Corporate Communications
Division, Logistics Division and Direct Marketing Division
Secretariat: Customer Service Center
Reporting

Inquiries

Board of Directors

Results of Customer Satisfaction Survey
X-ray testing system at Morinaga America Foods, Inc.

Quality Assessment
Legal compliance, safety (hazards), production suitability, distribution andsales suitability, social receptivity, etc.

13 departments verify 184 items
Determine product release100

Intention to repurchaseWe also conduct quality inspections of manufacturing contractors
located outside of Japan to verify that products shipped are safe
based on the appropriate quality assurance systems.

93.3%

0

Initiatives to Improve Customer Satisfaction
Framework for customer satisfaction
Led by the Customer Service Center, Production Headquarters,
and Quality Assurance Division, meetings of the Customer
Relations Committee are convened quarterly to share the voice of

93.1%

88.1%

87.4%

88.4%

87.3%

87.7%

Satisfaction level (overall customer service)2018/3

Conducting a final inspection on standards for packaged products
prior to shipping

91.4%

93.4%
89.8%

Product development involves multiple departments and eachdepartment is responsible for conducting their own review inorder to ensure safety and accountability. Quality assessment
involves all product development processes. We have establishedMarketing departments

R&D Center

For more details, please refer to our corporate website “Supply Safe andReliable Foods.”
https://www.morinaga.co.jp/company/english/sustainability/healthylives/product-safety.html

Examine how to ensure safety• Marketing Headquarters• Direct Marketing Division• New Business
Development Divisionand legal compliance and report the results to customers.

Planning
and reliability in individual
and review processes by each department

Morinaga Group Quality Assurance Policy / Quality Assurance Rule / Quality Assurance Objective

Prompt, accurate andcareful response, andinformation provision

The Customer Service Center analyzes every piece of every
suggestion, investigates the cause, and reports the result to thecustomer who gave the suggestions. With the report, we enclose
a postcard that requests the recipient to respond to a survey, andthe results are used in improving services.

Role of Quality Assessment

Customers’ Voice Suggestions / Requests

Customers

Results of customer satisfaction survey

6. Ensuring traceability

7. Responding to inquiries on quality
In order to implement the quality policy, we have established the
Quality Assurance Rules, and are centrally and systematicallymanaging and maintaining the “Quality Assurance Objective,”“Target Level,” “Manuals Related to Quality Assurance,” and“Quality Standards.” We conduct activities on assuring quality ineach department.
We have also developed a “Crisis Management Response” thatoutlines the handling of matters by directors and employees inthe event of a quality accident.

Customer Relations Committee– Mechanism for Making Use of Customers’ Voices –* SQF is an acronym for Safe Quality Food. It is an international certification standard for bothfood safety control systems based on HACCP and quality control systems in order to ensure
product safety and quality.

We conduct various investigations and analyses to determine quality

Quality Assurance System

customers with relevant divisions to further enhance customer
satisfaction. Meeting results from the Committee are reported at
the Board of Directors meetings by a representative officer incharge. In addition, we agree with consumer-oriented
management recommended by the Consumer Affairs Agency andhave made a voluntary declaration on consumer-orientation.

Quality Assurance Overseas

3. Production

Delicious, Fun, and Healthy

important confirmation items that in particular could affect thesafety and reliability of final products (covering 13 categories andapproximately 184 items) and manage the items using achecklist. This represents a mechanism to identify and eliminate
risks by looking at the entire plan before deciding on productrelease. This mechanism also prevents sectionalism between thedevelopment and review departments, rather than creating across-functional paradigm.
We encourage autonomous quality assurance actions by
individual product development managers through quality
assessment.
We conduct quality assessment for all products including
revamped products to ensure a consistent quality level alongwith safety and compliance.

2019/32020/32021/32022/3 (FY)In FY2022/3, both the overall satisfaction and intention to
repurchase have reached over 87%. Because of accessibility
issues caused by reduced operating hours and fewer operators
due to COVID-19 in FY2021/3, we returned to our pre-pandemic
operator staffing system in FY2022/3 and improved accessibility
by telephone. Customers praised our prompt and thoroughresponse, which led to slight improvements in customer
satisfaction over FY2021/3. Going forward, we will focus on being
more considerate of our customers in an effort to increasecustomer satisfaction.

Manufacturing Contractors

48

Morinaga Group INTEGRATED REPORT 2022

Morinaga Group INTEGRATED REPORT 2022

49

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Initiatives for Sustainability

Diversity and Inclusion of People

First, we conducted training to educate employees about ourDiversity and Inclusion Policy and the five guidelines andencourage them to put both into practice. We believe that end-toend efforts are important. Following a lecture for officers, we
held total of ten training sessions for the Group’s management,from general managers to leaders, with 370 employees taking
part. Moreover, we are promoting better understanding among all
employees by holding seminars in each workplace forparticipants post training. This training will be held annually tofoster a culture that embraces diversity and inclusion, and wewill continue to evolve curriculum for promoting actions based on
the policy and creation of innovation.

Aimed at 2030
The Morinaga Group aims to increase its competitiveness and achieve sustainable growth through creating awork environment that enables diverse personnel to shine and cultivates autonomous human resources who cancontinuously generate value for society.
Long-Term Targets for 2030
Rate of positive responses on the employee awareness survey: 80%• “The Morinaga Group is contributing to enriching people’s lives and creating a society that is more affluent and sustainablethrough its businesses.”• “The active participation of diverse human resources leads to the Company’s growth and persistence.”• “Employees find their job meaningful and they are in good mental and physical health at work.”

Program to Spread and Implement Diversity and Inclusion
Companywide
survey*Basic Stance
The Group has positioned promoting diversity and inclusion at
the center of its management, and is developing a workplace that
fosters the active participation of diverse human resources andthe satisfaction of taking part in a meaningful job based on thephilosophy of “Leveraging each person’s individuality.” We areworking on themes listed in the table on the right based on ourhuman resources strategy in order to achieve the targets above.
The results of the employee awareness survey for FY2022/3
are shown at right. Although the score for contributing tosustainable society through business beat the target for 2030,
scores for items on diversity and inclusion of people andcorporate growth, and items on motivation and mental andphysical health are still below the targets for 2030. We will
analyze the survey results in detail and then work to improvethese scores. In the future, the Morinaga Group will expand thecoverage of surveys to Group companies in Japan and overseas,
and work collectively as a Group to achieve the long-term targets.
First, we will promote initiatives by expanding surveys todomestic Group companies in FY2023/3.

Initiative Themes to Achieve Long-Term Targets for 2030
1. Foster people, culture, and organizations to achieve our
Purpose and the 2030 Vision
2. Foster organizations that are diverse and dynamic
3. Build healthy and comfortable workplaces and help
employees to find their work meaningful

The Morinaga Group is contributing to enrichingpeople’s lives and creating a society that is more
affluent and sustainable through its businesses

80%

The active participation of diverse human resources
leads to the Company’s growth and persistence80%

Employees find their job meaningful and they are ingood mental and physical health at work

• Planning ofaction plans

Sharing inworkplaces

Ratio of Female Managers
10

Implementation
at workplaces

89.7%

6.7%

• Discussion on position
we want to be in
and issues

5

7.7%

8.3%

9.4%

5.2%

• Re-establishment ofaction plans

Sharingacrossthe company

0
2018/3*Survey on Corporate Philosophy and diversity

80%

Initiatives for promoting female participation andcareer advancement in the workplace• Workplacepresentations

Results for
FY2022/3

70.1%

Initiatives for mid-career hiring
The ratio of mid-career hires in overall recruitment was 22% in
FY2022/3. We are promoting diversity and inclusion at our
workplaces by recruiting mid-career employees for job openings
such as in marketing and accounting.

(Morinaga & Co., Ltd. (non-consolidated))

Study Meeting at Workplaces

Rate of Positive Responses on the Employee Awareness
Survey Long-Term Targets and Progress*
FY2031/3
Targets• Discussions
on position
we want to be in

Sharing
examplesLifting of ban on second jobs
In April 2022, we lifted the ban on second jobs with the goal ofpromoting employee-led open innovation and supporting
autonomous career development. Using this as an opportunity for
employee growth and skill building, we will boost the creation of
new innovation and strengthen relationships with society.

We will enhance systems such as Angel Return* and promote
working at home and flextime so that our people can fully
harness their skills while balancing work and family. Also, we will
forge a support system that encourages using work-life balancesystems suited to an individual’s situation and foster a culture
across the Group that promotes the active participation of every
employee. With these initiatives, the ratio of female managers
has increased for the last five consecutive years.

Training for Management (370 persons)Lectures andcase studies

Making Workplaces More Diverse

74.6%

2019/32020/32021/32022/3(FY)*A system for rehiring an employee who previously resigned due to childbirth, childcare,family care or the transfer of a spouse once they are able to continue their career again.

*Scope: Permanent employees of Morinaga & Co., Ltd. (non-consolidated) excluding forwarded
employees

Developing a Workplace Where Employees Find Their Job Meaningful
Fostering Organizations that Are Diverse and Dynamic
Diversity and Inclusion Promotion Structure
In FY2022/3 we changed the reporting line of the Diversity
Promotion Office from the President to the Corporate Strategy
Division to further incorporate diversity and inclusion, one of theDiversity and Inclusion Promotion Structure
Corporate Strategy Division

Monitoring

ReportingDiversity Promotion
OfficeProgress/
Plan sharing

Instruction/
Supervision

Business Execution
Meeting
Chairperson: Representative
Director, President
Report/ProposeInstruction/
Supervision

Cooperation

Human Resources Division

Promoting Work-Life Balancebasic policies of the 2030 Business Plan, into more specificstrategies.
Under this promotion structure, we will explore and implement
measures to encourage understanding of diversity and inclusionand specific behaviors. Additionally, we will set and evaluate
quantitative targets and KPIs to shift to more qualitative actions
for responding to changes and creating new value.

Implementation of Diversity and Inclusion Policy
Promoting understanding
In FY2022/3, we focused on promoting understanding of theDiversity and Inclusion Policy and the five guidelines, undertaking
various activities including training to make both further known
to all.

Management of total working hours
In our management of total working hours, we take necessary
measures as needed based on an analysis of an individual’s
overtime working hours, holiday working hours, usage ofAcquisition Rate of Annual Paid Leave(permanent employees of Morinaga & Co., Ltd. [non-consolidated]excluding forwarded employees)
80
60

61.0%

63.7%

65.8%

62.6%

68.2%

compensatory holidays, and usage of annual paid leave. We also
allow working at home and are making work more efficient with IT
tools to encourage a better work-life balance among employees.

Expanding eligibility for personal days off
We have established a system where individual employees cantake personal days off based on the situation and workload of each
workplace. In FY2022/3, we expanded eligibility from factory
departments to all employees, with a total of 66 employees taking
110 days off. In addition to working at home and flextime, we arepromoting working styles that extend beyond day of the week,
time, and location.

Volunteer leave

40
20
0
2018/3

2019/32020/32021/32022/3(FY)

We adopted a volunteer leave system in April 2022. The goal of thissystem is to raise awareness of giving back to the community
among employees and promote personal growth fromparticipation in volunteer activities outside of work.

Diversity and Inclusion Policy
https://www.morinaga.co.jp/company/english/sustainability/policy/pdf/policy_diversity.pdf

50Morinaga Group INTEGRATED REPORT 2022

Morinaga Group INTEGRATED REPORT 2022

51

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Initiatives for Sustainability

Achieving Sustainable Value Chains
2. Promote CSR Supply Chain Management

Aimed at 2030
Taking actions to address social issues relevant to our businesses across the entire value chain in contributing toa sustainable society.
Long-Term Targets for 2030
• Sustainable procurement of raw materials: 100% for cacao beans, palm oil, and paper*1• CSR supply chain management: implement for 80% or more of raw materials transaction value*2• Food loss and waste reduction: Food loss and waste reduced by 70% from receiving of raw materials to delivery (distribution)*3*1. Group consolidated basis. Paper covers product packaging only. *2. Group consolidated basis. *3. Domestic Group consolidated basis. Intensity; compared to FY2020/3

Promotion of Solving Social Issues in the Value Chain
With the intensifying severity of social issues such as climatechange, all stakeholders are expected to address these issues inaccordance with their own abilities and responsibility. The
Morinaga Group is also making efforts to realize “health ofenvironment” which will contribute to the sustainability of society
and the global environment throughout our entire value chain. In

particular, we consider human rights and environmental issues
in the production phase of agricultural raw materials, social andenvironmental issues that arise in the supply chain when
procuring raw materials, issues related to stable procurement,
and food loss and waste as our top priorities. As such, we arepromoting the following initiatives.

We are working together with our raw material suppliers inorder to prevent human rights, labor, and environmental issues
within the supply chain. The Supplier Guidelines formulated inJune 2021 serve as a foundation for establishing a fair, just, andThe Morinaga Group Supplier Guideline
https://www.morinaga.co.jp/company/english/csr/management/pdf/policy_supplier-guideline.pdf

Formulation of the Morinaga Group Supplier Guideline
We will need to work across the entire supply chain in order tosustain our business activities with integrity. While requesting
suppliers to comply with the Morinaga Group Procurement Policy,
we also established the Supplier Guideline, which clearly sets out
requirements for compliance with laws and social norms,
ensuring quality and safety, fair and just purchasing transactions,
respect for human rights, and environmentally conscious
procurement activities. We held a briefing in October 2021 inwhich 49 companies participated.

Procurement Policy
https://www.morinaga.co.jp/company/english/sustainability/
valuechain/procurement.html

Sustainable Procurement Medium-term Targets and Progress*
Initiatives

Targets

Results for
FY2022/3

Single Month Resultsfor March 2022

Cacao beans

FY2026/3

100%

9%

26%

Palm oil

FY2024/3

100%

2%

6%

Paper

FY2023/3

100%

98%

–

beans (Cocoa Horizons*- certified cacao supplied by Barry
Callebaut Group) in some of our chocolate products in FY2021/3.
We plan to switch 100% of cacao beans to sustainable sources by
FY2026/3.

Briefing on the Procurement Policy at a discussion for sharing
information with partner companies* Cocoa Horizons-certified cacao supplied by the Barry Callebaut Group are cacao beans
using the Cocoa Horizons Foundation’s mass balance method (certification model thatcombines certified and non-certified raw materials.)

CSR Procurement Survey

2. Palm Oil
Illegal logging and human rights problems in producing regionsof palm oil, which is extracted and refined from oil palm, havebecome social issues. We will switch to certified palm oil (e.g.,
RSPO*-certified) aimed at achieving sustainable procurement. We
aim to start using certified palm oil in our soft candy and ice
cream products in Japan by FY2023/3 and all other products by
FY2024/3.
* RSPO is an acronym for Roundtable on Sustainable Palm Oil, which is involved in thedevelopment and operation of the sustainable palm oil certification scheme.

together with raw materials, but scores for supply chain andcoexistence with local communities were somewhat low. We willhold dialogues with suppliers that had low scores to encourage
improvement.
The Morinaga Group will continue building strong, long-term
partnerships with suppliers through briefings and surveys basedon the procurement policy. Using regular monitoring, we willrealize sustainable procurement by continuing activities following
the Supplier Guideline.

FY2022/3 Results of the CSR Procurement Survey*
Number ofcompanies
receiving thesurvey1. Promote Sustainable Raw Materials Procurement
For main raw materials, including cacao beans, palm oil, andpaper, we aim to switch to sustainable sources by 2030. In orderto achieve this goal, we are cooperating and working together
with our raw material suppliers based on the Morinaga Group
Procurement Policy. First, we will carry out the following for our
products in Japan.

highly transparent relationship with our suppliers in promoting
procurement activities with consideration toward society andthe environment.

Raw materials
transaction
Surveyvalue*
response rate

Averagescore

Rawmaterials

35
companies

81%

100%

83%

Materials

13
companies

81%

100%

88%

Total

48
companies

—

100%

85%

* Morinaga & Co., Ltd. in Japan (non-consolidated)

To better understand the ESG measures of our raw material
suppliers, in March 2022, we conducted a CSR procurement
survey on the 48 main business partners of Morinaga & Co., Ltd.
(Japan). In FY2022/3, we adopted the CSR/Sustainable
Procurement Self-assessment Questionnaire of Global Compact
Network Japan, which has a high affinity with our Supplier
Guideline, to evaluate the main items of the environment andhuman rights.
The survey response rate was 100%, with an average score of
85%. Scores for quality and safety were high at 95% or higher

Raw materials
Materials

Corporate GovernanceCo-exist withlocal communities

100 (%)

Human rights

80
60
40
20

Supply chain

Labor

0

Information security

Environment

Quality and safety

Fair corporate activities*Scope: Morinaga products in Japan. Paper covers product packaging only.

1. Cacao Beans

3. PaperCacao beans, a key raw material for chocolate, are associatedwith a range of social issues including human rights issues suchas working conditions, poverty, child labor, and environmental
issues such as deforestation. We began using certified cacao

Sustainable procurement of timber resources for raw papermaterial is in demand as resources continue to decline
worldwide due to deforestation and illegal logging. In order toutilize forest resources with due consideration for theenvironment and local communities, we have been switching toprocurement of raw materials such as FSC®-certified paper* (apart of specialty papers use recycled paper or certified paper bya third-party.) We switched 98% of paper used in all major brands
to sustainable sources in FY2022/3. We aim to transition all ofour products in Japan to sustainable paper by FY2023/3.

Visit to a cacao sapling farmer inIndonesia by a director in charge(FY2020/3)*FSC®N003064

52

Morinaga Group INTEGRATED REPORT 2022

3. Reduction of Food Loss and Waste
As a responsible food company, we address the issue of food loss
and waste. The Morinaga Group has established a long-term goal
for food loss and waste reduction, which we are now working toachieve. As one example, the West Japan Branch Office isworking with Osaka Prefecture as a member of the Osaka Food
Loss and Waste Reduction Partnership System. In FY2022/3,
although food loss increased temporarily due to theestablishment of a frozen desserts manufacturing line atTakasaki Morinaga Co., Ltd., we will continue to promote a cycle
for and effective use of food resources while helping reduce

occurrence of food loss and waste, improving the recycling rate
and making donations to food banks.

Food Loss and Waste Reduction Long-term Target and Progress*
Target

FY2031/3

Results for FY2022/3

-70%

+8%

* Scope: from receiving raw materials to product delivery (distribution) (Domestic Group
consolidated)* Intensity [Annual Food Loss and Waste Amount (t) ÷ Annual Production Weight (t)] (Comparedto FY2020/3)* Food loss and waste is defined as food that has been processed and disposed of byincineration, landfill, etc., except for food waste that has been returned to the circulation offood resources, such as feed and fertilizer.

Morinaga Group INTEGRATED REPORT 2022

53

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Initiatives for Sustainability

Conserving the Global Environment

Main Initiatives Aimed at Reducing Greenhouse Gas Emissions
Initiatives

Aimed at 2030
In order to achieve “health of environment,” we strive for the health of society surrounding people by minimizing
environmental impacts in our business activities and conducting environmental conservation activities froma medium to long term perspective.
Long-Term Targets for 2030
• Goal of net-zero GHG emissions by FY2051/3*1
30% reduction in CO2 emissions by FY2031/3*2• Reduce the plastics used in in Jelly products by 25%*3 by FY2031/3

Details

1. Reducing CO2 emissions at
production sites• Promote visualization of CO2 emissions• Establish a highly efficient production system• Implement energy conservation initiatives (adopt high-efficiency and energy-saving equipment, operate air conditioning
efficiently, etc.)

2. Initiatives at facilities using
fluorocarbons• Consideration for switch to alternative fluorocarbons with a low ozone depletion potential and non-fluorocarbon materials• Strengthen preventive management of fluorocarbon leakage• Introduction of natural refrigerant equipment with zero ozone depletion potential and low global warming potential (Morinaga
Angel Dessert Co., Ltd., Morinaga Dessert Co., Ltd., and Takasaki Morinaga Co., Ltd.)

3. Initiatives in logistics• Improve loading rate and reduce transportation and delivery vehicles by joining other companies in the industry intransportation and delivery*1. Group consolidated basis. *2 Scope 1 + 2 (domestic Group consolidated basis; compared to FY2019/3)*3. Scope: Amount of plastics used in packaging materials (intensity; compared to FY2020/3; including replacement with biomass plastics)

3. Promotion of Environmental Consideration in Containers and Packaging
1. Environment Management
Global environmental issues, such as climate change andenvironmental pollution caused by plastic waste, can potentially
impact the Group’s business and performance over the medium
to long term. We will accelerate our initiatives on environmental
conservation appropriately and strategically following theMorinaga Group Environmental Policy in achieving sustainablegrowth for the Group and providing “health of environment.”
To achieve this, the ESG Committee deliberates, formulates, andreviews progress on important policies and targets related to theenvironment. The Environment Integration Office was establishedby the Production Administration Division and Sustainable
Management Division to exchange information with the Factory

Environment Management Committee and other organs, as wellas to promote continuous improvements to our management
system and to reduce the environmental impacts and increase
productivity.
We have built an environmental management system centeredon ISO 14001. Since January 2018, the Morinaga Group’s
Production Sites obtained multiple site certification (four factoriesof Morinaga & Co., Ltd., and three affiliated production companies.)
In addition, we endorsed the TCFD Recommendations in April
2022. Going forward, we will conduct analysis and disclose
information in line with the recommendations. (See pages 56 and
57 for details.)

Please see our corporate website for the Morinaga Group’s environmental policy, Multi-site Organization Site, and ISO 14001 certification status.
Environmental Policy
https://www.morinaga.co.jp/company/english/sustainability/environment/#policy
Multi-site Organization Site and ISO 14001 Certification Status
https://www.morinaga.co.jp/company/english/sustainability/environment/

Target

FY2031/3

Results for FY2022/3

-30%

+2%

* Scope 1 + 2 (domestic Group consolidated basis; compared to FY2019/3).

Environmental Initiatives in the Containers and Packaging of Major Brands
Initiatives

Current initiatives (includes tentative items)

Reduce weight and volume of plastic

Reduce the amount of plastic used in the packaging of products including in Jelly and Choco Monaka Jumbo

Switch to eco-friendly materials for packaging

Switch plastic package of HI-CHEW and in Jelly to biomass-derived plastic packaging

Promote recycling

Launched in Jelly Recycling Program in September 2021

Initiatives for reducing plastic waste: in Jelly Recycling Program
To further reduce plastic waste, Morinaga and TerraCycle Japan G.K. launched a recycling
program to collect empty jelly drink containers in September 2021. The program works to collectused containers and recycle them into new plastic products as resources. We will continue topromote recycling initiatives for in Jelly as a leading jelly drink brand.

4. Effective Use of Water Resources
Morinaga Co., Ltd. Going forward, we will work from various angles
to further reduce the Group’s CO2 emissions.

CO2 Emissions (Scope 1 + 2)*(Thousand t- CO2)

100

0.46

80
60
40

67.5

68.9

46.9

47.5

0.48
75.7

(t-CO2e/ million yen)

0.50
0.40

Scope 1
Scope 2
Intensity

0.30

53.4

20
0

CO2 Emissions Reduction: Long-term Target and Progress*

0.20

sites are located using Aqueduct* , which identified regions facing
high water stress and water resources usage. We will now strive toascertain risks related to water resources to ensure effective use of
these resources.

Amount of Water Resource Usage* (Thousand t)

Water Stress Evaluation of all Production Sites (FY2022/3)

2,000

0.10

20.6

21.4

22.3

2020/32021/32022/3 (FY)0

* Domestic Group consolidated basis. CO2 emissions are rounded up to the second decimal place.
Figures for FY2021/3 and onward are third-party-assured by LRQA.
The Company applied the “Accounting Standard for Revenue Recognition (ASBJ Statement No. 29,
March 31, 2020)”, etc., from the beginning of FY2022/3. The figures for FY2021/3 are from after
retroactive application of the said accounting standard.

Morinaga Group INTEGRATED REPORT 2022

2

In recent years, there is growing risk of water resource shortages
due to rising populations and frequent occurrence of natural
disasters caused by climate change. We believe that water resources
are essential to our Group’s business activities, and it is importantto promote business activities that effectively assess water
1
stress* and utilize water resources. We assessed water stress andconducted water withdrawal surveys in regions where production

1,739.3

1,771.8
169.7

148.0

1,500

*1. A state in which water supply and demand is tight. Water stress occurs when maximum
3
available water resources per capita falls below 1,700 m .
*2. World Resources Institute (WRI)’s Aqueduct Water Risk Atlas

Extremely high 0%

1,778.4

High 9%

179.4

1,000

1,602.1

1,591.3

1,599.0500

Domestic Group consolidated
Overseas production sites

02020/32021/32022/3 (FY)* Domestic figures reflect Group consolidated figures. Overseas figures reflect figures at production
sites. The domestic Group consolidated figure for FY2021/3 and later is third-party assured by LRQA.

54

the packaging material for mainstay in Jelly products. With thislong-term goal as a starting point, we will promote the initiatives
towards achieving a resource-recycling society.

The collection box and students of Koriyama High School in Fukushima Prefecture

2. Response to Climate Change Issues
To contribute to a decarbonized society, we are promoting carbon
management including energy conservation and visualization ofenergy usage to achieve the long-term goal of net-zero greenhousegas emissions by 2050. In 2022/3, CO2 emissions increased owing
to the new frozen desserts manufacturing line at Takasaki Morinaga
Co., Ltd., and other factors. We will continue to explore utilization ofrenewable energy while conserving energy to reduce CO2 emissions.
Also, we are switching to alternative fluorocarbons with a low ozone
depletion potential and non-fluorocarbon materials for facilities
that use fluorocarbons. Freezers that use natural refrigerant wereadopted for the cold storage warehouse newly built at Takasaki

In recent years, marine pollution by plastic waste has becomea serious issue that is attracting growing concerns globally. The
Group believes its efforts through business activities are important,and has established a long-term goal for reducing plastic use in

Medium-high55%

Low 9%

Low-medium
27%•Scope: Four factories of Morinaga &Co., Ltd. (Yokohama, Kanagawa; Oyama,
Tochigi; Mishima, Shizuoka; Anjo, Aichi), four
affiliated production companies (Takasaki,
Gunma; Yamato, Kanagawa; Tosu, Saga;
Amagasaki, Hyogo), and three overseas
production sites (North Carolina, USA; Taipei,
Taiwan; Zhejiang, China.)

Morinaga Group INTEGRATED REPORT 2022

55

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Initiatives for Sustainability

Information Disclosures Based on
the TCFD Recommendations

Scenario Analysis

Force on Climate-related Financial Disclosures (TCFD), which was established by the Financial Stability

We established the 4°C, 2°C and 1.5°C scenarios for Morinaga &Co., Ltd.’s domestic food manufacturing business to analyze theimpacts in 2030 and 2050.
We referenced scenarios of government institutions andresearch institutes for the identification and evaluations ofBoard (FSB.) Since then, we have been addressing the TCFD recommendations, including conducting

Morinaga Group’s Important Risks

The Morinaga Group recognizes that climate change is an important issue that affects the continuity of
its operations and sustainable growth. In April 2022, we endorsed the recommendations of the Task

climate change scenario analysis.
Area

Governance

Strategy

Risk Management

Category

Risk factors

Impact on operations

Response

Spread of GHG emissions
pricing and stricter GHG
emissions

Rising energy costs and logistics costs
caused by the introduction of carbon
taxes

Stricter energy conservation
policyRising cost of capital investment
for manufacturing facilities due tothe company’s response to energy
conservation driven by stricter energy
conservation policy• Consider and implement ways to reduce CO2 emissions by 30%*
2
by 2030 and to achieve net-zero GHG emissions by 2050*• Promote visualization of CO2 emissions at factories, implement
energy conservation measures, and establish highly efficient
production system through reorganization• Consider use of renewable energy• Establish more efficient logistics system/transport and deliveries
with fewer environmental impacts

Decarbonization-related
mandates and regulations
on existing products andservices

Rising packaging costs due toregulations on the use of plastics
derived from petroleum

Markets

Changes in consumer
behavior

Increased environmental awarenessamong consumers leads to a decline
in sales due to consumer defection
from products that have been slow
to respond to the environment anda decrease in the adoption of suchproducts by retailers

Acute

Rising severity andfrequency of extreme
weather, such as cyclones
and flooding

Loss of opportunities and decreasein sales due to suspension of
procurement, production, logistics, andsales activities caused by damage tofactories, warehouses, and employees
due to extreme weather, disruption oflogistics, etc.

• Continuously review BCP for natural disasters and promote BCM• Design buildings and electrical equipment at the time of
manufacturing base relocation or new establishment based on
hazard map• Decentralize manufacturing bases of mainstay products• Purchase raw materials from multiple suppliers (or multiple sites)

Changes in rainfall patterns
and extreme changes inweather patterns

Rising raw material and development
costs due to quality deteriorationand yield reduction of crops causedby changes in weather patterns andfrequent occurrences of extreme
weather• Promote raw materials procurement in consideration of theenvironment in line with Procurement Policy and Supplier Guidelines• Promote initiatives aimed at 100% sustainable procurement of cacao
4beans, palm oil and paper by 2030*• Purchase raw materials from multiple suppliers (or multiple sites)• Strengthen collaboration with suppliers and increase communication
aimed at risk response• Consider shifting milk ingredients to plant-based materials

Details

The Morinaga Group’s reporting, target setting, and progress
monitoring concerning sustainability initiatives which include
climate change, are deliberated on by the ESG Committee. The
Representative Director, President, who chairs the committee,
then makes a decision and reports it to the Board of Directors. In
FY2022/3, the ESG Committee convened seven times.
The deliberations of the ESG Committee are considered invarious aspects of decision making concerning management.
In FY2022/3, we established the TCFD Subcommittee under
the ESG Committee. This subcommittee is responsible foranalyzing the Morinaga Group’s risks and opportunities andreviewing responses following the TCFD recommendations. It ischaired by the Director and Managing Executive Officer in chargeof the Sustainable Management Division. It convened threetimes in FY2022/3, and the results were reviewed by the ESG
Committee and then reported to the Board of Directors.

Review and Promotion System for
Climate Change Issues
Board of Directors

Policy andregulation

Transition risks
Chair: Representative
Director, President

ESG Committee

Chair: Director,
Managing Executive
Officer

TCFD Subcommittee

In the process of identifying risks and opportunities of climate change, Morinaga established the 4°C, 2°C, and 1.5°C
scenarios for its domestic food manufacturing business. Based on the information released by the Intergovernmental
Panel on Climate Change (IPCC) and International Energy Agency (IEA), we use these scenarios to analyze the impacts
in Japan in 2030 and 2050. As a result, the 4°C scenario identified the risks of a reduction in quality of agricultural
produce, changes in yield caused by changes in weather patterns, and increasing frequency of extreme weather events.
The 2°C and 1.5°C scenarios found that rising costs due to stricter energy conservation policy and carbon taxes will
have a larger impact on business operations. In response to these risks, we will strive to reduce our own CO2 emissions
and address risks and opportunities that are important.

The Morinaga Group established the Total Risk Management Committee, which is chaired by the Representative
Director, President. This committee identifies risks, evaluates the severity, implements countermeasures against
these risks, and manage and address them appropriately. The importance of these risks is evaluated by the TCFD
Subcommittee. The results are reviewed by the ESG Committee and then reported to the Board of Directors, ensuring
companywide risks and business operations are managed and addressed appropriately. Based on the above,
management conducts business operations after carrying out appropriately oversight of companywide risks.

Physical risks

Chronic

To mitigate climate change risks, the Morinaga Group has
established targets to reduce CO2 emissions (Scope 1 and
2) by 30% from FY2019/3 in Japan by 2030 and to achieve
net-zero GHG emissions by 2050. We are actively improving
energy efficiency at our production sites (preventing air
leaks, adding insulation, etc.), by upgrading our infrastructure
and utilizing new and efficient equipment; thus highlighting
our shift away from fossil fuels. At the same time, we areconsidering the introduction of renewable energy andimplementing measures to achieve these targets.

74.1

Category

68.930%
reduction

51.8

Products andservices

Aim fornet zero

Resilience0
2019/3(Baseline FY)

2021/3

Opportunity factors

Impact on operations

Response

Development and use of
efficient production anddistribution processes

Declining manufacturing and transport
costs due to development of efficientmanufacturing and distribution processes• Promote efficient production activities by rebuilding the production system5and creating smart factories*
6• Promote initiatives aimed at 70% reduction in food loss and waste by 2030*• Establish more efficient logistics system/transport and deliveries with fewer
environmental impacts

Changes in consumer
preferences

Rising demand for eco-friendly products
amid increasing environmental awarenessamong consumers including Generation Z• Implement “One Chocolate for One Smile” campaign *• Develop eco-friendly products

Adaptation to climate

Rising demand for in Jelly and frozen
desserts due to global warming• Increase sales of in Jelly and frozen desserts

Increasing capacity of operations undervarious conditions from review ofsubstitution/diversification of raw materials• Consider substitution and diversification of raw materials based on climatechange risks

Increased trust in supply chain and fewer
opportunity loss due to formulation ofresilience plan (BCP)• Continuously review BCP for natural disasters and promote BCM*Domestic consolidated basis

75.7

2022/32031/32051/3 （FY）

• Promote raw materials procurement in consideration of theenvironment in line with Procurement Policy and Supplier Guidelines• Promote initiatives aimed at a 25% reduction in plastics usage for3
in Jelly products by 2030*• Expand the use of biomass plastics• Promote initiatives aimed at 100% sustainable procurement of cacao
4beans, palm oil and paper by 2030*

Morinaga Group’s Important Opportunities

CO2 Emissions (Scope 1 + 2)
(Thousand t- CO2)

1

*1 Scope 1 and 2 (domestic Group consolidated basis; compared to FY2019/3)*2 Group consolidated basis.
*3 Target: usage of plastics in packaging materials (intensity, compared to FY2020/3, including shift to biomass plastics)*4 Group consolidated basis. Paper covers product packaging only.

Resource
efficiency

Indicators
and Targets

Sub-category

climate change risks and opportunities and for the analysis of the
impact on the Morinaga Group’s business, strategies and financial
standing caused by these risks and opportunities. Going forward,
we will deepen our study of countermeasures and consider
further expanding the scope of our scenario analysis.

Substitution/Diversificationof resources

7*5 Smart factory: Using IoT and AI technologies to integrate technology and digital data of production equipment to ensure stable operations and increase production efficiency*6 Scope: Food loss and waste occurring from receipt of raw materials to delivery (distribution) (domestic consolidated basis; intensity; compared to FY2020/3.) Food loss and waste is defined as foodwaste that is disposed of through incineration or landfill, excluding food waste recycled into fertilizer or feed, etc.
*7 “One Chocolate for One Smile” campaign: Donates a part of sales of eligible products to support children in cacao-producing countries by improving their educational environment, etc.

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57

Initiatives for Sustainability

Initiatives for Human Rights
The Morinaga Group is a signatory to the UN Global Compact and supports such international rules as
the UN Guiding Principles on Business and Human Rights. We respect the human rights of everyone
involved with all of our business processes as part of our commitment to realize a sustainable society.

60 Executive Management Team

Human Rights Management System
We have established the Morinaga Group Code of Conduct andStandards of Behavior, the Morinaga Group Human Rights Policy
and the Morinaga Group Supplier Guideline. We are working toshare our philosophy on human rights defined in these policies
through compliance training sessions for all employees andsupplier briefings. We have a system in place to discuss theGroup’s response at both committees indicated on the right incase of concerns about possible human rights infringements. If
such concerns arise within the Group or if a complaint is madeto the Helpline, we will report to the Compliance Committee, or if
these concerns have arisen outside the company, the Sustainable
Management Division will summarize the information and reportto the ESG Committee. Directors who receive such reports from

Governance Section
62 Messages from Outside Directors

both committees will supervise and provide instructions for the
response.

64 Corporate Governance
68 Compliance
69 Risk Management

Human Rights Management System Diagram
Board of Directors
Reports on Plans,
Progress, Responses, etc.

Compliance Committee
ReportingMonitoring

Inquiries

ESG Committee
ReportingMonitoring

General Affairs Division

Sustainable Management DivisionHelpline
Human Rights Information in the Group

External Human Rights Information
Including the Value Chain

Reinforce Human Rights Management
The Morinaga Group respects the human rights of stakeholders
within the Group and across its value chain.
The Morinaga Group Human Rights Policy established in 2018
requires that we respect human rights and provide workplaces
that are free of discrimination and harassment. It also requiresthat we eliminate child labor and forced labor in the supply chain.
The Group supports initiatives to eradicate child labor and genderequality awareness activities in cacao-producing countries throughthe One Chocolate for One Smile campaign. We exchange opinions
for future initiatives while learning about local conditions fromrelevant NPOs and NGOs, and we deepen understanding of humanrights issues in palm oil producing regions through communication
with the RSPO*. We are also assessing and addressing humanrights issues in the supply chain through our CSR procurement
surveys based on the Supplier Guideline.

Morinaga Group Human Rights Policy

Roadmap to Reinforcing Human Rights Management
FY2022/3• Started initiatives on human rights due diligence• Completed supplier guideline• Commenced CSR procurement survey based on the Supplier Guideline• Conducted stakeholder engagement with NGOs and NPOs
• Promoted internal training and education (basic approach to respecting humanrights and prevention of harassment, etc.)

FY2023/3• Become signatory to the UN Global Compact• Develop raw materials procurement guidelines for cacao beans, palm oil and paper• Revise the Morinaga Group Human Rights Policy• Begin impact assessments of businesses that could have a negative impact
on human rights• Expand internal training and education (global approaches to business andhuman rights, etc.)• Participate in a grievance mechanism platform

FY2024/3• Respond to issues identified (starting from urgent issues)• Review progress of response to issues and report in the integrated report, etc.

(Established in May 2018)

As a member of the international community, the Group respects fundamental human rights, undertaking sincere business activities
that do not tolerate human rights violations.
1. Respect for human rights andprohibition of discrimination

We respect fundamental human rights, and will not discriminate in any way based on a person’s race,
gender, nationality, religion, ideology, age, or physical characteristics, or for any other reason.

2. Prohibition of harassment

We will not participate in power harassment, sexual harassment, or any other behavior whatsoever that injures
human dignity.

3. Consideration for safety/ hygiene

We will give consideration to safety and hygiene in the workplace, endeavoring to ensure a comfortable work
environment, and respect employees’ fundamental human rights.

4. Building and maintenance of goodlabor-management relations

We will respect the right to freedom of association and collective bargaining and other fundamental rights of
employees, building and maintaining good labor-management relations.

5. Elimination of child labor/ forced labor

In our various business activities, we will not accept child labor, forced labor, or any other unfair labor practices.

* RSPO is an acronym for Roundtable on Sustainable Palm Oil, which is involved in the development and operation of the sustainable palm oil certification scheme.

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59

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Executive Management Team(As of June 29, 2022)

Director
Career summary

Career summary

Career summary

Apr. 1982 Joined Morinaga & Co., Ltd.
Jun. 2011 Director, Commissioned General Manager of Frozen Dessert
Business Headquarters of the Company
Apr. 2014 Commissioned General Manager of Sales Headquarters of
the Company
Jun. 2014 Director, Senior Executive Officer of the Company
Jun. 2015 Director, Managing Executive Officer of the Company
Jun. 2017 Director, Senior Managing Executive Officer of the Company
Jun. 2019 Representative Director, President of the Company (present)
Jun. 2020 President of Morinaga Angel Foundation (present)
Jun. 2021 President of All Nippon Kashi Association (present)

Apr. 1983 Jointed Matsushita Electric Industrial Co., Ltd. (Currently
Panasonic Corporation)
Apr. 2011 Officer, General Manager of Environment Headquarters andPower Saving Headquarters of Panasonic Corporation
Oct. 2012 Officer, responsible for Future Life Research,
R&D Headquarters of Panasonic Corporation
Jun. 2014 Outside Director of Morinaga & Co., Ltd.
Dec. 2014 Outside Director of KATO SANGYO CO., LTD.
May 2015 Outside Director of YOSHINOYA HOLDINGS CO., LTD.
Jun. 2018 Director, Managing Executive Officer of the Company (present)
Commissioned General Manager of Marketing Headquarters
Feb. 2019 Chairperson of Sustainability Forum Japan (present)
Apr. 2022 Auditor of Ochanomizu University (present)
Jun. 2022 Outside Director of SEKISUI CHEMICAL CO., LTD. (present)

Apr. 1979 Joined Bridgestone Tire Co., Ltd. (Currently Bridgestone
Corporation)
Mar. 2009 Executive Officer, responsible for General Affairs andCorporate Communications of Bridgestone Corporation
Jun. 2014 Director, General Manager of Group CC Headquarters of
ZENSHO HOLDINGS CO., LTD.
Jan. 2015 Director, General Manager of Group General Affairs
Headquarters of ZENSHO HOLDINGS CO., LTD.
Jun. 2020 Outside Director of Morinaga & Co., Ltd. (present)
Jun. 2022 Outside Director of The Nisshin OilliO Group, Ltd. (present)
Jun. 2022 Outside Director of NIPPON YAKIN KOGYO CO., LTD. (present)

Eijiro Ota

Representative Director,
President
Significant concurrent positions

Term of office as a director:

Board of Directors meeting
attendance:

11 years

16/16 times

Responsibilities: Audit Division and Sales Headquarters

Director,
Senior Executive Officer

Director,
Managing Executive Officer
Significant concurrent positions

Chairperson of Sustainability
Forum Japan
Outside Director, SEKISUICHEMICAL CO., LTD.

President of Morinaga AngelFoundation
President of All Nippon Kashi
Association

Takashi Hirakue

Machiko Miyai

Term of office as a director:

Board of Directors meeting
attendance:

8 years

16/16 times

Responsibilities: Sustainable Management Division, Quality
Assurance Division, Customer Service Center

Director,
Senior Executive Officer

Outside Director(Independent Officer)
Significant concurrent positions

Outside Director, The Nisshin
OilliO Group, Ltd.
Outside Director, NIPPON YAKIN
KOGYO CO., LTD.

Reason for appointment
Ms. Eto has business experience accumulated in the manufacturingindustry and a wealth of experience as an executive in the retail industry.
Based on this experience, she provides objective and neutral advice on
overall management from a broad perspective that extends beyond theCompany’s industry.

Term of office as a director:

Board of Directors meeting
attendance:

2 years

16/16 times

Shuichi Hoshi
Outside Director(Independent Officer)

Significant concurrent positions

Outside Director, SBS Holdings,
Inc.

Reason for appointment
Mr. Hoshi has a wealth of experience as an executive in the wholesaleindustry, and based on this experience, he provides objective and neutral
advice on overall management from a broad perspective that extends
beyond the Company’s industry.

Term of office as a director:

Board of Directors meeting
attendance:

2 years

16/16 times

Career summary

Career summary

Career summary

Career summary

Apr. 1984 Joined Morinaga & Co., Ltd.
Jun. 2008 Senior Executive Officer, General Manager of Frozen Dessert
Business Headquarters of the Company
Apr. 2009 Senior Executive Officer, General Manager of Confectionery
Business Headquarters of the Company
Jun. 2010 Director, Commissioned General Manager of Confectionery
Business Headquarters of the Company
Jun. 2013 Commissioned General Manager of Foodstuff Business
Headquarters of the Company
Apr. 2014 Commissioned General Manager of Marketing Headquartersof the Company
Jun. 2014 Director, Senior Executive Officer of the Company (present)
Jun. 2018 Commissioned General Manager of Production Headquartersof the Company

Apr. 1984 Joined Morinaga & Co., Ltd.
Jun. 2013 General Manager of Health Care Business Headquarters of
the Company
Apr. 2016 Executive Officer, General Manager of Health Business
Headquarters of the Company
Apr. 2018 Executive Officer, Deputy General Manager of R&D Center of
the Company
Jan. 2019 Executive Officer, General Manager of R&D Center of theCompany
Jun. 2019 Director, Senior Executive Officer of the Company (present)
Commissioned General Manager of R&D Center (present)

Apr. 1979 Joined Komatsu Ltd.
Apr. 2014 Executive Officer, General Manager of Human Resources
Division of Komatsu Ltd.
Apr. 2016 Managing Executive Officer, General Manager of Human
Resources Division of Komatsu Ltd.
Jun. 2018 Director, Managing Executive Officer of Komatsu Ltd
Jun. 2021 Outside Director of Yokogawa Electric Corporation (present)
Jun. 2021 Outside Director of Morinaga & Co., Ltd. (present)
Jun. 2022 Outside Director of NIPPON STEEL CORPORATION (present)

Apr. 1980 Joined TOKYU LAND CORPORATION
Apr. 2006 Executive Officer and General Manager of Corporate
Planning Division of TOKYU LAND CORPORATION
Jun. 2007 Director and Managing Executive Officer of Tokyu Hands Inc.
Apr. 2011 Representative Director and President of Tokyu Hands Inc.
Jun. 2014 Director of Tokyu Fudosan Holdings Corporation
Apr. 2015 Representative Director and President of Tokyu Livable, Inc.
Apr. 2019 Director and Chairperson of Tokyu Livable, Inc.
Mar. 2022 Advisor of Tokyu Livable, Inc. (present)
May 2022 Outside Director (Audit and Supervisory Committee Member)of SAN-A CO., LTD. (present)
Jun. 2022 Outside Director of Morinaga & Co., Ltd. (present)

Term of office as a director:

Board of Directors meeting
attendance:

12 years

16/16 times

Shinya Mori

Director,
Senior Executive Officer

Term of office as a director:

Board of Directors meeting
attendance:

3 years

16/16 times

Responsibilities: R&D Center, New Business Development Division

Responsibilities: Logistics Division, DX Promotion Division

Daisuke Fujii

Naomi Eto

Career summary
Apr. 1979 Joined ITOCHU Corporation
Sep. 1998 Director of Family Corporation Co., Ltd. (Currently NIPPONACCESS, INC.)
Dec. 2002 Director of Yukijirushi Access Co., Ltd. (Currently NIPPONACCESS, INC.)
Apr. 2010 Executive Officer of ITOCHU Corporation
Jun. 2013 President, Representative Director of ITOCHU-SHOKUHIN
Co., Ltd.
Mar. 2019 Outside Director of SBS Holdings, Inc. (present)
Jun. 2020 Outside Director of Morinaga & Co., Ltd. (present)

Career summary

Apr. 1987 Joined Morinaga & Co., Ltd.
Apr. 2018 General Manager of General Affairs Division of the Company
Apr. 2019 Executive Officer, General Manager of General Affairs
Division of the Company
Jun. 2019 Director, Senior Executive Officer of the Company (present)
Aug. 2019 Commissioned General Manager of Corporate Strategy
Division of the Company

Apr. 1990 Joined Morinaga & Co., Ltd.
Apr. 2010 General Manager of Area Sales Division of Confectionery andFoodstuff Sales Division of the Company
Apr. 2014 General Manager of Sales Strategy Division ofSales Headquarters of the Company
Apr. 2018 Executive Officer, General Manager of Sales Strategy
Division of Sales Headquarters of the Company
Apr. 2019 Executive Officer, General Manager of Confectionery andFoodstuff Sales Division of Sales Headquarters of the Company
Oct. 2019 Executive Officer, General Manager of Sales Headquarters of
the Company
Apr. 2021 Senior Executive Officer, General Manager ofSales Headquarters of the Company
Apr. 2022 Senior Executive Officer, General Manager ofMarketing Headquarters of the Company
Jun. 2022 Director, Senior Executive Officer of the Company (present)
Commissioned General Manager of Marketing Headquarters(present)

Board of Directors meeting
attendance:

3 years

16/16 times

Responsibilities: Corporate Strategy Division, General Affairs
Division, Strategic Investment & Alliance Division

Hideki Matsunaga
Director,
Senior Executive Officer

Kuniko Urano
Outside Director(Independent Officer)

Significant concurrent positions

Term of office as a director:

Board of Directors meeting
attendance:

Outside Director, Yokogawa
Electric Corporation
Outside Director, NIPPON STEELCORPORATION

1 year12/12 times

Shinji Sakaki

Outside Director(Independent Officer)
Significant concurrent positions

Outside Director (Audit andSupervisory Committee
Member), SAN-A CO., LTD.

Reason for appointment
Mr. Sakaki has a wealth of experience as an executive in the retailand real estate industries, and based on this experience, he provides
objective and neutral advice on overall management from a broad
perspective that extends beyond the Company’s industry.

Term of office as a director:

Board of Directors meeting
attendance:––

Statutory Auditors

Career summary

Term of office as a director:

Reason for appointment
Ms. Urano has a wealth of experience as an executive in the machineryindustry, and based on this experience, she provides objective andneutral advice on overall management from a broad perspective that
extends beyond the Company’s industry.

Term of office as a director:

Board of Directors meeting
attendance:––

Career summary

Career summary

Apr. 1980 Joined Mitsubishi Corporation
Jun. 2010 Executive Officer, CFO and General manager of Corporate
Administration of Metal One Corporation
May 2014 Managing Director, General Manager of General Affairs andAccounting Division of MC FERTICOM CO., LTD.
Jun. 2016 Managing Director, responsible for Functional Departments
and General Manager of Accounting Division of Meiwa
Corporation
Jun. 2019 Standing Statutory Auditor of Morinaga & Co., Ltd. (present)

Apr. 1982 Joined Morinaga & Co., Ltd.
Jun. 2006 Executive Officer, General Manager of Development Planning
Office of R&D Center of the Company
Jun. 2011 Executive Officer, General Manager of Chukyo Factory of theCompany
Jan. 2014 Representative Director, President of Morinaga America
Foods, Inc.
Apr. 2017 Executive Officer, General Manager of R&D Center ofMorinaga & Co., Ltd.
Jun. 2017 Director, Senior Executive Officer, Commissioned General
Manager of R&D Center of Morinaga & Co., Ltd.
Jan. 2019 Representative Director, President of Morinaga America
Foods, Inc.
Jun. 2022 Standing Statutory Auditor of Morinaga & Co., Ltd. (present)

Reason for appointment

Akiyuki Igarashi

Standing Outside Statutory
Auditor (Independent Officer)

Mr. Igarashi has a wealth of management experience in the wholesaleindustry and abundant knowledge of finance and accounting. He
provides objective and neutral audits from a broad perspective that
extends beyond the Company’s industry.

Board of Statutory Auditors
meeting attendance:

Board of Directors meeting
attendance:

16/16 times

16/16 times

Toshiaki Fukunaga
Standing Statutory Auditor

Board of Statutory Auditors
meeting attendance:

Board of Directors meeting
attendance:––

Responsibilities: Marketing Headquarters, Direct Marketing
Division

Career summary

Tetsuya Takagi

Apr. 1986 Joined Fuji Xerox Co., Ltd. (Currently FUJIFILM Business
Innovation Corp.)
July 2015 Corporate Vice President, General Manager of Corporate
Planning Division of Fuji Xerox Co., Ltd.
July 2017 Executive Counselor of Fuji Xerox Co., Ltd.
Apr. 2018 Managing Executive Officer, responsible (deputy) for Corporate
Planning Division of UNIZO Holdings Company, Limited.
July 2019 Chief Financial Officer, Director & Group Executive of
Twinbird Corporation
Nov. 2021 Joined Morinaga & Co., Ltd.
Apr. 2022 Senior Executive Officer of the Company
Jun. 2022 Director, Senior Executive Officer of the Company (present)

Director,
Senior Executive Officer

Term of office as a director:

Board of Directors meeting
attendance:––

Responsibilities: Accounting Division, Corporate Communications
Division

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Morinaga Group INTEGRATED REPORT 2022

Career summary

Career summary

Apr. 1979 Registered as an attorney and joined Tamiya & Tsutsumi
Law Office
Apr. 1985 Established Sakaguchi & Takanaka Law Office (renamed Legal
Plaza Law Office in April 1998)
Sep. 2000 Appointed Judge of Tokyo District Court
Sep. 2013 Chief Judge of Akita District Family Court
Nov. 2015 Registered as an attorney and joined Kato Sogo Law Office(Currently GINGA LAW OFFICE) (present)
Jun. 2016 Outside Statutory Auditor of Morinaga & Co., Ltd. (present)

Apr. 1981 Joined The Dai-Ichi Kangyo Bank, Ltd. (Currently Mizuho
Bank, Ltd.)
Apr. 2017 Senior Managing Executive Officer, General Manager ofPlanning and Administration Division of Mizuho ResearchInstitute Ltd.
May 2019 Advisor of Chuo Fudosan K.K. (Currently Chuo-Nittochi Co.,
Ltd.) (present)
Jun. 2019 Outside Statutory Auditor of Morinaga & Co., Ltd. (present)
Jun. 2021 Outside Director of MEDIPAL HOLDINGS CORPORATION (present)

Reason for appointment

Koichi Sakaguchi
Outside Statutory Auditor(Independent Officer)

Significant concurrent positions

Attorney (GINGA LAW OFFICE)

Mr. Sakaguchi has a high level of expertise and experience as a judge
and attorney. He provides objective and neutral audits from a broad
perspective that extends beyond the Company’s industry.

Board of Statutory Auditors
meeting attendance:

Board of Directors meeting
attendance:

16/16 times

16/16 times

Reason for appointment

Hiroshi Iwamoto

Outside Statutory Auditor(Independent Officer)
Significant concurrent positions

Outside Director, MEDIPALHOLDINGS CORPORATION

Mr. Iwamoto has experience in financial operations accumulated in
the financial industry, along with a wealth of management experiencein the information and communication industry. He provides objective
and neutral audits from a broad perspective that extends beyond theCompany’s industry.

Board of Statutory Auditors
meeting attendance:

Board of Directors meeting
attendance:

16/16 times

16/16 times

Morinaga Group INTEGRATED REPORT 2022

61

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Messages from Outside Directors

Shuichi Hoshi Outside Director
Today, we find ourselves in a time when an infectious disease or conflict in one region can spread to the entire
world. This requires that companies grasp and analyze the situation with modesty and consistently use creative
ingenuity with a flexible stance.
The Morinaga Group is finishing up with its efforts to lay the foundation for the 2030 Business Plan, seeking
to change into a wellness company. Product development that contributes to “health of mind and body” is one ofour major themes of this plan.
For production investment and the focused domain category, Morinaga has held discussions with a long-term
perspective, and on the other hand, built a framework for an objective evaluation and monitoring process ofaction plans to accomplish short- to medium-term business plans.
In the field of confectionery and foodstuffs, companies will be recognized for their ability to quickly generate
results from fast-paced response to changes in living patterns and consumption trends. Using my experience inbusiness management, corporate management, business alliances and M&A in the food industry, I will work tofurther increase the company’s corporate value so that the company can contribute to all stakeholders including
shareholders and employees with outward-looking and future-oriented perspectives.

Kuniko Urano Outside Director

Shuichi Hoshi

Naomi Eto

Kuniko Urano

Shinji Sakaki

Outside Director

Outside Director

Outside Director

Outside Director

Naomi Eto Outside Director
Thanks to the efforts of Morinaga’s executive team, the company has been able to establish its corporate
philosophy and our vision for 2030 internally, and initiatives have gotten off to a strong start.
From my position as Outside Director, I have repeatedly found there are two challenges that need to be
overcome in order for Morinaga to achieve its long-term targets. First, Morinaga must get ahead of the times
in strengthening functional divisions such as human resources and IT, which underpin business growth.
Second, Morinaga must establish an effective risk management system covering the Group and the entire
supply chain.
Today, the world’s food security is being threatened by Russia’s military invasion of Ukraine. Morinaga
must effectively utilize food resources, which will become more valuable in the future, and serve as aninternational corporation trusted by people around the world for consistently providing security andwellbeing through foods.
Toward this end, it is vital that Morinaga share with outside stakeholders its detailed roadmap to becoming
a wellness company as stated in the 2030 Vision. I look forward to supporting these efforts.

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Morinaga Group INTEGRATED REPORT 2022

Through my participation in meetings and workplace visits since becoming Outside Director, I have found that
employees are actively working on the 2030 Vision and that outside stakeholders attach high expectations
to this vision. The Morinaga Group has formulated three basic policies to change into a wellness company by2030. However, the items in these basic policies are rather simple, so I believe the next one to two years will bea crucial time where the collective strengths of the Group are called into question in terms of its ability to put
these policies into specific actions and speed up the process.
As such, I believe there are two fundamental aspects of decision making and execution. First is frankly
discussing at Board meetings risks and opportunities using the perspectives of different industries, and second
is sharing competitive strengths with everyone. In addition, new changes taking place in the social environmentof this past year should not be perceived as simply headwinds, but rather viewed as an excellent opportunity
to overcome weaknesses. What’s expected the most for Morinaga is to continue to be a company that boldly
tackles new challenges and it is my job as Outside Director to push this forward. In this manner, I will makeevery effort to contribute to the Group’s development over the medium to long term.

Shinji Sakaki Outside Director
My initial impression after becoming Outside Director is that Morinaga has clearly indicated its direction over the
medium to long term of becoming a wellness company through the 2030 Vision and other means. In addition, thebusiness domains of foods and health will be extremely important and offer great growth potential for achievinga sustainable society in the future.
Today, the world faces unprecedented and unpredictable risks in terms of geopolitics, disasters, and infectious
diseases. A key factor of corporate management will be responding in a flexible manner to various management
risks and unlock sustainable growth opportunities.
Corporate management during this time of high uncertainty requires multifaceted perspectives. I will support
Morinaga’s growth from the perspective I’ve gained through management experience in different industries suchas retail and services.

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63

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Corporate Governance
For more detailed information, refer to our website for Corporate Governance and Corporate Governance Report.
https://www.morinaga.co.jp/company/english/about/governance.html
https://www.morinaga.co.jp/company/english/ir/library/governance_report.html

Board of Directors

Corporate Governance Basic Policy
collaboration in accordance with corporate philosophy and thecode of conduct.

The Morinaga Group has established our corporate governancewith the aim of maximizing corporate value and achieving
enduring corporate growth based on the basic policies ofimproving the soundness and efficiency of management,
ensuring the reliability of its financial position, providing timely
and appropriate disclosure of information, complying with laws
and regulations, and strengthening the trust and relationships
with all stakeholders.

2. Management Monitoring Functions
We are committed to building an effective internal control system
by strengthening the management monitoring functions of theBoard of Directors, appointing Outside Directors and Outside
Statutory Auditors, requiring attendance by Standing Statutory
Auditors at important meetings, and placing the Audit Division
under the direct control of the President.

1. Positioning of Stakeholders
The Morinaga Group considers all stakeholders vital to ourcompany in order to achieve our Purpose. To enable us to fulfill
our social responsibility in all areas of our business activities, weare committed to maintaining and further developing strong
relationships with all stakeholders, and promoting appropriate

3. Consistent Approach throughout the Group
While respecting the independence of our subsidiaries, we
endeavor to maintain close ties amongst the Group’s member
companies.

Corporate Governance System
Rationale for Choosing the Current Corporate
Governance System

the Representative Director. They also attend meetings of theBoard of Directors and other important gatherings to audit the
Directors’ performance of duties. Among cases under thejurisdiction of any Director, Executive Officer, or General Manager,
the Standing Statutory Auditor performs audit on the approval
application for important cases. Statutory Auditors conduct regularmeetings with the accounting auditor and Standing Statutory
Auditors with the General Manager of the Audit Division, as well as
meetings as needed to exchange opinions and perform accounting
and business audits.

We have adopted our corporate governance system based on thedetermination that the system will contribute to healthy andefficient corporate management for the following reasons.
(1) Outside Directors: Four Outside Directors have been appointed
to strengthen corporate governance from an objective and neutral
standpoint regarding overall management based on their wide
range of perspectives.
(2) Outside Statutory Auditors: Three Outside Statutory Auditors(including one Standing Statutory Auditor) have been appointed toperform audits on the business execution of the Directors.
(3) Management monitoring functions: The Board of Statutory
Auditors meeting is in principle held once a month, and also held
as needed. Standing Statutory Auditors hold regular meetings with

The Company has clearly defined the responsibility and authority
for each decision-making unit, including the Board of Directors,
Business Execution Meetings, each Director, each Executive Officer,
and each General Manager, according to the Rules for Decisionmaking Criteria.

Reporting

Cooperation

ReportingBoard of Statutory
Auditors
Comprises 4 Statutory
Auditors (of which 3 are
Outside Statutory
Auditors)

64

Morinaga Group INTEGRATED REPORT 2022

Business Execution Meetings

Executive Officer System
With the aim of increasing the agility to respond to the changing
business environment and accelerating the decision-making
process, the Morinaga Group has adopted an Executive Officer
system. With this move, the Company delegated authority andresponsibility for executing regular business relating to theimplementation of strategies to Executive Officers, ensuring
efficient management and a clarification of responsibilities forbusiness execution.

Management
Meetings

Reporting

Representative
Director

Instruction/
supervision

Individual
divisions/departments

●

●

●

●

Shinya Mori
Director, Senior Executive Officer●

Daisuke Fujii
Director, Senior Executive Officer●

Hideki Matsunaga
Director, Senior Executive Officer●

Tetsuya Takagi
Director, Senior Executive Officer●

Naomi Eto
Outside Director●

Shuichi Hoshi
Outside Director●

IR Committee

Kuniko Urano
Outside Director●●

ESG Committee

Shinji Sakaki
Outside Director●●<Main Committees as the Advisory Bodies>
Officer Appointment andRemuneration Committee

Appointment/ dismissal

Total Risk Management
Committee

Response

Compliance Committee

Name

Role

Outside Director

Chairperson

Eijiro Ota

Representative Director, President

Committee member

Shuichi Hoshi

Outside Director

Committee member

Kuniko Urano

Outside Director

Committee member

Shinji Sakaki

Outside Director

Committee member

In addition, the Company has the following committees asadvisory bodies to strengthen the auditory functions of theBoard of Directors.
Name

Chairperson

Main agenda items

Total Risk
Management
Committee

Representative 1. Build and promote a company-wide risk
management system
Director,
2. Build and promote a total risk management
President
systemCompliance
Committee

1. Build and promote compliance managementand deliberate and implement their relevant
Representative
initiatives
Director,
2. Establish and promote compliance action
Presidentplans
3. Report and propose to the Board of Directors

1. Deliberate on policy, target, action, and KPI
related to sustainable management
Representative 2. Follow up on action and KPI progress
3. Share, propose and deliberate on the
Director,
ESG Committee
establishment of subcommittees and agenda
President
items
4. Deliberate on the publication of integrated
reports

IR Committee

Formulation and follow-up on measures toRepresentative improve shareholder value
Director,
1. Timely and appropriate information disclosure
2. Communication approach with shareholders
President
3. Improvement of shareholder value

Specialty and Experience

Takashi Hirakue
Director, Senior Executive Officer

Affiliatedcompanies

Position

Naomi Eto

Main Areas of Expertise of Directors●

Instruction/
supervision

Composition of the Officer Appointment andRemuneration Committee

The Officer Appointment and Remuneration Committee has been●

Internal audit

established to review the nomination and remuneration of
Directors. Chaired by an Outside Director, the Committee
deliberates on matters, including appointment and remuneration
for Officers.

Other Main Committees

Business Execution Meetings, which are mainly comprised of fulltime Directors, Standing Statutory Auditors and Senior Executive
Officers, deliberate and make decisions on importantmanagement themes on business execution. These meetings
also hear reports from relevant parties.

Machiko Miyai
Director, Managing Executive Officer

Internal audit

Cooperation

Partial delegationof authority(of which 4 are Outside Directors)

Appointment/ dismissal/
supervision

36.4% (4 out of 11)

Eijiro Ota
Representative Director, President

Instruction/
supervision

Audit

Audit

Board of Directors

Ratio of Outside Directors

ESG/
Sustainability

Audit Division
Immediate supervisor:
instruction/ supervision

ReportingComprises 11 Directors

27.3% (3 out of 11)

Name and position

Accounting Auditor

ReportingAppointment/ dismissal

Appointment/ dismissal

Ratio of Female Directors

Corporate
management/
Corporate strategy

Cooperation

General meetingof shareholders

Diversity of Directors (As of June 29, 2022)

Officer Appointment and Remuneration Committee

Business Execution

Corporate Governance System (As of June 29, 2022)
Appointment/
dismissal

The Board of Directors deliberately makes decisions on statutory
matters and the execution of important business based on thebusiness judgment principle, and supervises the execution ofbusiness. To ensure the effectiveness and efficiency ofdeliberations at the Board of Directors, sufficient priordiscussions are made at various committees (see diagram on theright) that serve as advisory bodies for the Boards. The Board of
Directors comprises 11 Directors, of which four are Outside
Directors, with eight male and three female Directors.

Finance/
Accounting

Human resources/
Labor affairs

Legal affairs/
Compliance/
Risk management

Marketing/
Sales

GlobalResearch/
Production/
Logistics

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●
●

●

●

●

●

●

●
●

●

●

●
●

●

●

Morinaga Group INTEGRATED REPORT 2022

65

Profile

Approach to the Appointment of Officers
The appointment of an officer is based on the premise that thecandidate possesses appropriate characteristics, insight andleadership, as well as a high level of specialization and richexperience required by the Company.
The appointment of an Outside Director is made fromcandidates who meet the Company’s Independence Standards,
and are capable of stating appropriate opinions and raising
issues on our management challenges from an independent andobjective standpoint. Furthermore, we have the policy of
appointing one or more Statutory Auditor who has considerable
knowledge of finance and accounting.

Independence Standards for Outside Directors
As our policy on the appointment of Independent Outside
Directors, in addition to the Standards for Independence set byfinancial instruments exchanges, candidates should meet all of
the following, as well as be capable of stating their opinions andraising issues from an independent and objective standpoint
regarding our management challenges.
1. If the candidate or the corporation in which the candidate is
the executive holds shares of the Company, the voting rightownership ratio shall not exceed 10%.
2. In the transactions of the most recent fiscal year, the sales tothe candidate or the corporation to which the candidate
belongs shall be less than 2% of the consolidated sales of theCompany.
3. In the transaction for the most recent fiscal year, the sales of
the candidate or the corporation to which the candidate
belongs shall be less than 2% of the consolidated sales ofsaid corporation.

Strategy Section

Sustainability Section

Governance Section

Financial Section

Board of Directors Activity Status
In FY2022/3, Board of Directors meetings were held 16 times, with a total deliberation time of approximately 1,500 minutes. The maindeliberation themes are as follows:

Main Deliberation Themes in FY2022/3
Category

Main deliberation themes

1. Legal items

Convene a general meeting of shareholders, financial results, and important human resources matters.

2. Items specified in the
Corporate Governance CodeUpdating of Corporate Governance Report, changes in framework and system to strengthen corporate governance, reports on
the ownership status of cross-shareholdings, and revisions to the Stock Handling Rule, etc.

3. Overall management

Establishment of sustainability policy, market selection for new stock market category, organizational changes, etc.

4. Internal control,risk management, compliance

Compliance Committee report, Total Risk Management Committee report.

Evaluation of the Effectiveness of the Board of Directors
Basic Policy and Structure of Executive Remuneration System
Basic Policy

Method of Analysis and Evaluation

Our Executive Remuneration Basic Policy stipulates that theCompany shall establish and operate a system that prioritizes
the strengthening of executives’ motivation for contributing to
the enhancement of corporate value over the medium- tolong-term and the achievement of sustainable growth, while
discouraging excessive risk-taking. We are determined tocontinue pursuing a better remuneration system, ensuring theobjectivity and transparency of the remuneration determination
process and taking into account regulatory revisions and social
trends in the future.

to job title, and the remaining 30% consists of performancebased remuneration according to the business performance forthe previous fiscal year, ESG initiatives, and level of contribution
to achieving the Medium-Term Business Plan. The executive
bonuses are paid following the approval and resolution at thegeneral meeting of shareholders, while non-monetary
remunerations such as stock compensation are provided as
10% of the basic compensation for Directors (excluding Outside
Directors and non-residents in Japan) for the purpose of
motivating Directors to make contributions to an improvementof medium- to long-term performance and corporate value.

Structure and Content of Remuneration

Structure of Remuneration of Directors
Title

The Company’s executive remuneration amount is determinedfollowing a basic policy, referring to the levels of executive
remuneration paid by leading companies that are similar in size
to the Company. Remuneration for Directors (excluding Outside
Directors and non-residents in Japan) consists of basic
compensation, which is paid monthly, executive bonuses(monetary remuneration) and stock compensation. The basic
compensation comprises 70% as fixed remuneration according

Fixed remuneration(%)

Performance-linked
remuneration (%)

Directors(excluding Outside Directors)

70

30

Outside Directors

100

0Results of Evaluation

Statutory Auditors

100

0

As a result of the analysis and evaluation by a third-party law
firm, the Company’s Board of Directors for FY2022/3 wasdetermined to be “functioning effectively” in light of the

Total Amount of Remuneration for Directors and Statutory Auditors in FY2022/3

66

Total amount of
remuneration(Millions of yen)

Monetary remuneration

Non-monetary remuneration

Fixed remuneration

Performance-based
remuneration

Compensation
based on the board incentive plan
(BIP) (performance-linked)

Number of persons

Directors

246

167

55

24

11

Statutory Auditors

54

54

-

-

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Morinaga Group INTEGRATED REPORT 2022

Companies Act and the Corporate Governance Code, without any
significant dysfunction or structural deficiency, etc. Based on thisevaluation, the Company recognized that the Board of Directors
was effective and functioning effectively in line with the basic
views on corporate governance, etc., of the Company.

Initiatives for Improvement
There were some issues identified in FY2021/3 evaluation of theBoard of Directors’ effectiveness. They included: 1) ample
discussions to step up risk management and 2) review tostrengthen the function of the Board of Directors as a monitoringboard. We believe that substantive progress has been maderegarding these items based on FY2022/3 effectivenessevaluation.

Initiatives for the Future
We recognize the following issues for the future, in order tostrengthen the function of the Board of Directors, and further
enhance its effectiveness and governance.
1. Further expand discussions to step up risk management
2. Strengthen the function of the Board of Directors as amonitoring board

Cross-Shareholdings

Total amount by type of remuneration (Millions of yen)
Category

To evaluate the effectiveness of the Board of Directors as awhole, in FY2022/3 the Company conducted, during the period
from February through March 2022, a survey of all Directors,
including Outside Directors, and all Auditors regarding: 1) thecomposition, operation, and agendas of the Board of Directors; 2)
nomination, and remuneration of senior management; 3) risk
management; 4) dialogue with shareholders; 5) systems
supporting the Board of Directors; and 6) findings from pastevaluations of the Board of Directors. Based on the results, a
discussion was held at a Board of Directors meeting and each
Director conducted an evaluation.
Moreover, in order to obtain objective opinions from experts,
we engaged a third-party law firm to analyze and evaluate theresults of the survey. The evaluation of the Board of Directors
was discussed and decided at meetings of the Board of Directors
held in April and May 2022, with reference to this third-party
analysis and evaluation.

At the Board of Directors, the Company quantitatively evaluates
once every year whether cross-shareholdings are commensuratewith the cost of capital, and assesses whether such holdings arerational, by taking into account the qualitative evaluations
including the purposes of holdings and the medium to long termprospect of trading relationships with the companies in which theCompany holds such shares. It is the Company’s policy to sell
stocks that carry little meaning as cross-shareholdings based on
the results of these evaluations. Furthermore, the Company soldsome of its cross-shareholdings of Morinaga Milk Industry Co.,

Ltd. in FY2022/3. As a result, the ratio of cross-shareholdings toconsolidated net assets declined from 29% to 8%.
With respect to exercising voting rights related to shares held
as cross-holdings, the Company determines approval ordisapproval for proposals by each individual stock after
considering from the viewpoints of whether the proposal inquestion will impose a negative impact on the relationship andtrading with the Morinaga Group, or whether significant concerns
have arisen on corporate governance.

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Profile

Compliance

Efforts in FY2022/3

Compliance System
The Morinaga Group has established Compliance Regulations
and set up the Compliance Committee, which is chaired by the
President of Morinaga & Co., Ltd., to formulate and update
compliance-related policies as well as monitor activities.

Morinaga Group Compliance Management System
Cooperation• Lawyers and labor union
representatives are included• Advisors (Statutory Auditors)
are included

Individual divisions, departments,
offices, and affiliates

Compliance supervisor* Responsible for crisis response incase of emergency

Cooperation

Helpline

Morinaga & Co., Ltd.)
Morinaga & Co., Ltd.)• External (All Morinaga Labor Union)• External (Designated law firm)Compliance promotion leader
Response

Point of contact for consultation• Internal (Standing Statutory Auditor,

With the aim of embedding a compliance culture into theorganization, we displayed the Morinaga Group Code of Conduct
and Standards of Behavior on panels in each office, anddistributed booklets to raise awareness among all employees. We
conducted training at the headquarters and individual offices in
addition to training by job class, including those for new recruits.
In FY2022/3 we also conducted the annual compliancequestionnaire for all employees working at domestic Group
companies. This questionnaire helps us to identify the Group’slevel of compliance and plan for future measures. The results ofthese efforts were reported to and deliberated by the Compliance
Committee, as well as reported to the Board of Directors.

Governance Section

Financial Section

Name of training

Targets

Consultation

Consultation
Response

Employees working at
Group companies in Japan

Compliance Committee

Risk Management System
In addition to establishing the Total Risk Management Regulations,
the Group monitors organizations cross-functionally and plans risk
management through the Total Risk Management Committee.

Total Risk Management System

Number ofparticipants(running total)

Training by
job classYears at work and position

245

Training by
workplace

Employees of Morinaga and Group
companies

1,546

Operation of the Whistleblower System
We established a helpline as a point of contact to reportcompliance violations and review consultations regarding
compliance. We have set up a total of four contact points,
including internal (General Affairs Division and Standing
Statutory Auditor) and external (labor union and law firm) to not
only handle compliance violations that affect the whistleblower,
but also violations witnessed by others or potential violations
with an ambiguity. We have appointed both male and female
lawyers for this hotline, widening the options for those seeking
consultation. In FY2022/3, there was a total of 34 consultations
received by the helpline Groupwide. In June 2022, we established
the Whistleblower Regulations, carving out and expanding upon
provisions previously found in the Compliance Regulations. In
addition to adding a Standing Statutory Auditor to theconsultation points, the helpline has been made available toofficers and former employees (including temporary employees)
within one year of leaving the company. In this manner, we willfurther strive to detect and correct violations of laws andregulations at an early stage.

Inquiries

The Group has categorized assumed risks and identified the main
responsible department based on the Total Risk Matrix to have aclear handle on risks that require prioritized response.
Segmented items that align each risk and the department
implementing response are recorded in the Total Risk Map, witheach business office taking specific risk management. In addition,
to ensure business continuity in the event of a disaster, we
conduct regular revisions of the business continuity management(BCM) of mainstay products to ensure smooth operation of suchmanagement, and report the results to the Total Risk
Management Committee.

Response to COVID-19

Board of Directors
Response

Total Risk Management Committee• Chairperson: Representative Director, President• Vice-chair: Director responsible for the Quality Assurance Division• Committee members:
Officers responsible for the Corporate Strategy Division, General Affairs Division, Accounting
Division, Marketing Headquarters, Overseas Business Headquarters and R&D Center aswell as the general managers of the Production Administration Division, Quality Assurance
Division, Corporate Strategy Division, Corporate Communications Division, Human Resources
Division, General Affairs Division, Audit Division, Accounting Division, Customer Service
Center, Sales Headquarters, Sales Strategy Division, Marketing Headquarters, Overseas
Business Headquarters, Procurement Division, and R&D Strategy Division of R&D Center.
• Advisors: Standing Statutory Auditors• Secretariat: General Affairs Department of General Affairs Division
Establish as needed

Task ForceThe Total Risk Management Committee identified the latest
developments, such as the number of infections in Japan andoverseas, and government policies, formulated appropriate
response policies according to the situation, and distributed
information to the Group as appropriate. We believe that it is stillnecessary to strengthen the system for employee safetymeasures and business continuity.

Reinforcement of Information Security Measures
We have built a robust information security system and we arefurther strengthening security countermeasures against risks
such as unauthorized access, a risk which continues to growmore complex.

Major Risks Anticipated by the Morinaga Group and Responses Thereto
Perspective

Risk item

Assumptions

Assumed risk

Response by the Morinaga Group

1. Food safety

Ensuring food safety is thehighest priority issue for a foodcompany• Occurrence of large-scale recall or product liability
compensation due to unexpected quality incidents• Influence on cost burden, social credibility, businessperformance, and financial status

Establish a systematic quality assurance
system such as Quality Assurance Rules
Respond following Crisis Response Manuals

2. Production system

Production system of one
product per factory, in principle

Serious impact on business performance and financial status due
to factory inoperability as a result of a disaster

Maintain production of mainstay products andimplement re-start measures following thebusiness continuity management (BCM)

Impact on business performance and financial status in the eventof price hike or difficulties in acquiring a sufficient volume of
raw materials due to such reasons as poor crops resulting from
unseasonable weather or political instability in the country oforiginDiversify procurement sources, maintainappropriate inventory, forward exchange
contracts, make primary raw materials
sustainable.

• Agricultural products as main
raw materials

3. Raw materials procurement • Petroleum products used as
packaging materials

4. Weather, natural
disasters, etc.

• Impact on purchasing behavior• Occurrence of major natural
disaster

Impact on business performance and financial status due todecreased purchasing opportunity and stagnation of the supply
chain as a result of unforeseen weather conditions, or a largescale natural disaster

Demand prediction and production management
based on information collection and analysis
Ensure safety, and improve production andsupply systems in the event of a disaster5. Infectious diseases, etc.

• Epidemic of infectious diseases,
etc.
• Changes in purchasing behavior

Impact on business performance and financial status due tostagnation of the supply chain, changes in consumer purchasing
behavior as a result of an epidemic of an infectious disease, etc.

Ensure safety during the epidemic, improve theproduction and supply system
Conduct survey on consumer behavior,
establish a product development system

Large cost burden, credit damage, impact on businessperformance and financial status in the event of unexpected
information leakage such as unauthorized access

Improve internal system and strengthen
security
Specific measures and credit recovery in theevent of information leakage

6. Leakage of corporate and/ • Use of information system inbusinessor personal information• Diversified cyber-attacks

Medium- andlong-term• Chairperson: Representative Director, President• Committee members:• Committee members: Officers responsible for the Corporate Strategy Division,
General Affairs Division, Accounting Division, Quality Assurance Division, Marketing
Headquarters, Overseas Business Headquarters, and R&D Center as well as the General
Managers of the Production Administration Division, Quality Assurance Division,
Corporate Strategy Division, Corporate Communication Division, Human Resources
Division, General Affairs Division, Audit Division, Accounting Division, Customer Service
Center, Sales Headquarters, Sales Strategy Division, Marketing Headquarters, Overseas
Business Headquarters, Procurement Division, R&D Strategy Division of R&D Center,along with the labor union representative and legal counsel (part-time.)• Advisors: Standing Statutory Auditor• Secretariat: Legal Affairs Department of General Affairs Division

Assessment and Management of Risks

The Morinaga Group conducts Total Risk Management byidentifying not only apparent risks, but also risks that potentiallyexist in its business activities and takes appropriate measuresagainst the risks.

Actual Compliance Training Sessions (FY2022/3)

Cooperation

Reporting(users' identity is
kept anonymous)• Internal (General Affairs Division,

Basic Philosophy

Short- and medium-term

Based on the recognition that compliance is a priority issue forall business activities, we have formulated the Morinaga Group
Code of Conduct and Standards of Behavior, under which theGroup is promoting compliance initiatives.

Establishment

Sustainability Section

Risk Management

Basic Philosophy

Compliance Committee

Strategy Section

7. Business expansion into
overseas markets

Expand business through Group
companies in the United States,
China, etc.

Impact on business performance and financial status due tounpredictable events such as war, terrorism, changes in legal
regulations and tax systems, and sudden fluctuations in exchange
rate

Strengthen business and risk management
system by gathering information in eachcountry and region

8. Corporate social
responsibility

Compliance with laws andsocial norms and fulfillment ofcorporate social responsibility

Legal punishment, social sanctions, loss of trust, and damaged
reputation or brand value, entailed in a regulatory violation or
anti-social behavior

Thorough compliance with laws and regulations
based on the Code of Conduct
Thorough risk management

9. Secure and foster
human resources• Human Resources, an
important issue for growth• Reduced domestic labor
population

Reduced market competitiveness due to delay in securing
and fostering suitable human resources and developing anenvironment for active job participation. Impact on businessperformance and financial status

Establish the Diversity and Inclusion Policy
Promote human resources development from a
specialized and global standpoint

10. Climate change andsustainability

Increased social issues forsustainability such as climatechange due to global warming

Impact on business continuity, performance, and financial status
for the medium- to long-term in the entire value chain from raw
materials procurement to consumer purchasing behavior

Efforts for environmental conservation andachieving a resource recycling society
Enhance management of sustainability issues

For more detailed information, please refer to our corporate website.

68

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69

Profile

Financial Section

Strategy Section

Sustainability Section

Governance Section

Financial Section

11-Year Financial and Non-Financial Summary

Financial information

Unit

FY2012/3

FY2013/3

FY2014/3

FY2015/3

FY2016/3

FY2017/3

FY2018/3

FY2019/3

FY2020/3

FY2021/3*6

FY2022/3*6(Million yen)

147,190

152,885

164,603

177,929

181,868

199,479

205,022205,368

208,878

168,240

181,251(Million yen)

2,813

2,695

3,858

5,939

11,456

17,612

19,751

20,217

21,23019,176

17,685(Million yen)

3,140

2,973

4,446

6,530

12,062

18,325

20,422

20,767

21,95019,782

18,247(Million yen)

1,081

1,419

8,090

3,806

8,092

11,115

10,28912,816

10,824

13,416

27,773(Million yen)

7,585

13,01014,517

2,393

7,406

3,750

7,310

7,983

10,661

20,404

20,411(Million yen)

5,506

5,594

6,808

6,581

6,130

5,771

5,820

5,835

6,230

7,909

10,032(Million yen)

2,399

2,329

1,984

2,005

2,152

2,210

2,205

2,194

2,240

2,217

2,686

(Million yen)

4,879

5,565

7,684

11,182

16,715

18,40017,78820,897

20,994

12,127

24,825(Million yen)

-7,817-5,681-6,459-3,022-2,091-29,736

8,154-20,025

16,993-19,862

9,312(Million yen)

-1,845

3,645-5,764-1,491-2,311-2,398-17,906-11,888-4,375-4,084-5,943(Million yen)

-2,937-2,615625

8,159

14,223

15,663

13,943

15,871

7,988-7,73534,318(Million yen)

128,845

141,154

144,441

151,310163,085

183,112

177,920

175,837

188,060

202,910214,300(Million yen)

52,77352,98162,594

69,39377,223

91,763

100,331

97,193

105,487

123,706

131,174(Million yen)

24,091

29,901

26,20026,764

26,446

26,282

11,265

10,666

10,00010,00010,000Accounting year
Net sales
Operating income
Ordinary income
Profit attributable to owners of parent
Capital spending
Depreciation
R&D expenses
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financial activities
Free cash flow*1

End of fiscal year
Total assets*2

Net assets
Interest-bearing debt*3

Financial indicators
Operating income to net sales ratio

(%)

1.9

1.8

2.3

3.3

6.3

8.8

9.6

9.8

10.2

11.4

9.8

Return on equity (ROE)

(%)

2.1

2.7

14.4

6.0

11.5

13.6

11.0

13.2

10.8

11.8

22.0

Return on assets (ROA)*2

(%)

2.5

2.2

3.1

4.4

7.7

10.6

11.3

11.7

12.1

10.1

8.7

Shareholders’ equity ratio*2

(%)

40.7

37.2

41.5

43.8

45.7

48.7

55.0

54.8

55.7

60.5

60.7

(Times)

0.46

0.57

0.44

0.40

0.35

0.29

0.12

0.11

0.10

0.08

0.08

Book value per share (BPS)*4(Yen)

1,004.47

1,009.48

1,151.30

1,274.09

1,432.50

1,713.49

1,882.23

1,917.22

2,080.77

2,441.25

2,603.95
552.59D/E ratio
Earnings per share (EPS)*4

(Yen)

20.73

27.24

155.3773.11

155.47213.60197.76247.15215.18266.73

Dividend per share*4

(Yen)

30

30

30

30

35

45

50

66

72

80

90

Dividend payout ratio

(%)

144.6

110.1

19.3

41.0

22.5

21.1

25.3

26.7

33.5

30.0

16.3

Dividend on equity ratio (DOE)

(%)

3.0

3.0

2.8

2.5

2.6

2.9

2.8

3.5

3.6

3.5

3.6

Total shareholder return ratio*5

(%)

145.3

114.5

19.5

41.5

22.9

21.5

26.7

92.5

33.6

30.1

21.5

*1. Calculated excluding expenditures associated with payments into time deposits and proceeds from the reversal of time deposits.
*2. The Company applied Partial Amendments to Accounting Standard for Tax Effect Accounting, etc., from FY2019/3.
Figures for FY2015/3 to FY2018/3 were retroactively adjusted in line with this accounting standard.
*3. Interest-bearing liabilities are the sum of all liabilities on which interest is paid that are shown in the consolidated balance sheets, except for lease obligations.

Non-financial information

Unit

Japan
CO2 emissions*7
Overseas
Amount of water resource
consumption*8*13

Amount of waste emissions*9

13(Thousand t-CO2)

13(Thousand t-CO2)

Scope 1*
Scope 2*
Scope 1(Thousand t-CO2)

Scope 2(Thousand t-CO2)*4. The Company implemented a five-for-one share reverse stock split on October 1, 2016. Figures calculated assuming that this reverse stock split was carried out at the beginning of FY2011/3.
*5. The total amount of dividends for which the record date falls in the current fiscal year and the total amount of treasury shares acquired in the current fiscal year divided by net income attributable to ownersof the parent.
*6. The Company applied the “Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020)”, etc., from the beginning of FY2022/3. The figures for FY2021/3 are from after retroactive
application of the said accounting standard.

FY2012/3

FY2013/3

FY2014/3

FY2015/3

FY2016/3

FY2017/3

FY2018/3

61.8

62.5

63.9

58.0

55.3

57.0

56.7

FY2021/3*6

FY2022/3*6

24.0

20.6

21.4

22.3

50.1

46.9

47.5

53.4

2.8

3.4

3.3

3.7

6.6

7.2

6.3

6.8

-

4.7

9.0

14.3

18.4

15.1

1,724.5

1,689.7

1,556.0

1,487.9

1,482.5

1,548.7

1,529.9

1,550.4

1,591.3

1,602.1

1,599.0

Japan(Thousand ton)Overseas(Thousand ton)

-

-

130.6

215.3

182.6

246.6

208.9

158.7

148.0

169.7

179.4

Japan

(Thousand ton)

9.2

10.7

11.4

10.1

9.8

10.0

9.8

9.7

9.6

9.4

10.8

Overseas(Thousand ton)

-

-

0.3

1.1

1.2

1.3

0.9

0.5

0.6

0.6

0.7
9

Cacao beans(%)

Palm oil

(%)

2

Paper

(%)

98

Procurement ratio of sustainable
raw materials*10

Japan

Number of Employees*11

Consolidated

Ratio of Female Managers*12

Non-consolidated

Morinaga Group INTEGRATED REPORT 2022

FY2020/3-(People)
(%)

2,670

2,573

2,927

2,978

3,056

3,256

3,169

2,717

2,711

2,825

2,937

(2,036)(2,084)(2,323)(2,613)(2,330)(2,186)(1,950)(1,712)(1,687)(1,597)(1,658)

4.3

4.5

4.2

4.4

4.2

4.6

5.2

6.7

7.7

8.3

9.4

*7. Figures for Japan for FY2019/3 and later represent a Group consolidated basis. Figures for overseas for FY2020/3 and later represent a Group consolidated basis. Figures prior to this are for production sites
both in Japan and overseas. The conversion coefficient at the time of CO2 calculation for FY2018/3 and prior uses the fixed coefficient of 0.378kg-CO2 /kwh established internally in 2003.
*8. Figures prior to FY2018/3 are for production sites both in Japan and overseas. Figures for Japan for FY2019/3 and later represent a Group consolidated basis.
*9. Figures for production sites both in Japan and overseas.
*10. Paper covers product packaging only.

70

FY2019/3*11. Data as of March 31 each fiscal year. Number of employees represents the number of people working for the Company (excluding forwarded employees from the Group to outside the Group but including
forwarded employees from outside the Group to the Group.) For temporary employees, the number in parenthesis is excluded from the above number and shows the average number of temporary
employees per year. Temporary employees include part timers and contract workers, but exclude temporary employees from placement agencies.
*12. Figures are non-consolidated for Morinaga & Co., Ltd. as of April 1 of each fiscal year.
*13. Figures for FY2021/3 CO2 emissions for the Group in Japan on a consolidated basis (Scope 1 + 2) and water usage amount have received third-party assurance from LRQA.

Morinaga Group INTEGRATED REPORT 2022

71

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Financial Summary

Consolidated Balance Sheets
Million yen

FY2021/3(Mar. 31, 2021)

FY2022/3(Mar. 31, 2022)

Assets31,56856,652

Notes and accounts payable–trade

Notes and accounts receivable–trade

19,934

22,313Current portion of long-term loans

Merchandise and finished goods

11,43013,645

Lease obligations

319

374

7,962

9,736

795

157

6,078

9,236

-43

-48

78,045

112,067

Raw materials and supplies
Income taxes receivable
Other
Allowance for doubtful accounts

FY2022/3(Mar. 31, 2022)

18,162

20,392Current liabilities

Cash and deposits

Work in process

FY2021/3(Mar. 31, 2021)

Liabilities

Current assets–

10,000359

367

Accounts payable–other

9,847

10,538

Income taxes payable

1,357

9,974

Refund liabilities

3,303

3,611

Allowance for bonuses

2,595

2,697

–

453

Other

13,956

12,112

Noncurrent assets

Total current liabilities

49,58370,147

Property, plant and equipment

Long-term liabilities

Total current assets

Asset retirement obligations

Buildings and structures

59,33562,295Long-term loans

10,000–

Accumulated depreciation-33,562-32,283

Lease obligations

Buildings and structures–net

25,77330,011

558

616

Machinery, equipment and vehicles

94,23998,116

Accumulated depreciation-70,659-68,740

Machinery, equipment and vehicles–net

23,57929,375Tools, furniture and fixtures

4,848

5,236

Accumulated depreciation-3,807-4,015Tools, furniture and fixtures–net

1,041

1,221

Land

21,58921,318

Lease assets

1,703

1,851

Accumulated depreciation

-875

-966

828

884

Construction in progress

9,618

2,241

Total property, plant and equipment

82,43185,053

Lease assets–net

Intangible assets

Deferred tax liabilities
Provision for directors’ stock benefits
Provision for environmental measures
Net defined benefit liability
Asset retirement obligations
Deposits received

6,852

–

57

82

279

274

7,767

8,231

262

–

3,706

3,642

135

131

Total long-term liabilities

29,62012,978

Total liabilities

79,203

83,126

Common stock

18,612

18,612

Capital surplus

17,281

17,292

74,13997,886Other

Net assets
Shareholders’ equity

Goodwill

196

98

Retained earnings

Other

231

211

Treasury stock-11,291-12,717309

Total shareholders’ equity

98,742

121,074

20,7295,396

Total intangible assets

427

Accumulated other comprehensive income

Investments and other assets
Investment securities

35,583

10,447

Valuation difference on available-for-sale securities

Net defined benefit asset

4,548

4,232

Deferred gains or losses on hedges

23

-1

831

1,191

Foreign currency translation adjustments

493

1,304

1,080

1,034

Remeasurements of defined benefit plans

2,803

2,261

Total accumulated other comprehensive income

24,0498,960

Deferred tax assets
Other
Allowance for doubtful accounts

72

Million yen

-37

-36

Total investments and other assets

42,006

16,869Non-controlling interests

915

1,139

Total noncurrent assets

124,865

102,233

Total net assets

123,706

131,174

Total assets

202,910214,300

Total liabilities and net assets

202,910214,300

Morinaga Group INTEGRATED REPORT 2022

Morinaga Group INTEGRATED REPORT 2022

73

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income(Consolidated Statements of Operations)

Million yen

FY2021/3(Apr. 1, 2020 –Mar. 31, 2021)(Consolidated Statements of Comprehensive Income)

FY2022/3(Apr. 1, 2021 –Mar. 31, 2022)

Million yen

FY2021/3(Apr. 1, 2020–
Mar. 31, 2021)

FY2022/3(Apr. 1, 2021 –Mar. 31, 2022)

13,602

27,9597,069(15,333)

Net sales

168,240

181,251

Net income

Cost of sales

95,664105,425

Other comprehensive income

Gross profit

72,57575,826

Valuation difference on available-for-sale securities

Selling, general and administrative expenses

53,39858,140

Deferred gains or losses on hedges

14

(23)

Operating income

19,176

17,685

Foreign currency translation adjustments

(90)

970

1,590

(535)

Interest income

7

21

Share of other comprehensive income of associates accounted for using equity method

Dividends income

490

543

Other

349

Total non-operating income

Non-operating income

Remeasurements of defined benefit plans, net of tax

(7)

(0)

Total other comprehensive income

8,575(14,921)228

Net comprehensive income

22,17813,037847

793(Breakdown)
21,986

12,684

Interest expenses

32

34

191

353

Equity in losses of affiliates

16

25

Depreciation

131

112

Other

61

58

Non-operating expenses

Total non-operating expenses
Ordinary income

Comprehensive income attributable to owners of parent

242

231

19,782

18,247

Comprehensive income attributable to non-controlling interests

Extraordinary income
Gain on sales of noncurrent assets

1

10Gain on sales of investment securities

43

21,952

Total extraordinary income

45

21,963700

Extraordinary loss
Loss on sales and retirement of noncurrent assets

796

Impairment loss

32

99

IT system failure response expenses

–

193

Other

38

1

Total extraordinary loss

867

994

Income before income taxes

18,95939,216

Income taxes—current

3,572

11,279

Income taxes—deferred

1,784

-22

Total income taxes

5,356

11,257

Net income

13,602

27,959Profit attributable to non-controlling interests
Profit attributable to owners of parent

74

Morinaga Group INTEGRATED REPORT 2022

185

186

13,416

27,773Morinaga Group INTEGRATED REPORT 2022

75

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Consolidated Statements of Changes in Net Assets
FY2021/3 (Apr. 1, 2020 – Mar. 31, 2021)

FY2022/3 (Apr. 1, 2021 – Mar. 31, 2022)
Million yen

Million yen

Shareholders’ equity

Common stock
Balance at beginning of
the fiscal year

Capital surplus

18,612

17,28164,572

Cumulative effects of changes inaccounting policies
Restated balance

Retained earnings

Shareholders’ equity

Treasury stock

Total shareholders’equity-11,279

18,612

17,28164,346

Balance at beginning of
the fiscal year

89,187-226

88,961

Restated balance

Changes of items during the period

18,612

17,281Retained earnings
74,139Treasury stock

Total shareholders’equity-11,291

98,742–

18,612

17,281

74,139-11,291

98,742

Changes of items during the period

Dividends from surplus-3,623-3,623

Dividends from surplus-4,025-4,025

Profit attributable to owners of parent

13,416

13,416

Profit attributable to owners of parent

27,773

27,773Purchase of treasury stock0

Disposal of treasury stock

-12

-12

Purchase of treasury stock00

Disposal of treasury stock

Net changes of items other thanshareholders’ equity

Balance at end of the fiscal year

–

0

9,792

-11

9,781

Total changes of items during
the period

18,612

17,281

74,139-11,291

98,742

Balance at end of the fiscal year

Valuation
Deferred gains
difference onor losses onavailable-forhedges
sale securities

41

51

–

10

23,747-1,42522,331

18,612

17,292

97,886-12,717

121,074

13,6607Foreigncurrencytranslation
adjustments
600

Accumulated other comprehensive income

Total
Remeasureaccumulated
ments ofother
defined benefit
comprehensive
plansincome1,211

15,478

Noncontrollinginterests

Total
net assets

821

105,487

Cumulative effects of changes inaccounting policies
Restated balance-1,467

10

Accumulated other comprehensive income

Balance at beginning of the fiscal year

-1,467

Net changes of items other thanshareholders’ equity

Total changes of items during
the period-226
13,660

7

600

1,211

15,478821

105,261

Changes of items during the period

76

Capital surplus

Cumulative effects of changes inaccounting policies-226-11,279

Common stock

Valuation
Deferred gains
difference onor losses onavailable-forhedges
sale securities
Balance at beginning of the fiscal year

20,72923

Foreigncurrencytranslation
adjustments
493

Total
Remeasureaccumulated
ments ofother
defined benefit
comprehensive
plansincome2,803

24,049Noncontrollinginterests

Total
net assets

915

123,706

Cumulative effects of changes inaccounting policies
Restated balance–
20,729

23

493

2,803

24,049915

123,706

Changes of items during the period

Dividends from surplus-3,623

Dividends from surplus-4,025

Profit attributable to owners of parent

13,416

Profit attributable to owners of parent

27,773Purchase of treasury stock-12

Purchase of treasury stock-1,467

Disposal of treasury stock0

Disposal of treasury stock51

Net changes of items other thanshareholders’ equity

7,069

15

-106

1,592

8,570

93

8,664

Net changes of items other thanshareholders’ equity-15,333

-25

811

-541

-15,088224-14,864

Total changes of items during theperiod

7,069

15

-106

1,592

8,570

93

18,445

Total changes of items during theperiod-15,333

-25

811

-541

-15,088

224

7,467

Balance at end of the fiscal year

20,729

23

493

2,803

24,049915

123,706

Balance at end of the fiscal year

5,396

-1

1,304

2,261

8,960

1,139

131,174Morinaga Group INTEGRATED REPORT 2022

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77

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Consolidated Statements of Cash Flows
Million yen

FY2021/3(Apr. 1, 2020 –Mar. 31, 2021)

FY2022/3(Apr. 1, 2021 –Mar. 31, 2022)

FY2021/3(Apr. 1, 2020 –Mar. 31, 2021)

Operating activities

FY2022/3(Apr. 1, 2021 –Mar. 31, 2022)

Investing activities

Income before income taxes

18,95939,216

Payments into time deposits

Depreciation

7,909

10,032

Purchase of property, plant and equipment

Impairment loss

32

99

Amortization of goodwill

98

98

–

-180

-19,853-15,307

Proceeds from sales of property, plant and equipment

10

369

Purchase of intangible assets

-21

-15

Increase (decrease) in provision for directors’ stock benefits

24

24

Purchase of investment securities-3-2

Increase (decrease) in net defined benefit liability

379

143

Proceeds from sales of investment securities

105

24,784(Increase) decrease in net defined benefit asset

50

-159

Proceeds from liquidation of subsidiaries

387–

Increase (decrease) in allowance for bonuses

-13

80

Other

Increase (decrease) in allowance for doubtful accounts

13

1

Net cash provided by (used in) investing activities
Financing activities

Increase (decrease) in provision for environmental measures

-23

-5

Interest and dividends income

-498

-564

Interest expenses

32

34

Proceeds from sales of treasury stock

Equity in losses (earnings) of affiliates

16

25

Cash dividends paid

Loss (gain) on sale of investment securities-36-21,951(Gain) loss on sales of noncurrent assets

84

89

Loss on retirement of noncurrent assets

710

599

Net cash provided by (used in) financing activities

Purchase of treasury stock

-486

-336

-19,862

9,312

-12

-1,467051-3,623-4,025

Dividends paid to non-controlling interests

-97

-128

Other

-351

-373

-4,084-5,943(Increase) decrease in notes and accounts receivable–trade

1,013-2,127

Effect of exchange rate change on cash and cash equivalents(Increase) decrease in inventories-1,385-3,752

Net increase (decrease) in cash and cash equivalents

-39

384

-11,858

28,578751

2,039

Cash and cash equivalents at beginning of period

43,42731,568Other-4,037

2,773

Cash and cash equivalents at end of period

31,56860,146

Subtotal

24,082

26,697

Interest and dividends income received

532

561

Interest expenses paid

-31

-33

Increase (decrease) in notes and accounts payable–trade78

Million yen

Income taxes (paid) refund-7,599-2,400Contract cancellation fee-4,855–

Net cash provided by (used in) operating activities

12,127

24,825Morinaga Group INTEGRATED REPORT 2022

Morinaga Group INTEGRATED REPORT 2022

79

Profile

Strategy Section

Sustainability Section

Governance Section

Financial Section

Corporate Profile/ Stock Information/ Information Disclosures System

Corporate Profile (As of March 31, 2022)*
Company Name
Representative
Headquarters
Establishment
Incorporation
CapitalBusiness Activities
Sales
Number of Employees

Information Disclosures System

MORINAGA & CO., LTD.
Eijiro Ota Representative Director, President
5-33-1 Shiba, Minato-ku, Tokyo 108-8403, Japan
August 15, 1899 Founded as Morinaga’s Western Confectionery Shop
February 23, 1910
18,612 million yen
Morinaga’s main business activities are the manufacture, purchase, and sale of confectioneries (caramel, biscuits,
chocolate, etc.), foods (cocoa, cake mix, etc.), frozen desserts (ice cream, etc.), and health products (jelly drinks, etc.)
Consolidated / 181,251 million yen Non-consolidated / 155,425 million yen
Consolidated / 2,937 Non-consolidated / 1,453 (average age: 42.7 years)

Main details

ReportFinancialinformation

Latest information• Investor relations
website• Securities Report• Corporate Governance Report*The Company applied the “Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020)”, etc., from the beginning of FY2022/3.

Business Offices and Affiliated Companies (As of March 31, 2022)

Main Offices

Domestic Group Companies

Non-financial
information

Other

Morinaga Finance Co., Ltd.
Morinaga Institute of Biological Science, Inc.
Morinaga Business Partner Co., Ltd.
SEE THE SUN Inc.

Food Manufacturing

Head Office
East Japan Branch OfficeWest Japan Branch Office
Tsurumi Factory
Chukyo FactoryOyama Factory
Mishima Factory
R&D Center• Integrated ReportMorinaga Angel Dessert Co., Ltd.
Morinaga Dessert Co., Ltd.
Aunt Stella Inc.
Takasaki Morinaga Co., Ltd.
Morinaga Market Development Co., Ltd.

• Sustainability
website• Sustainability website• ESG Data Book

Overseas Group Companies
Taiwan Morinaga Co., Ltd. (Taipei, Taiwan)
Shanghai Morinaga Co., Ltd. (Shanghai, China)
Morinaga (Zhejiang) Co., Ltd. (Zhejiang, China)
Morinaga America, Inc. (California, USA)
Morinaga America Foods, Inc. (North Carolina, USA)
Morinaga Asia Pacific Co., Ltd. (Bangkok, Thailand)Morinaga Bioscience (Thailand) Co., Ltd. (Bangkok, Thailand)

Food Merchandise

Morinaga Shoji Co., Ltd.

Real Estate and Services

Morinaga Takataki Country Co., Ltd.

Non-consolidated companies accounted for using the equity method

Integrated Report

Web

Web

IR Information

Our integrated report presents our medium- to

Our website contains the latest IR information

long-term value creation strategy for achieving

for shareholders and the investment community,

Group’s sustainability, including various policies,

our Purpose and the 2030 Vision. It also reports

including securities reports, financial results,

progress of initiatives for each material issue, andon the progress of initiatives to achieve ourfinancial results briefing materials, and videos.

ESG data, in order to provide a more detailed looktargets incorporating both financial and non-https://www.morinaga.co.jp/company/english/ir/

at our approach to sustainability.

financial aspects.

Stock and Shareholder Information (As of March 31, 2022)
First Section of the Tokyo Stock Exchange

Fiscal Year

April 1 to March 31 of next year

Industry

Food products

Securities Code2201

Total Number of Shares
Authorized to be Issued

200,000,000

Number of Shares
Constituting One Unit

100 shares

Total Number of Shares Issued

54,189,769

Number of Shareholders

23,817*1 TSE Prime Market on April 4 2022 and onward

Our website contains the latest information on thehttps://www.morinaga.co.jp/company/
english/sustainability/

https://www.morinaga.co.jp/company/
english/sustainability/reports/

Stock Exchange of Listing

Sustainability

Editing Policy
2

Status of Major Shareholders*Shareholder Name

The Master Trust Bank of Japan, Ltd. (Trust account)
Morinaga Business Partner Shareholding Association
Custody Bank of Japan, Ltd. (Trust account)
MUFG Bank, Ltd.
Mizuho Bank, Ltd.
NORTHERN TRUST CO. (AVFC) RE SILCHESTERINTERNATIONAL INVESTORS INTERNATIONAL VALUEEQUITY TRUST
Meiji Yasuda Life Insurance Company
SSBTC CLIENT OMNIBUS ACCOUNT
JP MORGAN CHASE BANK 385632
NORTHERN TRUST CO. (AVFC) RE U.S. TAX EXEMPTEDPENSION FUNDS

Distribution of Shares by Owner
Number of shares held(Thousand shares)

Ratio of voting
rights (%)

6,860
3,280
2,249
1,704
1,289

13.7
6.5
4.5
3.4
2.5

1,248

2.4

1,246
890
879

2.4
1.7
1.7

711

1.4

Treasury shares
7.8%

Financial
institutions
30.5%

Individuals,
other
21.8%

Foreign-owned
corporations
25.5%

Securities
companies
1.3%
Other corporations
13.1%

The Morinaga Group launched a new long-term business plan in FY2022/3
called 2030 Business Plan, in aiming to continuously enhance corporate
value based on the new corporate philosophy. This integrated report isdesigned with the goals of disseminating and promoting understandingof our vision for the future through the Group’s new corporate philosophy
as well as our value creation strategy aimed at fruition of this philosophy
over the short-, medium-, and long-term to audiences inside and outsideof Japan. We hope this report will deepen our dialogue and mutual
understanding with shareholders and define our path towards value
creation. Referencing the International Integrated Reporting Framework,
this report aims to concisely convey material issues in achieving its new
corporate philosophy from both financial and non-financial aspects, as wellas initiatives to address these issues.
For more detailed information, please refer to our corporate website*.

Reference guidelines“International Integrated Reporting Framework” of the International
Integrated Reporting Council (IIRC)

Period covered by the Report
FY2022/3 (April 1, 2021 through March 31, 2022)
Information outside of this period may also be reported in case it isappropriate to illustrate past information or recent case studies.

Reporting boundary
This report is relevant to the Morinaga Group*. However, if the information
for the entire Group is not fully available, the scope of coverage is statedin the report.
* In principle, Morinaga & Co., Ltd. and its consolidated subsidiaries (as of March 31, 2022) arereferred to as the Morinaga Group or the Group.

* Morinaga Group Corporate Profile
https://www.morinaga.co.jp/company/english/*2 The Company holds 4,213,327 shares of treasury stock but is excluded from the list of major shareholders
above. The holding ratio is calculated after excluding treasury stock.

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Morinaga Group INTEGRATED REPORT 2022

Morinaga Group INTEGRATED REPORT 2022

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