Future Vision andPath to Achieve It

Introduction

Sustainable
Management

Value Creation
Strategy

Financial
Performance

Governance

Message from the CFO

2030

Value Creation Strategy
Message from the CFO

29“in-” Business34

Direct Marketing Business

36

U.S. Business38

Frozen Desserts Business

40

Confectionery and Foodstuffs Business42

R&D Strategy

44

Structural Reforms of Production Functions

46

DX Strategy

48

Human Resources Strategy

49

Special Feature: Employee Roundtable Discussion—Toward Achieving Our 2030 Vision

52

Tetsuya Takagi

We will sustainably increase
corporate value and achieve stable,consistent shareholder returns by
pursuing capital cost management.

TowardChief Financial Officer
Director,
Senior Executive
Officer

Progress of the 2021 Medium-Term Business Plan (2021–2023)
Business growth in the focused domains defined in the 2030 Business Plan was a key driver in ourrecord high net sales*. We are working to restore profitability to respond to changes in the businessenvironment symbolized by soaring raw materials and energy prices.
Under the 2021 Medium-Term Business Plan (MTBP), the Group is
working diligently to “Build a New Foundation for Dramatic Growth.”
In FY2022, the second year of the plan, we achieved record highsales* for the second consecutive year, driven by business growthin the focused domains as defined in the 2030 Business Plan,
our long-term management plan. Sales in the focused domains
accounted for approximately 50% of total net sales, and the rapid
growth of overseas businesses, mainly in the United States, helped
push the overseas sales ratio to double digits for the first time. In
terms of net sales, we expect to achieve the target set in the 2021
Medium-Term Business Plan.
While we have made steady progress with the transformation of
our business portfolio, our current profitability has declined due tosoaring prices of raw materials and others and increased investment
burdens for future business growth. Raw materials prices are
expected to remain elevated over the medium term, and based on

this assumption, we will implement flexible and appropriate pricerevisions and increase cost reductions, expense efficiency, andinvestment efficiency to improve profitability.
By steadily implementing these initiatives and various measures
based on our financial strategy, we aim to restore ROE to 10%, which
is a target for the final year of the 2021 Medium-Term Business Plan.
*Accounting Standard for Revenue Recognition applied retrospectively

KPIs in the 2021 Medium-Term Business Plan
FY2022

FY2023

194.3 billion yen 190.0 billion yen 204.0 billion yen

Net sales
Operating income
Operating income to
net sales ratio
Overseas sales ratio

15.2 billion yen

21.5 billion yen

17.3 billion yen

7.8%

11% or higher

8.5%

Focused domains sales ratio

11.2%

9% or higher

12.7%

49.8%

47% or higher

51.5%

7.9%

10% or higher

10.0%

ROE

Overseas Sales Ratio (%)

Focused Domains Sales Ratio (%)

Operating Income to Net Sales Ratio (%) ROE (%)

15

60

15

12.7
11.2

10

+2.2 pt
2021 MTBP target (9%)

5

49.8

50

51.5

15
2021 MTBP target (11% or higher)

10

5

8.5

7.8

10.0
10
2021 MTBP
target (10%5 or higher)−3.2 pt+2.8 pt
2021 MTBP target (+5 pt)

40
Approx. 42

0
2021

2022

2023
(FY)
(Forecast)

2018
2021
MTBP average

0

0

30
2020

2022

Forecast

Plan

Results2023 (FY)(Forecast)

2020

2021

2022

−2.1 pt
7.9

Excludes impacts of extraordinary profit
on the sale of cross-shareholdings(22.0% when included)

2020

2023 (FY)(Forecast)

2021

2022

2023 (FY)(Forecast)Morinaga Group’s Financial Challenges
We recognize that sustainably increasing corporate value is the most important challenge facing theGroup financially.
Trend in P/B Ratio
Price-to-book ratio (P/B ratio) is one of the indicators used to evaluate
corporate value from the perspective of the capital markets. Looking
at the Group’s medium- to long-term trend, our P/B ratio has been on
a downward trend since FY2018 and has been at a level of about 1.5
times as of the end of FY2022. We are aware that the Group’s growthpotential has not been adequately evaluated by the capital markets.
On the other hand, return on equity (ROE), which is an indicator of
return on capital, had been trending at 10% or more until FY2021, but
it had been on a downward trend since FY2020 due to rapid changes
in the external environment, such as the impact of the COVID-19
pandemic and soaring prices of raw materials. In the Group’s case,ROE (left)
(%)
16
14
12
10
8
6
4
2
0

P/B ratio (right)(Times)
4
3

*

2
1

2015

2016

2017

2018

2019

2020

2021

2022

2023

(FY)

0

(Forecast)*Excludes the impacts of extraordinary profit on the sale of cross-shareholdings

Morinaga Group INTEGRATED REPORT 2023

29

Introduction

Future Vision andPath to Achieve It

Sustainable
Management

Value Creation
Strategy

Financial
Performance

Governance

Financial Capital Strategy

To increase corporate value, it is important toimprove return on capital and optimize thecost of capital.

etailsWe believe that to improve ROE we need to pursue both
1) improvement return on capital and 2) optimization of the cost ofcapital. For the former, under ROIC management, the optimization of
the business portfolio, the improvement of business profitability, andthe efficiency of invested capital and similar factors, pose challenges.
With regard to the latter, while ensuring financial security, we will
adjust the weighted average cost of capital (WACC) to around 6%
to attain an optimal capital structure by expanding the use ofinterest-bearing debt.
Through initiatives to resolve these challenges, we will strive tosustainably enhance corporate value and provide stable, consistentshareholder returns.

Trend in Net Sales and Return on Invested Capital (ROIC)
ROIC (left)

Financial
Challenges

Sustainably enhance corporate value by
improving return on capital and optimizing thecost of capital● Provide stable, consistent shareholder returns(Billion yen)210

We are strengthening the system of ROIC management from three perspectives.

180

The Morinaga Group is strengthening its system of implementing
ROIC management according to the three perspectives of1) corporate, 2) business operations, and 3) managementof individual investments. The commonality of these three

150

ROIC management

12
8
4
0

2018

2019

2020

2021

2022

(FY)

Trend in Financial Leverage■ Interest-bearing debt (left)*2■ Cash and deposits (left)

Net D/E ratio (right)(Billion yen)(Times)

60

0.4

45

0.2

30

0

15

−0.2

2018

2019

2020

2021

2022

(FY)

−0.4

*1 Since the Company applied the “Accounting Standard for Revenue Recognition (ASBJ
Statement No. 29, March 31, 2020),” and other regulations, from the beginning of FY2021,
the figures for results in FY2020 used for year-on-year comparisons have been calculated
following retrospective application of said accounting standard.
*2 Interest-bearing debt represents liabilities on the consolidated balance sheet, excluding
lease obligations, for which the Company pays interest.

To realize the sustainable enhancement of corporate value, we will practice capital cost management.

Strategy1Strategy 1

Improve business growth potential and capitalefficiency using ROIC management

Strategy 2

Streamline capital cost by ensuring financial
security and creating an optimal capital structure

Strategy 3

Increase shareholder returns

Improve business growthpotential and capital efficiency
using ROIC management

Business portfolio management
Allocate cash and prioritize domains forinvestment● Use the ROIC tree to improve capital efficiency
and implement PDCA management● Clarify decision-making criteria for investments
based on capital cost

Strategy Streamline capital cost by ensuring
financial security and creating an
2
optimal capital structure
Implement capital costmanagement●●

Strategy
Increase shareholder returns
3

Secure funds to address risks and manage
financial security● Pursue an optimal capital structure● Optimize capital cost levels (WACC)● Manage capital efficiency indicators(ROE and ROIC)● Secure funding methods (preparatory funds forinvestment and working capital)●

Provide stable and consistent shareholder returns
Increase the medium- to long-term DOE level● Buy back shares flexibly with an awareness ofthe total shareholder return ratio●●

Financial risk management

30

Improve business growth potential and capital efficiency using ROIC management(%)

Framework of Financial Strategy
The Morinaga Group’s basic policy is to increase corporate value
sustainably and achieve stable and continuous shareholder returns
using proactive investments in growth and by maintaining our stablefinancial base. Aimed at achieving the 2030 Business Plan, we
will contribute to all stakeholders by implementing capital costmanagement and maximizing corporate value.
Toward this end, we will enhance our financial management
following the three main financial strategies outlined below.

Strategy 1

16

0
●

■ Net sales (right)*1

Financial governanceCash management

perspectives is whether we can generate returns in excess of capitalcost. We will make management-level decisions based on financial
assessments, as well as non-financial elements, and implement the
PDCA cycle to increase growth potential and capital efficiency.

Commonality ofbasic perspectives

Financial management perspective

1 Corporate perspective
Company-wide financial target
management● Business portfolio optimization●

2 Business operation perspective●

Business-specific capital efficiency
management

Whether we cangenerate returns inexcess of capital cost(value creation)

investment
3 Individual
management perspective●

1

Whether the Company as a whole can achieve capital efficiency targets
Company-wide ROIC target = Σ business-specific ROIC > WACC

2

Whether each business can achieve business-specific ROIC targets
Business-specific ROIC > Business-specific hurdle rate
In case of gaps, the strategy will be adjusted based on
rolling reviews

3

Whether individual investments clear our investment criteria
Implement regular investment payback reviews (PDCA cycle)

Profitability management for individual
investments

We will clarify our strategy according to thebusiness and brand mission and aim to form
an optimal business portfolio.
Regarding ROIC management from a corporate perspective, we
analyze ROIC and its components for the entire company and eachbusiness, and check whether it exceeds the cost of capital (WACC).
In addition, we will confirm the key points for strengthening the
growth potential and return on capital of each business and eachmarket category, and consider the mission, transformation, andoptimal allocation of management resources in the business portfolio.
In FY2022, we proceeded with discussions on business strategies
for growth, focused on the four businesses that were designatedas focused domains in the 2030 Business Plan at the Business
Execution Meeting. In the confectionery and foodstuffs business,
which has a relatively large amount of invested capital, we areconsidering strategies and measures to improve the efficiency of thisinvested capital.

We will increase return on capital of ourbusinesses utilizing the ROIC tree.
Regarding ROIC management from the perspective of business
operations, management and the divisions in charge use the ROIC
tree for each business to identify problem areas that will lead to
improvements in return on capital, and they consider strategies andmeasures to solve these issues. From the formulation of the FY2023
budget, we have started to inspect the budget level based on the
ROIC tree, which will lead to continuous improvement activities using
the PDCA cycle in the future. In addition, to instill ROIC management
down to the frontline level, we are promoting understanding of theconcept of ROIC management and the relationship between frontline
activities among all employees using our own video-based teachingmaterials.
Regarding the third perspective, individual investment
management, in FY2022 we revamped our investment management
system, including the investment evaluation method, decision-making
process, and investment review process. We are now working tostrengthen the foundation for capital cost management.

Direction of Business Portfolio Growth/Transformation(Sample Image)Direct marketing
Emphasize increased
business size
● Capture newcustomers● Convert one-time
customers to
subscription
customers

Improvement●

Return on capital (ROIC)

the correlation between P/B ratio and ROE is relatively strong, andwe believe that it is important to increase ROE to enhance corporate
value in the future.

“in-”Emphasize growth
Capture new
demand● Expand/Strengthen
the “in-” brand
●
●

U.S.
Prioritize business growth● Accelerate the growth of
HI-CHEW● Create a market for Chargel●

Frozendesserts

Expand market share andpursue business growth● Set ourselves apart using
confectionery technology● Improve return on capital●

Review

Confectionery
and foodstuffs
Increase profitability throughwellness and higher addedvalue● Improve return on capital●

Growth (size of net sales)
Note: The size of the circle indicates the scale of net operating profit after tax (NOPAT).

Reverse the ROIC Tree
Perspectives of strategy/
measures (examples)
1)Extensive review of portfolio by
reducing items with low
profitability2) Improvement of raw material
procurement capabilities
Sourcing of alternative raw materials
and diversification of suppliers,
expansion of joint procurement,
securing of long-term contracts,
utilization of commodity futures, andsimilar initiatives3) Optimization of the composition of
in-house production and outsourced
manufacturing by business partners

Drivers ofimprovement
Variable costof sales ratio
Variable selling
expenses ratio
Logistics expense ratio
Loss on disposal of
defective products
Manufacturing cost ratio
based on fixed costs
such as labor and utilities
Loss on disposal of
inventory assets4)Reorganization and optimization of
the logistics system

Adverting expense ratio5)Optimization of variable selling
expenses, sales structure, andadvertising investment basedon thorough management of
cost-effectiveness

Depreciation ratio
Repair cost ratio
Indirect labor cost ratio
Other manufacturing
expenses

6) Maximization of production output
and capacity utilization by optimizing
the Company-wide production system

Company-widecommon fixed cost ratio7) Thorough evaluation of the profitabilityof new and renewal capital
investments based on optimization of
the invested capital turnover ratio

Working capitalturnover ratio8)Other measures

Operatingincome to net
sales ratio

Fixed asset turnover
ratio

ROIC

Invested
capitalturnover ratio

Morinaga Group INTEGRATED REPORT 2023

31

Future Vision andPath to Achieve It

Introduction

Value Creation
Strategy

Sustainable
Management

Governance

Financial
Performance

Financial Capital Strategy

Strategy 2

Approach to Cash Creation and Cash Allocation Based on Financial Strategy

Streamline capital cost by ensuring financial security and creating an optimal capital structure

We will enhance our ability to generate cash through ROIC management and financial measures andstrengthen growth investment and shareholder returns.

On the premise of maintaining our financial security with our credit rating at “A”* or higher, we will
optimize the cost of capital by utilizing financial leverage.

Financial Indicators

Guidance

Japan Credit Rating Agency,
Ltd. (JCR), rating

Maintain at “A” or above

2 or more months’ sales● Between -0.1 and
0.5 times● Less than 2.0 times●

Cash on hand
Net D/E ratio● Interest-bearing debt to
EBITDA ratio●●

In FY2022, excessive cash on hand was one of the factors behindthe decline in return on capital. Therefore, we significantly reduced
the net cash balance while taking financial security into consideration(from 46.6 billion yen at the end of FY2021 to 17.3 billion yen at theend of FY2022). We will continue to optimize capital costs by making
adjustments to reach our optimal capital structure.
*Credit rating of Japan Credit Rating Agency (JCR)

Trend in Financial Position(Times) –0.5

Net D/E ratio (stock)

The Morinaga Group’s basic policy is to ensure a certain level offinancial security in preparation for changes in the macroeconomic
environment, uncertainty in the business environment, and increases
in management risks. Furthermore, our basic rule is to maintain aJapan Credit Rating Agency, Ltd. (JCR), credit rating of “A” or above
as a benchmark for financial security.
Moreover, referencing financial guidance for funding to satisfy
demand, we will aim for an optimal capital structure holisticallyconsidering appropriate levels of cash on hand, capital cost, funding
conditions, and other factors.

2020

–0.3

2018
2017
2019

–0.1

Note: Years in this graph indicate fiscal years

Less than 2.0 times

During the 2021 Medium-Term Business Plan (2021–2023), in addition
to generating EBITDA in a relatively stable manner, we procured funds
through various means, including the issuance of sustainability bonds
and the significant reduction of cross-shareholdings.
At the same time, we revisited our cash allocation. This included thecontribution of additional funds to our retirement benefit trust, capital
investment that prioritizes investment in focused domains and building abusiness foundation, investments in intangible assets, and shareholder
returns that substantially exceeded our plan. As a result, we havesignificantly adjusted our net cash position to improve return on capital.
Looking ahead, during the 2024 Medium-Term Business Plan
(2024–2026), we will promote ROIC management and optimize capitalcosts, while considering further increasing growth investment andshareholder returns.

3-year cumulative forecast under the2021 Medium-Term Business Plan (2021–2023)

Future approach

Operatingcash flow

Generate operating cash flow of 55 billion
yen–60 billion yen*1 over the three-year period
EBITDA comparatively stable

2015

2016

2021

2014

❶ Sustainability bond issuance (+9 billion yen)
Allocated to the reconstruction of the Morinaga
Shibaura Building with ZEB Ready certification

0.1−0.1 to 0.5
times

0.3

❷ Renewal of long-term loans
Access to funds for medium- to long-term
investments in a low interest rate environment

0.5
1.0
1.5
2.0
Interest-bearing debt to EBITDA ratio (flow)

2.5(Times)❸ Contributions to the employee retirement
benefit trust (−5.0 billion yen)
Early resolution of the unfunded portion andincreased return on capital

Financial measures❹Reduction of cross-shareholdings (25.0 billion
yen*2 or more)
Ratio of cross-shareholdings (market value) toconsolidated net assets fell sharply from 29% to 8%

Increase shareholder returns●

During the 2021 Medium-Term Business Plan, we significantly increased shareholder returns.
We will continue to sustainably enhance corporate value and aim for stable, consistent shareholder returns.
In addition, we will consider prompt approaches to share buybacks
as needed with an eye toward the total shareholder return ratio.
In FY2022, we provided our largest ever shareholder returns of 15.8
billion yen, comprising the year-end dividend of 4.7 billion yen and sharebuybacks of 11.1 billion yen. During the 2021 Medium-Term Business
Plan (2021–2023), we expect to achieve shareholder returns of morethan 31.8 billion yen, which is substantially higher than planned.

Trend in Shareholder Returns
2015 MTBP
6.9 billion yen*1,*2

2.6%
22.5%

2.9%

21.1%

3.5%

3.6%

3.5%

2.8%

2021 MTBP
31.8 billion yen + extra*1,*2
3.6%
35.3%

25.3% 26.7%

33.5% 30.0%(Excludes
extraordinary
profit)

16.3%

3.8%
47.9%

3.9%

39.6%

35
2015

45
2016

0.1
2.6
50
2017

3.3

3.6

4.0

1.4
4.4

Dividend
payout ratio

66
2018

72
2019

80
2020

90
2021

(Billion yen)*1

Dividends
4.7
100
2022

4.8

(Billion yen)*2

Dividend
per share(Yen)*2105
2023 (FY)(Forecast)*1 Data covers the acquisition amount during the relevant accounting period (for
FY2023, the amount acquired up until May 16, 2023).
*2 Data indicates the amount of appropriation of surplus for the relevant accounting
period.

32

Dividend on
equity (DOE)

Sharebuybacks
5.2

2.3

Financial Indicators

15.8
11.1

8.4

1.8

Began adjusting leverage to achieve an optimal
capital structure

Capital investments: approx. 49.0 billion yen(+4.0 billion yen vs. plan)
Prioritizing investments in focused domains and building abusiness foundation, while also addressing the aging of facilities

Guidance

Intangible investments: Increase advertising and R&D
spending vs. plan
Strategic advertising investment centered on focused domains
Increase R&D spending to create new customer value
Start DX investment mainly for business efficiency●

Cash allocation●

Clarify key points to strengthen each strategy unit

▶ Improvement of capital efficiency of each business

Utilize the ROIC tree to identify issues and conduct
continuous improvement activities using the PDCA cycle▶ Strengthening of profitability management for individual
investment●

Shareholder returns: 30.9 billion yen*3 +extra(+18.9 billion yen vs. plan)
Provided shareholder returns greatly exceeding the2021 Medium-Term Business Plan
Increase dividends for the eighth consecutive year
Share buybacks totaling more than 17.7 billion yen
Cancel treasury stock up to about 2% of the total
number of issued shares●

Share buyback amount

Establish based on theinvestment and capital plan in
the Medium- to Long-TermBusiness Plans

Share Buybacks Completed during the2021 Medium-Term Business Plan*3
Resolution date

MethodOctober 25, 2022

9,999,887,500 yen

Marketpurchases

February 10, 2023 February 14, 2023

2,486,250,000 yen

ToSTNet-3

5,256,900,000 yen

ToSTNet-3

February 28, 2022

May 11, 2023

May 16, 2023●

Consider performance fluctuation risk and financial
leverage level▶ Utilize interest-bearing debt to achieve an optimal capital

structure
Consider raising interest-bearing debt within financial
guidance levels
Secure cash on hand at two or more months’ of sales▶ Promote asset-light operations
Further reduce cross-shareholdings
Divest and dispose of unnecessary business assets andnon-business assets
●

●

●

●

▶ Increase and enhance investments in intangible assets

Proactive
investments
in growthand non-financial capitalContinue strategic advertising investment centered on
focused domains
Increase R&D investment See pp. 44–45
Full-scale DX investment (e.g., core system renewal) See p. 48
Strengthen human capital investment See pp. 49–51▶ Flexible response to strategic M&A opportunities(cash and investment)
●

●

●

●

Furtherincreaseshareholder
returns▶ Increase DOE over the medium to long term●

DOE of 4.5% or higher (around FY2030)▶ Continue flexibility in share buybacks●

Consider investment capital needs, financial leveragelevel, and other factors, with an awareness of the total
shareholder return ratio*1 Amount after deducting the effects of contributions to the employee retirement benefit trust from operating cash flow
*2 Total amount for FY2021 and FY2022*3 Total amount of dividend payments and share buybacks between April 2021 and March 2024 (shares bought back up to May 16, 2023)

Aiming to Increase Corporate Value Still Further

AmountAcquisition date

▶ JCR rating of “A” or above▶ Full shift to “investments in growth” centered on focused domains●●

4.5% or more (target for FY2030)

Adjust to an
optimalcapitalstructure(Optimize
capital cost)●●

Dividend on equity (DOE)

Securefinancialsecurity●●

2018 MTBP
19.3 billion yen*1,*2

ROIC
management

●

0.5
0

The Morinaga Group’s basic policy is to offer stable and consistentshareholder returns backed by a solid business foundation.
As for shareholder returns, we will seek to raise the dividend on
equity (DOE), an indicator of capital policy, over the medium to longterm while considering a dividend payout ratio level and free cash
flow and ensuring a healthy balance sheet.

(ROE and ROIC) targets▶ Optimization of business portfolio●●

Strategy 3▶ Strengthen management of capital efficiency indicator●

From FY2022 onward, we are focusing on “capital costmanagement” in order to realize the 2030 Business Plan, whichis the Group’s long-term business plan.
To help investors understand these initiatives, we have been
actively engaged in IR activities, such as enhancing segment
information in disclosures, switching the timing of financial results
briefings and provision of materials to a quarterly basis, holding

theme-specific IR Days, increasing the number of small meetings andindividual IR interviews, and strengthening dialogue with overseas
investors through overseas IR and conferences. We will utilize thevaluable opinions received through these IR activities and dialogue
with stakeholders in our management activities to continue toincrease corporate value in a sustainable manner.

*3 Data up to the share buybacks completed on May 16, 2023

Morinaga Group INTEGRATED REPORT 2023

33

Introduction

Future Vision andPath to Achieve It

Value Creation
Strategy

Sustainable
Management

Financial
Performance

GovernanceImprove Profitability through Business Portfolio Optimization and Structural Reforms

Focused
Domain“in-” Businessin Jelly

Status of Efforts in FY2022

What we are aiming for in 2030
Aiming to become the No. 1 brand among foodstuffs supporting“health of mind and body” centering on sports

Minoru Sato

[Initiatives for target achievement]

Executive Officer
General Manager of HealthMarketing DivisionMarketing Headquarters

We are expanding and strengthening the “in-” brand in
response to health needs by extending the targets andgrowing awareness of drinking situations.

in BarAwareness of the Business Environment and Business Overview
Since the launch of in Jelly in 1994, the Group has created a new foodculture of replenishing nutrition easily on the go. Amid the changing
social dynamics of women’s greater participation in society, the aging
society, and an increase in the number of people living alone, people’s
awareness and interest in health spiked during the COVID-19 pandemic,
which is a trend that is expected to continue. Also, with the concept ofa work-life balance penetrating society, people are spending more timeon their hobbies and entertainment, and as a result, consumers arelooking for ways to simplify food and prepare meals quicker.
Given this environment, demand is growing for jelly drink products
and food products with balanced nutrition that provide or restrict
nutritional elements related to health issues easily, and the jelly drink
market in Japan is forecast to grow to 89.4 billion yen in 2025,* marking
a 10% increase over FY2022.
In FY2022, net sales of the “in-” business totaled 30.6 billion yen, up
9% compared with FY2021. Operating income rose 200 million yen
year on year to 7.0 billion yen amid strong sales, which helped to offset
soaring raw materials prices and aggressive spending on advertising.

Net Sales

No. 1 brand supporting the nutrition, exercise, and deliciousness ofeveryone from top athletes to general consumers proactively seeking to
improve their conditioning based on sports science

34

Growth of in Jelly Products

Growth of “in-” Brands

Provide wellness value to diverse
customers in various lifestyle scenarios● Expand drinking situations of coreproducts (e.g., in Jelly Energy)● Respond to new needs and targets

Provide new value to customers
using in Bar and new “in-” products,
following the success of in Jelly, andfoster the brand so that it creates
new markets

TV commercial “Eat, Nootbaar” for in Bar Protein

40
30
50.0

20
10

23.6

28.0

30.6

2020

2021

2022

0
2030

(FY)

Operating Income(Billion yen) ■ Operating income
86Operating income to net sales ratio

(%)

24.3

25

22.9

19.2

20
15

4
7.0

6.8

2

4.5

10

Becoming a Wellness Company

5
0

0
2021

2022

(FY)

Medium- to Long-Term Strategy

Brand Vision for “in-”TV commercial “A competitor’s drive” for the “in-” brand*INTAGE SRI+ Pouch-type Drink Market (estimated cumulative sales amount from April 2022
to March 2023)

Target50

2020

Overview of the Medium- to Long-Term Strategy
for the “in-” Businessin weaker performance year on year. The needs for protein intake andsimplifying foods are expected to grow, and we will strengthen thecommunication of product value in both products and promotions tocreate demand. In particular, a commercial featuring Lars Nootbaar,
who represented Japan at the World Baseball Classic in 2023, createda great deal of buzz, and we are working to grow sales of in Bar
further capitalizing on this opportunity. We will continue to promote
initiatives for the creation of new brands under such themes asdeveloping products that can provide nutrition in new forms andcreating the advanced food products of the future.

2030(Billion yen)

*Pouch-type Jelly Drink Market (2022 sales estimates and 2025 sales forecast) according to the 2023 Processed Foods Marketing Data Book No. 4 by Fuji Keizai

There will be a greater necessity for exercise and adjusting nutrient
intake to avoid malnutrition or overnutrition against the backdrop of anincreased elderly population and concerns of future contagious diseases.
In the “in-” business, the Morinaga Group will utilize its know-how innutrition and physique building cultivated through our knowledge ofsports nutrition along with proprietary food processing technologies to
respond to the needs of customers seeking delicious and healthy eating.

The jelly drink market continued to grow steadily in FY2022, up 16%*
over the previous year. As a result, in Jelly continued to perform welleven after the price revisions implemented in December 2022. In
response to changes in lifestyles during the COVID-19 pandemic, weare continuing to address the need for nutritional replenishment andhealth maintenance when losing appetite, as well as for drinking
situations such as snacking between meals, at work, or whenstudying. As a result, net sales in FY2022 reached a record high. We
will continue to respond to changes in the environment and focus on
initiatives to expand drinking situations and targets.
As for in Bar, we revised the product lineup, including the launchof new products, but the competitive environment continued tointensify amid the diversification of protein intake methods, resulting

We have established a vision for the “in-” brand for 2030 (see figure atbottom left), under which we will continue to evolve the brand for thegreater provision of health value.

Through the “in-” business, we have been accumulating know-how ofnutrition and physique building by supporting nutrition and training
based on sports science, which forms the foundation of the “in-”brand. The Morinaga “in” Training Lab, a training facility exclusively for
top athletes operated by Morinaga & Co., Ltd., explores cutting-edge
sports science, nutrition, psychology, and other fields to study
body mechanisms, training, and necessary nutrition. Utilizing theknow-how accumulated there and our unique food processing
technology, we will meet the needs of customers looking fordelicious and healthy eating habits, from top athletes to general
consumers.
Furthermore, with the aim of providing health value to customers
through the “in-” brand, we are working to further improve thenutritional aspects of existing products, such as fortifying in Jelly Fruit
Texture products with one serving* of multivitamins (12 vitamins).

Initiatives in the 2021 Medium-TermBusiness Plan
We will promote business growth based on the framework of thethree basic strategies.

Basic Strategies for the “in-” Business in the2021 Medium-Term Business Plan
Basic Strategies

1

Details
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 the target age group (e.g., children, seniors) and drinking situations

Growth of
in Jelly
Products●

Growth of●

2 in Bar Products
Creation of

3 New Brands●●

Address diversifying and growing needs for protein
Address sports performance and muscle building (high protein) andhealth maintenance (replenish protein and manage carbohydrates)
Begin initiatives to create future foods by taking advantage of the“in-” brand

The Morinaga “in” Training Lab featuring training facilities exclusively for
top athletesin Jelly Fruit Texture
Peach

in Jelly Fruit Texture
Melon*One serving is based on the nutrient labeling standard value.

Morinaga Group INTEGRATED REPORT 2023

35

Introduction

Future Vision andPath to Achieve It

Value Creation
Strategy

Sustainable
Management

Governance

Financial
Performance

Improve Profitability through Business Portfolio Optimization and Structural Reforms

Focused
DomainDirect Marketing
Business

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

Oishii Collagen Drink

Status of Efforts in FY2022

What we are aiming for in 2030

Oishii Collagen Drink posted the top sales in the collagen drink
market for the sixth consecutive year*1, and Oishii Aojiru, a

We will evolve into a healthcare business supporting
customers’ wellness realization.

Koji Nagano
General Manager of
Direct Marketing Division[Initiatives for target achievement]
We supply delicious functional foods directly andcontinuously to customers.
Oishii Aojiru

Awareness of the Business Environment and Business Overview
The Morinaga Direct Store supports the wellness lifestyle of every
customer through the direct delivery of foods for health and beauty
such as collagen drinks. The size of the direct market for healthproducts in FY2021 was 642.5 billion yen*1, reaching 119% growthover the past five years. The market is growing steadily following
increased consumption through online direct sales and rising healthawareness because of the COVID-19 pandemic.
Against this backdrop, sales of the direct marketing business in
FY2022 totaled 10.2 billion yen, up 13% year on year, owing to strong
sales at the Morinaga Direct Store, centered on Oishii Collagen Drink.
Operating income increased by 300 million yen from the previous
year to 600 million yen. The number of new subscription customers
increased buoyed by proactive advertising, even though we revised
the prices of five drinks*2, including Oishii Collagen Drink, in response
to soaring raw materials prices and energy costs. Net sales of ourdirect marketing business have continued to grow for 18 consecutive
years. For FY2022, we topped the market average*3 of 1%
year-on-year decrease.

Net Sales
Target for(Billion yen)

2030

20
15
10
5
0

20.0
7.4

9.1

10.2

2020

2021

2022

2030

(FY)

Operating Income(Billion yen) ■ Operating income
1.0
0.8

Operating income to net sales ratio (%)
10

8.7

3.7

0.4

Fan meeting

listening to the real voices of customers and reflecting them inproduct development, we aim to further improve satisfaction.

*1 Source: H.B. Foods Marketing Handbook 2018–2023, Fuji Keizai (Category for beauty-oriented products and collagen products/2016–2021 results)*2 Compound annual growth rate

0.6
0.3

0

Becoming a Wellness Company

4

0.6

2020

2
0

2021

2022

(FY)

Medium- to Long-Term Strategy

36

Hizakaru Collagen

6*1 Source: H.B. Foods Marketing Handbook 2023, Fuji Keizai *2 Oishii Collagen Drink Peach, Oishii Collagen Drink Lemon, Oishii Collagen Drink Premio, Oishii Aojiru, and Passienol Drink*3 Japan Direct Marketing Association: Direct Marketing Sales of “Health Food Products”

We provide products that are both functional and delicious at theMorinaga Direct Store to support our customers’ “health of mind
and body.”
The continuous patronage of our products and services is essential
for us to contribute to “health of mind and body” through food, andas such, it is important to enhance the customer experience (CX). We
are visualizing customer behavior and emotions through data that
we collect from various contact points—from product recognition
to aftercare—to implement product design and customer service
tailored to each individual. This will allow us to improve CX andmaintain an amiable long-term relationship with customers. In
addition, we will harness the Group’s strengths in basic research on
nutrition, materials research, food processing technology, and raw
material procurement that we have amassed over more than 120
years of business to develop and provide products that best support
the health of customers.

Top screen of the redesigned website of the Morinaga Direct Store

8
6.4

0.6

0.2

candidate for the second pillar of sales after Oishii Collagen Drink,also performed well with sales growing at a CAGR*2 of 164% overthe previous five years. Sales of Hizakaru Collagen, a food withfunctional claims that contains ingredients supporting theimprovement of knee movement, have been steadily increasing,
too, due to an increase in the number of new subscription
customers. We are now working to further cultivate markets forthis product.
Regarding product quality, based on our subscription customers’
requests, we changed to a plant-based sweetener in two collagen
drink products. For five drinks, we changed to straws made ofenvironmentally friendly biomass plastic.
In addition, in the direct marketing business, we are working
to improve CX by regularly surveying customers to gauge anddeepen their understanding. In November 2022, we redesigned
our website and IT systems to improve customer convenience.
We changed the website to make it easier for customers to findthe information they need and to carry out various procedures
such as changing an order.
In addition, we value our connection with customers throughmeetings to interact with fans and other means. By regularly

Initiatives in the 2021 Medium-Term Business Plan
In addition to establishing the Customer Experience Management(CXM) Promotion Office, we will utilize customer data to maximize
the value we provide to customers. On top of that, we will promote
the following basic strategies.

Basic Strategies for the Direct Marketing Businessin the 2021 Medium-Term Business Plan

Oishii Collagen Drink Peach and Oishii Collagen Drink Lemon wererevamped in July 2023 as foods with functional claims
that specifically market four functions* by adding “functions thatmaintain skin elasticity and improve skin health for those who areconcerned about dry skin due to aging.” We will continue withbasic research of collagen ingredients and provide new value tocustomers in accordance with science-based evidence.
To make the Morinaga Direct Store more appealing, we will takeon the challenge of expanding the range of products we sell in
addition to health foods centered on collagen drinks. Specifically,
we aim to contribute to the “health of mind and body” of ourcustomers by developing and selling products in two domains:high-value-added products that make maximum use of the Group’s
brands and technologies, and foods good for the body that
contribute to health and beauty in daily meals.

Oishii Collagen Drink
Peach

Oishii Collagen Drink
Lemon

Details

Basic Strategies*Collagen peptide functions:
Expand business using a regular direct marketing sales
model centered on Oishii Collagen Drink● Develop new collagen products with functionality● Maximize customer experience (CX) value through theprovision of services tailored to individuals with digitalmarketing●1

Evolution ofexisting
businesses

2Creation ofnewbusinesses●

Create new businesses using the customer base cultivatedin the direct marketing business

1) Retains moisture and enhances the moisturizing ability of the skin for thoseconcerned about dry skin (research report)
2) Supports daily activities limited by discomfort in the knee joint (research report)
3) Maintains the elasticity of the skin of those concerned about dryness due to aging,making it useful for skin health4) Supports bone formation
Unlike Food for Specified Health Uses, this product has not undergone an individual review
by the Commissioner of the Consumer Affairs Agency.
This product is not intended to diagnose, treat, or prevent any medical conditions.
People should eat a well-balanced diet based on staple foods, main dishes, and side dishes.

This photo is for illustration purposes.

TAICHIRO MORINAGA Caramel Baumkuchen released exclusively at theMorinaga Direct Store as a high-value-added product

Morinaga Group INTEGRATED REPORT 2023

37

Introduction

Future Vision andPath to Achieve It

Value Creation
Strategy

Sustainable
Management

Governance

Financial
Performance

Improve Profitability through Business Portfolio Optimization and Structural Reforms

Focused
DomainU.S. Business
HI-CHEW

Status of Efforts in FY2022

What we are aiming for in 2030
Growth of the U.S. business through expanding the
HI-CHEW brand and creating a jelly drink market.

Masaki Matsumoto[Initiatives for target achievement]

Senior Executive Officer
General Manager ofOverseas Business
Headquarters

We will make progress by improving the loyalty of HI-CHEW
customers, establishing a global supply system, andexpanding the food experience and recognition of Chargel.

ChargelAwareness of the Business Environment and Business Overview
While the U.S. economy remains uncertain amid inflation caused bysoaring raw materials and energy prices and labor shortages, the U.S.
candy market is growing strongly. Both the distribution ratio and retailstore turnover of HI-CHEW in the United States are performing wellthanks to the expanded product lineup and various sales measures.
Sales growth in the United States has made a significant contribution
to earnings, and in FY2022, the overseas sales ratio reached 11.2%
for the entire year, exceeding 10% for the first time. We are making
steady progress toward the target of 15% or more in FY2030 in the2030 Business Plan, and we recognize that achieving growth in the
U.S. market is one of the most important issues for the Group in our
future growth strategy.
Against this backdrop, in FY2022, net sales of the U.S. businesstotaled 14.6 billion yen, up 39% compared with FY2021. In the 2021
Medium-Term Business Plan, we achieved our FY2023 target of 10
billion yen in net sales two years ahead of schedule in FY2021, and we
significantly exceeded the previous year’s results in FY2022. On theother hand, operating income declined slightly by 3 million yen fromFY2021 to 1.4 billion yen* due to soaring raw materials prices, higher
labor costs, and up-front marketing investment in Chargel.

Net Sales
2030(Billion yen)

Target

30
20

30.0

10
0

14.6

10.5

7.2
2020

2021

2022

(FY)

2030

Operating Income(Billion yen)
1.5

■ Operating income

14.7

Operating income to net sales ratio (%)
15

14.0
10.1

1.0

0.5

1.4

1.4

1.0

2021

2022

(FY)

Medium- to Long-Term Strategy
We have increased the distribution ratio of HI-CHEW across theUnited States since its launch, and we continue to expand contact
points with customers. We intend to promote brand extension
products aimed at further increasing net sales. At the same time,
we will establish a global supply system to match expanded sales,collaborate with manufacturing companies, and reestablish a logistics
system to ensure the steady supply structure of products.
The United States has yet to see any product such as jelly drinks,
which are quite popular in Japan, and we believe that demandpotentially exists. As such, we will provide new value to customers
and aim to create a market using jelly drinks developed specifically for
the U.S. market.
With the wellness market forecast to continue growing, we havebeen searching for wellness products contributing to “health of mind
and body” that could be the third earning pillar. We aim to change intoa wellness company also in the United States by creating a new jelly

38

drinks market while leveraging the business foundation establishedwith HI-CHEW.

Initiatives in the 2021 Medium-Term Business Plan
We have been promoting business growth based on the frameworkof the three basic strategies.

Basic Strategies for the U.S. Business in the2021 Medium-Term Business Plan
Details

Basic Strategies

Expand our lineup including extension products● Formulate plans to increase manufacturing capacity inline with sales growth

1

Further accelerationof HI-CHEW●

2Creation of thejelly drink market●

3

Exploration of third
pillar of earnings

Left: HI-CHEW
Right: HI-CHEW Bites
HI-CHEW Bites were released as an extension product of the HI-CHEW
brand. The environmentally friendly design does not package each piece of
candy individually.

Becoming a Wellness Company

5

0
2020

rapid sales growth in the United States is an important management
challenge. In addition to our existing production lines in the UnitedStates and Taiwan, we will continue to swiftly build a production
system from the ground up.

100*Includes profits relating to exports bound for the United States from China and Taiwan

The retail store turnover of HI-CHEW has remained strong even after
price revisions instituted in February and November 2022 amid
proactive marketing activities including partnerships with professional
sports teams and sampling events to increase brand awarenessand loyalty. To expand the number of HI-CHEW fans, we launched
products with non-fruit flavors, such as HI-CHEW Fantasy Mix, whichwere well received by customers, and newly developed and launched
HI-CHEW Bites without individual candy packaging in consideration of“health of environment.”
Furthermore, as the second pillar of the U.S. business, we launchedfull-scale initiatives for the jelly drink Chargel, which was developed
for the U.S. market, in February 2022. These initiatives include
sampling at sporting events andstrengthening advertising and PR
activities to expand contact points
with targets aiming at enhancing
brand awareness within the sports
scene.
Looking at the current market
share and brand recognition rate,
we believe that HI-CHEW has thepotential for even greater growth,
HI-CHEW Fantasy Mix
and we will work to grow the U.S.
New flavors such as Rainbow
business together with Chargel.
Sorbet, Blue Hawaii, and Blue
Establishing a stable supply
Raspberry have been a hit withcustomers.
system that can respond to the

Candy is deeply ingrained in the daily lives of U.S. consumers, but
demand for health-conscious products such as sugar-free candy
is growing, especially due to the need to control weight and cut
down on sugar intake.
To increase the value expected of HI-CHEW by customers suchas real fruit taste and texture, as well as to meet a wide range ofcustomer needs, we are expanding the product lineup to include
healthier options such as HI-CHEW Infrusions, made only using
natural flavors, and HI-CHEW Reduced Sugar, which contains 30%
less sugar.
Chargel, which is caffeine free and provides a quick energy
boost in the form of a jelly drink, is popular with customers who
enjoy cycling and triathlons. We started with our own e-commerce
website (https://chargel.com) and gradually began selling Chargel
in retail stores. We will continue to actively carry out sampling
events with the aim of increasing food experiences andrecognition, and steadily advance toward delivering new value
and creating new markets.

HI-CHEW
Infrusions

ChargelPartnering with a cycling teamWork to create markets using jelly drinks developed for
the U.S. market● Establish innovative marketing strategies●

Explore the potential of differentiated products andwellness-oriented goods

Free samples of Chargel were provided to a junior soccer teamMorinaga Group INTEGRATED REPORT 2023

39

Introduction

Future Vision andPath to Achieve It

Value Creation
Strategy

Sustainable
Management

Governance

Financial
Performance

Improve Profitability through Business Portfolio Optimization and Structural Reforms

Focused
DomainFrozen Desserts Business
Status of Efforts in FY2022

What we are aiming for in 2030
We will stably expand the frozen desserts business byconcentrating on differentiated products that exploit
our confectionery technologies.

Kiyoshi Kawagishi[Initiatives for target achievement]

General Manager ofFrozen Desserts Marketing
Division
Marketing Headquarters

While evolving the freshness marketing of Jumbo, we will
also acquire customers in peripheral markets and create
new markets with our technological advantages.

Choco Monaka Jumbo

Ita Choco Ice

Awareness of the Business Environment and Business Overview
The frozen desserts business is expected to see market expansion
due to increased opportunities for consumption by seniors, who
are set to occupy a larger percentage of the population, along withrising temperatures due to global warming. Also, in addition to risingdemand for convenience, consumption in the frozen foodstuffs
category has been growing amid increased opportunities to eat athome owing to changes in people’s lifestyles.
In Japan, with inflation remaining elevated against the backdrop of
soaring raw materials prices, consumer inclination to save money andchoose safer and more trustworthy brands is expected to increase
further. In the frozen desserts business, we are concentrating
management resources on our core high-quality brands anddeveloping marketing centered on Jumbo, the top brand in the frozen
desserts market, in an effort to efficiently generate profits.
As such, in FY2022, net sales of the frozen desserts businesstotaled 40.5 billion yen, a 1% increase over FY2021. However,operating income declined by 1.4 billion yen from FY2021 to 3.4 billion
yen due to soaring raw materials prices and energy costs coupledwith higher depreciation.

Net Sales

Target for(Billion yen)
50

2030

40
30
20

38.4

40.1

40.5

2020

2021

2022

50.0

10
0
2030

(FY)

Operating Income(Billion yen) ■ Operating income
864Operating income to net sales ratio (%)

19.4

20
15

12.1
8.5

7.4

2

4.8

3.4

0
2021

2022

10
5

Becoming a Wellness Company(FY)

Medium- to Long-Term Strategy
We aim for stable business growth by concentratingon proprietary product development using ourlong-standing confectionery technologies in sub-zerotemperatures. For our major brand Jumbo, we willfurther evolve the unique value of “freshness
marketing.” We will also develop and establish thenext round of major brands that set us apart fromcompetitors and that are more like desserts, such as
Ita Choco Ice and The Crepe. We will tackle thechallenge of value creation in line with customer
needs by developing products with an eye toward
such new markets as the frozen foodstuffs category
aimed at sustainable growth over the medium to longterm. Furthermore, we will invest in equipment for
the necessary improvement in the production system
to achieve this strategy.

Initiatives in the 2021 Medium-Term Business Plan
We will promote business growth based on the framework of the three basic strategies.

Basic Strategies for the Frozen Desserts Business in the2021 Medium-Term Business Plan
Basic Strategies

1

Evolving of“freshness marketing”

2

Capturing customers
from adjacent markets

3

Creating new markets
using productdevelopment withtechnological advantages

Details●●

Evolve the “crisp texture” representing thevalue of the Jumbo brand
Expand the target and situations for eating
the productCapture customers from adjacent markets withdifferentiated products that are more like desserts
Develop new products more closely tailored tocustomer needs● Meet the challenges of increasing the added
value of products●●●

Expand applications of Flavored Ice products for
new market entry

Ice Box Otsubu for Chuhai(conducted test sales insome locations)*A manufacturing technology that coats both sides of the ice cream with chocolate to block the gradual and small release of moisture from the ice cream, maintaining monaka wafer's crisp texture
as long as possible.

02020

For the Jumbo group, we launched limited edition products for winterand revamped quality for Choco Monaka Jumbo, which celebrated its
50th anniversary, and Vanilla Monaka Jumbo, and sales increased year
on year thanks to the success of promotions that marketed the crisp
texture. In the spring of 2023, after five years of an improvement
process, we improved the quality of Choco Monaka Jumbo by adding
a “chocolate wall*” in its making to further expand sales.
Although sales of Ita Choco Ice fell below the previous year’s
results in FY2022, we will create consumption opportunities throughpromotions that capitalize on quality allowing customers to fully enjoy
thick and crisp chocolate and establish consistent sales throughout
the year. As for The Crepe, which was changed over to year-roundsales in FY2022, we have further pursued appealing texturesand developed promotions linked to web content. We willcontinue to create further demand by developing uniqueproducts more like desserts that utilize confectionery
technology.
For Ice Box, we actively promoted the product according toeach customer segment, that is, appealing to the consumption
situations, and in addition to the peak demand season, it
captured demand in the fall and winter, with sales performing
well throughout the year. In the future, we will conduct test
sales of Ice Box Otsubu for Chuhai and take on the challengeof mixers for alcoholic beverages, and work on the
Aired first-ever summer TV commercial “Ita Choco Ice”
development of frozen foodstuffs such as frozen hotcakes toin 2022
expand the business domain.

With the revamping of Choco Monaka
Jumbo in the spring of 2023, we launched
the Jumbo Smile Project with the aim ofcreating “ice cream that makes everyone
smile.” We actively disseminate
information on production lines and theJumbo Smile Project
key points that developers focus on inlaunched in the spring of 2023
pursuit of crisp texture. In addition, we
started sensitivity research as a new approach to delve deeper into
why the Jumbo crisp texture is popular and find ways to make further
improvements. We will continue to promote research on theemotional value brought to our customers and to pursue the crisp
texture that contributes to “health of mind.”
Ice Box is a product that efficiently and quickly hydrates and cools
the body by using hypotonic quality* ice cubes, replenishing sodium
lost in sweat. We will continue to appeal to consumption situations
where the functions of Ice Box are useful.
In addition, Ice Box has supported the Heat Illness
Prevention-Communication Project since 2019.

Joint research on emotional value with Professor Watanuki of Saitama University

Ice Box Support Team of STU48.
(Setouchi 48, a Japanese idol group)Marketing the water replenishment
and cool down functions*Due to the low concentration of ingredients such as sugar and sodium, the body absorbs water and ingredients quickly when humans drink after sweating.

40

Morinaga Group INTEGRATED REPORT 2023

41

Introduction

Future Vision andPath to Achieve It

Value Creation
Strategy

Sustainable
Management

Governance

Financial
Performance

Improve Profitability through Business Portfolio Optimization and Structural Reforms

Basic
DomainConfectionery andFoodstuffs Business
Status of Efforts in FY2022

What we are aiming for in 2030

HI-CHEW

Changing the category portfolio to build
a high revenue base.

Mitsutaka Murase

Azusa Murata[Initiatives for target achievement]

General Manager ofConfectionery Marketing
Division
Marketing Headquarters

General Manager ofFoodstuff Marketing
Division
Marketing Headquarters

We will add the value of wellness to existing
brands and roll out high-value-added
products such as food with functional
claims.

Morinaga
Milk Cocoa

Awareness of the Business Environment and Business Overview
Our domestic confectionery business is a fundamental part of theGroup that values the spirit of “Delicious, Fun, and Healthy” throughcontributions to “health of mind and body” of our customers throughconfectioneries. The health needs of consumers, which increased dueto the COVID-19 pandemic, are expected to continue to grow, anddemand for our products is expected to rise as people go out.
In the domestic foodstuffs business, we have driven the market withmany long-selling brands such as Morinaga Amazake, Morinaga Cocoa,
and Morinaga Hotcake Mix, each with a top market share*. Prolonged
inflation resulting from soaring raw materials prices and other factors are
causing more consumers to want to save money, and consumers are
expected to look toward more reliable brands they see value in.
Against this backdrop, in FY2022, net sales of the confectionery andfoodstuffs business amounted to 74.3 billion yen, up 3% compared withFY2021. Despite price revisions and efforts to increase profitability,
operating income fell by 1.7 billion yen over FY2021 to 1.5 billion yen due
to the impacts of soaring raw materials and energy prices.

Net sales(Billion yen)
80
60
40

73.3

72.4

74.3

2020

2021

2022

20
0

Operating income

Target for(Billion yen) ■ Operating income
8

Operating income to
net sales ratio

10.0

8.3

(%)
10
8
6

4

4.5
6.1

0
2020

2021

0
2030

(FY)

Medium- to Long-Term Strategy■ Domestic Confectionery BusinessIn the candy category, which generates excellent profitability, we will
improve the net sales weighting and increase the operating income to net
sales ratio for each number of items. We will increase the net sales
weighting of our main brands HI-CHEW and Morinaga Ramune to improve
the operating income to net sales ratio of the confectionery business.
Moreover, for the biscuits category, which has been growing, we will
boost production capacity and introduce products with high added value.
In the chocolates category, we will strengthen brand power bypromoting a communication strategy in line with new packaging
formats and targets centered on DARS and Carré de chocolat.

■ Domestic Foodstuffs Business
For Morinaga Amazake, Morinaga Cocoa, and Morinaga Hotcake Mix,
we will work on proposals to expand opportunities for easily enjoying
products in day-to-day life. We will achieve net sales growth by
expanding communication and sales promotion that help spark
42

demand for Morinaga Amazake as a product for replenishing water,glucose, and salt for daily health management and during increasingly
hot summer temperatures; for Morinaga Cocoa as a product thatprovides not only physical but also emotional nourishment; and forMorinaga Hotcake Mix as a product with excellent cost performanceand that captures demand among consumers for cost cutting.

2021 Medium-Term Business Plan●

Candies

Biscuits

Chocolates●

TV commercial for Power of Cacao/Cocoa Powder, which was renewed asa food with functional claims

In the confectionery and foodstuffs business, we will roll out
wellness products to meet a broad range of needs and improvebusiness profit through high-value-added products.

2

1.5
2022

First new commercial in the Morinaga Biscuits series in 13 years*INTAGE Inc. SRI+
Candy/Caramel, Biscuit/Cracker, Chocolate Markets (April 2022 to March 2023; estimated cumulative sales amount)

4
2.1

3.2
*INTAGE Inc. SRI+
Amazake, Cocoa, Hotcakes Markets (April 2021 to March 2023; estimated cumulative sales
amount)

2030

6

2

(FY)

In FY2022, the candy category was in a recovery trend, with theoverall market growing 9%* compared with FY2021. In this context,
sales of HI-CHEW, which offers an appealing texture, continued
to perform well even after two price revisions, far exceeding theprevious year’s results. Morinaga Ramune posted record high sales
as we rolled out products for students preparing for entrance exams.
In the biscuits category, while the overall market remained strong, up
3%* year on year in FY2022, Morinaga Biscuits posted record highsales thanks to proactive promotions centered on Moonlight and thesuccess of Marie’s 100th anniversary initiatives, despite temporary
product supply constraints due to the planned shutdown ofproduction to accommodate expansion work on production lines. In
the chocolate category, where the overall market was sluggish, down
1%* compared with the previous year, sales of Carré de chocolat
were below the previous year’s results, and sales of DARS were on
par with the previous year’s results, as they could not escape thechallenging environment. We will review our tactics to re-expand
sales in the autumn of 2023. Sales of Chocoball, which was promoted
to commemorate the 55th anniversary of its release, exceeded theprevious year’s results.
In the foodstuffs business, to strengthen both Morinaga Amazake
and Morinaga Cocoa as health brands, we continued to promote theirfunctional value, such as airing TV commercials for Power of Cacao/
Cocoa Powder, which was renewed as a food with functional claims,
but net sales fell below the previous year’s results. In FY2023, we will
stimulate demand through initiatives focused on the 50th anniversaryof Morinaga Amazake.

Strengthen sales promotion efforts for HI-CHEW andMorinaga Ramune
Develop products to meet the needs of changed lifestyles
and stress reduction due to the COVID-19 pandemic●

Increase the production capacity of Morinaga Biscuits
and develop new products●

Improve the operating income to net sales ratio andsecure sufficient sales scale by reviewing the product,sales channel, and communications strategies

Becoming a Wellness Company
For the domestic confectionery business, we will provide value to“health of mind and body” available only through product groups
that are easily enjoyable. In the spring of 2023, we completed thenationwide release of two products. First was Chocolate Chip
Cookie 50% Less carbohydrates and Almond Cookie 50% Less
carbohydrates, which are made using half the carbohydrates of
conventional products, while maintaining the deliciousness ofMorinaga Biscuits, and second was Power of Cacao/Chocolate, a foodwith functional claims, containing cacao polyphenols (as flavanols),
which have been reported to improve peripheral blood flow reduced
due to cold conditions and keep the surface
temperature of the hands warm. These releases
allow us to focus on providing even greater
health value.
In the domestic foodstuffs business, we
are working on product development withenhanced functional value leveraging researchoutcomes on materials amassed over the years.
In February 2023, we launched Amazake 30%
Amazake 30%
Less carbohydrates, featuring 30% lessLess carbohydrates

Chocolate Chip Cookie
50% Less carbohydrates

Almond Cookie
50% Less carbohydrates

carbohydrates than the top brand Morinaga Amazake, along with
Hotcake Mix Plus, a food with a nutrient function that contains
Vitamin D in addition to calcium and iron.
To realize the 2030 Vision, we will continue to increase the healthvalue of a wide range of products through the development of
products unique to the Group that combine the results of researchand technology on ingredients with deliciousness.

*Unlike food for specified health uses, this product has not undergone an individual review by the Commissioner of the Consumer Affairs Agency. People should eat a well-balanced diet based on
staple foods, main dishes, and side dishes. This product is not intended to diagnose, treat, or prevent any medical conditions.

Morinaga Group INTEGRATED REPORT 2023

43

Introduction

R&D Strategy

Future Vision andPath to Achieve It

Value Creation
Strategy

Sustainable
Management

Financial
Performance

GovernanceIntellectual Properties
Basic Policy
We have established the following basic policy on intellectual properties aimed at realization of the 2030 Vision.

What we are aiming for in 2030

1) Protection of the Intellectual Property Rights of Others
2) Acquisition of New Intellectual Property throughIntellectual Property Intelligence*

We will create new customer value for the future based on technology,enhance development from a medium- to long-term perspective, and support
company-wide strategies and businesses in a cross-functional manner.

Shinya Mori
Director,
Managing Executive Officer
Responsible for R&D Center

Acquisition of New Intellectual Property through Intellectual Property Intelligence

In addition to promoting “deepening of existing technologies” and“exploration of new technologies,” we will work to create and utilize
intellectual properties to enhance corporate value.

R&D

Continuing to take on the challenge of“exploration of new technologies” while
promoting “deepening of existing technologies”

R&D Strategy Aimed at Achieving the2030 Vision

Long term

Strategy 1

Short term

■ Enhancing product development for the U.S. market
For HI-CHEW in the United States, we are expanding our productlineup around the keyword healthy by developing technologies
that replicate the taste of real fruit with natural flavors and sugar
substitute technologies to meet local needs. Against this backdrop,
we established a laboratory in the United States in 2022 to further
enhance our R&D capabilities locally. By linking local marketing andproduction systems to R&D functions in Japan, we will accelerate
product development for the U.S. market. We will develop brandextensions and wellness products to grow sales of HI-CHEW anddevelop the jelly drink Chargel in the United States to provide newvalue to the U.S. market.

Strategy 5

Update the threemain technologies●

Sustainability

Jelly drink technology● Confectionery technology
in sub-zero temperature● Soft candies technology●●

Development ofcontainers
Utilization of waste

Changeover of main raw materials
to sustainable ones●

Strategy 2Strategy 4

Strengthen our growthstrategy in the

New value
creation

United States●●

Deep dive into
“health of mind”

SAI MEAT

Existing domains

Strategy 3 growth strategy
Food withfunctional claims

New domains

PurposeThe Morinaga Group willcontinue to create healthy
foods that can be enjoyedbeyond generations, thereby
bringing smiles to the facesof people around the world
now and in the future.

Want something deliciousthat satisfies the appetite
Want to enjoy a texture thatyou can’t get enough of

U.S. laboratory
conducting R&D

50

90

2020

2021

50

44
28

0
2015

2016

2017

2018

2019

(FY)

manner. The figure below shows the causal path of the Jumbogroup, the flagship brand of the frozen desserts business part of the
focused domain category. It shows how the creation and utilizationof intellectual properties and intellectual assets leads to theenhancement of corporate value.

Want to share happinesswith those around you

Factors behindcompetitive strengths/
what sets Morinaga apart

Creation andutilization strategy

Technology and trust
built up since 1899

Technological development
for further crispness andsecuring of patent rights
Establishment ofa patent network

Amassed knowledgeof chocolate
Flexible thinking to use spraycoating technology for Monaka
Crisp texture achieved by delaying
the moisture absorption of monaka(wafer) using the “Chocolate Wall”
Accumulation of knowledge on“crisp comfort” throughtexture and sensibility research
Freshness marketing
utilizing weather data
Sales capabilities with a large
network of stores selling the product50 years of sales data andconsumer survey results

Measuring cerebral blood flow
as part of sensitivity research*Data that measure emotions from eating by having subjects answer a mood survey containing words that express emotions (e.g., happy, refreshing, unpleasant)91

72

Creation and utilization of intellectual
properties and intellectual assets

Sound logo andTV commercials■ New value creation using new development methods

44

To realize the 2030 Vision, we will build a robust portfolio ofintellectual properties combining multiple intellectual properties
and intellectual assets. We formulate intellectual property strategies
for each business domain and aim to create and utilize intellectual
properties and intellectual assets in a multifaceted and strategic

Customer needs

In the wellness domain, we are enhancing the development of
products that contain proteins and lactic acid bacteria, products with
reduced carbohydrates and calories, and foods with functional
claims. In FY2022, we launched Morinaga Biscuits featuring 50%
less carbohydrates and in Jelly with functional claims. We are also
working to create new value by utilizing the food ingredients andfood processing technology developed originally by the Group.
Passienol™, a food ingredient developed in-house, is rich inpiceatannol, which can activate longevity genes (sirtuins). We will
expand research on sirtuins and contribute to more people who feelyounger than their actual age.

100

100

Robust Management of the Intellectual
Property Portfolio

Wellness●

Ratio of Patent Applications Related to Health (%)

PassienolTM

Strengthen our

Initiatives for speedy productdevelopment, productimprovement, and cost savingsin existing domains

We use information analysis tools to identify trends in technologies
and intellectual properties inside and outside the Group, and actively
invest in intellectual properties to build new business models. In
terms of patents, we have increased the number of applications
related to “health of mind, body, and environment” to grow thewellness domains (see the figure at right). We will continue to
implement both proactive and defensive intellectual property
strategies with health as the keyword and work to create value by
utilizing this information in new ways of marketing.

Causal Path Example—Frozen Desserts Business: Jumbo Group●■ Enhancing development for the wellness domain

In collaboration with universities and other organizations, we conduct
texture and sensibility research using biometric measurement andsubjective evaluation data* at the time of eating to co-create newvalue. In 2023, these research results are being used to describe
HI-CHEW in TV commercials (texture of happiness) and marketingmeasures for Choco Monaka Jumbo (Jumbo Smile Project).

We will explain 2) and 3) in greater detail below.

*Activities to collect and analyze information on intellectual properties and use it for decision-making
in business[Initiatives for target achievement]

To realize the 2030 Vision, we will promote initiatives in line with thefive strategies shown in the figure at right to create new value
through linkages between management and business strategies. Of
these five strategies, we will promote the following initiatives for
Strategy 2: United States, Strategy 3: Wellness, and Strategy 4: New
Value Creation.

3) Robust Management of the Intellectual Property Portfolio

Greater accuracy offreshness marketing
Management of know-how
and trade secrets

Deepening of “food texture
and sensitivity of marketing”
Research and marketing

Increased recognition of
product names and features
Trademarks and copyrights

Fun advertising that
increases the efficiencyof brand recognition
Recognition and reputation

For many years, the Group has been working to maximize the brandvalue of the Jumbo group by creating and utilizing its intellectual
properties and intellectual assets. We will continue to promote our

Value provided
to customers

Impacts on society

Makes
everyonesmile

Smiles forthe future

Jumbo satisfies
one’s appetite

Enjoy various texturesin every bite.
(Crisp texture of monaka
wafer and chocolate andthe creamy smoothnessof ice cream)

The ice cream inmonaka wafer
can be easily shared

Able to buy anywhere andanytime when you want it

Toward enhanced
corporate value

Increase net sales

Grow market share

Increase operating income
to net sales ratio

Increase market capitalization
Increase P/B ratio

creation and utilization strategies to generate value for society andenhance corporate value.

For more details, please refer to our corporate website “Intellectual Property.”▶ https://www.morinaga.co.jp/company/english/rd/ip.html
Morinaga Group INTEGRATED REPORT 2023

45

Introduction

Future Vision andPath to Achieve It

Value Creation
Strategy

Sustainable
Management

Governance

Financial
Performance

Structural Reforms of
Production Functions
What we are aiming for in 2030
We will overcome labor shortages and establish a powerfulprofit structure to allow us to compete around the world.

Shuji Watanabe[Initiatives for target achievement]

Senior Executive Officer
General Manager of
Production Headquarters

We will promote the changeover to smart factories under the
keywords of visible, connected, and resilient, and establish
a safe, reliable, and efficient production system.

Real-time operation analysis

External Environment Related to the Production Function
The external environment surrounding the Group has many factorsthat pose headwinds for production activities, such as labor
shortages due to a decline in the domestic labor force and soaring
costs, including raw materials and energy.
On the other hand, digital technologies such as IoT and AI are
rapidly evolving around the world and in the process transforming
society.
In response to the external environment, which is expected toremain severe, we must undertake structural reforms of production
functions using technology, strengthen the business foundation, andestablish a system for competitive advantages.

Changes in the External Environment Related to
Production Functions●

Headwinds●

Threats●

Risks

Decline in the domestic labor force
Inflation and the rising cost of services(e.g., raw materials prices, energy prices,personnel cost)
Difficulty procuring raw materials andfluctuating market prices due to climatechange and geopolitical risks

Tailwinds●

Emergence of IoT and AI

Opportunities●

Evolution of robotics technology

Promoting Changeover to Smart Factories
The Group has continued to manufacture products with top priority
given to ensuring excellent quality, safety, and reliability. To realize
the 2030 Vision, we will further evolve our safe, reliable, andefficient production system built as a food manufacturer for the next
generation. One such initiative is the changeover to smart factories.
We will combine our long-standing technologies with digital datafrom manufacturing facilities to increase the stability of operations
and improve operational efficiency.
The keywords for smart factories are visible, linked and resilient.
By automatically collecting data using IoT and sensing technology
on the operation of manufacturing facilities, which was previously
aggregated manually, we can visualize the status of operations inreal time. In addition, by connecting to cameras installed on the
manufacturing floor, managers and members of the Production
Headquarters can connect to the manufacturing site anytime,
anywhere, and check the operation status on video. Furthermore,
we are working to develop a predictive maintenance system toprevent serious failures by incorporating special sensors into
manufacturing facilities, and to build a system to deal with problems
more quickly by recording the time before and after shutdown witha drive recorder and capturing the cause on video. Through these
efforts, we will achieve stable operation of manufacturing facilities.
In addition, many people at Morinaga are working to ensure stable
operation of manufacturing facilities, such as data aggregation, data
analysis, and maintenance. We plan to further increase production

46

Overview of Changeover to Smart Factories

VisibleLinks
Information
sharing andremote support

Real time
operation graphJapan

Operation
Quality
TroubleOverseas

AI and predictive maintenance

Graphing
Analysis
Accumulation

volume to achieve the 2030 Business Plan, which is expected toincrease the operational burden as well. Smart factories will also
contribute to the higher efficiency of these operations.

Able to monitor the manufacturing floor via the cloudThrough these efforts, we will achieve stable operation of
manufacturing facilities; improve operational efficiency; andestablish a safe, reliable, and efficient production system.

Looking Ahead
In FY2022, we repeated development and operation tests at Takasaki
Morinaga’s No. 3 Plant to create the optimal model in line with theactual conditions on the manufacturing floor. In FY2023, we will deploy
this model to all production sites in Japan and build an environment
connected to the cloud, including the administrative departmentsof the Head Office. We visualize the operating status of eachmanufacturing floor throughout the Production Headquarters to speed
up daily production management and improvement activities andimprove quality. We will also look to roll out this model to overseas
production sites.
We will use IoT to automatically collect and amass a large amount ofdata such as on equipment operation status and worker information.
By combining this data with AI technology, we will focus on enhancing
the functions of smart factories for further stable operation andoperational efficiency.
In addition to system development, it is important to shift fromconventional business processes to operations that utilize smart

Discussing with operation supporting tools
factory systems. We will continuously conduct employee training sothat the transition and establishment of new business processes
proceed smoothly.

Rollout to Overseas Production Sites

Main controllers

Morinaga America Foods, Inc.
(North Carolina)

Controllers
Cameras formonitoring ofabnormaloperations

Resilient

FacilityA

Facility
B

FacilityC

Increase utilization rateof good products
Prevent prolonged
stoppages

Morinaga (Zhejiang) Co., Ltd.
(Zhejiang)
Taiwan Morinaga Co., Ltd.
(Taipei)Morinaga Group INTEGRATED REPORT 2023

47

Introduction

DX Strategy

Sustainable
Management

Value Creation
Strategy

What we are aiming for in 2030

We will strategically introduce and utilize digital technologies tostrengthen the business foundation and competitivenessaimed at achieving the 2030 Business Plan.

We are working to achieve employee happiness by encouraging their autonomous growth
based on mutual relationships of trust with the Company and to continuously generatevalue for society, all in an effort to achieve the Group’s sustainable growth.

[Initiatives for target achievement]

Masaaki Takahashi[Initiatives for target achievement]

Director, Senior Executive Officer
Responsible for DX Promotion
Division

To lay the foundation for data-driven management, we will
promote the standardization, efficiency, and advancementof operations and IT systems through digitalization.

Senior Executive Officer
General Manager of Human
Resources Division

We will advance the promotion of diversity, humanresources development, and health management
to maximize the value of human capital.

activities on a global level. This will enable timely and multifaceted
analysis and support management’s decision-making.

Medium- to Long-Term Strategy
There have been advancements in communication technology anddramatic changes in the business environment brought about by thedigitalization of society, such as AI, big data, and IoT. Given this,the Group believes that it is essential to invest in digital technologies
to increase productivity and strengthen its business foundation. In
FY2021, we established the DX Promotion Division to advance our
DX strategies.
We aim to build an IT system and data infrastructure as a robust
and flexible business platform that supports sustainable growthby balancing the standardization of operations and strengthening
governance at the global level with the advancement of operations. To
support the growth of our overseas business centered on the UnitedStates using a digital platform, we will expand the reach of our core IT
systems to include overseas businesses. At the same time, we will
standardize the quality of various data generated from business

Strengthening the Promotion Structure
In April 2022, we introduced the recruitment-based DX Ambassador
system to increase our employees’ IT literacy. DX Ambassadors holdstudy sessions and other events according to the issues of theirrespective division to build a foundation for IT utilization. Furthermore,
to enhance the development of human resources specializing indigital technology, we are working with the Human Resources
Division to expand the options for self-led study related to digitalutilization.
In February 2022, we were certified as a “DX Certified Business
Operator” under the DX Certification System* established by the
Ministry of Economy, Trade, and Industry.
*A system run by the national government thatrecognizes businesses preparing for thepromotion of DX

Results of Initiatives and Future Direction
Results of Initiatives

Looking Ahead

We conducted the following initiatives in FY2021 and FY2022.
Purpose

Initiative

Outcomes

Reduction of work hours
for updating procurement
management tables

Streamlining of the update of
raw materials procurement
management tables in the
Procurement Sectors with RPA*1

RPA implementation
reduced processing time
(approx. 500 hours/year)
and human error

Reduced input work for
expense processing● Reduced work hours
for expense approval
operations

Process transformation bydigitizing paper-based
payment processing

Linked Concur Invoice*2 andRemota*3 to digitize expense
processing operations andsave labor in input andapproval operations (approx.
6,300 hours per year)

Initiated structural reformof production functions(ensuring safety andreliability, stable
operation, and improving
operational efficiency)

Start of changeover tosmart factories*4
Introduction at Takasaki
Morinaga and Mishima
Factory

Visualized factory
operation status using IoT
for early detection ofproblems and remote
tracking of work progress

Operational transformationof the Accounting Sectors

Introduced various SaaS*5
in the Accounting Sectors

Visualized and standardized
some accounting operations
and ascertained the actual
status of accounting
treatment for the entire Group

●

●

●

Financial
Performance

What we are aiming for in 2030

Takashi Hirakue●

Governance

Human Resources Strategy

Medium- to Long-Term Strategy and Promotion Structure*1 RPA: Robotic Process Automation. Technology for automating business processes andtasks performed on computers for humans*2 Technology that automates business processes such as invoice payment requests and approvals*3 Technology that automatically reads the contents of invoices and converts them into text using AI*4 Using IoT and AI technologies to integrate technology and digital data of manufacturing
facilities to ensure stable operations and increase production efficiency*5 SaaS: Software as a Service. A service that allows users to utilize software on the cloud via a network

48

Future Vision andPath to Achieve It

To realize the 2030 Vision, we must continue to develop
high-value-added products globally. To improve the quality and speedof value creation and strengthen business competitiveness, we will
work to standardize and improve the efficiency of each business
operation, including product development, procurement, production,
logistics, and sales. First, we are working to rebuild the productdatabase system to increase the efficiency of product development
operations and realize seamless information sharing and utilization ofdevelopment data across businesses and countries. In Japan, thesystem is scheduled to begin operation in FY2023.
We will support the evolution of product development operations
by utilizing digital technology and help to strengthen businesscompetitiveness.

Medium- to Long-Term Strategy
Based on our corporate philosophy, we have established the 2030
Vision with the aim of being a sustainable company that continues
to grow. The driving force behind this aim is our people, and we will
promote human capital management to maximize the power ofour people, that is, the value of human capital. Specifically, we will
promote a human resources strategy linked to the 2030 Business
Plan and invest in human capital.
Diversity & Inclusion (D&I) is positioned as an essential initiativeof the 2030 Business Plan. By leveraging the individuality of each
employee and creating a diversity of knowledge from the diverse
individuals working together, we will enhance our ability to respond tochanges (resilience) and promote the creation of new value (innovation).
At the same time, we will advance self-sustaining career development
and promote the active participation of our diverse workforce.
In terms of human resources development, in the 2030 Business
Plan, we intend to transform our business portfolio, implement

structural reforms to improve profitability, and strengthen thebusiness management foundation, and we believe that it is necessary
to develop human resources who can evolve and transform various
operations. We will actively invest in human capital to develop leaders
who will drive such evolution and transformation, as well as humanresources who will execute each strategy. Furthermore, regarding thepromotion of health management, we will advance various initiatives
to maintain and improve employees’ “health of mind and body” andrealize a work environment where each employee can maximize
their abilities.
Through the above, we will maximize the value of human capital,
contribute to a sustainable society, and enhance the corporate valueof the Group in a sustainable manner.
For details on promotion of health management, see pages 56 and 57.

Promotion of Diversity and Inclusion
For all employees to embody our Diversity and Inclusion Policy andthe five guidelines, the Group is advancing initiatives to promote
understanding and encourage concrete actions per the policy.
In FY2022, to promote understanding, we continued to conduct
training to spread the Diversity and Inclusion Policy amongsupervisors, in addition to holding lectures on psychological safety,
and organized training on unconscious bias for executives and all
employees in an effort to improve basic skills and obtain knowledge
useful for promoting D&I.
Regarding concrete actions, supervisors took the lead in confirming
issues at each workplace and created action plans and put them into
practice. Furthermore, to accelerate initiatives in the Production andOverseas Sectors, we conducted interviews with managers andfollowed up on the formulation of action plans.
In addition, as a prerequisite for promoting D&I, the Human
Resources Division is focusing on various initiatives to advanceself-sustaining career development and encourage the active
participation of women and seniors to increase the momentum for all
employees to play an active role.

The Diversity Promotion Office of the Corporate Strategy Divisionand the Human Resources Division will continue working together toadvance D&I.

Program to Spread and Implement Diversity and Inclusion
Companywide
survey*Training for Supervisors (370 persons)Lectures andcase studies

Discussions onwhat we want to be
Planning ofaction plans

Sharing
examplesMeeting at workplaces

Sharingacross thecompany

Diversity and Inclusion Policy▶ https://www.morinaga.co.jp/company/english/sustainability/policy/pdf/policy_diversity.pdf

Implementation
at workplaces

Sharing inworkplaces

Lectures
Discussions on what wewant to be and other issues
Reestablishment ofaction plans*Survey on Corporate Philosophy and Diversity

Morinaga Group INTEGRATED REPORT 2023

49

Future Vision andPath to Achieve It

Introduction

Value Creation
Strategy

Sustainable
Management

Financial
Performance

Governance

Human Resources Strategy

Succession Plan

To promote self-sustaining career development among employees,
we conducted e-learning on the protean career, to build career
proactively and flexibly, for approximately 2,400 employees, including
those from Group companies, in FY2022, focusing mainly on theconcept behind the protean career. Ahead of e-learning, the President
sends out a message on self-sustaining career development to raiseawareness among employees. In October 2022, we established theCareer Guidance Office, where staff from the Human Resources
Division with career counseling qualifications provide career guidance
to employees that request it. Prior consultation with superiors is not
required for guidance, and we have put in place a system that allows
guidance both face-to-face and online, making it easy to use. In
FY2023, we intend to conduct new training aimed at improving
supervisors’ career support skills. By learning key points in dialogue
with subordinates and methods for creating opportunities, we aim to
educate supervisors on how to establish the knowledge and skills
necessary for providing career support to their employees.

What you want to do/achieve
・Values to honor

Can

Must

What you are capable of,what you possess

What you are expected to do(knowledge, skills, experience)(expectation from the company,
improvement, and changes)

・Characteristics
and traits

・Barriers to overcome
・Roles to fulfill

Ideals for self-sustaining career development▶Our ideal career development—the protean career—ischaracterized by the ability to flexibly transform oneself in theface of environmental changes and enhance one’s skills andknowledge with the mindset that a career is individually driven.
▶We seek to integrate “Will, Can, and Must” by ensuring that
employees know (identity) and change (adaptability) themselves.

Promoting the Active Participation of
Senior Human Resources
With the decline in the domestic labor force, there is a growing needfor seniors to play an active role at work. With this in mind, we began
conducting training mainly for employees in their 50s in FY2022.
Specifically, we conducted unlearning training that provided an
opportunity to rethink “Will, Can, and Must” in line with the conceptof self-sustaining career development. In FY2022, 43 people took thecourse, and in FY2023, 80 people are scheduled to participate. Afterthe training, individual interviews will be held to continuously follow
up on behavioral changes. Furthermore, with the aim of grasping thecurrent situation regarding the active participation of senior humanresources, we surveyed the heads of each division about the degreeof participation in the workplace by senior human resources ages
56 and older. In FY2023, we will implement initiatives to resolve
problems based on the results.

Human Resources Development
We have identified an ideal employee profile and required skills andare advancing employee development and skill building initiatives
accordingly. In addition to hierarchical training and selective training,
we offer human resources development programs to improve the six

Ideal profile ofan employee

required skills, which enable us to enhance human resources
development. Moreover, we will implement the various initiatives
listed on the page at right, including succession planning.

Employee who is capable of grasping andthinking through the essence of mattersfrom a wide perspective

Employee who possesses an entrepreneurial
mindset and looks outwardly, and can makedecisions from a higher perspective

Employee who can act independently toembrace challenges without being content
with the current situation

Employee who is capable of producing results
by engaging others to achieve the Vision

We are implementing initiatives from a medium- to long-term
perspective to continuously develop candidates at all levels.
For officer candidates, we offer one-on-one coaching with an outside
professional. Through this one-on-one coaching, candidates are given
opportunities to deepen self-understanding, such as how to be a leader.
We continue to develop human resources who meet the Group’s
management personnel requirements, including leadership skills.
For general manager candidates, we conduct off-site training
and Morinaga Recipe Training*1 that teaches the framework forproblem-solving. In off-site training, discussions are held in a groupsetting with participants of the same rank from other companies
on the theme of solving social issues, with the aim to broaden
perspectives and understanding of society and to foster co-creation
with outside parties. Morinaga Recipe Training was attended by 42
employees in FY2022.
For manager candidates, we conduct training for future leaders
targeting select employees in their 30s to develop the eightrequirements*2 of future leaders over a nine-month period. This
training program has been held for four terms. In FY2022, 14
employees attended, bringing the cumulative total to 49. There are
now cases where participants have gone on to become managers.
We will continue to promote these initiatives.

Recognizing that they are indispensable in each business domain for
the Group to achieve sustainable growth, we will work to secure
human resources with advanced expertise and develop them overthe medium to long term. In FY2022, we defined human resource
requirements for DX, accounting, and global human resources as key
areas. This definition spans several levels, from the development andgrowth phase to the advanced specialization phase. We have set the*1 Training unique to the Group in which the steps for solving problems are summarizedaccording to the Japanese characters for “mo,” “ri,” “na,” and “ga”
*2 Problem formation, problem solving, innovation and creation, risk-taking and growthpotential, independence and pioneer spirit, persuasiveness and influence, listening andinterpersonal relationships, guidance and development

required number of people every three years until 2030 and areworking to develop and secure human resources following this plan.
In FY2023, we have begun providing expert-level training options
based on the definition of human resource requirements. In addition
to continuous learning centered on e-learning, the options consistof training that imparts a wide range of knowledge. Based on theconcept of self-sustaining career development, we respect theindependence of employees and openly recruit some participants.

Human Resources Requirements Definition Items and Details (Examples)
Area
Accounting
human resources

Accounting

Budget management
●

●

Area

Knowledge and skills of
accounting and tax matters

Language proficiency

Performance
management skills fromthe perspective ofmanagement awarenessof capital costs

Finance
Payment and disbursement,
and cash management● Financial knowledge● Financial strategy
planning, etc.
●

Recommended qualifications
Certified public accountant
Tax accountant● USCPA● The Official Business Skills
Test in Bookkeeping● FASS exam●●

Intercultural understanding Global business experience Recommended qualifications
Practical trading businessexperience● Experience as an
expatriate● Understanding of local laws,
regulations, and systems●

Globalhuman resources

Identifying challenges

Planning and development

Embracing challenges

Execution

Nurturing and self-development

Developing efficient organizations

Ability to perform workin English● Mastery of a second
language●●

Understanding of othervalues such as customs,
culture, political
economics, and religion

Required skills

50

Training for future leaders

Securing and Developing Human Resources with Advanced Expertise

Details

Will

Details

Promotion of Self-Sustaining
Career Development (Protean Career)Through the implementation of these human resources strategies, wewill establish an environment where diverse human resources can maximize

TOEIC
STEP Eiken (English)
Other language proficiency
tests
●
●

their abilities, while building a relationship of mutual trust between the
Company and employees and achieve sustainable growth for the Group.
Morinaga Group INTEGRATED REPORT 2023

51

Introduction

Special Feature

Future Vision andPath to Achieve It

Value Creation
Strategy

Sustainable
Management

Governance

Financial
Performance

Employee Roundtable Discussion

Toward Achieving Our 2030 Vision
With an eye on becoming a Wellness Company as part of the 2030 Vision,
employees from various divisions that support the Group sat down to discuss
how they perceive and act on the Corporate Philosophy and the 2030 Vision,
along with how they envision the future.

How do you understand the Corporate Philosophy and Purposeand go about achieving them in your daily work?
Morii: I work in sales, so the Corporate Philosophy, including our
Purpose, represents our basic stance and foundation. Even in actual
business negotiations, we cannot gain customer empathy unless weshow an awareness of contributing to society. This is why I strongly
feel the importance of understanding and personifying our Corporate
Philosophy and Purpose. One of the values in our Corporate
Philosophy is “value ties between people.” I feel that there is alimit to what one person can do in sales, so in practice I value theconnections between people and between companies. This includes,for example, having researchers attend business negotiations andcollaborating with other companies. In addition, I am conscious offormulating sales strategies that emphasize regional characteristics
and issues, and I try to develop them in cooperation with thegovernment and other partners in each region.
Shimizu: I work in production,
where we take actions based on anawareness that the quality of our
products forms the very relationshipof trust with customers. I place great
importance on “pursue quality withintegrity,” which is part of the vision in
the Corporate Philosophy. I’m always
mindful of whether I can provide
my family, friends, and loved ones
Production Technology
with our products with confidence,
Development Division
Production Headquarters
including in terms of quality.
Joined Morinaga in 2002
Confectioneries tend to bring out a
Takayuki Shimizu
child-like grin in just about all people,

Shimizu: In production, we arepromoting the changeover tosmart factories that utilize digitaltechnologies such as IoT to undertake
safe, secure, and efficient production.
This initiative is directly linked to“health of environment.” Realizing
efficient production will lower CO2

Morinaga America, Inc.

U.S. Laboratory
emissions by reducing the amount ofJoined Morinaga in 2001
electricity and city gas used. It will
Kimihiro Ominato
also lead to a reduction in food loss
and waste caused by equipment
troubles. The external operating environment is constantly changing,and I believe that it is important to take on challenges without fearof failure.

How do you perceive your own futurewhen Morinaga changes into a Wellness Company?
Iwahashi: Since joining the Company, I’ve always said that I want toOminato: To become a global

do a job that my family can be proud of. Transformation of the Groupwellness company, R&D activities

into a Wellness Company also means that I will be able to embody

need to look at the world even morethis desire. With the support of my family, I can immerse myself inthan they do now. For this reason,

my work, and as a result, I can proudly tell them about my work, andcollaboration among R&D

my family—my closest customer—will say “great.” This is the futurelaboratories on a global scale is

I’m aiming for. I believe that if everyone at Morinaga aims to be aimportant. For example, I’d like to

Wellness Company, the Company will grow even faster.

promote dynamic R&D that allows

Nakamura: As with the Company’s wellness, I want to engage

technologies and knowledge

customers with the state of mind of “realizing a rich and bright life

obtained at one R&D laboratory to

based on a vibrant mind, body, and environment” and create products

be seamlessly deployed at the others.

and services that are needed by the world. I’d like to work from aMorii: As an employee of Morinaga, I want to make everyone

higher perspective so that I can identify changes in the externalsmile, from colleagues to stakeholders involved in the Group,

operating environment and be able to respond sensitively and flexibly

while valuing connections with people. I’d like to connect what I

to customer needs and issues. I’d also like to take the initiative in

learn in my daily work to my own growth and acquire the ability

creating a work environment that creates positive synergies.

to pave the way toward the smiles of our customers even in a

Corporate Strategy Division
Joined Morinaga in 2011

Takafumi Iwahashi

How does your day-to-day work connect toShimizu: In production, many people

drastically changing environment. In this roundtable discussion,

with different employment types andI feel that there is tremendous enthusiasm of the Group that isMorinaga changing into a Wellness Company per the 2030 Vision?

nationalities are working side by side.

changing into a Wellness Company. I’d like to connect the growing

While embracing diversity, I’d like topower of each department—similar to a relay race—to fulfill our

promote the Company’s policies andCompany-wide commitment of becoming a Wellness Company

strategies flexibly and expansively. By

and play a role as a salesperson in delivering the commitment

providing products that are beloved

directly to customers.

Nakamura: I work in marketing. We are the flagbearers responsible
for coordinating with all the relevant departments involved in ourbrands. In general, when we hear the term “wellness,” we tend to
think only of foods with health functions, but the Wellness Company
advocated by the Group has three perspectives: “health of mind,
body, and environment.” In the spring of 2023, the Jumbo brand that
I’m in charge of added a new technology that is a “chocolate wall” toencase the ice cream, locking in the “fresh crisp texture” for much
longer thanks to the technological evolution that delays the transfer of52

regardless of age, nationality, culture,or values. I hope to increase these
nostalgic smiles, and I believe that
this will lead to the realization of our
Purpose. To do so, of course, wemust be sincere so that we ourselves
can continue to smile.
Iwahashi: The Group’s Corporate
Philosophy and Purpose are not
Sales Strategy Division
Sales Headquarters
imposed by top management. They
Joined Morinaga in 2007verbalize what has been handed
Kazuki Morii
down from generation to generation,
during more than 120 years ofhistory. I feel that they also put intowords “Morinaga’s uniqueness.” From what Mr. Morii and Mr.
Shimizu have just said, I’m convinced that employees have acommon understanding of this and that each is taking their own
specific actions. I work in corporate strategy with members toformulate strategies, while facing day-to-day concerns, but there is no
single solution to realizing the position that Morinaga wants to be in.
The Corporate Philosophy functions as a compass to confirm that ourplans are taking us in the right direction.

Ominato: As people’s health awareness has increased substantiallyin the United States due to the COVID-19 pandemic, the launch of
Chargel in 2022 was of great significance for Morinaga. As a new
category product that allows customers to easily and deliciously
consume nutrients that form the basis of “health of body” andprovides a sense of satisfaction after eating, we hope that manycustomers in the United States will try Chargel. There are a variety offunctional beverages in the U.S. market, including energy drinks. As
someone involved with R&D in the United States, I’m inspired tolearn from the products already on the market, and I think about theelements that will lead to the business growth of Chargel every day.
We are conducting R&D activities while imagining that in 2030,
Chargel will be the drink closest to the “health of body” forcustomers in the United States.

moisture to the wafer. Taking this opportunity, we redefined the valueof Jumbo not only as “crisp texture” but also as “the smile created bythis crisp texture (contribution to health of mind).” In turn, we started
disseminating new information as part of the Jumbo Smile Projectso that customers will know about our freshness and crispness
marketing activities. I believe that connecting customers with people
involved in Jumbo and connecting them to co-creation is an importantjob of marketing.

by people around the world acrossgenerations and steadily passing the
Frozen Desserts Marketing
Division
Marketing Headquarters
Joined Morinaga in 2008

Nozomi Nakamura

baton to the next generation, we aim tobecome a company that can increase
the smiles of people around the world
through food.

Morinaga Group INTEGRATED REPORT 2023

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