Oisix ra Daichi Inc.
Q4 Financial Results Briefing for the Fiscal Year Ended March 2022
May 12, 2022

Event Summary[Company Name]

Oisix ra daichi Inc.

[Company ID]

3182-QCODE[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]

Q4 Financial Results Briefing for the Fiscal Year Ended March 2022

[Fiscal Period]

FY2021 Q4[Date]

May 12, 2022

[Number of Pages]

47[Time]

16:00 – 17:03(Total: 63 minutes, Presentation: 32 minutes, Q&A: 31 minutes)[Venue]Webcast[Venue Size][Participants][Number of Speakers][Analyst Names]*

1
Kohei Takashima

Hideki Sumi

Representative Director, Chief Executive
Officer
Tokai Tokyo Research Institute Co., Ltd.

*Analysts that SCRIPTS Asia was able to identify from the audio who spoke during Q&A.

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Presentation
Sato: Now that we are at the appointed time, we will begin. Thank you very much for taking time out of yourbusy schedule today to participate in the Oisix ra daichi Inc. financial results briefing for the fiscal year ended
March 31, 2022. My name is Sato from the IR Department, and I will be your moderator today. Thank you forcoming today.
Today’s financial results briefing will be divided into two major parts. In the first half of the meeting, Mr.
Takashima, Representative Director and CEO, will give a 30-minute presentation on the financial results andgrowth strategies. After that, we will move to the question and answer session with participants in the second
half. I will explain the details again. Let me now move on to the briefing. President Takashima, please go ahead.
Takashima: Hello everyone. Thank you for your time today. It has been three months since the last time we
had a problem in Ebina, in February. I was living in Ebina at that time, and since then, I would like to explain
how the recovery situation at the center is going and how we are responding to changes such as COVID-19,
inflation, and carbon neutral flow, since the situation is changing very rapidly. I would like to spend a little lessthan 30 minutes explaining how we are responding to changes such as COVID-19, inflation, and carbon neutral
trends.

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First of all, we talked about the most recent Q4, the last time we had a problem.
This means an explanation of the landing. First of all, we had expected that sales would be damaged by about
JPY1.5 billion, but we were able to hold down sales per customer more than we had expected, landing at a
JPY1 billion decrease. Then there is the quality of delivery. There were cases of shortages of goods, or goods
not being delivered in the first place, or not enough goods being delivered even if they were delivered, butthese problems have recovered to the pre-troubleshooting level during Q4.
As for the number of customers, there was an increase in cancellations due to the trouble, and althoughcancellations were not as large as initially thought, there were about 5,000 cancellations, and during that time
we had new acquisitions, promotions, and suspensions, so there were about 15,000 cancellations that would
not have had to be reduced if not for the normal trouble. There were about 15,000 cancellations, which would
not have been necessary if there had not been the usual problems. Including that, promotions have resumed
since late February, and have landed almost at even.
As for profits, we have invested costs to recover from the troubles as planned. The forecast for the bottom
part of the profit decline is slightly higher than expected because the forecast for the sales decline was lessthan expected in relation to the cost of recovering from the troubles. On the other hand, as we will talk about
again later, some distribution center costs have not yet been fully avoided, and we are considering lowering
them well into H1 of the year.
This is Q4 of the year.

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As for what we did throughout the year as a whole, before the troubles, we thought we would lose a lot of
members and ARPU, especially at Oisix, after COVID-19, but we made progress with higher sales per capita
than we expected. On the other hand, there are some areas in the US where inflation is beginning to have avery large impact. As for profits, except for Ebina, which I mentioned earlier, we are on schedule except for
the US issue.

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I had originally forecast JPY105 billion at the beginning of the period, and I thought I could make a few more
upward revisions, but due to problems and other factors, the result was JPY113.5 billion in sales, JPY6.2 billion
in EBITDA, and about JPY4.2 billion in operating income.

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5Over time, sales have grown by about 20% since the integration.
The reason for the terms “actual performance” and “actual results” here is that we believe that the increasein ARPU in both FY2021 and FY2022 is largely due to the temporary impact of the infectious disease, and that
if we assume that the increase in sales per capita is temporary, the actual amount of sales is called actual
performance. The increase in sales per capita is assumed to be temporary, and is referred to as the actual
sales value. The poor performance in terms of actual performance values is continuing.

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Profits, on the other hand, are also similar here with respect to the actual value, but EBITDA has remained
almost flat. The center’s troubles reduced profits by about JPY1.3 billion, and if that had not happened, wewould have been able to increase our EBITDA by that amount, but it did happen, and we continue to beaffected by it, resulting in a similar EBITDA transition in terms of competence level.

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Now, I would like to talk about what we have been working on in the last year.
Last year, we made a commitment to sustainable retailing, and for us, last year was the first year of sustainableretailing. We have worked on it, but we have been engaged in various exposure activities in an effort to makeit visible.
For example, looking at whether the business type of home delivery, which is written on the left side, produces
more or less greenhouse gases than the business type of store, which is a physical store. After doing some
calculations, we have found that compared to a physical store, we are a business type that makes about half
the greenhouse gas emissions, including the delivery we do. Let’s lower food loss even further to include it.
We are very small as a retailer, but let’s also reduce with regard to food loss that is happening in the fields
and in production. To this end, we have been working to make it possible to measure it in the first place.
This is partly because progress has been made compared to what was visible in H1 of the fiscal year, and partly
because things that were not visible in H1 of the fiscal year are now becoming visible. However, there are stillsome areas that are not fully apparent, and we hope to make these visible in FY2022.

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Let me talk about the second and third strategic initiatives.
Secondly, there were two major themes in terms of responding to the large-scale expansion, and one of themworked, but one failed. We will strengthen our systems, servers, and so on. There was a very dangerous time
two years ago, so there was a project to reinforce it around last summer. This one has been successful, andstabilized.
On the other hand, it has led to major troubles regarding the large-scale expansion of the distribution center.
As for promotion, the commercial was aired right after the failed relocation of the distribution center, but wemanaged to promote it in time to recover the quality of the trouble, and the service level of our customers.
We are in the process of acquiring these skills.

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I would like to talk about the current status of the distribution center that I mentioned earlier.
It is the quantity and quality of the delivery that is marked point number 1 and point number 2. As for whether
we can deliver everything properly and without mistakes when we deliver, we had problems in January. Things
got very bad, especially in the first week, but we have recovered enough in Q4 to have some better numbers
than before the center relocation. The recovery has been completed by the end of Q4.
On the other hand, this is before the relocation of the center with respect to costs. In terms of Oisix sales, thedistribution center was costing us roughly 6% of our total sales before the move. In contrast, there wereoverlapping costs during the relocation period, which were about 7%, but the trouble effectively raised themfrom 10% to 15% in the worst cases. As of March, that figure is now at about 8%, but the current recovery
progress is still 1% or 2% above the 7% before the relocation, or the 6% of the old center before that.

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10Next, we will talk about the impact of inflation.
In Japan, there has been a price increase of some raw materials, and we are responding to it, but so far there
has been no major impact.
On the other hand, the US has been hit by very large inflation, and the cost of raw materials, distribution
centers, et cetera, has been rising very sharply. At the same time, the time of COVID-19 is over, and people
are rapidly increasing their eating out, et cetera, making it a bit of a difficult phase for the US. We will be
implementing several price increases and cutting costs, but Purple Carrot’s profit margin has deteriorated
significantly as a direct result of the effects of inflation.

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As a result of the above, as I mentioned earlier, sales were JPY113.4 billion and EBITDA was JPY6.2 billion,
which is where we landed last year. As for the summaries by business, we have the materials, but will notprovide a detailed explanation.

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I would like to discuss our medium-term growth strategy.
First of all, I would like to briefly talk about sustainable retail strategy, which I have already talked about inthe previous issue, or rather at the end of last year. Our current strategy is to provide food that is good forthe planet, and good for people, through the power of our business model, and technology, and to become asustainable retail business as a result.

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I would like to explain this a little more concretely, but first, in terms of our business model, our main businesscategory is that of multiple food subscriptions, both domestically and internationally.

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In the past, there was the producer, the local agricultural cooperative, the market, the wholesaler, thesupermarket, and the customer, but now we are taking on the functions of these various people and directly
connecting the producer, the producer’s supply, and the customer’s demand. We are the direct link between
the producer, the producer’s supply, and the customer’s demand.
We can do this because it is a large subscription. We have a sales method that makes it easy to predict how
much demand we will have next week or next month, and we have a direct network of producers, so we havedirect access to how much harvest we can get this month and how the harvest will be affected next month.
Information also comes in directly. This is why we are able to connect directly with them.
Technology supports this business model, with purchasing data from just under 500,000 customers and morethan 4,000 farmers. There are others, but we match the information of more than 4,000 farmers and othermanufacturers every week to ensure that they can use what they have harvested without waste.
We believe that by achieving this form, we can create an extremely lean supply chain and value chain, andthat this business model is capable of thoroughly eliminating food loss and other factors in this process. Ourbasic strategy is to master this.

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On top of that, today I would like to talk a little more about the business model and introduce you to it.
We have businesses other than the domestic B2C business, but if you add up all the domestic B2C businesses,
the total amount in circulation is about JPY120 billion. The largest of our own sales is Tokushimaru, which has
a total distribution value of over JPY25 billion, but this is not reflected in our sales, and for the products wesell with docomo and Isetan, the total distribution value cannot be expressed as our sales value. In terms of
total distribution amount, it is about JPY120 billion, and in terms of the number of members, about 600,000
people are using our food subscription service.

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There are probably various ways to translate this into the market, but currently, the total market is about
JPY2.5 trillion, of which we consider our share to be about 5%.

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We believe that the number of supermarkets will continue to grow at a considerable pace in the future, partly
due to the rapid growth of COVID-19, and partly due to the increase in the number of players, includingInternet supermarkets.
The Yano Research Institute’s data, however, gives us a sense that the speed of growth is a little faster than
we would expect from our own experience, but now that we have the data, it is in this form.

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We have sorted out how to organize that market.
The vertical axis is whether the product is generally reasonably priced for affordability, or whether it is adistinctive specialty. The horizontal axis is about how to buy, and it organizes the food delivery market
according to whether it is a form of pay-as-you-go purchase, a subscription like ours, or a subscription.
In this organized and plotted list of players, I believe there are two major markets that are growing right now.
One is a reasonable spot. The number of online supermarkets and platforms, such as Amazon, has increased
considerably, while a large number of food service delivery companies have entered the market in the past
two or three years, and the area of having relatively reasonable products brought to you on a case-by-casebasis has grown considerably. There is a large number of players coming into the market. Another area thatis increasing is in food subscriptions, and we believe that various brands are being counted in this area bothin Japan and overseas.

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We have listed three things that make our company unique among them.
One is that we have a direct production area, and can procure high quality products at low cost. Second,although they failed to relocate, they own several distribution centers, both refrigerated and frozen, and havea much larger facility than other companies with respect to fulfillment. The third offers distinctive services foreach brand.
Under these circumstances, I believe that we are currently number one in the specialty and subscription areas,
and I believe that we will continue to expand our market share in these areas. To explain this business model,
our basic strategy is to establish a strong presence in the growing food delivery market in the area of specialty
times subscription.

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With that said, I have written a bit about what we are going to do this year, and I think it will be to refine thecharacteristics of this business model and promote sustainability.

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Specifically, we would like to be very distinctive with respect to the level of service. One is that we are now
able to collaborate with Disney in a variety of ways, and we will continue to promote and expand thiscollaboration, which has been very well received since this fiscal year. Breakfast and, in the future, lunch, but
we are considering expanding into areas other than dinner where needs are high.

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Furthermore, in addition to increasing the value, I was thinking of doing something that would make the timeeven shorter. The leftmost started as a foregone conclusion, and the reaction is that although the expectations
are very high, although frozen foods that can be filled with vegetables, Patto Oisix has started, and this should
be strengthened.
We are also planning to develop a service for beginners in cooking, and this is partly due to the fact that we
believe that there has been an extreme increase in cooking by men in recent years. Some say children, but for
example, meal kits. We feel that it has become quite common for men to use meal kits on days when they areon meal duty and use regular vegetables on their wives’ days, so we would like to add more sections where
even beginners, including men, can cook.

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The brand is a commercial with the Tonisen group that we started last year, and today we have also started acollaboration to produce meal kits. We are very much looking forward to spending more money than everbefore to promote our brand recognition expertise in this area.

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24Regarding sustainability, I would like to focus quite a bit on it this year.
Meal kits also have a large amount of raw materials that are wasted, so you could use those. We would liketo increase the number of products that are not used, products that are not usually served, such as the black
vinegar starchy sauce made with shark meat, which is now starting to gain popularity in our company. Or,
what was taken from a good harvest, the leaves. By saying that we can cook whole leaves of things that we
don’t know how to cook, we are also thoroughly reducing food loss in the fields.

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The commercialization of Upcycle and Uneven Radish, which we started last year and which has been very
well received, are selling very well, and we intend to further strengthen our sales this year.

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Also, as our customers have commented, we will promote sustainability in materials, corrugated cardboard,and packaging.

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So, at least for B2C domestic subscriptions, we hope to continue to grow by 10% or more each year.

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I will talk about the expansion of our business areas.
We are now talking about B2C domestic subscriptions, and for B2C overseas Purple Carrot, we have alreadystarted in Hong Kong and Shanghai, but this year we would like to focus on B2B subscriptions.

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Specifically, we are considering not only delivering foodstuffs to nursery schools, which we have beendeveloping in the past, but also delivering them in the form of meal kits for business use. We still distribute
foodstuffs to about 700 nursery schools, but the problem of labor shortages in nursery schools is becoming
more and more serious, and we think that the skills we have accumulated through our B2C business in thearea of food education, such as food that makes children happy, will be useful. That is what we would like tooffer.
We would like to aim for JPY10 billion in five years. This figure is not included in today’s materials, but I would
like to work with that image in mind with regard to our new business.

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30This is the profitability part.
The cost is generally on schedule, but there is the Ebina matter, which is the former Ebina station of the Food
Rescue Center, and this operation has been delayed a bit. We are making progress with no problems otherthan we are behind, but we are behind, and will do our best to operate well, and rescue foods to lower ourcost of goods.

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Also, regarding Ebina, I mentioned earlier that the rate once rose from 10% to about 15%, and now it is about
8%. We hope to return this to 6% over the next six months, to the state it was in before the relocation.
The reason it is taking longer than expected is partly because we have decided that we should be more careful
than we thought, and partly because we are being very careful because we cannot afford to inconvenience
our customers. I had to make emergency arrangements for a six-month contract and several supply centersin the middle, but that inevitably led to a slightly longer contract, such as a six-month contract, because I
couldn’t make a one-month contract. I expect it to take until about H1 of the year, partly because that is what
it will take for six months.
During H1 of the year, we hope to complete all of that work, and finish the work on the 1% further reductionthat we had planned before the move, and prove in H2 of the year that our revenues are better than before.
On top of that, Ebina is refrigerated this time, but we are planning a new frozen center next year, so we arelooking to lower costs for that as well.

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Future EBITDA margin of 10%, FY2025.
As for that, I think we can go without changing the target, but in the short term, I think there will be a slightdeterioration in H1 of this year with the current situation. However, we would like to temporarily eliminate
this area and bring it firmly to 10%.

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Finally, we are planning for the current fiscal year.
I would like to keep it simple, but I would like to place a target of JPY120 billion in sales, JPY6.5 billion in
EBITDA, and JPY4.5 billion in operating income.

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I would like to make the number a little more aggressive, and there are some areas where I thought we could
go a little further, but last year we set a target of JPY105 billion, and we ended up with JPY113 billion, butsome have pointed out that it is not very good to suddenly change the level of conservatism from year to year,
so I would like to go with this number. I would like to keep the figure as it is.

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As for the big issues, in addition to making sure that the Ebina part of the Company is settled, we expect Purple
Carrot to be in the red for the current fiscal year. I think one challenge will be to increase profits overall basedon that part of the business.

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36Regarding initiatives for the second half of H1, I think it is important to achieve a solid recovery in profitability,
including at distribution centers, in H1.
Besides that, with the end of COVID-19, the profit margin is going down compared to when COVID-19 wasthere, because the sales per person is decreasing, and the profit margin is going down partly due to that, so
we are predicting that in the future. I think it is very important in H1 of the year to build a structure that cangenerate profits even under such circumstances.
Then, in H2 of the year, we would like to proceed with relatively separate themes for H1 and H2 of the year,
in order to be able to launch large-scale promotions.

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Purple Carrot has been mentioned several times earlier.
As for what is happening, one thing that is happening is that sales are down because of the end of COVID-19.
Second, inflation is having a rather steep impact, which is making it difficult to make a profit. We are still atjust about a ton, but we are getting into a situation where we are not getting out, and we will be raising prices
and doing various other things, but we think it would be best to expect that we will inevitably be in a
temporarily difficult phase.

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Lastly, on the ESG thing, we created a platform called WeSupport, which provides food for healthcare workers
during the COVID-19 period. Many food companies supported the project, which was very much appreciatedby the medical professionals. We are very grateful to the 34 food companies that have continued to cooperatewith us in this program, which we are continuously developing for poor households with children, and singleparent children. Most recently, we are also considering providing food for evacuees from Ukraine.
I went a little over time. That is all. Thank you very much.

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Question & Answer

Sato [M]: Thank you very much, President Takashima. We will now move on to the question and answer
session.
The question and answer session will be conducted in the form of a verbal question and answer session using
Zoom. Questions from sell-side and buy-side investors will be followed by questions from the press. Whenasking a question, please state your company name and name at the beginning of your question, and limit
each person to two questions. For those who are unable to speak due to their participation environment, we
will also accept questions via text on the screen, so please enter your question.
We will now move on to the receiving of oral questions. We welcome questions from both sell-side and buyside participants. Thank you for your patience.
First of all, Mr. Sumi, please unmute and ask your question.
Sumi [Q]: Thank you. My name is Sumi of Tokai Tokyo Research Center. Two questions, please.
First of all, I would like to ask you about ARPU in Q4. Oisix’s ARPU seems a little high despite the logistics
trouble, while both ARPU per frequency and ARPU per unit price of Daichi wo Mamoru Kai and Radishbo-ya
appear to have declined in Q4. What are the factors behind this, and what are the factors behind Oisix’s high
ARPU level? Also, regarding your plan for this fiscal year, is JPY4.5 billion in operating income and JPY6.5 billion
in EBITDA a minimum target that must be met, or do you see it as conservative in what areas you see asconservative? Could you first tell us about this? This is the first question.
Second, the new distribution center has been delayed. I understood that the satellite center is rented, but the
distribution cost rate has increased by 1% to 2%. What is the reason for the delay in the effects of the project?
I would like to hear more about this. Thank you for coming today.
Takashima [A]: Thank you very much. Regarding the first one, ARPU, I don’t know if Oisix, Daichi, Radishboya, and generally COVID-19 in Q4 are over, but the fact that you are now able to move freely and spend a little
less time at home is a major factor in the slight decrease in the unit price.
In addition, I would say with Oisix, there was a center problem with it, so it would be strange to say that it
could be a little less. I thought it would be a little less, but it wasn’t as much as I thought it would be. I will
have to analyze this in the future. I thought that the unit price would also go down because we narrowed
down the product line considerably, but it did not go down that much. On the other hand, we know from
customers’ comments about cancellations that narrowing down the product lineup has led to cancellations,so we believe that recovery is necessary in either case. It’s like that. It’s like it didn’t go down as much as wethought it would on Oisix’s part.
As for Radishbo-ya and Daichi, it is not that they have gone down, but rather that they have not gone down
as much as expected. It is still much higher than 2019 by about 5%, so we believe that Daichi and Radishboya are also buying more than in 2019.
How do you think ARPU is going to be in this current year’s forecast? The assumption of the estimation is that
ARPU has become on par with 2019, so that’s the kind of question I’m asking. The estimation of how much of
ARPU is based on the assumption that each brand would be in the same state as in 2019.

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Regarding the delay in cost improvement at the new distribution center, the biggest problem, which overlaps
with the previous point, was that we had trouble in January and could not deliver products to customers, so
we set up several satellite centers and shipped products from them. Currently, shipments to Ebina arebecoming more stable, so we are gradually bringing those that have been out once back to Ebina, or rather,joining them, but that itself is a six-month contract, so the cost will not change if we rush too much.
Other than that, the Ebina center can originally operate 24 hours a day, but there were no plans to do so
immediately after the relocation. We were going to stop and operate during the night. That was immediately
after the distribution center had problems, so it became a 24-hour operation right after it went into operation,and it continues to this day. As I mentioned, we are currently in the process of gradually merging the productsthat were being transported at the satellite center into Ebina. In the meantime, we are afraid to stop latenight operations at the same time, so another reason is that we continue to operate 24 hours a day.
We expect that the future trend will be to change the satellite transportation to a form where all the products
are transported at Ebina without any problems, and to shorten the operation time.
Sumi [Q]: Thank you very much. Just to confirm on the first point, is the ARPU part of your plan for this fiscal
year where you are looking at conservatively? Are you standing buffer at the cost?
Takashima [A]: What we see conservatively is, there are places where the ARPU part and the situation in the
US are not as good as the situation in Japan, and that is where you are looking at the buffer and looking at theUS.
Sumi [M]: Thank you very much. That is all.
Sato [Q]: Thank you, Mr. Sumi. I will then read out one question that we have received by text.
This is close to your current question, but I was wondering if you could tell me which aspects of next year’s
guidance you consider to be conservative, either by segment or by cost improvement. Thank you.
Takashima [A]: To repeat what I just said, regarding ARPU, we expect all brands to fall to the pre-COVID-19
level, and regarding the situation in the US, we expect the possibility of a worse situation than what the US
team plans to produce. As for membership, I would say that we are conservatively looking at the fact that theend of COVID-19 may increase cancellations to some extent. That’s what it looks like.
Sato [M]: Thank you very much. We have one question by a show of hands, so Mr. Saito, please unmute andask your question.
Saito [Q]: This is Saito from Schonfeld. Two questions, please.
I think it says JPY4.5 billion in revenue growth for the three brands in this year’s guidance, on page 65. Can
you give us the breakdown figures for Oisix, Daichi, and Radishbo-ya, respectively? I think that Radishbo-ya
and Daichi are about 5% higher in ARPU than before COVID-19, so that would mean a 5% increase in revenue
for the three combined, but am I correct in assuming that subscriber growth will be about 10%? That is thefirst point.
The second point is that the cost of the new Ebina center is 8%, and I think you are saying that you would liketo bring that down to 6% by the end of this fiscal year, but how much will the cost drop if these two points
drop by two points on sales and by two points on value? I would like to ask you to do the following.
Takashima [A]: Regarding the first question, I have included an explanation on the page I have allocated today.
To put it briefly, Daichi, and Radishbo-ya expect a slight decrease. Oisix will increase, and the basic idea about

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that is that ARPU will decrease, but membership will increase by double digits. In terms of sales anddistribution costs, this is a ratio to Oisix’s sales.
Therefore, Oisix’s monthly sales are divided into sales that go through the distribution center and those that
do not, and of the JPY64 billion projected for this year, approximately JPY60 billion are sales that are
accounted for by the distribution center. If we revise this figure on a monthly basis, the average for the current
fiscal year will be approximately JPY5 billion, and we are thinking that 2% of this amount will be JPY100 million.
Rather than reducing it all at once, it will be in the form of a 2% reduction over the period of H1 of the year,
so it will not be up to multiplying by six, but in the end, if we compare March and September and assume thesame sales, we have a monetary sense that the distribution center costs are JPY100 million better off.
Saito [Q]: Is JPY100 million per month?
Takashima [A]: We have a monthly circulation of about JPY5 billion, and a 2% decrease in that amount would
mean a monthly decrease of about JPY100 million.
Saito [Q]: So, on page 57, if we look at another 2% improvement in 2025-3, am I correct in understanding that
there will be a reasonable amount of further improvement over the next two years in terms of amount?
Takashima [A]: I would like to realize that sales for two years will improve as a rate, although some of thiscannot be done if it is constant, so we will also do this while expanding this as well.
Saito [M]: Thank you.
Takashima [A]: To put it a little more bluntly, a significant portion of the center costs are labor costs. I would
like to mention that we operate 24 hours a day, but there are quite a few people for a 24-hour operation. In
addition, there are satellites, so there is rent for the satellites, and there is also the cost of personnel on thesatellite side. We believe that this can be achieved by firmly moving the entire system closer to Ebina andmaking it work, and by promoting labor savings, which is also the case for Atsugi.
Saito [Q]: I think the most recent energy costs and such have risen to a certain level. I think it will go up further
in the future, but even taking this into account, I think you commented in your explanation that it has not hadthat much of an impact so far. How do you see the risk of this coming into effect in the future?
Takashima [A]: In terms of the impact of environmental changes, the price of wheat and raw materials may
have a more direct effect than energy. The cost has gone up in the US. The cost of operating the distribution
center has gone up very much because the cost of labor has gone up in the US rather than energy. About 1.4
times the cost of raw materials is the largest in the US, followed by the cost of raw materials. In Japan, thecost of raw materials is more important than the cost of energy, and how much the price of bread and pasta
has gone up, depending on how much wheat has gone up. How much corporate effort will be made in
response to that is, in all likelihood, the more significant impact that way, as I see it at this stage.
Saito [M]: Thank you.
Sato [M]: Thank you very much, Mr. Saito. Now, Mr. Watanabe, please continue with your request to unmute.
Watanabe [Q]: My name is Watanabe from Sparks Asset Management. I apologize if this also covers some of
the aforementioned questions.
It is not a specific brand in terms of the expected decrease in ARPU, but you mentioned the impact of COVID19 on the pre-COVID-19 level. Not only in the US, but also in Japan, the CPI has been gradually rising. Unlikein the US, I believe that consumers’ wallets are of a certain size, and I was wondering if there is a risk that yourSupportJapan
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company’s purchase frequency will decrease when consumers have to cut back a little on their living expenses.
At the same time, do you think it is difficult to be affected by inflation in Japan because many of yourcustomers are specialty and premium customers who value their time more than their money? I would like to
ask for your thoughts on this matter.
Takashima [A]: Especially with the meal kit product, I think it is easier than with other products to have people
experience the impact. Of course, we need to be creative while the capacity of our customers’ wallets remains
the same, but at the same time, in our case, we are in an environment where we can use more, and more
food-loss-like products. If the Food Rescue Center is established, it will be possible to use potatoes that are
too small or tomatoes that have been harvested in too large quantities, for example, in meal kits, which could
not be commercialized until now. I believe that this can be reflected in improving the cost ratio, and also on
the side of making the price of the meal kit itself a little lower.
In the case of the US, we are buying directly from the market, and Purple Carrot is not able to do so, but inJapan, we are able to communicate directly with the producers, and we believe that we have the ability toabsorb this in the form of meal kits and frozen foods filled with vegetables, which does not mean that there
is no impact. This is not to say that there is no impact, but we believe that we can absorb some of the impact.
Watanabe [Q]: Thank you. In summary, do you believe that the impact can be mitigated through a
combination of successful value promotion, and cost reduction efforts on your part?
Takashima [A]: I think as you say.
Watanabe [M]: Thank you. I understood very well.
Sato [Q]: Thank you very much. We will now turn to questions from the press. I will move on to questions by
text at this time.
Purple Carrot, you asked if we can expect a similar trend of people flowing to real stores in Japan this quarterdue to the reopening of restaurants as has happened in the US. Thank you.
Takashima [A]: The restaurant has already happened. I think the fact that restaurants are happening, andthere are restaurants, is more a result of the fact that people are not eating lunch at home as a result of
everyone going to the office more often. That is where I feel that the ARPU is getting back to where it was.
On the other hand, what is different from the US is that the churn rate has not increased. At this stage, we
are not seeing an increase in cancellations, but rather, customers are continuing to use the restaurant anddelivery service once they have started using it. I think the current situation in Japan is that they continue to
use restaurants and home delivery.
Sato [Q]: Thank you very much. Let me move on to the next question.
You ask if it is easy to pass on prices regarding the impact of cost push, high raw material prices, farmers’
greenhouses, wheat, et cetera. Thank you.
Takashima [A]: I don’t think price shifting is that easy in Japan. In the case of the US, other companies will doit relatively soon, so it is more like Purple Carrot is going to do it from now on since the US was late in doing
it. In the case of Japan, I don’t think it is very easy to pass on the price, but as I mentioned, we can absorb thecost of raw materials by converting them into meal kits or frozen foods and selling them, rather than sellingthem as they are. We believe that it is possible to absorb such ingredients by making good use of those thatare harvested in large quantities and would otherwise be thrown away in the fields, but which are actually
very tasty.
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Sato [Q]: Thank you very much. Let me move on to the next question.
Please comment on the positioning and growth strategies of non-Oisix brands other than Radishbo-ya, Daichi
wo Mamoru Kai and Tokushimaru in your mid-term strategy.
Takashima [Q]: With regard to Radishbo-ya and Daichi, in a manner of speaking, the forecast that we are
putting out today is for a slight decrease, but, of course, we are not saying internally that a slight decrease isokay.
As for Radishbo-ya, last year the service called Fuzoroi Radish was a big hit, and has been growing. In the caseof Radish, there are many customers who originally love to cook, and many of them use unmatched products
while enjoying the challenge of cooking things they have never tried before, so I think it would be good for
Radish to expand this trend.
As for Daichi, Radishbo-ya’s customers are mainly in their 50s, while Daichi’s are a bit older, in their 60s and70s. In the case of Daichi, as has become more obvious with COVID-19, people who want to lead a healthy
lifestyle by eating a diet that strengthens their immune system are using our products, so we are committed
to providing products that meet their needs for a healthy lifestyle through diet rather than medicine. Although
we are inevitably growing in some COVID-19 difficulties, we would like to achieve organic growth.
Tokushimaru has grown very much in the last year, and the number of units has increased. I believe that 1,000
units will go as well. As for the shopping refugees, there are still many of them. There are many of them inTokyo. We believe that there are about 6,000 units in terms of market potential, so one thing we can do is toincrease the number of units. On the other hand, until now Tokushimaru’s approach has been to produce thenumber of units without having to make a profit, but now that we have reached 1,000 units, let’s figure out away to make a profit. Therefore, we are considering a slight change in our structure this fiscal year to make it
more profitable while consulting with our 1,000 drivers. That is all.
Sato [Q]: Thank you very much. Our time is up, but since it is a few more questions, I would like to continue
as is.
We feel bullish about the Oisix segment with a 15% increase in subscribers in the next fiscal year as expected
after COVID-19. The question is whether there is any reason why the economic resumption situation isreflected in the decrease in ARPU rather than in the growth of subscribers. Thank you.
Takashima [A]: The 15% comes from the growth rate before COVID-19, which was about the same. As for
ARPU, it clearly grew during the pandemic. There has been an increase in subscribers of over 15% for the past
year or two.
Even before COVID-19, there were trends such as the increase in the number of co-workers and theimportance of preparing meals in a short time that are comparable to those on Instagram, so we would liketo challenge this 15% double-digit increase.
Sato [M]: Thank you very much. Now that we have received all the questions, I would like to conclude thebriefing here. Thank you very much for taking time out of your busy schedule to join us today. Good-bye.
Takashima [M]: Thank you very much.
[END]______________

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Document Notes
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