Processed foodOverview
In the processed food business, we seek to provide safe and delicious food for consumers, in the hopethat they will choose our products for their loved ones. We aim to satisfy our consumers by offering
food products that meet the needs of their daily lives.
Our processed food business is dedicated to delivering safe, high-quality food products to consumers.
We are also mindful of the environmental impacts of our products and operations, and we makecontinuous improvements to these wherever possible.

Our processed food business value chain** This diagram represents the value chain of products for frozen and ambient foods. We do not deal directlywith raw material producers – such as growers – who provide raw materials to the trading rms or to thecontracted factories that supply us.

Processed food business sustainability strategy
Throughout 2019, we held numerous discussions on sustainability and set out three focus areas. Oneof the focus areas that we selected was ‘products and services’. We aim to continuously deliverproducts with commitment to quality and technology, in line with consumer needs. We will placeemphasis on ‘people’. We will strive to ensure workplace safety and invest in our people. Our third focus
area is the ‘supply chain’. We will continue to deliver safe products to our consumers by working on
reducing social and environmental impacts, to ensure that our supply chain is sustainable over the midto long-term. In total, there are eight targets set for the focus areas in the processed food business.
These will provide a solid basis for measuring and benchmarking our sustainability performance, andsupport the sustainability of the JT Group. We will be updating our progress regularly, as we strive tocontribute and ful ll our commitments that we have made to our stakeholders and to ourselves.

Processed food business sustainability strategy- Focus areas, aspirations and targets

Read more about the JT Group sustainability strategy.
Read more about our Group-wide initiatives in the Investing in people and Environment sections.

Our business operation andsustainability
We have a rigorous quality and processcontrol system based on the four priorities offood safety, food defense, food quality, andfood communication.
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Our business operation andsustainability
Food safety

Food

Fooddefensequality

Foodcommunication

Environment

Food safety standards
Our processed food business has 32
factories, including the one scheduled tooperate from 2020, which produce a variety offood products, from frozen foods toseasonings, and bakery products. 23 of thesefactories are located in Japan, and nine arelocated in China, Indonesia, Thailand, and theU.S. Our products are sold primarily in theJapanese market.

We make sure that all of our factories* are certi ed to the global food safety standard FSSC 22000.
FSSC 22000 is recognized by the Global Food Safety Initiative (GFSI), the food industry’s global body forpromoting food safety management.
All the factories contracted to manufacture frozen food products on our behalf have been certi ed to
the food safety standard ISO 22000 or FSSC 22000, as an assurance of food safety.
We also work with multiple independent advisors, who have helped to develop our approach to foodsafety since 2008. In 2019, these advisors visited our factories, sharing useful advice and givingpresentations to our employees on industry topics such as food safety, consumer consciousness,
and/or the laws and regulations relating to the Food Sanitation Act. These events provided employees

with a greater awareness of new developments and important topics in the eld of quality control.
There were two product recalls of our food products in 2019. We are working hard to enhance foodsafety and product quality assurance to eliminate the likelihood of recurrence.
* One of our factories which will start its operations during 2020 is on track for the certi cation.

Food defense practices
Food defense is about protecting ourmanufacturing processes and products fromintentional contamination. We apply robust
food defense guidelines across the supply
chain, both in our own factories and ourcontracted factories, which are referred toduring our annual audits.
Recent initiatives to strengthen our defense
mechanisms against deliberatecontamination include increasing our use offactory cameras and enhancing the way wemanage chemical substances. These
measures also help to detect and prevent any
incidences of intentional contamination.

Enhancing food quality
Food quality control is an essential element of our daily operations. Along with quality improvement
efforts on factory oors, we ensure that all of our employees receive training through customized elearning materials.
We also listen to our consumers’ suggestions for improving product quality, and swiftly share thesewith our factories and operations.
Our internal Quality Improvement Committee enables us to effectively respond to our consumers’
recommendations. The Committee is made up of representatives from different divisions, including

Product Development, Manufacturing, Distribution, Sales, Quality Control, and our Consumer CallCenter.
Our consumer complaints management system is compliant with ISO 10002, the international standard
for customer satisfaction and complaints handling. To enhance the quality of our correspondence withconsumers, we introduced a voice transcription system at our Consumer Call Center. This systemtranscribes and records correspondence with our consumers on behalf of our operators, enabling theoperators to focus on providing excellent customer service.

Further food communication
We are always willing to provide details about
our food products. We respond to consumers’
requests for information and disclose theprecise factory where food products weremade, or the country of origin of the main
ingredients.
Furthermore, in order to ensure food safety,
we have introduced a system that records
information about our products at every stageof the process, from the raw materials andproduction to processing, distribution, andsales. This means we can retrace our productto any point, if necessary.

We also have toll-free numbers on our product labels which consumers can call for extra information.
In 2019, we improved the customer inquiry form on our corporate website to make it more relevant forour consumers.
We invite consumers to our Uonuma Mizunosato frozen udon (noodles) and packed cooked ricefactory, where we explain our food safety approach by showing them our manufacturing process.

Reducing our environmental impacts

As part of our efforts to reduce environmental impacts within our operations, one of the companies
within the JT Group, Thai Foods International, built
a biomass co-generation system for its Thai factory, where it manufactures seasonings.

The system, which will operate during 2020, uses rice husks as an alternative fuel source. The factorypreviously used electricity supplied by a local company; now the new system is expected tosigni cantly reduce purchased electricity usage and the resultant Scope 2 GHG emissions (Indirectgreenhouse gas emissions from consumption of purchased electricity, heat, or steam.) by 7,000 tons
per year.
This project, which has been adopted by the Joint Crediting Mechanism of the Ministry of Environment
in Japan, not only helps us to reduce energy costs but also contributes to GHG reduction in Thailand.
We developed a compact tray for some of our packed cooked rice that uses approximately 10% lessplastic compared to conventional trays while holding the same amount of rice.
Read more about our Group-wide initiatives and programs.

Copyright© Japan Tobacco Inc. All rights reserved.