Processed food
Overview
In the processed food business, we seek to provide safe and delicious food for consumers, in thehope that they will choose our products for their loved ones. We will continue to aim to be highly
evaluated by our customers through the world of food, which is the source of our lives.
Our processed food business is dedicated to delivering safe, high-quality food products toconsumers. We are also mindful of the environmental impacts of our products and operations, andwe make continuous 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
directly with raw material producers – such as growers – who provide raw materials to the trading firms
or to the contracted factories that supply us.

Processed food business sustainability strategy
Our processed food business aims to continuously deliver products with a commitment to quality
and technology, in line with consumer needs. In view of this mission, in 2019, we selected the threefocus areas below and set eight specific targets for these focus areas. This is the first time we arereporting on our progress towards achieving the targets.

Focus areas

Products and services

PeopleSupply chain

Aspirational goals

We will continue to provide high-quality, technology-driven products in response
to our customer's needs, to satisfaction and trust.

We will ensure workplace safety for our employees, while continuously
investing in people who can contribute to enhancing corporate value.

We will reduce social and environmental impacts and continue to deliver safe
products to consumers.

The eight specific targets of our processed food business contribute to achieving the goals set out
in the JT Group sustainability strategy.
Respecting human rights
Investing in people
Improving our social impact
Environment

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

Our business
operation andsustainability

Copyright© Japan Tobacco Inc. All rights reserved.

Our business operation andsustainability
FoodFood

Foodsafety

defensequality

FoodcommunicationEnvironment

Food safety standards
Our processed food business has 32
factories, which produce a variety of foodproducts, from frozen foods to seasonings,and bakery products. 23 of these factories
are located in Japan, and nine are located inChina, Indonesia, Thailand, and the U.S. Ourproducts are sold primarily in the Japanesemarket.

We make sure that all of our factories* are certified to the global food safety standard FSSC 22000.
FSSC 22000 is recognized by the Global Food Safety Initiative (GFSI), the food industry’s global bodyfor promoting food safety management.
All the factories contracted to manufacture frozen food products on our behalf have been certified
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. Throughout the year, these advisors provide useful information. In 2020, theygave presentations 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 thefield of quality control.

In order to ensure food safety, we have introduced a system that records information about ourproducts at every stage of the process, from the raw materials and production to processing,distribution, and sales. This means we can retrace our product to any point, if necessary.
* One of our factories, which started its operations in 2020, is on track to receive this certification. It will bein 2021.

Food defense practices
Food defense is about protecting ourmanufacturing processes and products from
intentional 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.
We are continuously strengthening our fooddefense mechanisms. We are working on
further utilization of factory cameras andenhancement of our drug management
system both in our own factories and ourcontracted factories.

Enhancing food quality
Food quality control is an essential element of our daily operations. Along with quality improvement
efforts on factory floors, 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 includes not only members of the Quality Control division, butalso representatives from many other divisions, such as Product Development, Manufacturing,Distribution and Marketing and Sales.

Our consumer complaints management system is based on ISO 10002, the international standard
for customer satisfaction and complaints handling. To enhance the quality of our correspondencewith consumers, we introduced a voice transcription system at our Consumer Call Center. Thissystem transcribes and records correspondence with our consumers on behalf of our operators,
enabling the operators to focus on providing excellent customer service.

Further food communication
Transparency is at the heart of our business,
and we are always willing to provide details
about our food products. We respond toconsumers’ requests for information anddisclose the precise factory where foodproducts were made, or the country of originof the main ingredients.
We also have toll-free numbers on ourproduct labels which consumers can call for
extra information. In 2019, we improved thecustomer inquiry form on our corporatewebsite to make it more relevant for ourconsumers.

We seek to provide safe and delicious food for consumers, in the hope that they will choose ourproducts for their loved ones. This principle is not limited to our R&D and manufacturing sites; itapplies across all of our operations. We understand the importance of listening to consumers, andhave introduced a new online tool to share consumer feedback with all of our employees. We willcontinue to embed and reinforce this consumer-centric approach throughout our operations.

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 started its operations in 2020, uses rice husks as an alternative fuel source. Thissystem is expected to significantly reduce purchased electricity usage and the resultant Scope 2greenhouse gas (GHG) emissions by 7,000 tons per year.
This project, which has been adopted by the Joint Crediting Mechanism of the Ministry ofEnvironment in Japan, not only helps us to reduce energy costs but also contributes to GHG
reduction in Thailand.
In another step towards a greener future, we developed a compact tray for some of our packed
cooked rice. The new model holds the same amount of rice as conventional trays, but uses
approximately 10% less plastic.

Copyright© Japan Tobacco Inc. All rights reserved.