OUR TOBACCO BUSINESSOur processed food business is dedicatedto delivering safe, high-quality foodproducts to consumers. We are also
mindful of the environmental impactsof our products and operations, and we
make continuous improvements to thesewherever possible.
In 2018, we started to develop asustainability strategy for our processedfood business.

OUR PROCESSED FOOD BUSINESS VALUE CHAIN *1

60+

Factories

Distribution

OUR SUPPLIERS

OUR COMPANYOUR CUSTOMERSAND CONSUMERS

50+

Contracted
factories

PROCESSED FOOD BUSINESS

300+

Wholesale trading
companies *28425Suppliers of
packaging material

Customers andconsumers* 1 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* 2 or to the contracted factories that supply us.

85Delivering safe,
high-quality products
We have a rigorous quality and process control
system based on four areas: food safety, fooddefense, food quality, and food communication.
This system, which also applies to our suppliers,
aims to guarantee safety throughout our entire
processed food business, from buying raw materials
to manufacturing and distribution.
We regularly review our procedures to ensure thatour products are produced and delivered in the safest
possible way.

FOCAL AREAS OF FOOD SAFETY
FOOD QUALITY

FOOD COMMUNICATIONFOOD SAFETY

FOOD DEFENSE

Food safety standards
Our processed food business has 31 factories
producing a variety of food products, from frozen
foods to bakery goods and seasonings. 23 of thesefactories are located in Japan, and eight are locatedin China, the U.S., and Thailand. Our products aresold primarily in the Japanese market. All of ourfactories (frozen foods, bakery, and seasonings)
were certified to the global food safety standard
FSSC22000 in September 2018. FSSC22000 isrecognized by the Global Food Safety Initiative, thefood industry’s global body for promoting food safety
management.

There were no voluntary recalls of our food products
in 2018.

We also listen to our consumers and theirsuggestions for improving product quality. We
swiftly share consumer feedback on our productswith our factories and operations so that further
improvements can be made. Our internal Quality
Improvement Committee enables us to effectively
respond to their recommendations. The Committee ismade up of representatives from different divisions,including Product Development, Manufacturing,
Sales, Quality Control, and our Consumer Call Center.
Our consumer complaints management system iscompliant 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 withour consumers on behalf of our operators. As aresult, our operators are able to focus more on
communicating with our consumers and providing
excellent customer service.

We are always willing to provide details about ourfood products. We respond to consumers’ requests
for information and can disclose the precise factory
where food products were made or the country oforigin of the main ingredients. Furthermore, in orderto ensure food safety, we have introduced a systemthat records information about our products at every
stage of the process, from the raw materials andproduction right through to processing, distribution,and product sales. This means we can retrace ourproduct to any point, if necessary.
We also have toll-free numbers on our product labels
for consumers to call for extra information.
We invite consumers and shareholders to ourUonuma Mizunosato frozen udon (noodles) andpacked cooked rice factory, where we explain
our food safety approach by showing them ourmanufacturing process.
In 2018, we updated our website to make it easier forcustomers to find important information such as foodsafety management or the customer inquiry form.

Food defense practices‘Food defense’ is about protecting our manufacturing
processes and products from intentionalcontamination. We apply robust food defense
guidelines across the supply chain, both in ourown factories and our contracted factories, which
are referred to during our annual audits. Recent
initiatives to strengthen our defense mechanisms
against deliberate contamination include increasing
our use of factory cameras and enhancing the way
we manage chemical substances. These measures
also help to detect and prevent any incidences ofintentional contamination.

As part of our efforts to reduce environmental
impacts within our operations, one of the companies
within the JT Group, Thai Foods International, isbuilding a biomass co-generation system for its
Thai factory, where it manufactures seasonings.
The system, due to be completed in 2019, will use
rice husks as an alternative fuel source. The factory
currently uses electricity supplied by a local company;
once the system is operational it is expected thatpurchased electricity usage and the resultant
Scope 2*1 greenhouse gas (GHG) emissions could
be significantly reduced (by 7,000 tons of CO2e*2annually). This project, which has been adopted by
the Joint Crediting Mechanism of the Ministry ofEnvironment in Japan, will not only help us to reduceenergy costs but also contribute to GHG reductionin Thailand. In addition, in 2018 we developed acompact tray for some of our packed cooked rice thatuses approximately 10% less plastic while holding thesame amount of rice.

PROCESSED FOOD BUSINESSWe also call upon three independent advisors, whohave helped to develop our approach to food safety
since 2008. In 2018, these advisors visited ourfactories, sharing useful advice and giving talks toour employees on industry topics such as food safety,or the laws and regulations relating to the Food
Sanitation Act. These events provided employeeswith a greater awareness of new developments andhot topics in the field of quality control.

Food quality control is an essential element of ourdaily operations. Along with quality improvement
efforts on factory floors, we ensure that all of ouremployees receive training through customized
e-learning materials.

Food communication

Reducing ourenvironmental impacts

All the factories that are contracted to manufacture
frozen food products on our behalf have beencertified to the food safety standard, ISO 22000 orFSSC 22000, as an assurance of food safety.
In 2018, one of our factories received an award
for excellence in food hygiene from the Ministry ofHealth, Labor, and Welfare in Japan. This award
is given to individuals and facilities for remarkableachievements in promoting food safety andsanitation.

Enhancing food quality

Scope 2 GHG emissions are those greenhouse gas emissions relating to the consumption of purchased energy, such as electricity,* 1 steam, or other energy sources.
86* 2 CO2e stands for ‘carbon dioxide equivalent’ of GHG emissions, a standard unit for measuring carbon dioxide footprints.

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