Kewpie : Integrated Report 2022（6.11MB）

The Kewpie Group Integrated Report

2022

Contents

Contents / Editorial Policy	1	Corporate Governance
Message from the President	2	Working to Improve Corporate Governance	31
Overview of the Kewpie Group's Philosophy,		Composition, Operation and
Vision and Corporate Message	5	Support Systems of the Board of Directors	32
Medium- to Long-Term Business Management Strategy	Business Execution Mechanism	38
Risk Management	39
Policies and Targets	7
Cash Flow Allocation	9	Interview with Outside Director
Governance at the Kewpie Group	40
Initiatives on the TCFD Recommendations	10	Performance and Company Information
Review of Major Segments	11
Financial and Non-Financial Summary	41
Sustainability Dialogue
	Stock Information	43
Sustainability Shaped by a Vision	13
Value Creation at the Kewpie Group		Corporate Information	44
The Value Creation Process	15

Message from the President

We will contribute to the food culture and health of the world as a united Group, with an emphasis on the aspiration for "love around the kitchen table."

Value Creation Story

Contributing to Lifelong Health with a Focus on Salads and Eggs

Expanding Opportunities to Eat Vegetables with a Great Taste, and Contributing to the Food Culture and Health of the World

17	Editorial Policy
In putting together the Integrated Report 2022, the Kewpie Group
	hopes to deepen the understanding of all stakeholders, including its
	shareholders and investors, regarding efforts to create value over the
19	medium- to long-term. The Integrated Report 2022 therefore provides
an overview of the Group's business as well as comprehensive

Mitsuru Takamiya

Representative Director

President and Chief Executive Corporate Officer

Kewpie Corporation

Solving Issues across the Entire Value Chain and Creating Value for the Future

Strengthening Management Capital

strategies and plans aimed at creating corporate value.

21 The Report also summarizes matters of a material nature that underpin the Group's efforts to create corporate value. All other information, including details of the Group's financial results and position, social and environmental initiatives, products, and

Introduction

I wish to offer my deepest sympathies to those who have

The Kewpie Group Appeal We Strive to Create

Becoming a Group that Takes on Challenges Freely and Vigorously, and Can Share Joy with One Another

Roundtable Discussion with Employees

Developing a Framework for Empowering a Diverse

23

businesses can be found on its corporate website.

Period Covered by the Report

The Report covers the 12-month period from December 2020 to November 2021. Past background information and data as well as recent

been stricken with COVID-19 as well their families and associates, and also express my deep thanks to the medical professionals, public servants and other related people working on a daily basis to treat and prevent infections.

The Group aims to contribute to the food culture and health of the world through "great taste, empathy and uniqueness." This is Our Ideal, and to make it a reality, I want to create the appeal of the Group from four perspectives.

Range of Talent

Investment in Intellectual Property to Enhance the Group's Social Value

Improving Added Value and Creating Demand through Research and Development Activities

Technology-driven Productivity Enhancements and New Technological Endeavors

Evolving Value Creation While Valuing Engagement with Customers

Dialogue

Initiatives Aimed at Customer Success

1. examples of the Group's activities that fall outside the period covered have also been included when considered appropriate.
2. Forward-LookingStatements
   The forecasts and forward-looking statements contained in this Integrated Report 2022 are based on information available as of the
3. date of publication and on certain assumptions deemed rational. These forecasts also include certain probable uncertainties.
4. Actual performance, etc., could differ greatly from forecasts due to a variety of factors including changes in business conditions.

29

Note. Throughout this report, fractional amounts less than the indicated unit have been discarded. However, monetary figures in billions of yen, as well as

30 percentages, have been rounded to the nearest fractional unit.

My name is Mitsuru Takamiya, and I have recently been appointed Representative Director, President and Chief Executive Corporate Officer of Kewpie Corporation. Under the FY2021-FY2024Medium-term Business

Plan, the Kewpie Group has been pursuing initiatives around the theme of "Transition to a structure that realizes sustainable growth." The ongoing effects of the COVID-19 pandemic on our business results have been compounded with a spike in the price of vegetable oil and other main raw materials, resulting in a harsh management environment. The costs of materials and energy have risen even further against the background of a destabilized international situation. This is why we are determined to further accelerate the transition of our corporate structure. Further, in view of society as a whole, several social issues

1 Contributing to	P.17
Food Culture and Health

Our founder, Toichiro Nakashima, wanted to improve the physiques of Japanese people, and began manufacturing and selling mayonnaise with the desire to "make delicious, nutritious mayonnaise a daily necessity." That aspiration is still passed down today, more than a century later since our founding. Contributing to food culture and health is an important theme for the Group that can be said to be the reason for its existence. In addition to its delicious flavor, we deliver values such as the variety of ingredients through our food, an extensive assortment of dishes and the company of family and friends. These are both a source of health that builds the body and a source for mental well being.

Website The Kewpie Group posts a wide range of information from a variety of perspectives on its website.

IR Information	Sustainability	Recipes/Products
https://www.kewpie.com/en/ir/	https://www.kewpie.com/en/sustainability/	https://www.kewpie.com/en/products/

are becoming apparent, including health issues associated with Japan's aging population and the impact of global climate change. As an enterprise engaged in broad ranging business activities through food, facing these issues with a global perspective is something the Group accepts as its responsibility.

I embrace the mission of transition to a structure that realizes sustainable growth in both economic and social aspects while creating and communicating new appeal for the Group through initiatives for social issues. This will lead to the realization of "Kewpie Group 2030 VISION," a long-term vision formulated in 2019, and "Our Ideal" that lies ahead.

We have expanded our product lineup of mayonnaise and dressings as well as continued to offer a variety ways to enjoy food in our desire for people to eat vegetables in tasty ways. For example, in the Mayonnaise Classes*, we often hear the voices of participating children saying, "Now I can eat delicious vegetables that I couldn't eat before." We feel that consuming nutrients contained in vegetables in a balanced manner leads to the prevention of lifestyle- related diseases and the enhancement of immunization, and that this has contributed to the development of healthy

• Activities to convey the importance of eating vegetables and the joy of eating through hands-on experience and classroom learning about mayonnaise.

1	The Kewpie Group Integrated Report 2022	2

Message from the President

bodies not only for adults but also for children. In addition to our activities in Japan, we also pursue activities overseas to spread new dietary practices of eating raw vegetables based on the local food culture. In China, for example, we are suggesting that combine the ingredients of "jianbing" (a common crepe-like fast food), with vegetables and mayonnaise in addition to meat and eggs, and have been well received. We will continue to develop the ingenuities we have cultivated in Japan to eat vegetables in tasty ways, and expand it to the world with our group's products while adapting them to local food culture.

In addition, the gap between average life expectancy and healthy life expectancy is currently a major social issue, and we will focus on initiatives to extend healthy life expectancy. One of those themes is preventing a state of mental or physical frailty that accompanies aging.

It is believed that three aspects are important in preventing frailty, nutrition, exercise and social participation.

We contribute primarily to the nutritional aspect. We focus on protein as an important nutrient for prevention, and will strengthen the development of processed egg products for retail consumers so that they can easily consume eggs, which contain good quality protein. To date, we have developed processed eggs for use in food service, but applying the technologies we have developed to the retail consumer space will lead to the development of new markets.

We are able to deliver products to all dietary scenes in home-cooked meals, ready-made foods and restaurant, and we are developing products for a wide range of age groups, from baby foods to nursing care foods. This is why we can contribute most to food culture and health. Among the technologies we have cultivated over a history spanning more than a century, there are many that can contribute to people's health. In the health field, where growth is expected, we will create new value and accelerate overseas developments by leveraging the technologies and knowledge gained from this activity.

2 Contributing to Preserving the	P.21
Global Environment

It is blessings of nature that underpin our business activities. We will create a future full of children's smiles by caring

for people and the environment throughout the value chain, from product design and raw material procurement, to production, sales and consumption and by giving

earnest consideration to effective use of food resources, preservation of environment, and other matters.

In particular, in activities related to vegetables and eggs, which are handled in large volumes, we are working to become a group that is considered the most unique in the world. The Group, which has been selling egg yolk-type mayonnaise since its foundation, has considered ways to utilize the by-product of egg whites, and has continued to sell this by-product as an ingredient for fish paste and confectionery. We began selling egg shells as a soil improvement additive from 1956, and in the years since we have enhanced added value by finding unique uses for egg shells, including as a calcium material. As a result of these activities, we are able to utilize approximately 250,000 tons of eggs annually in Japan, including egg shells, without more than 100%. Similarly for vegetables, unused portions such as cabbage cores that come out at the time of production of cut vegetables are completely turned into animal feed or composted.

We will expand our contribution to the global environment by working on foodtech under the three themes of "extending product shelf life," "utilizing unused resources," and "substitutional foods," and we will translate to a structure that realizes our own sustainable growth. With this in mind, we will seek partners who empathize with the ideas of the Group from not only a domestic but a global perspective, and actively collaborate with them.

3 Deepening our Understanding	P.29
of Customers

To date, the Group has cultivated strong products, strong brands, strong value chains, and PR capabilities in stores. Combined with television commercials, many customers are familiar with the Kewpie Group. In addition, we have refined our product development and delivery methods by valuing the feedback we receive from our customers as well as letting them get to know us through our Customer Service Office and factory tours.

And from now on, with customers' dietary habits and purchasing behaviors rapidly changing, food culture is expected to become increasingly diverse in the future. Scenes where customers utilize e-commerce to purchase food products have become more common, and opportunities to become aware of health and the global environment are likely to increase. It will become essential to understand our customers in a way that is not merely an extension of what we have known in the past. We will continue to hone our strengths while valuing points of contact with customers, utilize digital technologies to build interactive connections with customers, and make preparations to gain a more in-depth understanding of customers. We have envisioned new developments that will lead to customer success, and on that basis we will propose foods that fit customer values and lifestyles to achieve dietary lifestyles that are healthy and enjoyable for each person. In pursuing overseas expansion, we believe it is important to identify the characteristics and needs of customers in each country and deliver products

and services that can solve problems. We will begin this customer success initiative domestically, and by also using it for overseas development, we will realize speedier global expansion, which will lead to "A Food Partner for Every Person" in 2030 Vision.

4 Becoming a Group that Takes on
Challenges Freely and Actively,	P.23
and Can Share Joy with One Another

We believe our employees will play the central role in shaping the future toward achieving our 2030 Vision. There is an approach that I value and which I have communicated to the members I have worked with. That is for each person to:

1. Envisage their own future
2. Superimpose that future on their current work
3. Find fulfillment and joy in their work and experience personal growth

By putting these three points into practice, I believe employees can enhance their value to society. I will once again clarify this approach as "Expectations for employees" and address the career development and growth of each and every employee. Additionally, we will improve two-way engagement between the company and employees, and develop into a group that takes on challenges freely and actively, and where employees learn and grow together and share their joy. To accomplish this, we will value a culture of taking on challenges and offering praise with a renewed vigor.

In addition to promoting diversity, we will implement various measures for human resources that are in line with this approach. Employees feeling fulfilled and joy in their work will lead to the creation of more valuable products and services. As a result, I believe we will be able to contribute to our customers' well being. I am confident that this is the way we deliver to our customers the aspirations of our corporate message, "love around the kitchen table."

Status of the FY2021-FY2024
Medium-Term Business Plan	P.7

In the Medium-term Business Plan, we have set the theme of "Transition to a structure that realizes sustainable growth," and are currently implementing strategies based on three policies: "Strengthening our profit structure and creating new dietary lifestyles," "Redoubling efforts involving society and the global environment," and "Developing a framework for empowering a diverse range of talent." Return on equity (ROE), operating income ratio, and growth ratio in overseas net sales, which are the key indicators of "Strengthening our profit structure and creating new dietary lifestyles," recovered from the previous year's results, which were affected by the COVID-19, and generally exceeded our forecasts. With respect to, due to share buybacks worth

10 billion yen in addition to recovering net income, we are making steady progress towards the FY2024 target of 8%. Meanwhile overseas growth and improved profits from retail products contributed to operating income ratio. Growth ratio in overseas net sales in particular has shown

growth beyond our forecasts, thanks to recovery from the impact of the COVID-19 and the stable expansion of sales. While striving to enhance the value of the KEWPIE brand, we will continue aiming to expand the scale of our activities overseas as a growth driver of the Group overall.

On the theme of "Redoubling efforts involving society and the global environment," in the first year of the plan we already achieved the initial FY2024 target and made partial revisions to the values and details of our targets. Additionally, in October 2021 Kewpie Corporation expressed its support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and joined the TCFD Consortium.

On the theme of "Developing a framework for empowering a diverse range of talent," we are working to develop diverse professional human resources by promoting the mobilization of human resources within the Group and providing opportunities to acquire various perspectives, skills and values. More than 20% of the participants in important meetings are from different backgrounds (skills/ages, gender) and stimulate discussions. More than 20% of the participants in important meetings are from different backgrounds (skills/ages, gender) and stimulate discussions. As the text of our corporate motto of "RAKU-GYOU-KAI-ETSU*" suggests, we aim to be an organization that can create new value by having various members enjoy working together and rejoice together.

While promoting these initiatives, at the same time we must face risks. The price of vegetable oil, the main raw material, has risen to unprecedented levels, and we expect this trend to continue further into the future. In addition, with the global situation becoming increasingly unstable, we are concerned about rising energy costs. Building a product portfolio that will minimize the impact of risks is an important measure. Specifically, we will work to expand the condiments category, which contains less vegetable oil, and cultivate products specialized in high-value-added health functions. In the areas of delicatessen foods and processed egg products, we will spread the risks from rising vegetable oil costs by working to boost productivity and increasing profitability.

In Conclusion

In the FY2021-FY2024Medium-term Business Plan, we will achieve the transition to a structure that balances both economic and social aspects, create new elements of appeal for the Group, and lead the way to sustainable growth to achieve "Our Ideal" and 2030 Vision.

To accomplish these things, first I will personally make active efforts to communicate with people both inside and outside the company more than ever before. We will value communication with customers, business partners, shareholders, investors and all stakeholders, and will clarify the issues faced by the Kewpie Group and what our stakeholders expect of us. By sharing those insights within the Group, employees will experience fulfillment, and we will build an even better Kewpie Group whose appeal can be appreciated by all stakeholders.

• RAKU-GYOU-KAI-ETSU:The idea that people who have the same ambitions enjoy working together, endure struggles together and rejoice together.

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Overview of the Kewpie Group's Philosophy,

Vision and Corporate Message

This overview clarifies the positioning of our philosophy, vision and corporate message out of a desire to on our corporate message of "love around the kitchen table" and to talk about what we really want to achieve through our thoughts and feelings.

The Corporate Philosophy of the Kewpie Group contains the fundamental values and aspirations that all employees should hold the most dear. The Corporate Motto and Corporate Principles are constants for us that serve as the source and rationale for all decisions and actions. Our Corporate Motto, "RAKU-GYOU-KAI-ETSU" is the idea that people who have the same ambitions enjoy working together, endure struggles together and rejoice together. Our three Corporate Principles are guidelines for action to achieve "RAKU-GYOU-KAI-ETSU", and all activities of the Kewpie Group lead to the sentiment we wish to deliver to customers, "love around the kitchen table," based on the spiritual pillars established in the Corporate Motto and Corporate Principles.

The Kewpie Group is active in a range of areas, including home-cooked meals, ready-made foods and restaurants, and is deeply involved in various situations related to food throughout people's lives, from infancy to old age. With this unique qualities not found elsewhere, at the Kewpie Group we believe there are still many wants that we can be of use to customers in myriad actions and situations related to food. We put love into our products and activities, including our commitment to raw ingredients and quality, and this sentiment is embodied by the message we wish to deliver to customers around the world: "love around the kitchen table."

"RAKU-GYOU-KAI-ETSU"

Act on Moral Principles

Strive for Originality and Ingenuity

Look After Parent's Well Being

Words to remember:

The world is fairer than you imagine

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Medium- to Long-Term Business Management Strategy

Policies and Targets

At the Kewpie Group, we will achieve sustainable business growth while helping to solve social issues as a future vision described in Our Ideal and the 2030 Vision. In our Medium-term Business Plan that was started in FY2021, we adopted the theme of "Transition to a structure that realizes sustainable growth," and have pursued our business activities based on three policies, namely "Strengthening our profit structure and creating new dietary lifestyles," "Redoubling efforts involving society and the global environment," and "Developing a framework for empowering a diverse range of talent."

FY2021-FY2024
Medium-Term Business Plan	Our Ideal
Group Management Policies	2030 VISION

Theme of FY2021-FY2024Medium-Term Business Plan

Transition to a structure that realizes sustainable growth

Strengthening our profit structure and creating new dietary lifestyles

The Group will respond to customers' needs with overseas business as a growth driver and

by introducing market-based focus domestically.

Focused Categories	Overseas Regions	Key Indicators
	Strengthen North America	ROE of 8% or more,
	operating income ratio of 7.5% or more,
Salads (including condiments)	while focusing on China and
annual growth rate in overseas
and eggs	Southeast Asia
net sales of 10% or more

Approach to Sustainability

Based on the Kewpie Group Basic Policy on Sustainability and our promotion system, we aim to be a group that contributes to society and continues to achieve growth through our Group Philosophy and Group Policies. To accomplish this, we have the material issues that the Group is addressing and each related sustainability target. In light of our results in FY2021, we revised some of the target values and their details, and continue to pursue initiatives in this area. We also participated in the TCFD Consortium by expressing our endorsement of the recommendations of TCFD* in October 2021.

• The TCFD was established by the Financial Stability Board in 2015 in response to a request from the G20. The TCFD recommends that companies assess the financial impacts of climate change risks and opportunities on management and disclose information pertaining to governance, strategies, risk management, metrics and targets.

Kewpie Group Basic Policy on Sustainability

With an emphasis on the aspiration for "love around the kitchen table," we aim to address and resolve various issues through "great taste, empathy and uniqueness." We will create a future full of smiles by caring for people and the environment throughout the value chain, from product design and raw material procurement, to production, sales and consumption.

Contributing to Food	• As "A Leading Company in Salads and Eggs," we contribute to extending the healthy life expectancy of people
Culture and Health	around the world through the pursuit and global promotion of nutrition and health benefits.
	• Through food, we support the mental and physical health of children who will create the future.
Effective Use and	• As the only manufacturer in the world that makes effective use of the entire egg, we will continue to refine our
Recycling of Resources	technologies and create value.
	• In proposing ways of eating and utilizing uneaten portions, we aim to become a globally unique "vegetable
	utilization manufacturer."
	• We will develop extensive technologies matching demand information with transportation and delivery data
	information to eliminate food loss.
	• We will curtail the use of plastics and reduce adverse impacts on the environment.
Deal with	• We aim to reduce CO2 emissions throughout the value chain, from the procurement of raw materials to product
Climate Change	consumption.

Redoubling efforts involving society and the global environment

Major Initiatives

Contribution to extending healthy life expectancy and mental and physical health support for children

Effective use of resources and realization of a circular economy

Deal with climate change

Developing a framework for empowering a diverse range of talent

Major Initiatives

Promotion of mobilization of the Group's human resources

Increasing opportunities to take part in initiatives from other departments

Increasing opportunities to learn

Sustainable	• In addition to safety, we will collaborate with business partners to promote stable procurement that takes into
Procurement	consideration environmental impacts and human rights.

Respect for Human Rights • We promote employee diversity and inclusion, protecting the human rights of everyone involved in our business.

Sustainability Targets and Performance	https://www.kewpie.com/en/sustainability/management/materiality/
Material Issues Initiative Theme	Indicators	FY2021	FY2024	FY2030	Related SDGs
Results	Target	Target
Contribution	As "A Food Partner for Every Person":
to extending	・Contribute to achieving a vegetable intake target of 350 grams per day
healthy life	・Promote a boost in egg consumption in order to contribute to increasing protein

Progress of the FY2021-FY2024Medium-Term Business Plan in FY2021

With respect to ROE, due to share buybacks worth 10 billion yen in addition to recovering net income, we are making steady progress towards the FY2024 target of 8%. In addition, overseas growth and improved profits from the retail market contributed to operating income ratio. The growth rate in overseas net sales has been steady, thanks to recovery from the impact of the COVID-19 pandemic and the stable expansion of sales.

In terms of "Developing a framework for empowering a diverse range of talent," we have provided employees with opportunities to utilize a wide range of skills with the aim of increasing human resource mobilization, and promoted initiatives enabling employees to acquire new skills.

Indicators		FY2020 Results	FY2021 Plan	FY2021 Results	FY2024 Target
ROE		4.9%	6.4%	7.4%	8% or higher
Operating income ratio	6.5% 1	6.6%	6.9%	7.5%
Growth ratio in overseas net sales		＋4% 2	＋17%	＋19%	(annualized)
(local currency basis)		＋10% or higher
Human resource mobilization ratio 3	16%	17%	18%	20% or higher
Ratio of women in managerial positions 4	10%	12%	11%	18% or higher

1. In the FY2020 results, operating income ratio is calculated after excluding the results of the distribution business, which transitioned to being an equity method affiliate.
2. The overseas sales growth rate is calculated after excluding the results of the North American egg products business, which underwent a share transfer in July 2020.
3. Applies to domestic Group companies.
4. Applies to employees of Kewpie Corporation on a non-consolidated basis.

Contributing to

expectancy

intake

Food Culture

Mental and

and Health

Number of children's smiles via

221 thousand

At least

At least

physical health

our activities

support for

children

400 thousand

1 million

(cumulative since FY2019)

children

Food waste reduction rate

39.0％

At least 50％

At least 65％

(compared to FY2015)

Elimination

Effective utilization rate of

62.1％

At least 70％

At least 90％

and effective

unused portions of vegetables

utilization of

Main vegetables: Cabbage, etc.

food loss

Effective Use

Reduction rate in volume of

61.3％

At least 60％

At least 70％

product waste (compared to

and Recycling of

FY2015)

Resources

Reduction and

Reduction rate in volume of

5.3％

At least 8％

At least 30％

reuse of plastic

plastic waste (compared to

emissions

FY2018)

Sustainable

Water usage (basic unit)

2.1％

At least 3％

At least 10％

use of water

reduction rate (compared to

resources

FY2020)

Deal with

Reduction of CO2

Reduction rate in CO2 emissions

24.0％

At least 30％

At least 50％

Climate Change

emissions

(compared to FY2013)

Sustainable

Promotion of

Promote Fundamental Policy for Sustainable Procurement in cooperation with

sustainable

Procurement

business partners

procurement

Respect for

Respect for

Promote the Kewpie Group Human Rights Policy to respect the human rights of all

Human Rights

Human Rights

people involved in our business

• In light of conditions in FY2021, a portion of this content has been revised. In addition, the "Food waste reduction rate" indicator also includes the "Effective utilization rate of unused portions of vegetables."
• Sustainability targets are domestic figures.
• Figures have been revised due to K.R.S. Corporation being changed to an equity-method affiliate.

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