Risks to the Group related to business conditions, accounting conditions, etc. as noted in securities reports and which could have an important effect on investor decisions are reviewed and discussed by the Board of Directors each year and are as described below.
Business and other risks are examined by each department as appropriate and are discussed and reviewed by the Board of Directors annually to assist in mid- to long-term company management. Risks in the event of an emergency are analyzed by the Risk Management Committee, who develops and implements countermeasures. Sustainability-related risks are discussed by the Sustainability Committee and reported to the Board of Directors.
Forward-looking statements in the document are based on the judgments of the Group as of the end of FY2023.

  1. Risks relating to climate change according to the TCFD
    The Group has conducted a more detailed scenario analysis of risks related to climate change based on the TCFD. The analysis was carried out based on the TCFD assuming two scenarios: 1.5°C and 4°C. The risks associated with climate change include “transition risks” related to the transition to a lower-carbon economy as well as “physical risks” related to the physical impacts of climate change; and risks that affect the Group are displayed in the table below. The Group endorsed the “Task Force on Climate-related Financial Disclosures (TCFD)” in November 2022 with the recognition that the risks and opportunities related to climate change are important management issues. Climate change risks according to the TCFD are set forth in the following table.
  Specific risks and opportunities for the Company arising from climate change Scenario classification Financial impact
Transition
risks		 (1) Introduction of a carbon tax 1.5°C Increased materials prices
(2) Regulation concerning the use of renewable energy Increased depreciation expenses, etc., due to the introduction of new equipment
(3) Regulation concerning oil-based plastics Increased packaging costs due to the introduction of biodegradable plastic, etc.
(4) Increased taxation and regulation of the use of crude oil Increased crude oil prices
(5) Technological shift to environmental raw materials 1.5°C Increased packaging costs due to the introduction of environmentally friendly packaging
4°C
(6) Changing consumer behavior to favor ethical products 4°C Increased sales of ethical products
(7) Lowered reputation due to slow TCFD implementation 1.5°C Reduced sales
4°C
Physical
risks		 (8) Factory damage due to typhoons,  high winds, etc. 4°C Stopped production of key products
(9) Shortage of raw materials due to climate change 1.5°C Stopped production of key products
4°C
  • 1.5°C scenario: Strict policy measures are implemented to reduce GHG (Greenhouse Gas) emissions, there is a decrease in fossil fuel consumption, and the rise in global temperatures is limited to 1.5°C.
  • 4°C scenario: Policy measures are not actively implemented to reduce GHG emissions, and global temperatures rise by 4°C.
  1. Risks relating to procurement of raw materials
    Sauce, which is our mainstay product, is made primarily of vegetables, fruits, and spices, and the Company procures raw materials from countries around the world. Increased cost of raw materials and increased energy expenses, such as crude oil, due to the war in Ukraine and the weak yen, have impacted the Company’s procurement costs. Due to increased materials expenses, we revised the price of some products in June 2022 and February 2023.
    Furthermore, with regard to raw materials, there are various risks such as intensified competition due to increased international demand, supply shortage due to climate change resulting from global warming, increased costs due to market fluctuations, the impact of exchange rate fluctuations, and restrictions on the use of plastic packaging due to tighter environmental regulations. This may affect the Group’s business performance and financial position. The Group is working to enable stable procurement by a) creating systems that can keep track of information relating to materials procurement, such as international affairs and market information, while responding swiftly to changes, and b) decentralizing production areas and suppliers of raw materials.

     
  2. Risks relating to product quality
    The Group’s management philosophy is to “provide products that fill people with joy.” We aim to be a safe, secure, and trustworthy company with products that put quality first, so that customers and their families can live in good health, and a company that creates new value and provides dependable flavors and joy like no other. In recent years, customers have been increasingly interested in food safety and health, and when product defects that harm health (contamination by foreign objects, mistakes in product representation, such as labeling, contamination with allergens, etc.) occur, or, even when no product defects occur, the product’s brand value and corporate image can be harmed by adverse publicity on social and other media. In such cases, the Group’s business performance and financial position may be affected. The Group has augmented its quality management system by incorporating management methods from food safety systems (FSSC22000), established food safety and quality policies, and promoted thorough traceability management. In addition, the Company strives to communicate with customers through its website and product packaging, discloses information in a timely manner, and engages in corporate activities with food safety as its top priority so that the Group’s products can be used by customers with peace of mind into the future.

     
  3. Risks relating to securing and training personnel 
    The Group considers personnel to be a resource, and aims to maximize corporate value by developing personnel capable of creating new value in response to changing times. We will hire personnel capable of making contributions in a global environment, as well as personnel to enhance digital transformation and marketing functions; develop personnel that can respond to changes in conditions; and create systems that can adapt to diverse work styles.
    Going forward, there is a risk that the working population will shrink along with the declining birth rate and aging population, and it will become difficult to hire and develop the personnel that meet the Company’s expectations. We will respond to this through mechanization and digital transformation; however, difficulty in hiring may impede production, and this may impact the Group’s business performance and financial position.

     
  4. Risks relating to natural disasters, accidents, etc.
    The Group has manufacturing sites and offices in many locations, and an inability to supply raw materials due to major damage to manufacturing facilities as a result of natural disasters such as earthquakes, or emergency situations such as fire and accidents; a suspension of operations at a factory, a decline in manufacturing capacity or impairment of facilities, or an interruption of the supply chain could potentially affect the Group’s business performance and financial position. The Group has established Risk Management Regulations, and the Risk Management Committee prepares BCP and risk management plans and revises them on a regular basis. The Group prioritizes stable provision of our products to customers even in times of emergency, and flexibly responds to changes in circumstances. It is also possible that the risk of a pandemic from an unknown infectious disease will alter market trends and lifestyles, and this may impact the Group’s business performance and financial position.

     
  5. Risks relating to business model reforms
    In the event that our response to the increasingly fast pace of changes in the external environment, such as rapid technological innovation, including digital technology, and changes in the social structure, changes in consumers’ values and lifestyle, the entrance of new companies and competitors, and legal regulations, is slow, product value could be impaired, and our brand value could fall. This could potentially affect the Group’s business performance and financial position. The Group will reinforce its marketing capacity, take up the challenge of new selling methods using IT that do not depend on conventional business models, develop products with the kind of added value that only the Group can provide, engage in public relations activities to create fans, and pursue promotions using social and other media aimed at consumers. We are also boosting productivity through digital transformation in the manufacturing, procurement, and distribution sectors.

     
  6. Risks relating to information systems
    The Group processes and manages many operations using computers. In recent years, cyberattacks have become more sophisticated and subtle, and if important systems are harmed and confidential information is leaked due to fraudulent access and cyberattacks, the Group’s business performance and financial position could be affected. When operating information systems, the Group takes measures to counter computer viruses and thoroughly manages information, entrusts its mission-critical systems to a data center, sets up a firewall, and has established Information Management Regulations, the Basic Information Security Policy, Information Systems Management Regulations, System Development Regulations, and Information Systems Outsourcing Management Regulations, and has strengthened our security systems.

     
  7. Risks relating to compliance and lawsuits
    The Group has established Corporate Governance Policies and strives to raise corporate value. However, in the event of legal violations such as compliance violations and scandals committed by officers and employees, lawsuits, or legal violations in countries to which we export products and countries in which we are expanding our business, a decline in our social standing, corporate value, brand value, or image could lead to a loss in customer confidence, and as a result, the Group’s business performance and financial position could be affected. We introduced an executive officer system so that we can respond to changing conditions, and we set up the Risk Management Committee, the Safety and Sanitation Committee, the Internal Control and Audit Committee, and the Food Safety Production Committee. To ensure highly transparent management for our Board of Directors meetings, three of the seven directors, including those who are Audit Committee members, are independent outside directors. We established the Nomination and Compensation Committee in December 2021 to ensure fairness, transparency, and objectivity in procedures relating to nomination and compensation, etc. of officers.