Q&A at the briefing on Integrated Report Topics (29 March 2019)

We are now releasing information related to Kachimeshi® through the media and then connect it to our products. Regarding touchpoints with consumers, we are not just considering mass merchandisers, but also restaurants and company cafeterias. Our basic strategy is to make the word Kachimeshi® appear in a wide range of real-life situations and increase interconnectivity with the media. We are also carrying out activities to raise product brand value, such as sharing value through articles on subjects like Kachimeshi® and nutrition in government newsletters and the like to create synergistic effects with the media.

 (In response to the following questions: How has brand equity changed compared to before Kachimeshi® activities started? What is the current status regarding expanding awareness of Kachimeshi® and what are your targets going forward?)

Four years ago, we shifted the focus of Kachimeshi® activities from targeting athletes to targeting all hard-working people. Although the domestic market for seasonings and processed foods has been shrinking, we have managed to grow sales by about 5% over four years. For cases of actual Kachimeshi® activities rolled out at stores, our reference points are sales growth by about 1.2 times at mass merchandiser stores and sales growth of our products by about 1.0-1.1 times. Additionally, overall awareness regarding Kachimeshi® is around 30%. However, awareness among parents and guardians of student athletes and students preparing for entrance exams, a group that we have been targeting using specific measures, has risen to around 47%. We aim to increase this to at least 70% by March 2020.

We have yet to see a sustained product sales growth effect after only one round of fairs. However, the number of stores at which the fairs are being held is relatively large compared to the total number of stores we are currently following up on, and each store will hold several fairs per year, so we think that as these take root, awareness will rise concerning things like the importance of reducing salt intake, and how CookDo® helps with vegetable consumption. At the current stage, we are expecting this to happen going forward.

 (In response to the following question: Do you have any quantitative data regarding the current state of awareness, such as survey responses?)

To give a specific example, the Iwate prefectural government is trying to popularize a “salt-reduction day,” and Low-salt HON-DASHI® is always on display next to HON-DASHI®. We have data that shows that as a result of this, although sales of the regular product remained the same, sales of the low-sodium version grew by about 15%. People are becoming aware that there are also flavor seasonings that meet the need for reduced salt intake. For recognition rates, answer with the content from the separate question above (30% overall, 47% for groups targeted by measures).

We are responsible for making diagnoses based on amino acid analysis data. The blood exams themselves are carried out by our partners at hospitals and the like, so we are unable to disclose some of the financial data. A single facility can handle around 50 exams on average, and as we are increasing the number of facilities, sales are expanding accordingly. Currently, unit cost is around 25,000 yen. Some argue that if we lower unit costs, we can expand the business with a leap, but the number of players engaged in the medical examination business is increasing. So our thinking, based on eight years of evidence accumulated as a pioneering company in this field, is that rather than focus on unit cost competitiveness, we want to increase convenience by enabling a range of things that can be understood through a single test. Regarding monetization, we are currently committed to monetizing medical examination services. For example, if a patient is diagnosed as being at risk of having cancer, then the solution will be to start treating the cancer, most of which will not directly involve us. However, in the case of lifestyle diseases, we already have a fully-realized business in terms of solutions, starting with supplements. We are still in the development stage regarding this point but going forward, we want to realize a monetization model that includes risk screening and solution provision.

When we started Kachimeshi®, our first communications aimed at athletes were centered on amino VITAL®. We use targeted marketing for athletes, such as customizing communications depending on what sport they play. On the other hand, in regard to all working people, eating well-balanced meals is the basic concept. We are defining activities that are based on our corporate philosophy of “Eat well, Live well” through good diet as Kachimeshi®, and we are working on promoting the benefits of adding amino VITAL® as a supplementary snack. When proposing the Kachimeshi® concept to drug stores, we are promoting amino VITAL® and the like as supplementary snacks.

In order to ascertain to what extent it has taken root, we have introduced an engagement survey which is carried out once every two years. This survey targets all Ajinomoto Group employees, including those at our companies around the world. In principle, the survey is carried out online but in regions that do not have an environment in which this can be accomplished, the survey is carried out on paper. The items in this survey relating to the proliferation of ASV and how it resonates among employees produced high scores of over 90%. Also, in regard to employee motivation, the survey also incorporates the target of having “a ratio of employees who feel their work is satisfying” of over 80% by 2020. The first survey, carried out in FY2017, produced a response of 79%, close to the target level. Analysis of this survey revealed that a lot of our employees have a strong interest in how their work is connected to society. This links to increased motivation and I suppose you could say the same about the sales forces on the frontline.

We are not yet broadly implementing activities aimed at raising awareness of individuals’ nutritional situations. However, we are distributing “Proper Diet Check Sheet 10” to drugstore customers who are interested in health and providing nutrition-related advice from pharmacists and dieticians based on this. The sheets enable customers to check whether they are eating a good daily balance of ten food items themselves. They also include menu ideas, which lead to solutions for nutritional issues. We have not implemented this kind of initiative for customers at mass merchandiser stores yet. We are implementing it in line with the distributors’ policies.

Awareness regarding the term “UMAMI” has spread, especially in major cities such as New York, London, Shanghai, and Hong Kong. In the US, there is a group of people known as Food Forward who have an interest in food and are sending messages through mass and social media, and out of an estimated 10 million people throughout the US, currently 66% have a positive image of UMAMI and 39% have a negative image of MSG. Our aim is to have people seeing both UMAMI and MSG as positive. As a first step, since Ajinomoto’s 100th anniversary in 2009 we have been carrying out activities to popularize umami using top chefs and key opinion leaders. Currently awareness regarding umami is spreading and it is normal for notable restaurants to use terms like “UMAMI” and “dashi” on their menus. The next step is to raise awareness that UMAMI and MSG are essentially the same. In September 2018, Ajinomoto hosted the World Umami Forum in New York. What effect this had in terms of numbers is not clear yet, but the dissemination of the fact that umami seasonings can be used to create delicious, low-sodium dishes probably had an impact on a lot of people. Although this activity will not have an immediate effect, we think that in the current environment, which is shifting away from the Chinese Restaurant Syndrome myth, the idea will proliferate quickly once a certain understanding has been achieved.

(In response to the following question: Do you plan to continue holding the World Umami Forum in New York?)

While we will have to give sufficient consideration as to whether New York is the best possible venue, we plan to continue holding the forum once every two years. We will also evolve the content to keep the information fresh.

Reference: US Food Forward image

Positive image of UMAMI: Currently 66% → Target for 2020 - 90%

Negative image of MSG: Currently 39% → Target for 2020 - 20%