Commitment of Top Management

1. Megmilk Snow Brand history

Snow Brand Milk Products Co., Ltd., one of the predecessors of Megmilk Snow Brand, was created to save Hokkaido’s dairy farming, which fell into difficult times due to food policies following the Great Kanto Earthquake (1923). As part of the former Hokkaido Cooperative Creamery Association, an organization founded by producers, for the last 90 years the company has been a part of Japan’s dairy industry.
Our history began with making butter, after which the company expanded to cheese and numerous other milk products as worked to contribute to ensuring enriched dietary lifestyles and health for the nation’s consumers.
However, in 2000 and 2002, Snow Brand Milk Products Group was involved in two incidents that would impact food safety and security, and greatly impact society. As a result, the company instantaneously lost the trust and corporate value built over the years by our predecessors. In a struggle for our very survival, we received support from numerous parties. Through business divestiture and other measures, we slowly over time worked to rebuild ourselves into a company that once again had earned the public trust.
In 2009, a consolidation and merger between Snow Brand Milk Products Co., Ltd.
and Nippon Milk Community Co., Ltd. resulted in a new start beginning in 2011 as Megmilk Snow Brand Co., Ltd.
The Megmilk Snow Brand Group Corporate Philosophy is to fulfill three missions: To focus on consumers, to contribute to dairy farming production, and to put our hearts into milk. By creating new value for milk, we will continue to exist as a company that contributes to society. This commitment is expressed through our corporate slogan: “Make the future with milk”. Megmilk Snow Brand will never forget the history of those two incidents. We will use that experience as a lesson towards solidifying our position as a responsible company focused on the future.

2. Market environment and forecasts

In Japan, milk production is on the decline and there are problems with securing raw milk supplies. On the other hand, demand for dairy products is firm thanks to increasing health consciousness among consumers. Looking at the global environment, population growth and changes in dietary lifestyles are driving a trend towards growth in dairy product consumption, particularly in Asia. Overall, the dairy market holds strong potential for growth, both in Japan and overseas. Moving forward, with trade liberalization, we expect the globalization of dairy products to continue, including increased imports of cheese as a raw material and exports of domestic dairy products.
Amid such an environment, we will actively pursue business development in growth markets by developing new products and through marketing. Additionally, we will address declining milk production in Japan by providing support to strengthen domestic dairy farming infrastructure and practicing stable procurement that incorporates milk globalization. The Megmilk Snow Brand Group will maintain our focus on domestic dairy farming while conducting business practices that respond to opportunities and risks.

3. Group Long-term Vision 2026 - for sustainable growth

In May 2017, the Megmilk Snow Brand Group announced our Group Long-term Vision 2026, which outlines our 10 year plan for achieving sustainable growth. Based on our Group Corporate Philosophy, the foundation of all our business activities, we named our long-term vision Future Creation Company with Milk with a focus on three futures: the future of consumers, the future of dairy farmers, and our own future (future of each employee).
Our three strategies for achieving this vision are based on the concept, Transformation and Renewal. The first is a transformation of our business portfolio. To enable sustainable growth, we must transform into a business portfolio for a new age in which we generate income through multiple businesses. The second is a renewal into a production structure that supports business growth. By linking production structure renewal with business platform transformation, we will adopt new technology and restructure our production line composition to establish a highly efficient and competitive production line. Lastly, simultaneous to transformation and renewal initiatives, we will evolve Group management. We will maximize management resources and value chain to enhance the overall strength of our Group. By FY2026, we will conduct 300 to 400 billion yen in investments with a focus on production facilities.
We will achieve between 700 and 800 billion yen in consolidated net sales and between 30 to 40 billion yen in consolidated operating profit by FY2026, the final year of our long-term vision. We will achieve transformation and renewal to establish ourselves as a Future Creation Company with Milk as we look to usher in a new age for the Megmilk Snow Brand Group.

4. SDGs and Megmilk Snow Brand Group initiatives

The UN adopted the SDGs (Sustainable Development Goals) in 2015. The SDGs outline 17 goals and 169 targets to be achieved by 2030 as priority global issues for achieving a sustainable society.
Moving forward, we believe it vital that the Megmilk Snow Brand Group adopt CSR policies that address what we can do in response to common global social issues and that respond broadly to both domestic and overseas stakeholders.
To share and promote this approach throughout the entire Megmilk Snow Brand Group, it is important that we clarify the priority initiatives that are important to both society and our Group.
With this in mind, we identified the Megmilk Snow Brand Group Core CSR Issue (Materiality). Shifting from CSR with a traditional corporate perspective to a focus on social issues, through our business activities, the entire Megmilk Snow Brand Group will contribute to resolving long-term social issues such as extending healthy lifespans for an aging society and sustainable development for the dairy farming industry.
In addition to designating materiality as our core CSR issue, we also will strengthen our initiatives related to ESG (environment, society, and governance).
To address environmental load reduction, we will gradually enhance initiatives such as CO2 emissions reduction and carbon offsetting. To strive for a recycling based society, we also are actively promoting the efficient use of raw materials and improved efficiency for waste products.
Beyond ensuring product safety, we also will address our social responsibilities through a variety of activities, including by disseminating research results and food education to promote sustainable dairy farming and contribute to local communities.
We will proactively work to strengthen corporate governance by practicing compliance and working to reinforce transparent management, enhance external audit functions, and establish a management structure that enables us to respond quickly to market changes.

5. Resolving social issues and creating value

Moving forward, the Megmilk Snow Brand Group will strive for the realization of a sustainable society through our milk business activities, and by applying our R&D and manufacturing strengths as well as our diverse team of human resources to contribute to resolving social issues and improve our corporate value.
Moving forward, we will continue conversing with stakeholders on how we can provide value to society and what role we can play in society. At the Megmilk Snow Brand Group, we still have many, many goals to achieve.
We ask our stakeholders for your continued understanding and support.

October 2018,
Keiji Nishio
Representative Director and President