Business Segment Info
In the alcoholic beverages segment, competition is intensifying as domestic demand falls further because the population is shrinking, the birth rate is falling, the population is aging, the frequency of drinking is declining, and selling prices are being adjusted (raised) across all categories, having been raised several times beginning in March 2022. However, the on-premise market is showing signs of recovery as restrictions on movement are eased. The practice of drinking at home persists as rising prices drive more frugal behavior, leading to favorable performance for price-conscious ready-to-drink (RTD) store-brand products. In relation to this trend, sales of chu-hi base spirit and umeshu plum wine rose. We moved forward with sales efforts aimed at meeting these changing needs. As a result, sales of alcoholic beverages amounted to ¥78,799 million (up 8.1% year on year). Progress on price revisions pushed up profitability in all categories, resulting in segment operating profit of ¥2,632 million (operating loss of ¥961 million in the previous year).
Sales in the shochu category (within Japanese alcohol products) decreased, owing to lower sales of store-brand products, although sales were favorable for the kou-otsu blended shochu products SUGO-MUGI and SUGO-IMO, as well as our shiso shochu, Tantakatan, were favorable. In this category, we have implemented various initiatives aimed at expanding our fan base, such as airing a new commercial for our Big Man kou-type shochu featuring rugby player Michael Leitch, and conducting a gift campaign in collaboration with other companies on the official Instagram and X (formerly Twitter) accounts for the shiso shochu Tantakan and the official X account for the Oenon Group. From fiscal 2022 through to the period under review, we have introduced a number of price revisions, averaging 4% for kou-type shochu and 6% for otsu-type and kou-otsu blended shochu.
In chu-hi and other RTD products, sales rose thanks to favorable performance of our NIPPON PREMIUM chu-hi series, which strictly uses ingredients of Japanese origin, and store-brand products. In this category, we have introduced two price revisions from fiscal 2022 through to the period under review, averaging 9%.
In the sake category, the market was lackluster, but sales rose on favorable performance in on-premise and store-brand products. In this category, we revised prices by an average of 7% in fiscal 2022.
In brewing and industrial alcohol for sale, category sales increased due to favorable performance in brewing and industrial alcohol. In this category, we generally conduct price revisions with each business partner approximately every quarter and are working to pass on increased raw material costs.
Sales in the wine and spirits category increased, owing to favorable performance for umeshu plum wine, and chu-hi base spirits which allow consumers to just add carbonated water to enjoy drinking at home while replicating the feeling of being in an izakaya (Japanese-style pub). We also saw an increase in domestic and overseas demand for WHISKY KOH-KUN, a type of whisky that is ideal for mixing in highballs. In addition, Tantakatan Shiso Umeshu was awarded the Grand Prix in recognition of its high quality under the Japan Food Selection food and ingredient evaluation system. In this category, we have introduced several price revisions from fiscal 2022 through to the period under review, averaging 6%.
(Starch for food processing)
In the starch for food processing segment, during the six months ended June 30, 2023, the Company sold some of its shares in SUNNY MAIZE CO., LTD., a consolidated subsidiary that handled operations in this segment. Owing to our reduced ownership percentage and deeming the transaction to have taken place at the beginning of the second quarter, SUNNY MAIZE CO., LTD. was excluded from the scope of consolidation, becoming an equity-method affiliate. Through the first three months of the fiscal year, segment sales came to ¥1,341 million (down 68.7% year on year from the preceding year), and we generated a segment operating loss of ¥6 million (operating loss of ¥344 million in the preceding year).
(Enzymes and pharmaceuticals)
Sales in the enzymes and pharmaceuticals segment were ¥3,488 million (up 2.7% year on year), due to solid results from the contract manufacturing business in Japan and overseas sales in the enzymes category. However, operating income came to ¥328 million (down 11.5% year on year), due to higher personnel expenses and repair expenses.
In the real estate segment, sales amounted to ¥1,230 million (up 167.5% year on year), and operating income was ¥618 million (up 188.3% year on year). November 2022 marked the opening of The Royal Park Canvas Ginza Corridor, a new hotel on our former head office site in Ginza that is operated by Mitsubishi Estate Hotels & Resorts Co., Ltd. a Mitsubishi Estate Group company. The Company also recorded the sale of real estate for sale in the second quarter.