■Lacto Japan ＜3139＞ Business Overview
4. Asia Business/Others
(1) Dairy Ingredients Sales Division
Targeting the Asian market where the dairy market is expected to expand due to the westernization of food, we have established subsidiaries and affiliated companies in Malaysia, Thailand, China, Indonesia, and the Philippines with the subsidiary Lacto Asia as the core enterprise to develop business. Similar to the dairy ingredients and cheese division, milk ingredients purchased from overseas are sold to Japanese and local food manufacturers in countries where each subsidiary is located and neighboring countries. Lacto Asia sells milk ingredients to Singaporean and Korean companies that export milk products to Japan, and also exports processed milk preparation products to Japan.
(2) Cheese manufacturing and sales department
Lacto Asia in Singapore, FTT in Thailand, and PLJ in Indonesia have their own factories and mainly manufacture and sell commercial cheeses with little competition. In addition to processed cheese, Singapore and Thailand also manufacture and sell shredded cheese made from processed natural cheese, which has been in high demand for pizza in recent years. In Indonesia, only shredded cheese is manufactured and sold. Regarding commercial cheese, we are proceeding with product development under the policy of carefully absorbing customer needs and issues from food manufacturers, food service companies, etc., such as “I want to use cheese as processed food, but it was not possible to process it well with cheese sold on the market,” and “I want to use cheese as processed food, but I don't know how to use it,” and solve them together at market-in. Currently, we offer two original brand products, “FOODTECH” and “CHOOSY.” Also, in Singapore, plans are underway to move the current plant to a new plant, and they are aiming to expand the production system by starting operation in 2025, but it is expected that the start of operation will be slightly delayed due to delays in local permits and approvals.
In terms of quality, it is manufactured with strict quality standards cultivated in the Japanese market, and under the policy of providing high quality products, the Singapore Plant, which is the main force, has continued to receive the highest level of evaluation called “A” grade from the SFA (Singapore Food Authority), which has supervised food factories in the same country since its establishment, and is trying to differentiate itself from local companies. Also, as a condition for sales in Asia, halal certification, which is a guarantee that Muslims (Muslims) in Singapore, Malaysia, Indonesia, etc. can eat with peace of mind, was also obtained from the time the manufacturing business was launched in 2004, and products in line with local business practices are provided. In June 2021, we acquired FSSC 22000, which is an international standard for food safety management systems, and it is our policy to further improve quality and continue manufacturing and providing safer and more secure products.
(3) Others
It is engaged in the export business of food ingredients by overseas subsidiaries outside of Asia.
5. Business strengths
The company's strength lies, first of all, in its human and intellectual capital. In importing raw materials related to dairy farming and livestock farming, in order to provide high value to customers, it is necessary to be familiar with everything such as production area trends, international market conditions, product characteristics, complex domestic and international agricultural policies and import systems, trade operations and tariffs. The company has accumulated knowledge and know-how about dairy products and import operations since the dawn of dairy product imports, and has highly specialized employees who constantly grasp the latest local information and needs while having direct contact with global suppliers and major food manufacturers. Our major strength is that we have established local subsidiaries in Europe, Oceania, and North America based on that human and intellectual capital, and have built long-standing business relationships and relationships of trust with most major dairy manufacturers, etc. that are overseas suppliers. The company can first obtain information on advanced technology from suppliers and the latest raw material development, and can procure and supply optimal raw materials to meet the diverse needs of sales destinations, develop optimal raw materials and products, and provide the latest information. Furthermore, it is also possible to create new products and demand by combining advanced technology from overseas with domestic raw materials for dairy products. In addition, we have established business relationships not only with domestic dairy manufacturers but also with various sales partners such as food manufacturers, beverage manufacturers, feed manufacturers, etc., and it is also possible to discover new needs and develop new products by feeding them back to suppliers.
Despite supply chain disruptions affected by the spread of the novel coronavirus infection (hereafter, COVID-19), the company continued a stable supply of raw materials by utilizing a global procurement network. Being able to stably procure from diverse suppliers scattered across regions is also a major advantage against risks such as fluctuations in production volume due to the effects of climate change and disasters. Also, since they have been developing business in Asia since early on, they have a network of sales destinations and are familiar with the Asian market. Furthermore, in addition to trading company functions, we have a track record of creating markets by realizing product development that responds in detail to the needs of sales destinations while possessing manufacturer functions with our own local cheese factory. It is also possible to expand sales of Japanese dairy products in the future according to Asian needs. In fact, the company has built a network with a wide range of stakeholders, such as the Japanese dairy farming and livestock industry, government, etc., and in measures against excessive inventory of skimmed milk powder in Japan, in addition to selling domestically produced skimmed milk powder in place of imported skimmed milk powder, it also handled export sales of domestically produced skimmed milk powder to Asia. Furthermore, having a manufacturer function in Asia also has the advantage of having a higher profit margin compared to wholesale.
(Written by FISCO Visiting Analyst Matsumoto Akihiro)