CORPORATE BOOK 2011
For the year ended April 30, 2011
ITO EN – Innovation and Growth
Management Principle
“Always Putting the Customer First”
Since its founding in 1966, ITO EN has consistently adhered to the management principle of “Always Putting
the Customer First.” The foundation of business management at ITO EN is our commitment to place importance
on each and every customer.
An industry first
March 1981
Development and introduction of canned
oolong tea marks full-scale entry into the
beverage market.
March 1990
990
Introduction of the
he industry’s
first green tea beverage
everage in
PET bottles.
ITO EN credo
Entry into the
beverage market
1990
1989
June 1977
Opening of the first directly
managed specialty store of
the Chajuttoku chain of tea
shops.
August 1966
Establishment of the Frontier
Tea Corporation, the predecessor of
ITO EN, in Shizuoka City,
Shizuoka Prefecture.
1985
1981
81
1977
February 1989
Februa
1969
1966
Change of name
n
of canned
green tea be
beverage to Oi Ocha.
May 1969
Change of company name to ITO EN, LTD.
February
ry 1985
Successful development and
introduction of the world’s first
canned green tea
tea.
Product Development Philosophy
To satisfy customers, ITO EN engages in
product development grounded in five concepts.
Natural
Products with natural ingredients
Healthy
Products that bring goodness and health to people’s lives
Safe
Well-designed
Delicious
Safe and enjoyable products
Simply designed packaging attests to good taste
Good-tasting products that bring happiness
February 2009
The 20th anniversary of the introduction of Oi Ocha.
May 2011
Chichiyasu Company made
a consolidated subsidiary.
October 2000
Launch of beverages in heatable PET bottles,
a leading-edge development in the industry.
2010
May 2001
Establishment of ITO EN
(North America) INC.
in the U.S.
2009
2006
2001
Brand development
2000
1992
October 2006
Tully’s Coffee Japan made
a consolidated subsidiary.
August 2009
Introduction of TEAS’ TEA NEW YORK.
September 1992
Introduction of Jujitsu Yasai (vegeta
(vegetables galore).
Contents
A Message from the Management
P02
Consolidated Statements of Cash Flows (Unaudited)
P35
The ITO EN Difference
P06
Consolidated Statements of Changes in Net Assets (Unaudited)
P36
P14
Non-Consolidated Operating Highlights
P38
Non-Consolidated Review of Operations
P16
Market Data
P39
ITO EN Initiatives
P20
The ITO EN Group
P40
Consolidated Financial Highlights
P26
Organizational Structure
P41
Consolidated Financial Review
P28
Domestic Network
P42
Business Risks
P30
The History of ITO EN
P44
Consolidated Balance Sheets (Unaudited)
P32
Investor Information
P46
Consolidated Statements of Income (Unaudited)
Consolidated Statements of Comprehensive Income (Unaudited)
P34
Corporate Data/Board of Directors and Corporate Auditors
P47
Special Feature
Tully’s Is Particular About Each and Every Cup
TEAS’ TEA Is a Roaring Success!
ITO EN Corporate Book 2011
01
A Message from the Management
Hachiro Honjo, Chairman
Daisuke Honjo, President
Management Principle
At the core of ITO EN’s management philosophy is our
emphasis on and commitment to each and every customer
At ITO EN, we consider consumers, shareholders, retailers, suppliers, financial institutions, and local communities
our customers. We have always regarded everyone involved with ITO EN to be our customer, and we earnestly strive
to address our customers’ needs through the feedback received, and by taking the perspective of our customers as the
foundation of our management strategies. We will continue to remain true to our long-standing principle of “Always
Putting the Customer First” and pursue new possibilities and challenges.
02 ITO EN Corporate Book 2011
Performance
For the beverage industry as a whole, the business environment remains adverse
In the fiscal year under review, ended April 30, 2011, Japan’s economy fell short of a full-scale recovery. Although an
uptrend in personal consumption appeared in some sectors due to improvement in corporate profits, the difficult
employment situation continued. In the beverage industry, the business environment remained adverse. Although sales
volume developed favorably amid record-high summer temperatures nationwide, the gradual decline in the prices of
goods continued, and the Great East Japan Earthquake also had a negative impact on business.
Consolidated net sales developed favorably in the fiscal year under review,
rising 5.6% year on year
Given the business conditions, during the year under review ITO EN continued to work to identify and address any
discontent among our customers in keeping with the principle of “Always Putting the Customer First.” We engaged
in the development of products that aim to delight customers in accordance with our five basic development
concepts, “natural,” “healthy,” “safe,” “well-designed,” and “delicious,” and strove to provide customer-focused
services. We worked to further strengthen individual brands including Oi Ocha, Tennen Mineral Mugicha (natural
mineral barley tea), and Jujitsu Yasai (vegetables galore). We also actively pursued synergies within the Group
through products such as the TEAS’ TEA NEW YORK line of black teas that deliver experiences in flavor and aroma
developed jointly with ITO EN (North America) INC. and TULLY’S COFFEE BARISTA’S CHOICE, a canned
coffee that has inherited the superb quality for which Tully’s Coffee Japan Co., Ltd., is renowned. As a result,
consolidated net sales for the year rose 5.6% from the previous year to ¥351,692 million.
Consolidated sales and earnings increased in the fiscal year ended April 30, 2011
Operating income increased 42.0% year on year to ¥17,679 million as a result of efforts to increase operating
efficiency, coupled with rigorous cost-reduction activities and increased cost effectiveness. Ordinary income rose
41.5% to ¥16,526 million due to efforts to improve profitability at consolidated subsidiaries. Net income rose 28.0%
to ¥7,675 million, marking an increase in both sales and earnings in the fiscal year ended April 30, 2011.
ITO EN Corporate Book 2011
03
A Message from the Management
Medium- to Long-Term Business Plan
ITO EN forecasts higher consolidated sales and earnings again
in the fiscal year ending April 30, 2012
In the aftermath of the Great East Japan Earthquake, factors such as radiation contamination, power supply outages,
and deterioration of consumer confidence are expected to have a prolonged negative impact on Japan’s economy and
on our business to some extent. In these circumstances, the ITO EN Group will adhere more than ever to the principle
of “Always Putting the Customer First,” and work to further improve the Group’s overall business performance by
striving for product development and service improvements that will bring customers greater satisfaction. In addition,
we will boldly enter new business sectors. For instance, we will engage in the dairy products business together with
Chichiyasu Company, which became a member of the ITO EN Group in May 2011, and pursue the expansion of the
chilled products business by engaging in new product development and marketing, leveraging ITO EN’s sales power
and Chichiyasu’s technical capabilities. Through these activities, in the fiscal year ending April 30, 2012, we forecast
net sales to rise 2.4% year on year to ¥360.0 billion, operating income to rise 1.8% to ¥18.0 billion, ordinary income
to rise 2.9% to ¥17.0 billion, and net income to rise 4.2% to ¥8.0 billion.
Net Sales
Operating Income and
Operating Income Ratio
(Millions of yen)
(Millions of yen)
400,000
24,000
360,000
351,692
Net Income and ROE
(%)
Operating Income
Operating Income Ratio 8
(Millions of yen)
16,000
300,000
18,000
18,000
6
17,679
12,000
200,000
12,000
5.0 5.0 4
8,000
100,000
6,000
0
0
07 08 09 10 11 12
(4/30) (Forecast)
2
4,000
0
0
07 08 09 10 11 12
(4/30) (Forecast)
Net Income(%)
ROE
16
12
7,675
8,000
7.6 7.8
8
4
0
07 08 09 10 11 12
(4/30) (Forecast)
As one of the targets of the medium-term business plan, we aim to
achieve record-high operating income in the fiscal year ending April 30, 2014
At the briefing on business results for the fiscal year ended April 30, 2011, ITO EN announced a medium-term
business plan to achieve the long-term management vision for the three-year period ending 2014. The specific goals
given high-priority in the plan are the fundamental reinforcement of existing business sectors, the pursuit of new
growth, and transformation to a highly profitable business structure. In the plan, we have set targets of consolidated
net sales of ¥400.0 billion or higher and record-high operating income of ¥23.0 billion in the fiscal year ending April 20,
2014.
04 ITO EN Corporate Book 2011
We will maintain a dividend payout ratio of 40% or higher
As milestones on the way to achieving the long-term management vision, we have set targets of consolidated net sales
of ¥500.0 billion and an operating income ratio of 8%, and we will implement a united, Groupwide effort to establish
a new business base. ITO EN regards the continuous return of profits to our shareholders as a top management priority.
We make stable profit distribution the basis of our profit distribution policy and will continue to provide dividends
based on the criterion of a consolidated payout ratio of 40% or higher. The Company intends to use internal reserves
for investments to increase corporate value, in other words, the value of our shareholders’ investments, and actively
pursue shareholder returns through future business development.
Cash Dividends per Share and
Payout Ratio (Common Stock)
Cash Dividends per Share and
Payout Ratio (Class-A Preferred Stock)
Cash Dividends per Share
(%)
Payout Ratio
(Common Stock)
160
(Yen)
60
Cash Dividends per Share
(%)
Payout Ratio
(Class-A Preferred Stock) 160
(Yen)
60
48
48
120
45
120
30
80
30
80
15
64.1 61.3 40
15
69.3 66.8 40
0
0
45
38
38
0
07
08
09
10
11
12
0
07
(4/30) (Forecast)
08
09
10
11
12
(4/30) (Forecast)
ITO EN seeks to become a global tea company
We plan to contribute to society by fulfilling our corporate responsibilities and establishing our position as a full-line
beverage company and market leader in green tea, in both ready-to-drink beverage and tea leaf forms, and rank first
or second in overall market share in Japan. We also seek to chart a course to become a global tea company whose
products are always readily available regardless of season, individual preference, place, or time. An important mission
for the future is to spread the word about green tea, an integral aspect of Japan’s food culture, to people around the
world.
July 26, 2011
Hachiro Honjo, Chairman
Daisuke Honjo, President
ITO EN Corporate Book 2011
05
The ITO EN Difference
The Foundation of Our Marketing Strategy
“Always Putting the Customer First”
Right from the start, the foundation of ITO EN’s marketing strategy has been based in an
ethos of identifying and addressing the needs and critiques of our customers.
In keeping with our long-standing principle of “Always Putting the
Customer First,” we consider everyone involved with ITO EN to be our
customers—including consumers, shareholders, retailers, suppliers,
financial institutions, and local communities. We aim to build deep
relationships of trust by always understanding the customer’s point of
view and by creating mutual benefits.
Consumers
Local Communities
Shareholders
Domestic Network
200
Offices
ITO EN Customers
(As of July 31, 2011)
Financial Institutions
Retailers
Chubu
26 offices
Suppliers
Chugoku/Kyushu
28 offices
Kansai/Shikoku
31 offices
06 ITO EN Corporate Book 2011
Route Sales System as a Source of
Customer Comments and Feedback
Hokkaido/Tohoku
26 offices
ITO EN’
s
Route Sales System
Delivery,display
Merchandising, campaign proposals
General
retailers
Northern/Eastern
Kanto
43 offices
Route Salesperson
Vending
machines
New
customers
Tokyo/
Southern Kanto
46 offices
Business negotiations
ITO EN operates the Route Sales System, a
distribution system that supplies products
directly to customers through a nationwide
network of 200 offices. The key characteristic and competitive advantage of this
system is that our frontline salespeople can
directly and personally experience what’s
taking place in the market and gather the
latest information to build better communication, offer merchandising advice, and
provide value-added services to retailers.
We also operate the Field Marketing System
to provide services to those customers whom
the route sales staff does not reach. Under
this system, sales representatives secure
retail shelf space for mainstay items and
strengthen promotion activities. In providing meticulous services our sales staff
serves as a bridge that links us with our
customers.
In addition, by making our products
available through a well-balanced combination of convenience stores, supermarkets,
vending machines, and general retailers, we
have created a sales system that ensures
that ITO EN products are available for
purchase anytime, anywhere, and enables
us to reliably deliver the products our
customers want.
The “Still Now” Ethos
“Still Now” expresses ITO EN’s commitment to the principle of “Always Putting the
Customer First” by tirelessly seeking to identify and address the opinions and expectations of consumers through our products and services.
At ITO EN, we create hit products by continually incorporating consumer tastes and
opinions channeled through our frontline salespeople into product development. At the
core of our Route Sales System, which is pivotal to our marketing efforts, are interpersonal ties. To ensure that we deliver customer satisfaction, we make a point to know our
customers well and to view things from their perspective.
We also operate the Voice System, an essential mechanism in the Company’s marketing pursuits whereby employees offer suggestions inspired and informed by their day-today contact with customers. This system has the added benefit of boosting motivation
among sales staff when they see their ideas and suggestions applied to products.
ITO EN Corporate Book 2011
07
The ITO EN Difference
Safe and Stable Procurement and
Supply of Products
To ITO EN, the most important responsibility of all is to ensure the safe and stable supply of our products.
26.8
%
of All Tea Grown in Japan
Used by Ito En
Our large-scale tea plantation business has extended to Miyazaki Prefecture.
Our strong
stro ties to tea producers and producing areas that we have developed over many years enable
us to pr
procure a stable supply of high-quality tea leaves. In the fiscal year ended April 30, 2011, 26.8%
of all th
the tea leaves grown in Japan went toward ITO EN products.
Raw Material Procurement, Highly Selective Purchasing, the Tea-Producing Region Development Project,
and Outsourced Production
Since the launch of Oi Ocha, ITO EN’s top
acquires leaves directly from the tea market
Oi Ocha line. We are increasing production
brand, we have paid meticulous attention to
or tea producers.
capacity each year at the plantation, which is
the raw materials used and the production
process. We deliver the wholesome delicious-
In addition, in 2001, we launched our
located in the Kyushu region. By sharing our
own tea plantation for growing tea for the
techniques and know-how in the cultivation
ness of nature through rigorous quality and
production control, using tea leaves that are
Current Status of Green Tea Materials
100% locally grown and adding absolutely
2008
no fragrances or flavorings.
Because tea is an agricultural product, its
Tons
2009
2010
Tons
YOY %
change
Tons
YOY %
change
86,000
-9.9%
85,000
-1.2%
leaves are subject to subtle variations in
Domestic Raw Tea Leaf Production
flavor according to the climate in the year of
Imports
7,326
5,865 -19.9%
5,906
0.7%
Exports
1,701
1,958
15.1%
2,232
14.0%
102,300
98,500
-3.7%
98,090
-0.4%
23,556
24,320
3.3%
22,761
-6.4%
production, the production region, and the
method of cultivation. In order to obtain tea
leaves of dependable quality, our staff
carefully checks the quality of leaves at the
plantations where they are grown and
08 ITO EN Corporate Book 2011
Domestic Consumption
ITO EN Utilization
95,500
Sources: The Ministry of Agriculture, Forestry and Fisheries, Japan Tea Industry Central Committee, ITO EN, LTD.
Years: ITO EN Utilization: May–April; Others: January–December.
Integrated Quality Control Systems
of tea plants for use in green tea beverages,
ITO EN recognizes that quality control is a
plants that satisfy ITO EN’s quality control
we work together with producers to supply
pivotal responsibility on which the survival
standards (guidelines for beverage produc-
the raw materials that are optimal for Oi
of a company that handles food products
tion and tea leaf processing). We strive for
Ocha. The strong ties developed with tea
depends. Accordingly, we have established
ever greater safety and security in produc-
producers over many years and our track
a strict quality control regime that encom-
tion by routinely sharing information with
record of using more than 20% of all the raw
passes everything from product design,
these plants and holding quality control
tea leaves grown in Japan are the source of
ingredients, and packaging materials, to
meetings with the plants’ quality control
the high quality for which Oi Ocha is known
production and distribution, and strive at all
personnel. We test and monitor all beverage
today.
times to ensure product safety.
products using radiation detectors and have
With regard to beverage production, ITO
In the initial production stages, both the
EN has built a robust cooperative production
Company’s Quality Control Department and
system based on outsourcing its production
the outsourced beverage plant conduct
to beverage plants located all over Japan
flavor and equipment analyses and inspect
which have the expertise in beverage produc-
for microorganisms and residual agricultural
tion. During production, these plants apply
chemicals. Production is outsourced to
put in place a system to check for contamination by radioactive substances.
rigorous quality control based on detailed
production manuals for each product line.
We will continue to offer new value made
possible through the mutually beneficial
partnerships that we have developed with our
outsourcers through day-to-day beverage
production activities.
Product Traceability System
Under ITO EN’s product traceability system
the cultivation, processing, and manage-
staff dispatched to these sites to monitor the
for domestically grown raw materials, we
ment of raw materials at production sites.
use of agricultural chemicals and check
check the cultivation control records of tea
These checks are performed by ITO EN
quality control systems.
producers, paying particular attention to
information concerning the use of agricultural chemicals. We have established a
Product Traceability System
Tea Producers
mechanism that makes it possible to
● Written pledge and certification covering safety of
ascertain product history to a level of detail
that includes the production plant, produc-
raw tea leaves
Raw Tea Leaf Factory
tion date, raw materials used, and cultiva-
● List of pesticides used at each factory
● Recording of raw tea leaf manufacture and
management data
● Producer information
tion data by tracing lot numbers recorded
on green tea beverages delivered to
● Written pledge clarifying appropriate use of pesticides
● Recording of plantation and cultivation data
Tea Wholesaler
(intermediary)
● Contract covering safety of tea to be sold
● Raw tea leaf factory data
consumers.
We pursue the same degree of detail for
vegetable beverages made from raw materials produced overseas. To ensure that we
use only safe raw materials that comply
Shizuoka Sagara Plant
● Documentation of processes
(raw tea leaves to beverage ingredients)
Beverage Factory
● Documentation of processes
(beverage ingredients to green tea beverages)
Retailer
with Japanese laws and regulations, we
examine certificates of compliance from
Customer
our suppliers around the world regarding
ITO EN Corporate Book 2011
09
The ITO EN Difference
Ongoing Brand Development
ITO EN engages in product research and development based on five product development concepts:
“natural,” “healthy,” “safe,” “well-designed,” and “delicious.”
Oi Ocha
1
No.
No
Tea Brand in Japan
Oi Ocha
ITO EN revolutionized the beverage
flavorings and our uncompromising
emphasizing not only design, function, and
industry in 1985 by introducing the canned
pursuit of flavor and quality since the
health benefits, but also elements unique to
sencha line of canned green tea. Four years
launch have underpinned the growth of Oi
Japanese food culture, such as seasonality
later, in 1989, we introduced the Oi Ocha
Ocha into a favorite brand among
and variety. In the coming years, we will
line, which has become our mainstay
consumers of all ages and backgrounds.
continue to build an unassailable position
brand. The use of 100% Japanese tea
We continue to offer green tea beverages
for Oi Ocha as one of Japan’s leading
leaves and absolutely no fragrances or
that deliver the genuine flavor of nature,
beverage brands.
Development of Oi Ocha
1989
10 ITO EN Corporate Book 2011
1996
2002
2007
2010
TULLY’S COFFEE
In 2009, we launched our first coffee in a
coffee shops in Japan. Tully’s is widely
bottle-shaped can developed jointly with
acclaimed for the high quality of its
Tully’s Coffee Japan Co., Ltd., a member
coffees. We will continue to launch
of the ITO EN Group. We subsequently
products that leverage the respective
launched canned coffee in the standard
strengths of ITO EN and Tully’s and
product size (190 grams). Tully’s, which
further enhance the value of the Tully’s
operates over 400 coffee shops throughout
Coffee brand.
Japan, was the first chain of specialty
TEAS’ TEA NEW YORK
Since 2009, in the black tea beverages
flavor sensations to TEAS’ TEA NEW
segment, we have sold TEAS’ TEA NEW
YORK as a new black tea beverage brand,
YORK in Japan, a product line based on the
and in the coming years will strive to
TEAS’ TEA line sold by ITO EN (North
further establish the brand by developing
America) and modified to suit the prefer-
an extensive product line that combines
ences of Japanese consumers, under the
ready-to-drink beverages with tea bags
banner of “New black tea with a pleasant
and instant tea products.
aroma and mild taste.” We introduced new
Jujitsu Yasai
Vitamin Fruit
evian
In the vegetable beverage category, the
We also offer the Vitamin Fruit line of
In 2008, ITO EN commenced exclusive
Jujitsu Yasai (vegetables galore) line and
natural fruit juices (a food with nutritional
marketing in Japan of evian, a global
Ichinichibun no Yasai (a day’s worth of
claims), highly acclaimed for being
mineral water brand sold in approximately
vegetables), a 100% vegetable beverage,
delicious and healthy. In addition to items
130 countries worldwide. To strengthen
are achieving steady market penetration as
that can be enjoyed year-round, we offer
the brand, we are expanding sales efforts
long-selling products. We use carefully
beverages made from seasonal fruits that
nationwide using our powerful Route Sales
selected vegetables as the ingredients for
are available for a limited time only. In this
System and have begun opening up sales
these beverages which are suited to the
way, we place importance on providing the
channels in the food
characteristics of each individual product.
rich taste of naturally
service market.
We exhaustively pursue health benefits,
ripened fruit.
focusing not only on
the safety of raw
materials, but also on
their constituents and
nutrients.
ITO EN Corporate Book 2011
11
The ITO EN Difference
ITO EN’s Ever-Expanding
Overseas Business
Our experience and track record in the American market are serving
as a valuable business model for future overseas business development.
Worldwide Network
of
7
Production and
Sales Bases
ITO EN (North America) INC.
Ningbo Shunyi Tea
Products Co., Ltd.
Head Office
Mason Distributors, Inc.
Shanghai
S
h
Representative Office
Fujian New Oolong
Drink Co., Ltd.
ITOEN (USA) INC.
ITO EN AUSTRALIA PTY. LIMITED
ITO EN’s overseas business strategy hinges
ITO EN (North America) INC.
on efforts to establish the ITO EN brand
ITO EN (North America) INC., our
year. We have set up the Route Sales
and open up new markets for green tea. At a
consolidated subsidiary established in New
System, a key strength of the ITO EN
time of increasing health consciousness
York in 2001, is charged with introducing
Group, in the Manhattan district of New
overseas, we operate sales offices in New
genuine green tea and establishing the ITO
York, where we are steadily expanding the
York, Florida, and Hawaii for the purpose
EN brand in the American market, where it
customer base for green tea beverages
of creating a market for green tea, an
engages in nationwide sales activities
through consumer-focused sales activities.
integral aspect of Japanese food culture. We
targeting mainly the mass market and the
Obesity is recognized as one of the
also operate production bases for tea
natural foods market. Awareness of green
greatest health threats in the United States,
materials and beverages in Australia and
tea in the United States is growing year by
and interest in healthy eating habits and
China. We will continue to actively develop
overseas business in the coming years.
Products under the ITO EN brand are now steadily
proliferating in the U.S. market.
12 ITO EN Corporate Book 2011
ITOEN (USA) INC.
exercise is on the rise. The health benefits
With a view to business expansion, in
ITOEN (USA) INC., established in Hawaii
of green tea, well known in Japan, are
2006, we acquired shares in Mason Distribu-
in 1987, makes and sells tropical juices,
gradually gaining recognition in the United
tors, Inc., a manufacturer and marketer of
unsweetened teas, coffee, and other canned
States, and demand is growing across the
nutritional supplements, which became an
beverages. Its mainstay product is the
country. Our sales channels are expanding
ITO EN Group company.
Aloha Made line of tropical juices,
in step with greater demand, and we are
We plan to further reinforce and expand
which are highly popular among the local
achieving steady business growth alongside
our business base in the United States by
people. In recent years, sales of tea-based
broadening our customer base for green tea
taking advantage of the strengths of these
beverages have been increasing, reflect-
beverages.
two companies.
ing growing health consciousness.
Sales of ITO EN (North America) INC.
(Thousands of
U.S. dollars)
75,000
58,875
50,000
47,872
49,657
08
09
63,619
67,950
40,341
25,000
0
07
10
11
12
(4/30)
(Forecast)
ITO EN AUSTRALIA PTY. LIMITED
China
ITO EN constantly seeks to ensure a stable
leaves and other ingredients is expected from
In China, ITO EN does business princi-
supply of raw materials in anticipation of
the United States and other markets, and
pally through two joint venture companies.
future growth in demand for green tea. With
Australian green teas are sold in Japan as
Ningbo Shunyi Tea Products Co., Ltd., in
this in mind, in 1994, we established ITO EN
“Green tea produced in Australia” at specialty
Zhejiang Province, manages tea planta-
AUSTRALIA PTY. LIMITED in the Austra-
stores under various brands, including ITO
tions and processes tea leaves, and Fujian
lian state of Victoria, where the climate is
EN, Chajuttoku, and Tea.Pi.O.
New Oolong Drink Co., Ltd., in Fujian
similar to Japan’s, and effectively launching
our tea plantation business in that nation.
In addition, since 2010 ITO EN AUSTRA-
Province processes and sells beverages
LIA has sought to expand its beverage
mainly for the domestic market. In May
Our green teas produced in Australia are of
business through the sale of products includ-
2011, we opened a representative office in
course sold on the Australian market. In
ing Veggie SHOT in Australia (Jujitsu Yasai in
Shanghai and began full-scale research on
addition, demand for Australian green tea
Japan), made from Australian raw materials.
the Chinese mainland.
At a time of rising health consciousness
overseas, ITO EN will continue to engage
in business in overseas markets, using these
business operations as a platform for future
development.
Tea plantation in the state of Victoria, Australia
ITO EN Corporate Book 2011
13
Special Feature
Tully’s Is Particular
About Each and Every Cup
Ongoing Brand Development
Providing the Finest Cup of Coffee
Operation of Community Cafés
Synergy between Tully’s and ITO EN
Tully’s Coffee is a chain of specialty coffee
In 1997, Tully’s Coffee opened its first coffee
ITO EN sells products developed jointly with
shops started up in Seattle in 1992. Tully’s
shop in Japan, in Tokyo’s Ginza district. Today,
Tully’s Coffee Japan Co., Ltd. Canned coffee
uses only the highest quality Arabica beans
Tully’s operates over 400 shops nationwide in
and chilled-cup coffee beverages that embody
carefully selected from plantations around the
various formats suited to individual markets
the Tully’s spirit feature a richness and aroma
world to make its coffees. To offer the enjoy-
and locations, such as roadside shops, shops in
that reflect the uncompromising commitment of
ment of fresh coffee, Tully’s carefully roasts
office buildings, shopping centers, bookstores,
Tully’s baristas* to every stage of the process,
these beans at a plant in Japan and lovingly
hospitals, and shops at expressway rest areas.
from roasting through to preparation. Carefully
prepares each individual cup of coffee using
Tully’s also operates cafés rooted in local
selected, high-quality Arabica coffee beans are
manual espresso machines. Tully’s delivers the
communities. In this way, the company
deep-roasted in Japan to extract their full
finest coffee to satisfy even the most discern-
provides high-quality products and services and
richness and flavor.
ing coffee lover together with a relaxing
a relaxing atmosphere in a variety of venues
atmosphere and heartfelt hospitality.
that meet the diversity of customer needs.
We plan to continue to launch products that
combine the strengths of ITO EN and Tully’s
and aim to enhance the value of the Tully’s
Coffee brand.
*Barista: A coffee specialist with the skills of a professional. This is
an Italian word for a person who serves coffee.
Tully’s Coffee Network
(As of March 31, 2011)
12
18
28
Kyushu
cafés
14 ITO EN Corporate Book 2011
8
Chugoku
cafés
54
Shikoku
cafés
36
Kinki
Chubu
cafés
234
cafés
14
Kanto
cafés
Tohoku
cafés
Hokkaido
cafés
TEAS’ TEA Is
a Roaring Success!
“Reverse Importing”
Black Tea Beverages from New York
What Makes TEAS’ TEA Special
Tea Bags and Instant Tea Products
TEAS’ TEA, born in 2002 at an ITO EN (North
TEAS’ TEA is a black tea brand started in the
Tea bags and instant tea products packaged in
America) INC. tea shop in the heart of New
dynamic city of New York, and modified to
small amounts to enable quick, convenient
York, imparts a sense of relaxation and health.
offer the mild flavor preferred by Japanese
enjoyment of the genuine aroma and flavor of
The custom of drinking tea, an integral aspect
consumers. The concept behind the brand is
fine teas have also been introduced under the
of Japan’s healthy traditional food culture, is
“New black teas with pleasant aromas and
TEAS’ TEA brand. As with ITO EN’s green tea,
attracting attention around the world. The
subtle flavors.” These teas are characterized by
we seek to reinforce the TEAS’ TEA brand by
TEAS’ TEA brand, which combines the health
pleasing aromas and subtle flavors.
offering tea bags and instant tea products along
benefits of tea with a wide selection of
with ready-to-drink beverages.
delicious flavors, has achieved substantial
market penetration.
The TEAS’ TEA brand has achieved
excellent acceptance in the United States. For
instance, TEAS’ TEA Green Jasmine won First
Place in the Best Flavored Green Tea category
at the World Tea Expo held in Las Vegas in
May 2009. To capitalize on this success, we
have joined with ITO EN (North America)
INC. to develop delicious black tea beverages
in new flavors so as to introduce TEAS’ TEA to
customers in Japan.
ITO EN Corporate Book 2011
15
Non-Consolidated Review of Operations
Tea Leaves
Net Sales Share
9.4%
Net sales in the fiscal year ended April 30, 2011: ¥30,962 million
(2.7% increase year on year)
ITO EN has established an integrated production system covering all
stages of tea production from the procurement and processing of tea
leaves to packaging and sales. We continue to pursue quality improvement, engage in independent technical development of tea leaf cultivation and processing methods, and strive to develop and offer products
that meet consumer needs. Japan has a low birthrate and an aging
society, in which families are getting smaller and people are demanding
more and more convenience. Addressing these factors, ITO EN is
reinforcing its lineup to include easy-to-use mini-pack products and a
series of teabag and instant tea products that offer the same delicious
flavor as freshly brewed tea.
Japanese Tea Beverages
Net Sales Share
48.2%
Net sales in the fiscal year ended April 30, 2011: ¥158,908 million (0.1%
increase year on year)
Green tea, which has a subtle flavor, is subject to dramatic changes in
quality. For this reason, the creation of ready-to-drink green tea beverages
with freshly brewed flavor was long considered technologically impossible.
In 1985, however, ITO EN successfully developed the world’s first canned
green tea beverage, the result of our strong desire to succeed and persistent
research over many years. In addition, over the years, we have constantly
worked to enhance the quality of our products on the basis of our unique
strengths. These include the application of state-of-the-art beverage production technologies, such as the development of chilled and hot green tea
beverages in PET bottles, raw materials procurement capabilities that take
advantage of economies of scale, and raw materials processing technologies
that enable us to extract and preserve the full flavor of tea leaves.
Chinese Tea Beverages
Net Sales Share
5.0%
16 ITO EN Corporate Book 2011
Net sales in the fiscal year ended April 30, 2011: ¥16,327 million (12.7%
increase year on year)
ITO EN became Japan’s first importer of oolong tea leaves in 1979,
when it signed an import agreement with the China National Native
Produce and Animal By-Products Import and Export Corporation, and
we successfully commercialized the world’s first canned oolong tea
beverage in 1981. With canned oolong tea, we created new value by
inaugurating the new concept of sugar-free products in the beverage
market. Since then, we have continued to lead the way in the introduction of groundbreaking new products, such as jasmine tea, which is
green tea scented with natural jasmine flowers that offer excellent health
benefits.
Vegetable Beverages
Net Sales Share
11.6%
Net sales in the fiscal year ended April 30, 2011: ¥38,138 million (10.6%
increase year on year)
In 1992, ITO EN launched Jujitsu Yasai (vegetables galore), a product
based on the concept of a vegetable beverage that is delicious, easy to
drink, and full of nutritional benefits. We accomplished this by using a
carrot base to produce a natural vegetable flavor without having to use
sugar or salt, and by adding fruit juice to improve taste. In 2004, we
introduced Ichinichibun no Yasai (a day’s worth of vegetables), which
contains the nutritional equivalent of 350 grams of vegetables, the daily
amount recommended by the Ministry of Health, Labour and Welfare of
Japan. Jujitsu Yasai and Ichinichibun no Yasai have become long-selling
vegetable beverages.
Fruit Beverages
Net Sales Share
4.5%
Net sales in the fiscal year ended April 30, 2011: ¥14,902 million
(3.0% increase year on year)
The Vitamin Fruit line, a naturally nutritious drink that combines the
delicious taste of fruit with the health benefits of supplementary vitamin
C intake, is highly popular among health-conscious consumers. In
addition to items that can be enjoyed year-round, we will continue to
offer beverages available for a limited time only to provide customers
with the delicious flavor of seasonal fruits.
Coffee Beverages
Net Sales Share
7.4%
Net sales in the fiscal year ended April 30, 2011: ¥24,530 million (14.9%
increase year on year)
Since November 2009, we have promoted the TULLY’S COFFEE line as
a new high-value-added coffee beverage in a bottle-shaped can. This
canned coffee, which features fresh coffee richness and aroma, was
developed under the supervision of baristas from Tully’s Coffee Japan
Co., Ltd., who applied advanced techniques and extensive knowledge of
coffee at every stage of the process, from roasting and extraction to
design. We plan to further strengthen the coffee business, both TULLY’S
COFFEE brand products and the W Coffee line of canned beverages sold
in vending machines, which combines flavor and functionality.
ITO EN Corporate Book 2011
17
Non-Consolidated Review of Operations
Black Tea Beverages
Net Sales Share
4.8%
Net sales in the fiscal year ended April 30, 2011: ¥15,747 million (50.4%
increase year on year)
TEAS’ TEA NEW YORK is a new brand of black tea jointly developed
with Group company ITO EN (North America) INC. Hailed as the “New
black tea with a pleasant aroma and mild taste,” TEAS’ TEA NEW YORK
delights customers with new flavor sensations with reduced calories and
caffeine. We plan to develop an extensive product line that combines
ready-to-drink beverages with tea bags and instant tea products. Functional Beverages
Net Sales Share
1.5%
Net sales in the fiscal year ended April 30, 2011: ¥5,058 million
(2.6% decrease year on year)
ITO EN offers beverages containing beneficial ingredients, such as
amino acids, calcium, dietary fiber, and vitamins that promote and
maintain good health. We also offer foods with specified health benefits,
such as Yogurt-Flavored Natade Coco, which contains dietary fiber that
promotes good digestion and regularity. We will continue to engage in
research to develop new products that help maintain and promote health.
Mineral Water
Net Sales Share
3.4%
18 ITO EN Corporate Book 2011
Net sales in the fiscal year ended April 30, 2011: ¥11,346 million
(7.8% increase year on year)
In 2008, ITO EN entered into an agreement with Groupe DANONE of
France that gave ITO EN the exclusive marketing rights in Japan for the
evian brand of natural mineral water. The agreement marked our
full-scale entry into the mineral water business. Japanese people love
this delicious mineral water, which has just the right mineral content and
provides an excellent balance of natural calcium and magnesium. We
will continue to expand sales channels nationwide and vigorously
engage in sales activities to promote and spread the health benefits of
evian.
Other Beverages
Net Sales Share
3.0%
Net sales in the fiscal year ended April 30, 2011: ¥9,827 million
(12.5% increase year on year)
ITO EN offers a variety of other beverages. Popular carbonated beverages include Natural Water Cider, a long-selling favorite at vending
machines, and a brisk, refreshing lemon beverage that contains catechin,
a component of green tea, and vitamin C. We also aim for a broad
product range and seek to boost product appeal by offering sports drinks
and food in beverage form, such as Dainagon Shiruko and Tokuno Corn
Pottage.
Supplements and Other
Net Sales Share
1.2%
Net sales in the fiscal year ended April 30, 2011: ¥3,882 million
(4.7% decrease year on year)
ITO EN produces nutritional supplement bars, popular among healthconscious people and people on the go. In addition, we provide products
that put our customers’ health first, such as supplements made using
ingredients traditionally considered healthy in Japan, through a collaboration with Maison Distributors, Inc., an ITO EN Group company.
Overview of Principal Consolidated Subsidiaries
Net sales in the fiscal year ended April 30, 2011: ¥15,336 million
(9.9% increase year on year)
Tully’s Coffee is a chain of specialty coffee shops established in
Seattle in 1992. Tully’s opened its first coffee shop in Japan in
Tokyo’s Ginza district in 1997 and today operates over 400
shops nationwide. Tully’s uses only the highest quality Arabica
coffee beans carefully selected from plantations around the
world and lovingly roasted at a factory in Japan to make its
coffees. Tully’s shops offer a wide variety of beverages and
foods and provide high-quality products and first-rate service in
a relaxing atmosphere.
ITO EN (North America)
▲
▲
▲
▲
Tully’s Coffee Japan
Net sales in the fiscal year ended April 30, 2011: US$ 63,619
thousand (8.1% increase year on year)
ITO EN(North America)INC., established in 2001 in New
York, is developing a market for green tea in the United States.
Amid heightening health consciousness in the United States, the
Company is introducing green tea in tea bags and as unsweetened tea beverages and is working to establish the ITO EN brand
in the American market.
In 2006, ITO EN acquired shares in Mason Distributors, Inc.,
a Florida-based dietary supplement company, and is working to
further strengthen the business in North America.
ITO EN Corporate Book 2011
19
ITO EN Initiatives
CSR
Promotion of CSR Policies and Reinforcement of CSR Activities
ITO EN will continue to adhere to the principle of “Always Putting the Customer First,” to increase corporate
value as a company essential to society, and to seek ongoing growth and development through further
reinforcement of corporate social responsibility (CSR) activities.
CSR Activities at ITO EN
In accordance with our principle of “Always
Putting the Customer First,” ITO EN has
always sought to reward the trust of our
stakeholders, including consumers, shareholders, retailers, suppliers, financial institutions,
local communities, government organizations, NGOs and NPOs, and employees
with sustainable growth of both society and
the Company.
We have established the following basic
CSR promotion policies and intend to
enhance CSR activities in the coming
years.
1) Ensure rigorous adherence to the
management principle “Always Putting
the Customer First” through further enhancement of CSR activities.
2) Become a company that meets the
expectations of stakeholders.
3) Provide products grounded in the
concepts “natural,” “healthy,” “safe,” “welldesigned,” and “delicious.”
In the coming years, we will seek to
contribute to the further sustainable development of society through dialogue with
our stakeholders, in line with the ISO
26000 international standard for social
responsibility. We will thoroughly address
the seven core subjects of social responsibility defined in ISO 26000 (organizational
governance, human rights, labor practices,
the environment, fair operating practices,
consumer issues, and community involvement and development).
The Seven Core Subjects of
Social Responsibility Defined in ISO 26000
Organizational governance
Human rights
Labor practices
The environment
Fair operating practices
Consumer issues
Community involvement and development
*ITO EN will engage in CSR activities in line with “ISO 26000
Guidance on Social Responsibility,” published in November 2010.
Corporate Auditor System (Corporate Governance)
ITO EN aims to enhance corporate value by ensuring transparency, soundness, and legal compliance in
management and prompt, appropriate information disclosure.
Corporate Governance System
ITO EN has adopted a corporate auditor system. Our internal corporate auditor and outside corporate auditors attend every meeting of the Board of
Directors, where they objectively and fairly express their opinions on audits and individual matters. They also monitor business execution by the
directors in accordance with the audit policy of the Board of Corporate Auditors.
Internal Control System
ITO EN is developing an internal control system for the purpose of enhancing work effectiveness and efficiency, ensuring the reliability of financial
reporting, complying with laws, regulations, and social norms, and safeguarding corporate assets through proper procedures and approval.
To achieve these objectives and comply with the new Companies Act, we have established a basic policy concerning the internal control system.
In line with these efforts, the Internal Auditing Department
General Meeting of Shareholders
periodically conducts audits from an independent and objective
Election, dismissal
Election, dismissal
Election, dismissal
viewpoint.
Audit
Board of Directors
Board of Corporate Auditors
[Management, supervision]
Disclosure
ITO EN will promote the development of society and the
Group by engaging in dialogue with a wide range of stakeholders to enhance CSR activities.
20 ITO EN Corporate Book 2011
Compliance Committee
Audit
Representative Director
Audit
[Business Execution]
Executive Board
CSR
Promotion Committee
Corporate Planning Department
CSR Promotion Office
[Internal Control]
Internal Auditing Department
Compliance Department
Dedicated ・Budget Committee
・ Environment Committee
committees ・Long-Term Planning Committee・ Internal Control Promotion
Committee
・Personnel System
Improvement Committee
・ Others
Advice,
guidance
Outside legal counsel, etc.
Stakeholder Dialogue
Election, supervision
Independent Auditor
[Management monitoring]
The ITO EN Group complies with the Financial Instruments
and Exchange Act and the Timely Disclosure Rules established
by the Tokyo Stock Exchange on matters concerning the disclosure of information. In addition, we strive to proactively
disclose information to promote a clear understanding of the
Company, with an emphasis on fairness and promptness.
[Management monitoring]
Compliance
The ITO EN Group is committed to compliance, and all employees strictly observe laws and regulations and
maintain high standards of corporate ethics.
To ensure rigorous compliance, ITO EN has developed and implemented a compliance system and risk management system. To identify and solve
compliance problems and prevent their recurrence, we have established a corporate ethics hotline for use in reporting misconduct, requesting
advice, and asking questions.
For additional information on compliance issues within the ITO EN Group, please visit the ITO EN corporate website.
(http://www.itoen.co.jp/company/compliance/)
Compliance System
Board of Directors
Inspections are
conducted fairly.
Stage 2: Investigations
Investigation findings are
utilized to prevent recurrence.
Compliance Committee
Measures to Reinforce Compliance
Director responsible for corporate ethics
Compliance Department
(Department responsible for corporate ethics)
Reports are accepted by interview,
phone, mail, fax, or e-mail.
Group Company
Liaison Committee
Presidents, division heads
Compliance officers
(Department or division head)
Whistleblowers are
protected, and
confidentiality is
strictly observed.
Stage 1: Whistleblowing
External source
ITO EN Group
ITO EN Group (Group companies,
divisions, departments)
Reporting
Stage 3:
Liaison,
reporting
Internal whistleblowing
Department responsible
for inspections
Outside legal counsel
All ITO EN Group employees, part-time employees and temporary staff, and customers
ITO EN appoints compliance leaders and
persons responsible for compliance promotion
in area sales divisions and departments and at
head office organizations and production
organizations, among others, to further
reinforce the compliance system across the
Company. We aim to create an excellent,
employee-friendly company where all
employees work in unison to prevent
compliance violations or their recurrence and
place the highest importance on customers.
Use of the system is not limited to regular employees.
Risk Management System
The ITO EN Group strives to enhance risk response by assigning organizations and persons responsible for risk management at each
affiliated company and periodically exchanging information.
Fair Operating Practices
The ITO EN Group strictly observes laws, regulations, social norms, ethics, and internal regulations in the conduct of its business and adheres
to the principle of fair competition in business activities. Specifically, ITO EN observes the Antimonopoly Law, the Unfair Competition
Prevention Act, the Law on the Prevention of Delay in the Payment of Subcontracting Charges and Related Matters, and other relevant laws,
and protects and utilizes its intellectual property rights and respects the intellectual property rights of others. ITO EN also educates employees
on such laws and regulations.
Human Rights
Labor Practices
The protection of human rights is a fundamental law of society. The Group has
established the ITO EN Group Code of
Conduct and standards of conduct that
clearly define basic human rights. On the
basis of the principles set forth therein,
we strive to create employee-friendly
work environments by eradicating sexual
harassment and power harassment and
eliminating discrimination based on sex,
age, religion, or ethnicity.
Ever since its founding, ITO EN has
embraced the principle of “treating people
as people” and operated a merit system
under which everyone is given equal opportunity and fairly evaluated regardless of
academic background or sex. We have a
number of systems and offer various
benefits that support the creation of work
environments in which each employee can
work vigorously. One example is the
“Voice System,” through which all employees can offer wide-ranging suggestions for
new products, sales promotions, and other
matters.
To support employee skills development,
we constantly upgrade our education
systems to provide employees with opportunities to enhance their knowledge and
technical skills.
ITO EN also promotes work-life balance.
We have earned the “Kurumin” mark
indicating certification under the Law for
Measures to Support the
Development of the Next
Generation and encourage
male and female employees alike to utilize childcare leave.
ITO EN Corporate Book 2011
21
ITO EN Initiatives
Environmental Initiatives
ITO EN is enhancing its unique environmental initiatives and fostering greater awareness of environmental issues
among employees.
Acquisition of ISO 14001 Certification at
All Divisions and Initiatives to Reduce CO2 Emissions
Proprietary Used Tea Leaves Recycling System
(Award Winner)
In the course of business activities, ITO EN consumes energy and emits
carbon dioxide (CO2) and other greenhouse gases and waste. We have
obtained certification under the ISO 14001 international standard for
environmental management systems and operate systems to achieve
environmental targets. We obtained ISO 14001 certification at the
Shizuoka Sagara Plant and the Central Research Institute in 2000 and
expanded the scope of certification to all plants in 2001. We obtained
certification for the Head Office, the Nishi-Shinjuku Building, and Taito
Asakusa Building in April 2007, and for all sales offices by March
2009. Today, ITO EN is reinforcing environmental protection activities
throughout the Company in accordance with our environmental
management system.
Specifically, we set medium-term environmental targets and actively
engage in environmental initiatives such as recycling empty containers,
introducing environment-friendly vending machines and low-emission
vehicles, and utilizing used tea leaves and coffee grounds from production processes for composting or conversion into animal feed. We also
implement a range of measures aimed at reducing the consumption of
resources. These include reviewing production methods, adopting low
environmental impact design, such as reducing the weight of PET
bottles and label size in the
product development stage, and
decreasing energy use by boosting the efficiency of distribution
and sales systems.
Hybrid vehicles introduced
The Company generated an estimated 43,000 tons of used tea leaves
during beverage production in the fiscal year ended April 30, 2011,
and the volume is increasing each year. We recycle this waste for use
in fertilizer and other materials, and some of it goes through our
Used Tea Leaves Recycling System to be transformed into chahaigo
(meaning “containing used tea leaves”) resin, cardboard boxes, and
other useful items. In recognition of its recycling activities, ITO EN
received the “Commendation for Contributors to Promote the Establishment of a Sound Material-Cycle Society” by the Ministry of the
Environment in 2007.
We received the Grand Prize from the Ministry of Agriculture,
Forestry and Fisheries in the Energy Services Section at the 2008
Eco Products Awards in recognition of our efforts in the tea plantation business and for the environmental benefits of our tea trees,
which contribute to the absorption and long-term storage of CO2 in
the course of their growth.
These accolades underscore the high acclaim ITO EN has
received for its unique Used Tea Leaves Recycling System and
environmental initiatives in the tea cultivation business. We will
continue to encourage all employees to think about the environment
and steadily engage
in activities to protect
the environment.
at sales offices
Eco-friendly PET
bottle approximately
30% lighter in weight
than previous bottles
Envelopes made from
recycled tea leaves
Consumer Initiatives
Initiatives to Increase Customer Satisfaction
Utilizing ISO 10002
In 2009, ITO EN issued a declaration of compliance with the ISO
10002 International Standard for Complaints Management. We plan
to continue to make use of customer feedback in business management and steadfastly adhere to our long-standing principle of
“Always Putting the Customer First.”
Traceability
As a beverage company, ITO EN’s most important mission is to
deliver safe products to customers. To ensure product safety, we
have developed strict quality control systems for each process, from
raw materials production and procurement to the production of
finished products.
For tea leaves and green tea beverages, which account for
approximately 60% of ITO EN products, we have established and
rigorously implemented a comprehensive traceability system that
covers every aspect of production.
Protection of Personal Information
ITO EN obtains personal information on customers using appropriate methods, observes the Act on the Protection of Personal
Information and other relevant laws, and appropriately stores,
maintains, and controls personal information. Information obtained
through websites is strictly controlled in accordance with the ITO
EN Website Management Policy.
ITO EN’s Personal Information Protection Policy, Privacy Policy,
and Matters Disclosed Under the Personal Information Protection
Law are posted on the corporate website.
Education on Tea and Tea Culture
Persons qualified under ITO EN’s own Tea Taster Qualification
System become tea specialists
who then disseminate information and awareness about tea
and tea culture both within and
beyond the Company.
A class on brewing delicious green tea
22 ITO EN Corporate Book 2011
In Partnership with Local Communities
(Community Participation and Community Development)
As part of its business operations, ITO EN pursues activities that involve nurturing partnerships
with local communities.
Concept Behind the Tea-Producing Region Development Project
As the largest purchaser of raw tea leaves grown in Japan, ITO EN
ITO EN has entered into long-term contracts to purchase entire
fosters the sustainable development of agriculture to create value
harvests at stable prices. This makes it possible for tea growers to
for local communities, in particular farming communities.
enjoy stable income unaffected by fluctuations in market prices.
Through our activities we pursue mutual benefits for both local
In consideration of the natural environment, we not only comply
communities and ITO EN through supply chain optimization.
with laws and regulations in the use of fertilizers and agricultural
Benefits include the realization of environmentally sustainable
chemicals, we also adjust the growing season and quantity grown
agriculture, the realization and expansion of stable agriculture, the
according to plantation conditions to ensure quality and crop yield
stable supply of high-quality raw materials, and the stable supply
and reduce environmental impact. We work with local communiof high-quality products.
ties and utilize local food and livestock waste for the cultivation of
Agriculture in Japan is teetering on the edge of a crisis as a result
our tea crops. Since launching this initiative in 2001, we have
of several factors, including management issues stemming from
expanded production volume each year, mainly in the Kyushu
wild fluctuations in produce prices, the aging of farmers, and the
region.
shortage of successors. This has not only
Local Communities
ITO EN
resulted in problems of supply of highquality fresh produce and abandoned
・ Purchasing harvests via contracts
・Using abandoned farmland for
new tea plantations
Role
farmland, but has also contributed to the
・ Provision of techniques
・Tea cultivation and raw tea leaf processing
erosion of many local traditions and diminished the appeal of local communities.
・ Stable supply of fresh produce
・Stable, sustainable agricultural management
Since 2001, ITO EN has been engaged
・ Improvement in quality of produce
・Local revitalization by creating new jobs
in a large-scale project dedicated to
・ Lower production costs leading to
・Solving the shortage of next-generation farmers
lower-priced produce
Value
growing tea on abandoned farmland. To
・Productive, efficient farming achieved with
improvements in cultivation techniques
・ Traceability
ensure the stable supply of high-quality tea
・ Development of an integrated quality
・Reduction of abandoned farmland
leaves from these plantations, we share our
control system
agricultural techniques with producers.
Oi Ocha New Haiku Contest
Green Tea for a Beautiful Japan
The Oi Ocha New Haiku Contest is an enjoyable cultural activity open
to the public which over the years has inspired millions of participants
to create new twists on haiku, a traditional form of Japanese poetry.
The contest began in 1989, the same year the Oi Ocha brand was
launched and has developed into one of Japan’s largest open-entry
writing contests. This year the
number of entries exceeded
1.7 million, bringing the total
number of entries over the
years to approximately 21
million. Prize-winning entries
appear on Oi Ocha packaging to share the beauty of
haiku with millions of people.
Since 2008, ITO EN has donated a portion of sales from beverages as
proceeds to support Lake Biwa conservation activities. In 2010, we
expanded the activities to include the preservation of beautiful natural
environments in the Mount Fuji area and other parts of Japan. In this
way ITO EN employees and residents of local communities work
together to contribute to community development.
Prize-winning entries are printed
on the Oi Ocha packaging
Tree planting under the Umi-no-Mori (Sea Forest) Project sponsored by
the Tokyo Metropolitan Government
ITO EN Corporate Book 2011
23
ITO EN Initiatives
Research and Development
With a long history of multifaceted research into tea and other areas, we continue contributing to the development
of various products and innovation of manufacturing processes.
Central Research Institute
The ability to continually create new value constitutes the driving force
for a company to generate sustained growth, and R&D plays a crucial
role in this regard. ITO EN is constantly exploring new possibilities for
a variety of ingredients, centering on green tea, that have been an
integral part of Japan’s traditional culture. Today, we pursue our
research at a time of growing interest in various aspects besides flavor,
such as safety and functionality.
The Central Research Institute conducts basic research into the
flavors, stability, and health benefits of ITO EN’s products. We focus on
improving flavor by identifying elements that contribute to the taste and
fragrance of beverages. The Institute is also carrying out research with
the aim of verifying the extent to which green tea and vegetable
beverages control lifestyle diseases, such as metabolic syndrome.
Some of this research is conducted in collaboration with universities
and other external research organizations. Work to date has established
that catechins, a key component of green tea, especially gallate-type
catechins, help reduce serum cholesterol and body fat. We have also
confirmed that catechins have an inhibitory effect on the A (H1N1)
influenza virus. ITO EN publishes these findings in research papers and
announces them at academic conferences.
The Company’s regular product development activities, spearheaded
by the Product Development Department, involve research into
processing methods for raw materials, new product formulas, and
manufacturing technologies. These are based on product concepts
supported by market research and analyses of consumer preferences.
We also conduct R&D related to effective utilization of used tea leaves
and other waste.
The Agricultural Technology Department conducts research into
green tea cultivation and manufacturing processes with the aim of
ensuring stable supplies of premium-quality tea leaves. We also conduct
research aimed at developing and nurturing tea and vegetable plantations, both in Japan and overseas. One highly successful project, centering on the Kyushu region, targets the development of tea-producing
regions. We also conduct trial cultivation of vegetables.
Confirmed serum cholesterol lowering effect
Confirmed body fat lowering effect
Catechin
Identified antiallergenic effect
Confirmed allergic reaction reduction effect
Confirmed Influenza A (H1N1) virus inhibitory effect
Research Successes Related to
Components of Green Tea
Theanine
Green Tea
Extract
24 ITO EN Corporate Book 2011
Identified mechanism for brain neuron protection effect
Confirmed possibility for prevention of dementia among elderly
Confirmed as oral cancer preventive agent
Financial Section
Consolidated Financial Highlights
P26
Consolidated Financial Review
P28
Business Risks
P30
Consolidated Balance Sheets (Unaudited)
Consolidated Statements of Income (Unaudited)
Consolidated Statements of Comprehensive Income (Unaudited)
P32
Consolidated Statements of Cash Flows (Unaudited)
P35
Consolidated Statements of Changes in Net Assets (Unaudited)
P36
Non-Consolidated Operating Highlights
P38
Market Data
P39
P34
Corporate Data
The ITO EN Group
P40
Organizational Structure
P41
Domestic Network
P42
The History of ITO EN
P44
Investor Information
P46
Corporate Data/Board of Directors and Corporate Auditors
P47
ITO EN Corporate Book 2011
25
Consolidated Financial Highlights
Years ended April 30
Profit and Loss
Net Sales (Millions of yen)
Ratio of Cost of Sales (%)
Operating Income (Millions of yen)
Operating Income Ratio (%)
Net Income (Millions of yen)
2002
2003
2004
204,730
50.3
15,148
7.4
6,753
214,808
50.2
15,694
7.3
8,003
239,235
49.7
17,505
7.3
8,731
92,773
52,508
40,211
196.0
56.6
76.6
6,371
1,180
1,295
97,726
56,679
41,046
173.0
58.0
72.4
9,467
686
1,261
102,055
62,258
39,797
188.9
61.0
63.9
11,584
481
1,205
13.5
7.3
29.2
−
3.9
−
148.08
−
1,151.36
−
40
−
27.0
−
−
14.7
8.4
20.4
−
2.9
−
176.43
−
1,253.27
−
43
−
24.4
−
−
14.7
8.7
24.3
−
3.4
−
193.48
−
1,388.04
−
50
−
25.8
−
−
Financial Condition
Total Assets (Millions of yen)
Total Net Assets (Millions of yen)
Total Liabilities (Millions of yen)
Current Ratio (%)
Equity Ratio (%)
Debt/Equity Ratio (%)
Free Cash Flows (Millions of yen)
Capital Expenditures (Millions of yen)
Depreciation and Amortization (Millions of yen)
Financial Indicators
Return on Equity (%)
Return on Assets (%)
Price Earnings Ratio (Times) (Common Stock)
Price Earnings Ratio (Times) (Class-A Preferred Stock)
Price Book Value Ratio (Times) (Common Stock)
Price Book Value Ratio (Times) (Class-A Preferred Stock)
Earnings per Share (Yen) (Common Stock)
Earnings per Share (Yen) (Class-A Preferred Stock)
Book Value per Share (Yen) (Common Stock)
Book Value per Share (Yen) (Class-A Preferred Stock)
Cash Dividends per Share (Yen) (Common Stock)
Cash Dividends per Share (Yen) (Class-A Preferred Stock)
Consolidated Payout Ratio (%) (Common Stock)
Consolidated Payout Ratio (%) (Class-A Preferred Stock)
Consolidated Payout Ratio (%) (Common Stock and Class-A Preferred Stock)
(1) The Company implemented a two-for-one stock split on March 1, 2006.
(2) On September 3, 2007, ITO EN allocated free of charge Class-A Preferred Stock at a ratio of 0.3 shares to one common stock.
(3) Effective from the fiscal year ended April 30, 2007, the Company and its domestic consolidated subsidiaries adopted the new accounting standard, “Accounting Standard for
Presentation of Net Assets in the Balance Sheet” (Statement No. 5 issued by the Accounting Standards Board of Japan on December 9, 2005), and “Implementation Guidance
for the Accounting Standard for Presentation of Net Assets in the Balance Sheet” (Guidance No. 8 issued by the Accounting Standards Board of Japan on December 9, 2005),
(collectively, the “New Accounting Standards”), and “Accounting Standard for Treasury Shares and Appropriation of Legal Reserve” (Accounting Standards Board of Japan,
August 11, 2006 final revised, Statement No. 1) and “Implementation Guidance on Accounting Standard for Treasury Shares and Appropriation of Legal Reserve”
(Accounting Standards Board of Japan, August 11, 2006 final revised, Guidance No. 2).
Net Sales and Operating Income Ratio
Total Assets and Return on Assets
Net Sales
(%)
Operating Income Ratio
(Millions of yen)
400,000
Total Assets
ROA
(Millions of yen)
(%)
12
200,000
300,000
9
150,000
9
200,000
6
100,000
6
100,000
3
50,000
3
0
0
0
02
26 ITO EN Corporate Book 2011
03
04
05
06
07
08
09
10
11
(4/30)
12
0
02
03
04
05
06
07
08
09
10
11
(4/30)
(Millions of yen)
2005
2006
2007
2008
263,764
49.4
19,710
7.5
10,451
288,077
49.3
21,066
7.3
11,685
310,200
48.5
22,796
7.3
12,261
328,071
48.9
19,236
5.9
10,096
109,921
69,311
40,609
199.4
63.1
58.6
10,116
2,773
1,111
121,284
77,419
43,865
201.0
63.8
56.7
8,371
4,517
1,232
2010
2011
332,847
50.8
10,613
3.2
4,765
332,984
50.9
12,453
3.7
5,996
351,692
50.6
17,679
5.0
7,675
137,314
51,377
164.9
62.6
59.8
-3,421
4,320
1,813
154,687
104,519
50,168
187.1
67.5
48.0
-9,221
7,085
2,330
160,803
99,989
60,814
179.7
62.1
60.9
-1,871
2,804
4,287
179,846
100,455
79,390
168.3
55.8
79.1
10,621
1,868
7,034
192,462
101,630
90,831
164.4
52.7
89.5
17,581
2,100
9,011
15.9
9.9
22.1
−
3.3
−
233.15
−
1,550.52
−
70
−
30.0
−
−
15.9
10.1
32.0
−
4.8
−
(1)
130.91
−
(1)
869.21
−
(1)
(3)
57
−
30.2
−
−
15.0
9.5
29.1
−
4.2
−
137.59
−
(3)
963.71
−
47
−
34.2
−
−
10.6
6.9
22.1
(2)12.4
2.2
(2)1.3
81.61
(2)91.69
836.81
(2)845.61
38
(2)
48
46.6
52.3
48.3
4.7
3.0
33.9
17.8
1.5
1.0
35.47
45.47
800.94
805.94
38
48
107.1
105.6
106.6
6.0
3.5
32.1
18.0
1.8
1.2
45.44
55.41
808.37
813.37
38
48
83.6
86.6
81.4
7.6
4.1
24.1
15.1
1.7
1.3
59.31
69.28
821.36
826.36
38
48
64.1
69.3
65.6
(3)
85,936
Consolidated Cash Dividends per Share (Common Stock),
Consolidated Cash Dividends per Share (Class-A Preferred Stock) and
Consolidated Payout Ratio
Free Cash Flows and Capital Expenditures
(Millions of yen)
Consolidated Cash Dividends per Share (Common Stock)
Consolidated Cash Dividends per Share (Class-A Preferred Stock)
Consolidated Payout Ratio
(Yen)
Free Cash Flows
Capital Expenditures
20,000
2009
80
(%)
120
10,000
60
90
0
40
60
-10,000
20
30
-20,000
0
0
02
03
04
05
06
07
08
09
10
11
(4/30)
02
03
04
05
06
07
08
09
10
11
(4/30)
ITO EN Corporate Book 2011
27
Consolidated Financial Review
Analysis of Operating Results
1.2% from 2009) and 5,906 tons (up 0.7%), respectively. Leaf
products, easy-to-use products that offer convenient enjoyment,
continued to perform favorably. In addition to green tea, tea bag
products such as the TEAS’ TEA brand and other flavors, whose
popularity grew the previous year, and Kaorikaoru Mugicha
(barley tea) sold well.
The beverage market in the fiscal year ended April 30, 2011
saw favorable results overall, due to record-high summer
temperatures. In this environment, the ITO EN Group has
worked to strengthen its brands by actively developing new
products and modifying existing products, making “Natural,
healthy, safe, well-designed, and delicious” the basic principle
of product development.
Sales of mainstay Oi Ocha green tea beverages progressed
well. The keys to the success of the Oi Ocha series are high
quality ensured by the use of 100% Japan-grown tea leaves and
ITO EN’s highly developed raw material procurement capabilities, including the tea-producing area development project. The
Company pursued further consumption value by expanding the
Oi Ocha product line to four items, adding Hojicha and Genmaicha to complement the highly popular Ryokucha and Koi Aji
flavors.
Sales of vegetable beverages increased, boosted by favorable
sales of Ichinichibun no Yasai and other products in paperpackaged containers. In results for black tea beverages, sales of
TEAS’ TEA NEW YORK, which was well received upon its
launch the previous year and has since become the Group’s new
key brand for its black tea products, were robust. As for coffee
beverages, TULLY’S COFFEE BARISTA’S CHOICE, which
offers exceptional quality owing to meticulous attention to
everything from ingredients to production methods, continued to
perform well, thanks in part to a boost from the launch of two
espresso flavors (Forte Stile and Latte Stile) in 190g cans.
As a result, sales in the Tea Leaves and Beverages Business
increased, rising 5.2% from the previous fiscal year, to 333,548
million yen.
Overview
During the fiscal year ended April 30, 2011, business conditions
on the whole remained severe. Although signs of a recovery in
personal consumption, due to improved corporate earnings,
were evident in some sectors of the economy, the employment
situation remained difficult and a full-scale economic recovery
failed to materialize. Other positive signs, including an upturn in
exports, hinted at a gradual recovery, but the devastating impact
of the Great East Japan Earthquake plunged the economy back
into uncertainty.
In the beverage industry, although gradual price declines
continued, sales volumes progressed favorably as summer
temperatures nationwide reached record highs. Nevertheless,
adverse business conditions prevailed due to factors including
the impact of the earthquake disaster.
In these business conditions, in keeping with the management
principle “Always Putting the Customer First,” the ITO EN
Group vigorously engaged in business activities while
constantly seeking to identify and address areas of customer
dissatisfaction in the beverage market.
As a result, ITO EN recorded consolidated net sales of
351,692 million yen, up 5.6% from the previous fiscal year. On
the earnings front, a review of expenses coupled with efficient
management resulted in operating income of 17,679 million yen,
up 42.0% year on year, ordinary income of 16,526 million yen,
up 41.5%, and net income of 7,675 million yen, up 28.0%.
Results by Business Segment
Tea Leaves and Beverages Business
The amounts of green tea leaf (raw tea) produced in Japan and
imported during 2010 were approximately 85,000 tons (down
Net Sales
Operating Income and
Operating Income Ratio
(Millions of yen)
(Millions of yen)
360,000
24,000
270,000
Net Income and ROE
(%)
Operating Income
Operating Income Ratio
(Millions of yen)
Net Income
ROE
(%)
8
16,000
18,000
6
12,000
12
180,000
12,000
4
8,000
8
90,000
6,000
2
4,000
4
0
0
0
0
07
28 ITO EN Corporate Book 2011
08
09
10
11
(4/30)
07
08
09
10
11
(4/30)
16
0
07
08
09
10
11
(4/30)
Others
decreased, reflecting 5,049 million yen in dividends paid and
508 million yen in treasury stock, at cost.
Tully’s Coffee Japan Co., Ltd. performed well, with net sales
rising 13.2% year on year, to 18,143 million yen.
The above amounts for net sales are those after elimination of
inter-segment sales.
Cash Flows
Cash flows from operating activities
Cash inflows from operating activities were 19,714 million yen.
The major factors contributing to cash inflows included 14,872
million yen from income before income taxes, 9,011 million
yen from depreciation and amortization, 2,046 million yen from
increase in notes and accounts payable, 5,197 million yen from
increase in notes and accounts receivable—trade, and 6,245
million yen from income taxes paid in cash.
Analysis of Financial Position
Assets, Liabilities and Net Assets
Assets
Total assets at the end of the consolidated fiscal year ended
April 30, 2011 stood at 192,462 million yen, increasing 12,615
million yen from the previous fiscal year. The increase in total
assets mainly reflected increases of 5,191 million yen in cash
and deposits, 5,072 million yen in notes and accounts
receivable—trade, and 4,999 million yen in lease assets, which
was offset by a decrease of 1,357 million yen in investments in
securities.
Cash flows from investing activities
Cash outflows from investing activities were 2,133 million yen.
The major factor contributing to cash outflows included 2,080
million yen from acquisition of fixed assets.
Cash flows from financing activities
Cash outflows from financing activities were 12,103 million
yen. The major factors contributing to cash outflows included
6,207 million yen from repayment of finance lease obligations
and 5,037 million yen from dividends paid.
As a result, cash and cash equivalents for the consolidated
fiscal year ended April 30, 2011 amounted to 23,986 million
yen, up 5,191 million yen from the previous fiscal year.
Liabilities
Total liabilities at the end of the consolidated fiscal year ended
April 30, 2011 amounted to 90,831 million yen, increasing
11,440 million yen from the previous fiscal year. The increase
in liabilities mainly reflected increases of 1,944 million yen in
accounts payable, 4,992 million yen in lease obligations, 1,344
million yen in accrued expenses, and 1,530 million yen in
income taxes payable.
Net assets
Total net assets at the end of the consolidated fiscal year ended
April 30, 2011 stood at 101,630 million yen, increasing 1,174
million yen from the previous fiscal year. The increase in total
net assets mainly reflected net income of 7,675 million yen, up
from the previous fiscal year. However, earnings surplus
Total Liabilities and ROA
(Millions of yen)
Total Assets and Equity Ratio
(%)
(Millions of yen)
12
200,000
90,000
9
60,000
30,000
Total Liabilities
ROA
120,000
0
07
08
09
10
11
(4/30)
Consolidated Cash Flows
(%)
(Millions of yen)
100
20,000
150,000
80
10,000
6
100,000
60
0
3
50,000
40
-10,000
0
0
0
-20,000
Total Assets
Equity Ratio
07
08
09
10
11
(4/30)
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities
07
08
09
10
11
(4/30)
ITO EN Corporate Book 2011
29
Business Risks
The various risks that could potentially affect the business performance and financial position of ITO EN are summarized below, as of
April 30, 2011. However, please note that potential risks are not limited to those listed below.
(1) Domestic Economy; Consumption Trends
(4) Production System
A large part of the Group’s business is dependent on developments within Japan’s domestic economy. For this reason,
economic or financial movements within Japan, and the
influence they may have on the Japanese consumer, can exert an
influence on the Group’s business and financial situation.
Much of the Group's production of tea leaves, and of other
ingredients for products in its Beverages division, is carried out
in the Group's own factories. However, the most of production
of its ready-to-drink products, and a portion of its tea leaf
production, is contracted out to other production facilities.
To ensure that there are no stoppages in production, our own
facilities are regularly inspected, and we have adopted measures
at numerous external production facilities nationwide to ensure
their preparedness in the event of an irregularity.
However, climatic and other natural disasters influencing
production cannot be ruled out, and no guarantees can be given.
Should such an event occur, it could exert an influence on the
Group's sales performance and financial situation.
(2) Competition in the Beverage Industry
Severe competition has been unfolding in the Group’s core
business beverage market, which has been affected by sluggish
growth in sales amount due to the intense price competition
fueled by strong sales promotions and reflected consumers
saving mind.
With changes in consumer preferences, and severe share
competition for each category, products in this market have a
short lifecycle.
Under current environment, ITO EN has focused on green tea
beverages, developing products and services in accordance with
its customer's needs. ITO EN delivered impressive results by
placing “Route sales system” at the center of our customer
service to powerful effect.
As we continue to implement these measures, and the market
moves as we forecast, we will develop our ability to withstand
the competition. However, if these measures do not sufficiently
respond to the changes in the business environment, there is a
possibility that the Group's operating results and financial
situation will be affected.
(5) Climatic and Natural Disasters
As ingredients such as tea leaves, vegetables, fruits, coffee and
other agricultural produce are needed in the products that ITO
EN emphasizes, the Group's core business of tea leaves and
ready-to-drink beverages is susceptible to damage by climatic
and other natural events. Especially, a chilly summer or a warm
winter, typhoons or prolonged rain causing crop damage or loss
can lead to shortages and supply price increases and the loss of
sales opportunities. In addition, earthquakes or other natural
disasters of greater magnitude than anticipated will also disrupt
supplies. Events such as these may have an influence on the
Group's sales performance and financial situation.
(3) Sourcing and Raw Materials
(6) Dependency on the Oi Ocha Brand
Tea-related beverages are the Group's core business, with
particular emphasis placed on green tea. The decline of the
agricultural population and the shrinkage of tea-producing land,
accompanied by growing demand for tea leaves, have brought
pressure on production volume. In the event, therefore, that the
market supply-demand balance deteriorates, and as a
consequence, the Group cannot secure supplies of the
all-important tea leaves, or that procurement costs rise due to the
surge in the prices of such imported ingredients as grains and
vegetables, the Group's cost of goods may increase.
Furthermore, within our Beverages division, the share of
drinks sold in PET bottles has reached 80%. It is possible that
increases in the price of crude oil, used in the manufacture of
PET bottles, will be a factor in our cost of goods. How the Group
responds to these changes in the business environment will
influence its earnings and financial situation.
The sales of the Oi Ocha brand took a 39% share of sales in the
beverages division for the consolidated fiscal year ended April
30, 2011, an exceptionally high proportion. The domestic green
tea market is valued at over 375 billion yen making it the largest
category within the cold beverage market. (In the 2010 calendar
year, according to our research) Of this, ITO EN held a 39%
share, again according to our research.
We expect the market for green tea to continue its expansion,
and accordingly for the Oi Ocha brand to continue its growth.
However, the fierce competition in the market for green tea; the
introduction of new, diversifying products; or a slow-down in
market growth are all factors which could bring about a decline
in market share. How the Group responds to these changes in the
business environment will influence its sales performance and
financial situation.
30 ITO EN Corporate Book 2011
(7) Exchange Fluctuations
The Group is engaged in developing overseas business. The
Group's overseas subsidiaries submit their financial reports in
local currency, which are translated into yen at the exchange
rate when the consolidated financial reports are compiled.
Consequently, the Group's performance results and financial
situation may be influenced by exchange fluctuations.
(8) Overseas Subsidiaries
The Group has consolidated subsidiaries overseas, including
ITO EN (North America) INC., KAI (North America) LLC,
both of which are headquartered in New York State, ITOEN
(USA) INC. in Hawaii, Mason Distributors, Inc. in Florida and
ITO EN AUSTRALIA PTY. LIMITED in Victoria, Australia.
These overseas consolidated subsidiaries represent equity
investment of 14.4 billion yen in the consolidated fiscal year
ended April 30, 2011, and all reported a cumulative operating
loss, except for Mason Distributors, Inc.
All the subsidiaries have developed a plan to overcome
losses by developing new business relations, achieving greater
efficiency in production, and implementing cost savings
measures. It is possible that the Group's business performance
and financial situation will be affected if the subsidiaries do
not reach their objectives.
(9) Legal and Other Regulations
The Group's business must comply with the Food Sanitation
Law, the Product Liability Law (PL), the Waste Management
Law and various other legal regulations. In addition, under
recycling legislation in the state of Hawaii, drinks are subject
to a special tax, the proceeds of which are to be used to finance
a bottle-recycling plant. The location and structure of the
business determines the burden and cost of legal and other
requirements.
The Group abides by all laws and regulations. If legal or
other regulations become more stringent, or if strengthening
regulations increase the cost burden, it is possible that they will
exert an influence on the Group's business performance and
financial situation.
(10) Personal Information
Through its activities in route sales and mail order service,
dealings with suppliers, and own consumer-directed marketing
activities, such as New Haiku Contest, large amounts of latent
client information come into the Group's possession. This
confidential client information is managed by the Group, or
consigns to a data management company.
The Group's Compliance Department has established a
secure structure for the management of this information. The
Group recognizes that its credibility would be damaged if such
confidential information were leaked to outside parties, which
could also exert an influence on the Group's business performance and financial situation.
(11) Food Safety and Hygiene Control
Awareness of food safety and hygiene are the utmost concern
of the Group's management, and product quality management
offices have been established to this end. These offices conduct
product quality inspections under their own direction and also
conduct regular on-site inspections at plants of outsourcers.
ITO EN also holds quality meetings on a regular basis, where
Group manufacturing management and outsourcing plant
managers receive feedback on inspection results in an effort to
raise awareness concerning food safety and hygiene. In
addition to these activities, ITO EN also conducts inspections
to prevent the introduction of foreign substances derived from
raw materials and the use of prohibited additives.
In light of circumstances following the Great East Japan
Earthquake, the Group is performing testing for radioactive
substances on all beverage products as well as raw materials of
green tea if necessary.
Domestic company outlets deal in items that are subject to
regulations of the Food Sanitation Law. In addition to compliance with legal ordinances, ITO EN conducts thorough
sanitary oversight based upon standards of hygiene at each
store and based upon the Group manual.
Regarding overseas restaurants, we have employed four
qualified food safety and hygiene officers in the United States
in accordance with local legislation, who ensure that legal
requirements are implemented.
The Group has never committed any violation of food safety
and hygiene practices, and has never been subject to official
censure or guidance in this regard. However, in the event that
problems of food quality were to arise (such as a foreign body
being found, or incorrectly labeled produce being distributed,
or foreign substances derived from raw materials or prohibited
additives being used) of if such problems were harmfully
rumored to have arisen, or if there were an outbreak of food
poisoning or similar occurrence, this could exert an influence
on the Group's business performance and financial position.
(12) Changes in Asset Valuations
The Group owns assets in land and marketable securities, and
it is possible that these will exert an influence on the Group's
business performance and financial situation if their valuations
decline.
ITO EN Corporate Book 2011
31
Consolidated Balance Sheets (Unaudited)
As of April 30, 2010 and 2011
(Millions of yen)
ASSETS
2010
2011
Cash and deposits
18,795
23,986
Notes and accounts receivable—trade
34,466
39,538
Merchandise and finished products
16,072
15,709
Raw materials and supplies
7,127
6,607
Accounts receivable—other
7,992
8,859
Deferred income tax assets
1,989
2,470
Other
2,084
2,218
Current assets:
Allowance for doubtful accounts
Total current assets
(125)
(86)
88,402
99,302
14,720
14,761
3,538
3,426
697
744
Land
13,941
13,968
Lease assets
19,702
24,746
209
44
52,810
57,692
13,944
12,824
144
100
Software
7,465
6,764
Other
2,404
2,089
23,959
21,778
Investments in securities
4,441
3,083
Deferred income tax assets
1,194
1,610
Other
9,319
9,306
Fixed assets:
Property, plant and equipment;
Buildings and structures
Machines and vehicles
Tools and furniture
Construction in progress
Subtotal
Intangible fixed assets;
Goodwill
Lease assets
Subtotal
Investments and other assets;
Allowance for doubtful accounts
(280)
(310)
Subtotal
14,674
13,689
Total fixed assets
91,444
93,159
179,846
192,462
Total assets
32 ITO EN Corporate Book 2011
(Millions of yen)
LIABILITIES AND NET ASSETS
2010
2011
25,083
27,027
310
310
Lease obligations
5,116
7,428
Accrued expenses
14,243
15,587
Income taxes payable
3,532
5,063
Accrued bonuses
2,573
2,610
Other
1,681
2,384
52,541
60,413
3,457
3,147
16,554
19,234
976
976
Allowance for retirement and severance benefits for employees
4,268
4,892
Other
1,593
2,167
26,849
30,418
79,390
90,831
Common stock and preferred stock
19,912
19,912
Capital surplus
20,259
20,259
Retained earnings
73,095
74,735
Treasury stock, at cost
(5,348)
(4,865)
Current liabilities:
Accounts payable
Short-term loans payable
Total current liabilities
Non-current liabilities:
Long-term loans payable
Lease obligations
Deferred income tax liabilities
Total noncurrent liabilities
Total liabilities
Shareholders’ equity:
Total shareholders’ equity
107,917
110,041
329
68
41
2
Valuation, translation adjustments and others:
Unrealized holding gains on securities, net of tax
Deferred gains (losses) on hedges
Land revaluation difference, net of tax
(6,260)
(6,260)
Foreign currency translation adjustments
(1,712)
(2,333)
(7,601)
(8,523)
Total accumulated gains (losses) from valuation, translation adjustments and others
11
7
128
105
Total net assets
100,455
101,630
Total liabilities and net assets
179,846
192,462
Stock acquisition rights
Minority interests
ITO EN Corporate Book 2011
33
Consolidated Statements of Income (Unaudited)
For the years ended April 30, 2010 and 2011
(Millions of yen)
Operating income and expenses:
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income and expenses:
Non-operating income;
Interest income
Dividend income from securities
Rent income
Insurance income
Compensation income for damaged goods
Equity income from an unconsolidated subsidiary and affiliates
Other
Non-operating expenses;
Interest expense
Loss on foreign currency exchange
Cancellation of finance lease
Other
Ordinary income
Extraordinary gains and losses:
Extraordinary gains;
Gain on sales of fixed assets
Gain on sales of investments in securities
Gain on withdrawal of golf membership
Other
Extraordinary losses;
Loss on sales of noncurrent assets
Loss on disposal of fixed assets
Impairment losses(*2)
Disaster loss
Loss on valuation of investment securities
Loss on adjustment for changes in accounting standard for asset retirement obligations
Loss on the liquidation of a subsidiary
Other
Income before income taxes
Income taxes—current
Income taxes—deferred
Total income taxes
Income before minority interests
Minority interests in income
Net income
2010
2011
332,984
169,590
163,393
150,940
12,453
351,692
177,992
173,699
156,020
17,679
402
23
41
48
—
50
51
187
1,176
785
98
33
258
11,679
491
13
40
36
67
56
58
217
1,643
969
543
—
130
16,526
4
2
2
—
—
510
—
95
188
80
21
—
122
2
11,173
5,829
(686)
5,143
—
33
5,996
143
—
62
80
0
1,796
0
57
93
386
1,009
244
—
4
14,872
7,793
(602)
7,191
7,681
5
7,675
Consolidated Statements of Comprehensive Income (Unaudited)
(Millions of yen)
2010
Income before minority interests
Other comprehensive income:
Valuation difference on available-for-sale securities
Net deferred losses on derivatives under hedge
Foreign currency translation adjustment
Share of other comprehensive income of associates accounted for using equity method
Other comprehensive income
Comprehensive income attributable to:
Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests
34 ITO EN Corporate Book 2011
2011
—
7,681
—
—
—
—
—
—
—
—
(238)
(38)
(595)
(48)
(921)
6,759
6,753
5
Consolidated Statements of Cash Flows (Unaudited) For the years ended April 30, 2010 and 2011
(Millions of yen)
Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Impairment loss
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in accrued bonuses for employees
Increase (decrease) in allowance for retirement and severance benefits for employees
Interest and dividends income
Interest expense
Loss (gain) on foreign currency translation
Loss (gain) on valuation of investments in securities
Loss (gain) on sales of investments in securities
Decrease (increase) in notes and accounts receivable—trade
Decrease (increase) in inventories
Loss on adjustment for changes in accounting standard for asset retirement obligations
Decrease (increase) in other current assets
Decrease (increase) in other fixed assets
Increase (decrease) in notes and accounts payable
Increase (decrease) in consumption tax payable
Increase (decrease) in other current liabilities
Other, net
Subtotal
Interest and dividend income received in cash
Interest expenses paid in cash
Income taxes paid in cash
Net cash flows from operating activities
Cash flows from investing activities:
Acquisition of investments in securities
Proceeds from sales of investments in securities
Acquisition of fixed assets
Acquisition of long-term prepaid expenses
Acquisition of investments in affiliates
Other, net
Net cash flows from investing activities
Cash flows from financing activities:
Proceeds from long-term loans payable
Repayment of long-term loans payable
Purchase of treasury stock
Proceeds from sales of treasury stock
Repayment of finance lease obligations
Dividends paid
Dividends paid to minority shareholders
Other, net
Net cash flows from financing activities
Effect of exchange rate fluctuation on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2010
2011
11,173
7,034
188
939
(46)
8
588
(65)
785
25
21
—
(5,879)
1,156
—
(318)
(157)
2,193
1,576
1,971
443
21,641
70
(788)
(3,731)
17,191
14,872
9,011
93
931
(8)
37
624
(54)
969
277
1,009
(0)
(5,197)
734
224
(971)
25
2,046
1,091
1,426
(290)
26,873
57
(972)
(6,245)
19,714
(1,441)
—
(4,470)
(46)
(902)
290
(6,569)
(14)
0
(2,080)
(19)
—
(19)
(2,133)
3,932
(165)
(502)
2
(3,975)
(5,063)
(52)
(5)
(5,830)
15
4,807
13,988
18,795
—
(310)
(508)
1
(6,207)
(5,037)
(28)
(13)
(12,103)
(285)
5,191
18,795
23,986
ITO EN Corporate Book 2011
35
Consolidated Statements of Changes in Net Assets (Unaudited)
(Millions of yen)
For the years ended April 30, 2010 and 2011
Shareholders’ equity:
Common stock and preferred stock
Balance at the end of the previous period
Balance at the end of the current period
Capital surplus
Balance at the end of the previous period
Balance at the end of the current period
Retained earnings
Balance at the end of the previous period
Changes during the current period
Cash dividends paid
Net income
Retirement of treasury stock
Disposal of treasury stock
Reversal of land revaluation differences, net of tax
Total changes during the current period
Balance at the end of the current period
Treasury stock
Balance at the end of the previous period
Changes during the current period
Purchase of treasury stock
Retirement of treasury stock
Disposal of treasury stock
Total changes during the current period
Balance at the end of the current period
Total shareholders’ equity
Balance at the end of the previous period
Changes during the current period
Cash dividends paid
Net income
Purchase of treasury stock
Retirement of treasury stock
Disposal of treasury stock
Reversal of land revaluation differences, net of tax
Total changes during the current period
Balance at the end of the current period
36 ITO EN Corporate Book 2011
2010
2011
19,912
19,912
19,912
19,912
20,259
20,259
20,259
20,259
72,141
73,095
(5,080)
5,996
–
(25)
63
953
73,095
(5,049)
7,675
(969)
(16)
–
1,640
74,735
(4,876)
(5,348)
(502)
–
31
(471)
(5,348)
(508)
969
22
483
(4,865)
107,435
107,917
(5,080)
5,996
(502)
–
5
63
482
107,917
(5,049)
7,675
(508)
–
5
–
2,123
110,041
(Millions of yen)
For the years ended April 30, 2010 and 2011
Valuation and translation adjustments:
Unrealized holding gains on securities, net of tax
Balance at the end of the previous period
Changes during the current period
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
Deferred gains (losses) on hedges
Balance at the end of the previous period
Changes during the current period
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
Land revaluation difference, net of tax
Balance at the end of the previous period
Changes during the current period
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
Foreign currency translation adjustments
Balance at the end of the previous period
Changes during the current period
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
Total valuation and translation adjustments
Balance at the end of the previous period
Changes during the current period
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
Stock acquisition rights
Balance at the end of the previous period
Changes during the current period
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
Minority interests
Balance at the end of the previous period
Changes during the current period
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
Total net assets
Balance at the end of the previous period
Changes during the current period
Cash dividends paid
Net income
Purchase of treasury stock
Disposal of treasury stock
Reversal of land revaluation difference, net of tax
Net changes of items other than shareholders’ equity
Total changes during the current period
Balance at the end of the current period
2010
2011
270
329
58
58
329
(261)
(261)
68
(23)
41
64
64
41
(38)
(38)
2
(6,196)
(6,260)
(63)
(63)
(6,260)
–
–
(6,260)
(1,658)
(1,712)
(53)
(53)
(1,712)
(621)
(621)
(2,333)
(7,607)
(7,601)
6
6
(7,601)
(921)
(921)
(8,523)
14
11
(2)
(2)
11
(4)
(4)
7
146
128
(18)
(18)
128
(22)
(22)
105
99,989
100,455
(5,080)
5,996
(502)
5
63
(15)
466
100,455
(5,049)
7,675
(508)
5
–
(948)
1,174
101,630
ITO EN Corporate Book 2011
37
Non-Consolidated Operating Highlights
(Millions of yen)
Years ended April 30
Sales by product
Tea leaves
Beverages
Japanese tea beverages
Chinese tea beverages
Vegetable beverages
Fruit beverages
Coffee beverages
Black tea beverages
Functional beverages
Mineral water
Other beverages
Supplements and other
Sales by container (thousands of cases)
Cans
PET bottles (2L)
PET bottles (500ml)
PET bottles (350ml and smaller)
PET bottles (others)
Cartons
Others
Sales by business category
Supermarkets
Convenience stores
Vending machines
Others
Sales by region
Hokkaido/Tohoku
Kanto
Chubu
Kansai
Chugoku/Shikoku
Kyushu
Sales by Product
(Year ended April 30, 2011)
Sales by Container (Volume Basis)
(Year ended April 30, 2011)
9.4%
Tea leaves
Japanese tea beverages 48.2%
5.0%
Chinese tea beverages
11.6%
Vegetable beverages
4.5%
Fruit beverages
7.4%
Coffee beverages
4.8%
Black tea beverages
1.5%
Functional beverages
3.4%
MIneral water
3.0%
Other beverages
1.2%
Supplements and other
Years ended April 30
Vending machine installation (units)
Number of sales offices
Number of employees
38 ITO EN Corporate Book 2011
Cans
PET bottles (2L)
PET bottles (500ml)
PET bottles (350ml and smaller)
PET bottles (others)
Cartons
Others
11.3%
26.0%
31.7%
14.2%
7.4%
8.6%
0.9%
2010
2011
YOY % change
312,766
30,152
278,541
158,811
14,492
34,495
14,467
21,353
10,467
5,194
10,525
8,732
4,072
177,543
19,881
45,912
55,117
26,624
14,828
13,225
1,922
329,631
30,962
294,787
158,908
16,327
38,138
14,902
24,530
15,747
5,058
11,346
9,827
3,882
193,153
21,915
50,217
61,145
27,383
14,234
16,601
1,655
5.4
2.7
5.8
0.1
12.7
10.6
3.0
14.9
50.4
-2.6
7.8
12.5
-4.7
8.8
10.2
9.4
10.9
2.8
-4.0
25.2
-13.9
111,443
73,874
52,570
74,877
119,378
75,955
53,379
80,920
7.1
2.8
1.5
8.1
29,913
153,881
28,458
36,648
16,042
20,895
32,340
165,248
29,941
39,688
18,171
22,702
8.1
7.4
5.2
8.3
13.3
8.7
Sales by Business Category
(Year ended April 30, 2011)
Supermarkets
Convenience stores
Vending machines
Others
Sales by Region
(Year ended April 30, 2011)
36.2%
23.0%
16.2%
24.5%
10.5%
53.6%
9.7%
12.9%
5.9%
7.4%
Hokkaido/Tohoku
Kanto
Chubu
Kansai
Chugoku/Shikoku
Kyushu
2010
2011
141,423
204
5,237
149,879
201
5,278
Market Data
Beverage Market
2006
Calendar year
Tea
Coffee
Vegetable
Fruit
Carbonated
Others
Total
2007
2008
2009
2010
Billions
of yen
YOY %
change
Billions
of yen
YOY %
change
Billions
of yen
YOY %
change
Billions
of yen
YOY %
change
Billions
of yen
YOY %
change
918.2
948.2
184.5
359.6
555.9
664.9
3,631.5
-1.4%
-0.7%
15.9%
-4.5%
3.2%
2.0%
0.5%
923.4
956.6
190.0
379.6
581.9
683.9
3,715.6
0.6%
0.9%
3.0%
5.6%
4.7%
2.9%
2.3%
910.5
969.1
156.2
324.2
592.0
663.9
3,616.0
-1.4%
1.3%
-17.8%
-14.6%
1.7%
-2.9%
-2.7%
870.1
966.2
144.4
305.6
603.3
638.2
3,527.7
-4.4%
-0.3%
-7.6%
-5.7%
1.9%
-3.9%
-2.4%
885.0
952.4
146.8
312.2
643.4
668.0
3,607.8
1.7%
-1.4%
1.7%
2.1%
6.6%
4.6%
2.2%
Billions
of yen
YOY %
change
Billions
of yen
YOY %
change
Billions
of yen
YOY %
change
Billions
of yen
YOY %
change
Billions
of yen
YOY %
change
421.0
26.7
140.2
149.7
180.5
918.2
-5.8%
2.0%
3.7%
-3.5%
7.7%
-1.4%
415.0
29.8
147.4
148.1
183.0
923.4
-1.4%
11.4%
5.1%
-1.1%
1.4%
0.6%
402.0
31.2
144.4
138.2
194.5
910.5
-3.1%
4.6%
-2.0%
-6.7%
6.3%
-1.4%
382.0
32.0
133.0
128.0
195.1
870.1
-5.0%
2.6%
-8.0%
-7.4%
0.3%
-4.4%
375.0
34.5
126.5
131.0
218.0
885.0
-1.8%
7.8%
-4.9%
2.3%
11.7%
1.7%
Tea Beverage Market
2006
Calendar year
Green tea
Barley tea
Blended tea
Chinese tea
Black tea
Total
2007
2008
2009
2010
Green Tea Leaf Market
2006
Calendar year
2007
YOY %
change
Domestic raw tea leaf production capacity (Tons)
Green tea leaf market (Billions of yen)
Beverage Market
Tea beverages
Coffee beverages
Vegetable beverages
(Billions
of yen)
4,000
91,800
330.0
-8.2%
-1.5%
94,100
321.5
Green tea
Barley tea
Blended tea
(Billions
of yen)
500
Chinese tea
Black tea
400
3,000
2009
YOY %
change
95,500
317.0
2.5%
-2.6%
1.5%
-1.4%
Domestic Raw Tea Leaf
Production Capacity
Tea Beverage Market
Fruit beverages
Carbonated beverages
Other beverages
2008
YOY %
change
2010
YOY %
change
86,000
298.0
YOY %
change
85,000
289.7
-9.9%
-6.0%
-1.2%
-2.8%
Green Tea Leaf Market
(Tons)
(Billions
of yen)
120,000
400
90,000
300
60,000
200
30,000
100
300
2,000
200
1,000
100
0
0
06
07
08
09
10
0
0
06
07
08
09
10
06
07
08
09
10
06
07
08
09
10
Others Data (2010)
Sales Volume Share by
Beverage Manufacturer
Sales Volume Contribution
by Container Type
Sales Contribution
by Sales Channel
Company A
28.7%
Cans
11%
Supermarkets
Company B
19.5%
2-liter PET bottles
27%
Convenience stores 20%
ITO EN
10.3%
34%
500-ml PET bottles 33%
Vending machines
35%
Company C
9.9%
Small PET bottles
14%
Others
11%
Company D
8.5%
Other PET bottles
6%
Others
9%
Others
23.1%
Note: Some figures for 2010 are estimates. Source: ITO EN Years: January–December
ITO EN Corporate Book 2011
39
The ITO EN Group
Company name ITO EN, LTD.
Business lines
Manufacture and sales of tea leaves and beverages
Location
47-10, Honmachi 3-chome, Shibuya-ku, Tokyo, Japan
Established
August 22, 1966
Capital
¥19,912 million
Fiscal year-end
April 30
Main Domestic Companies
ITO EN SANGYO, LTD.
Manufacture, sales, and cargo transportation of tea products
3272-1, Sakabe, Makinohara-shi, Shizuoka Prefecture, Japan
May 11, 1981
¥300 million
April 30
OKINAWA ITO EN, LTD.
Sales of beverages and tea leaves
10-4, Nishizakicho 4-chome, Itoman-shi,
Okinawa Prefecture, Japan
August 10, 1981
¥90 million
April 30
ITO EN KANSAI CHAGYO, LTD.
Manufacture and sales of tea products
1-4, Yasakadai 3-chome, Suma-ku, Kobe-shi,
Hyogo Prefecture, Japan
April 2, 1976
¥10 million
April 30
Tully’s Coffee Japan Co., Ltd.
Operation of restaurants and franchise business
22, Tansu-cho, Shinjuku-ku, Tokyo, Japan
May 12, 1998
¥100 million
March 31
ITO EN ∙ ITOCHU MINERAL WATERS CO., LTD.
Import and sales of mineral water
22, Tansu-cho, Shinjuku-ku, Tokyo, Japan
April 1, 2008
¥300 million
April 30
GREEN VALUE CO., LTD.
Maintenance of vending machines; procurement of vending
machines, vehicles, etc.
28-10, Nishishinjuku 4-chome, Shinjuku-ku, Tokyo, Japan
February 1, 2010
¥45 million
April 30
40 ITO EN Corporate Book 2011
Main Overseas Companies
RC Dining Co., Ltd.
Operation of cafe-style restaurants
22, Tansu-cho, Shinjuku-ku, Tokyo, Japan
June 1, 2010
¥70 million
April 30
ITOEN (USA) INC.
Manufacture and sales of beverages
Honolulu, Hawaii, USA
July 7, 1987
US$21.5 million
April 30
Chichiyasu Company
Manufacture and sales of dairy products such as
milk, yogurt, etc.
Manufacture and sales of fermented dairy products
and lactic acid bacteria beverage; manufacture and
sales of fruit juice beverages and soft drinks and
sales of non-bake desserts
337-4, Ono, Hatsukaichi-shi, Hiroshima Prefecture,
Japan
December 1, 2005 (Established on June 1, 1886)
¥100 million
April 30
ITO EN AUSTRALIA PTY. LIMITED
Manufacture and sales of tea leaves
Victoria, Australia
September 9, 1994
A$25.7 million
April 30
ITO EN (North America) INC.
Sales of beverages and tea leaves
New York, USA
May 10, 2001
US$81 million
April 30
Mason Distributors, Inc.
Manufacture and sales of supplements
Florida, USA
April 24, 1967
US$1,700
April 30
Ningbo Shunyi Tea Products Co., Ltd.
Manufacture, export, and sales of tea leaves
Yuyao, Zhejiang Province, China
September 14, 1994
RMB7.6 million
December 31
Fujian New Oolong Drink Co., Ltd.
Manufacture, export, and sales of beverages
Fuzhou, Fujian Province, China
February 25, 1998
RMB21 million
December 31
Organizational Structure (As of the end of July 2011)
General Meeting
of Shareholders
Administration
Division
Board of
Corporate
Auditors
Human Resources and
General Affairs Division
Board of
Directors
Product Planning
Division
Auditors
National Business
Development Division
Chairman
National Sales
Division
Vice-Chairman
of the Board
Hokkaido and
Tohoku
Area Sales Division
President
Northern and
Eastern Kanto
Area Sales Division
Executive Board
Tokyo and
Southern Kanto Area
Sales Division
Area Sales Control
Headquarters
Chubu
Area Sales Division
Kansai and
Shikoku Area
Sales Division
Chugoku and
Kyushu Area Sales
Division
Area Sales
Management
Division
Special Sales
Division
Shizuoka Sagara
Plant
Production
Headquarters
Internal Auditing Department
Secretarial Department
Merchandise Department
Sales Planning Department
Public Relations Department
Customer Consultation Department
Advertising Department
Merchandising Department
Health Food Department
Legal Department
Management Control Department
Financial & Accounting Department
Information Management Department
Operation Management Department
Environment Department
Management Planning Department
Intellectual Property Department
Personnel Department
Career Development Department
Personal Ability Development Department
General Affairs Department
Transportation Department
Product Planning Department I
Product Planning Department II
Product Planning Department III
Management Department
National Business Development Department I
National Business Development Department II
National Business Development Department III
Public Transportation Sales Department
Sales Management Department
Convenience Store Sales Department I
Convenience Store Sales Department II
Chilled Beverage Sales Department
Volume Retailer Sales Department I
Volume Retailer Sales Department II
International Department I
International Department II
Shanghai Representative Office
Sales Research and Support Department
Logistics Control Department
Sales Management Department
Hokkaido Area Sales Department
Northern Tohoku Area Sales Department
Southern Tohoku Area Sales Department
Sales Office Management Department
Joetsu Area Sales Department
Eastern Saitama Area Sales Department
Western Saitama Area Sales Department
Tochigi Area Sales Department
Ibaraki Area Sales Department
Central Chiba Area Sales Department
Eastern Chiba Area Sales Department
Northern Chubu Area Sales Department
Sales Office Management Department
Eastern Tokyo Area Sales Department
Southern Tokyo Area Sales Department
Western Tokyo Area Sales Department
Northern Tokyo Area Sales Department
Koshin Area Sales Department
Eastern Kanagawa Area Sales Department
Western Kanagawa Area Sales Department
Tokyo Volume Retailer Sales Department
Sales Office Management Department
Shizuoka Area Sales Department
Northern Chubu Area Sales Department
Southern Chubu Area Sales Department
Hokuriku Area Sales Department
Chubu Volume Retailer Sales Department
Chubu Sales Promotion Department
Sales Office Management Department
Northern Kinki Area Sales Department
Eastern Kinki Area Sales Department
Western Kinki Area Sales Department
Hyogo Area Sales Department
Shikoku Area Sales Department
Kansai Volume Retailer Sales Department
Kansai Department Store Department
Kansai Sales Promotion Department
Sales Office Management Department
Eastern Chugoku Area Sales Department
Western Chugoku Area Sales Department
Northern Kyushu Area Sales Department
Southern Kyushu Area Sales Department
Kyushu Volume Retailer Sales Department
Kyushu Sales Promotion Department
Sales Office Management Department
Sales Research and Support Department
Vending Machine Operation Department
Sales Management Department
Special Sales Department I
Special Sales Department II
Special Sales Department III
Retail Sales Department I
Retail Sales Department II
Department Store Department
Product Planning and Sales Promotion Department
Sales Management Department
Management Department
Manufacturing Control Department
Procurement Department
First Manufacturing Department
Second Manufacturing Department
Third Manufacturing Department
Beverages Materials Department
Beverages Department
Logistics Department
Quality Control Department I
Quality Control Department II
Product Development Department
Agricultural Technology Department
Central Research Institute
ITO EN Corporate Book 2011
41
Domestic Network (As of the end of July 2011)
Area Sales Control Headquarters
200 Sales Offices
■ Hokkaido Area
9 Sales Offices
Southern Sapporo Branch
Eastern Sapporo Branch
Western Sapporo Branch
Tomakomai Branch
Hakodate Branch
Asahikawa Branch
■ Joetsu Area
8 Sales Offices
■ Ibaraki Area
7 Sales Offices
■ Southern Tokyo Area
7 Sales Offices
Maebashi Branch
Eastern Mito Branch
Shinjuku Branch
Isesaki Branch
Western Mito Branch
Takaido Branch
Takasaki Branch
Hitachi Branch
Minato Branch
Shibukawa Branch
Tsuchiura Branch
Tokyo Konan Branch
Eastern Niigata Branch
Tsukuba Branch
Meguro Branch
Western Niigata Branch
Toride Branch
Shinagawa Branch
Nagaoka Branch
Kashima Branch
Tokyo Ota Branch
■ Central Chiba Area
5 Sales Offices
■ Western Tokyo Area
6 Sales Offices
Joetsu Sales Office
Obihiro Branch
Kitami Sales Office
■ Eastern Saitama Area
6 Sales Offices
Chiba Branch
Setagaya Branch
Kushiro Branch
Omiya Branch
Ichikawa Branch
Chofu Branch
Kawaguchi Branch
Matsudo Branch
Western Tokyo Branch
Yashio Branch
Kashiwa Branch
Fuchu Branch
Kasukabe Branch
Yachiyo Branch
Hachioji Branch
■ Northern Tohoku Area
7 Sales Offices
Aomori Branch
Hirosaki Branch
Hachinohe Branch
Kuki Branch
Kumagaya Branch
Morioka Branch
Oume Branch
■ Eastern Chiba Area
5 Sales Offices
Narita Branch
■ Northern Tokyo Area
6 Sales Offices
Asahi Branch
Ikebukuro Branch
Mizusawa Branch
■ Western Saitama Area
5 Sales Offices
Akita Branch
Urawa Branch
Mobara Branch
Suginami Branch
Yokote Branch
Kawagoe Branch
Kisarazu Branch
Nerima Branch
Tokorozawa Branch
Ichihara Branch
Itabashi Branch
■ Southern Tohoku Area
10 Sales Offices
Southern Sendai Branch
Niiza Branch
Higashimatsuyama Branch
Sendai Branch
Arakawa Branch
■ Eastern Tokyo Area
7 Sales Offices
Chuo Branch
Adachi Branch
Eastern Tokyo Branch
■ Koshin Area
6 Sales Offices
Eastern Utsunomiya Branch
Koto Branch
Kofu Branch
Koriyama Branch
Western Utsunomiya Branch
Asakusa Branch
Eastern Yamanashi Sales Office
Aizu Sales Office
Nasu Branch
Sumida Branch
Matsumoto Branch
Fukushima Branch
Nikko Sales Office
Katsushika Branch
Ina Branch
Iwaki Branch
Sano Branch
Edogawa Branch
Nagano Branch
Yamagata Branch
Oyama Branch
Sakata Sales Office
Ota Branch
Eastern Sendai Branch
■ Tochigi Area
7 Sales Offices
Furukawa Branch
42 ITO EN Corporate Book 2011
Komoro Branch
■ Eastern Kanagawa Area
7 Sales Offices
■ Southern Chubu Area
7 Sales Offices
■ Western Kinki Area
6 Sales Offices
■ Western Chugoku Area
5 Sales Offices
Yokohama Isogo Branch
South Nagoya Branch
Umeda Branch
Hiroshima Branch
Yokohama Izumi Branch
Toyota Branch
Yodogawa Branch
East Hiroshima Branch
Shin-Yokohama Branch
Mikawa Branch
Ibaragi Branch
North Hiroshima Branch
Yokohama Kohoku Branch
Toyokawa Branch
Osaka Tsurumi Branch
Yamaguchi Branch
Kawasaki Branch
Yokkaichi Branch
Miyakojima Branch
Shunan Branch
Shonan Branch
Tsu Branch
Neyagawa Branch
Yokosuka Branch
Ise Branch
■ Northern Kyushu Area
9 Sales Offices
■ Hyogo Area
6 Sales Offices
Fukuoka Branch
■ Western Kanagawa Area
7 Sales Offices
■ Hokuriku Area
5 Sales Offices
Kobe Branch
East Fukuoka Branch
Yokohama Midori Branch
Toyama Branch
East Kobe Branch
West Fukuoka Branch
Machida Branch
Takaoka Branch
West Kobe Branch
Yahata Branch
Sagamihara Branch
Kanazawa Branch
Amagasaki Branch
Kokura Branch
Ebina Branch
Komatsu Branch
Itami Branch
Kurume Branch
Kawasaki Miyamae Branch
Fukui Branch
Takasago Branch
Saga Branch
Nagasaki Branch
Atsugi Branch
Sasebo Branch
■ Northern Kinki Area
6 Sales Offices
■ Shikoku Area
6 Sales Offices
Kyoto Branch
Takamatsu Branch
West Kyoto Branch
Sakaide Branch
Shizuoka Branch
Fukuchiyama Branch
Matsuyama Branch
Kumamoto Branch
Sagara Branch
Nara Branch
Niihama Branch
Oita Branch
Hamamatsu Branch
Shiga Branch
Tokushima Branch
Miyazaki Branch
Numazu Branch
Otsu Branch
Kochi Branch
Nobeoka Sales Office
Odawara Branch
■ Shizuoka Area
7 Sales Offices
Miyakonojo Branch
Izu Sales Office
■ Eastern Kinki Area
7 Sales Offices
■ Eastern Chugoku Area
6 Sales Offices
Sakai Branch
Okayama Branch
Nanba Branch
Tsuyama Sales Office
Ikuno Branch
Kurashiki Branch
Nagoya Branch
Yao Branch
Matsue Branch
East Nagoya Branch
Suminoe Branch
Tottori Representative Office
West Nagoya Branch
Kishiwada Branch
Fukuyama Branch
North Nagoya Branch
Wakayama Branch
Fuji Branch
Kakegawa Branch
■ Northern Chubu Area
7 Sales Offices
Komaki Branch
Gifu Branch
Tono Branch
■ Southern Kyushu Area
8 Sales Offices
Kagoshima Branch
Izumi Representative Office
Kirishima Sales Office
Head Office, etc.
・ Head Office
・ Nishi-Shinjuku Building
・ Taito Asakusa Building
・ Kansai Headquarters
・ Shinmeicho Building
・ Shizuoka Sagara Plant
ITO EN Corporate Book 2011
43
The History of ITO EN
Corporate
1966
Aug The Frontier Tea Corporation, ITO EN’s
predecessor, established in Shizuoka City,
Shizuoka Prefecture.
1968
Feb First sales branch, the Kanagawa Branch (now
the Yokohama Midori Branch), opened in
Yokohama City, Kanagawa Prefecture.
1969
May Company name changed to ITO EN, LTD.
1971
Jul
Products and Technology
Others
Headquarters relocated to Shinjuku Ward,
Tokyo.
1972
Feb Introduction of high-speed automatic
wrapping equipment developed by Industrial
Gesellschaft of Switzerland. Development
of vacuum pack technology to preserve the
freshness of green tea leaves.
1974
May Shizuoka Sagara Plant constructed in Sagara
Town (now Makinohara City), Haibara,
Shizuoka Prefecture, and production systems
consolidated there.
1977
Jun First directly managed specialty store of the
Chajuttoku chain opened in Yokohama City,
Kanagawa Prefecture.
1979
Aug Signed a contract with the China National
Native Produce and Animal By-Products
Import and Export Corporation, a Chinese
company, to become the first company to
import oolong tea into Japan. Oolong tea
sales also commenced.
Mar Developed and commenced sales of Canned
Oolong Tea. Full-scale entry into beverage
market followed.
Sep Commenced sales of black tea directly
imported from Sri Lanka.
1981
1982
March 1981
Canned Oolong Tea
Sep Developed new green tea cultivation technology
based on organic fertilizer. Became first company
to display “best by” dates on packaged tea.
1985
Aug Successfully developed and launched Canned
Green Tea.
Feb Successfully developed and launched Canned
Green Tea.
1986
Sep Featuring cutting-edge technology, ITO EN’s
Central Research Institute is established
in Sagara Town (now Makinohara City),
Shizuoka Prefecture.
Feb Canned Green Tea is awarded “Outstanding
Product of the Year” by the Nihon Keizai
Shimbun.
1987
Jul
1988
Feb Established additional headquarters in Kansai
and the Kobe Distribution Center in Kobe
City, Hyogo Prefecture.
Established ITOEN (USA) INC. in Hawaii to
play a key role in overseas expansion.
1989
Mar Received an award from the China Tea Import
and Export Corporation for increasing the
market for oolong tea in Japan.
Feb Canned green tea line renamed under the Oi
Ocha brand.
Dec Awarded the Henmi Prize by the Canners’
Association of Japan for the development of
technology that removes the retort odor from
canned green tea.
Mar Launched Oi Ocha Green Tea, the industry’s
first green tea beverage in a PET bottle
(1.5-liter).
1990
1992
Aug Headquarters relocated to Shibuya Ward,
Tokyo.
1993
Feb Completion of coffee roasting and processing
plant at the Shizuoka Sagara Plant.
1994
Sep Established ITO EN AUSTRALIA PTY.
LIMITED in Australia. Joint venture
established with Ningbo Shunyi Tea
Products Co., Ltd., in China.
44 ITO EN Corporate Book 2011
February 1985
Canned Green Tea
Sep Launched Jujitsu Yasai (vegetables galore).
February 1989
Oi Ocha
May Initial public offering.
Dec Issued convertible bonds worth 140 million
Swiss francs.
Apr Awarded the “Director General’s Prize”
from the Director General of the Science
and Technology Agency for the successful
development of canned green tea.
Jun Issued convertible bonds worth 100 million
Swiss francs.
Corporate
Products and Technology
Oct Awarded the top prize of the second “Radio
Tanpa Over-the-Counter Stock Blue Chip
Awards.”
1995
1996
Others
Apr Established a green tea packing plant in
Fukushima City, Fukushima Prefecture.
Opened the first Natural Station store in
Shinjuku, offering freshly squeezed fruit and
vegetable juice and freshly brewed coffee.
1997
Jul
Received patent for technology used in the
production of PET bottle green tea, known as
the “Natural Clear” production method.
Nov Awarded the Ministry of Agriculture, Forestry
and Fisheries Prize for developing the green tea
beverage market.
Sep Stock listed on the Second Section of the
Tokyo Stock Exchange.
Sep Cooperated in clinical tests carried out by
the M. D. Anderson Cancer Center at the
University of Texas, having been granted
permission by the U.S. Food and Drug
Administration.
1998
Oct Stock advanced to the First Section of the
Tokyo Stock Exchange.
1999
Jan Awarded the Superior Financial Disclosure
Company Award by the Tokyo Stock
Exchange.
2000
Dec Shizuoka Sagara Plant and Central Research
Institute earn ISO 14001 certification.
2001
May Established ITO EN (North America) INC.
Jun New research building completed in Sagara
Town (now Makinohara City), Shizuoka
Prefecture.
2002
Mar ITO EN (North America) INC. opened tea
store ITO EN New York and restaurant KAI,
marking full-scale entry into the U.S. market.
Apr Production headquarters received ISO 9001
certification.
2004
Oct ITO EN AUSTRALIA PTY. LIMITED built
and commenced production at new raw tea
leaf factory.
Oct Launched beverages in heatable PET bottles,
a leading-edge development in the industry.
October 2000
Heatable PET bottle
May Launched Oi Ocha Koi Aji and Ichinichibun no
Yasai (a day’s worth of vegetables).
2005
2006
2007
2008
2009
Jan Double award from the Tokyo Stock Exchange:
ninth Superior Financial Disclosure Company
Award and second Increase in Individual
Shareholders Award.
Dec Used Tea Leaves Recycling System received the
Grand Prize from the Ministry of Agriculture,
Forestry and Fisheries in the Energy Services
Section at the 2005 Eco Products Awards.
Jun The Company strengthened its U.S. business
by acquiring shares in Mason Distributors,
Inc., a Florida-based supplier of nutritional
supplements.
Oct Seeking to expand its coffee business, ITO EN
made FoodX Globe Co., Ltd., which operates
the Tully’s Coffee chain, a consolidated
subsidiary.
Apr Head office divisions received ISO 14001
certification.
Mar Agreement signed with Groupe DANONE
(France) giving ITO EN exclusive marketing
rights in Japan for evian natural mineral water.
Apr Tully’s Coffee Japan Co., Ltd. established
through merger of FoodX Globe Co., Ltd. and
Tully’s Coffee Japan. ITO EN and ITOCHU
Corporation established joint venture, ITO EN·
ITOCHU MINERAL WATERS CO., LTD.
Mar All departments across the Company, including
sales offices, received ISO 14001 certification.
2010
Feb Established GREEN VALUE CO., LTD.
to handle maintenance and procurement of
automated vending machines.
May Established RC Dining Co., Ltd., which
operates restaurants.
2011
May Created Chichiyasu Company to
further expand its dairy business.
October 2006
Tully’s Coffee
May Launched chilled-cup coffee beverage under
the Tully’s Coffee brand.
Mar Launched Catechin Green Tea (certified as food
for specified health uses).
March 2008
evian
Sep Class-A Preferred Stock listed on the First
Section of the Tokyo Stock Exchange.
Nov “Tea Plantation Business: Planting Tea Trees
for Regional Benefit” received the Grand Prize
from the Ministry of Agriculture, Forestry and
Fisheries in the Ecological Services Section at
the 2008 Eco Products Awards.
Feb Oi Ocha celebrated its 20th birthday.
Aug Launched black tea line, TEAS’ TEA NEW
YORK.
Nov Launched bottle-shaped canned coffee under
the Tully’s Coffee brand.
Oct Used Tea Leaves Recycling System received
the jury’s special award—Green Purchasing
Award 2010.
ITO EN Corporate Book 2011
45
Investor Information
Stock Market (Thousands of shares)
April 30
Total number of outstanding shares (Common Stock)
(Class-A Preferred Stock)
Treasury stock
(Common Stock)
(Class-A Preferred Stock)
2007
2008
2009
2010
2011
91,212
—
2,062
—
91,212
35,246
2,021
16
91,212
35,246
2,019
21
91,212
35,246
2,008
568
91,212
34,246
1,999
69
2007
2008
2009
2010
2011
12,655
19,912
19,912
19,912
19,912
Capitalization (Millions of yen)
April 30
Capitalization
Shareholders and Stock Breakdown by Holder
April 30
2010
[Common Stock]
Private investments and others
Financial institutions
Securities firms
Domestic companies
Foreign companies, etc.
Total
(Shareholders)
(%)
81,282
92
39
537
283
82,233
98.8
0.1
0.0
0.6
0.3
100.0
April 30
2011
(Hundreds
of shares)
367,634
150,917
6,208
306,160
81,203
912,122
(%)
(Shareholders)
(%)
40.3
16.5
0.6
33.5
8.9
100.0
83,385
91
35
533
287
84,331
98.8
0.1
0.0
0.6
0.3
100.0
2010
[Class-A Preferred Stock]
Private investments and others
Financial institutions
Securities firms
Domestic companies
Foreign companies, etc.
Total
(Shareholders)
(%)
66,681
41
14
579
101
67,416
98.9
0.0
0.0
0.8
0.1
100.0
(Hundreds
of shares)
(%)
40.8
16.9
0.2
33.5
8.3
100.0
372,887
154,403
2,598
306,078
76,156
912,122
2011
(Hundreds
of shares)
175,328
35,222
226
99,298
42,392
352,466
(%)
(Shareholders)
(%)
49.7
9.9
0.0
28.1
12.0
100.0
66,110
34
16
568
87
66,815
98.9
0.0
0.0
0.8
0.1
100.0
(Hundreds
of shares)
(%)
50.2
7.6
0.0
29.0
12.9
100.0
171,971
26,341
143
99,607
44,406
342,468
Note: Treasury stock is included in “Private investments and others.”
Stock Price and Turnover
(Yen)
Common Stock
ITO EN Stock Price
ITO EN Stock Turnover
Class-A Preferred Stock
ITO EN Stock Price
ITO EN Stock Turnover
2,000
(Thousands
of shares)
30,000
1,000
15,000
0
0
09.1
2
3
4
5
6
7
8
9
10 11 12 10.1 2
3
4
5
6
7
8
9
10 11 12 11.1 2
3
4
5
6
Note: Trading volumes include both floor trading and off-floor trading.
Cash Dividends per Share and Payout Ratio
(Common Stock)
Cash Dividends per Share and Payout Ratio
(Class-A Preferred Stock)
Cash Dividends per Share
(%)
Payout Ratio (Common Stock) 6
(Yen)
60
Cash Dividends per Share
(%)
Payout Ratio (Class-A Preferred Stock) 6
(Yen)
60
48
5.9
38
4
2.6
2.7
2
20
0
0
10
11
40
3.2
20
40
4.8
4.2
4
4.6
2
2.1
0
1.2
07
08
09
Note: Dividend yield = Dividends per share ÷ Year-end share price
46 ITO EN Corporate Book 2011
(4/30)
0
07
08
09
10
11
(4/30)
Corporate Data
COMPANY NAME
(As of April 30, 2011)
ITO EN, LTD.
Board of Directors and
Corporate Auditors (As of July 26, 2011)
CHAIRMAN AND
Hachiro Honjo
*REPRESENTATIVE DIRECTOR
HEAD OFFICE
47-10, Honmachi 3-chome, Shibuya-ku,
Tokyo 151-8550, Japan
PRESIDENT AND
Daisuke Honjo
*REPRESENTATIVE DIRECTOR
DATE OF ESTABLISHMENT
PAID-IN CAPITAL
NUMBER OF SHARES ISSUED
AND OUTSTANDING
NUMBER OF SHAREHOLDERS
STOCK TRADING MARKET
CERTIFIED PUBLIC
August 22, 1966
Kizuku Ogita
EXECUTIVE VICE-PRESIDENTS
Yoshito Ejima
Shunji Hashimoto
Minoru Watanabe
Shusuke Honjo
EXECUTIVE MANAGING
Kiyoshi Shimoda
Shoichi Saito
Yoshihisa Kimura
Mitsuo Yashiro
¥19,912,300,000
Common Stock
91,212,380
Class-A Preferred Stock 34,246,962
(As of April 30, 2011)
Common Stock
84,331
Class-A Preferred Stock 66,815
(As of April 30, 2011)
Tokyo Stock Exchange, First Section
Common Stock
(Code: 2593)
Class-A Preferred Stock (Code: 25935)
KPMG AZSA LLC
ACCOUNTANTS
MAIN FINANCING BANKS
Resona Bank, Ltd.
Mizuho Corporate Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation
MAIN SECURITIES
NOMURA SECURITIES CO., LTD.
SMBC Nikko Securities Inc.
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
Daiwa Securities Capital Markets Co. Ltd.
Mizuho Securities Co., Ltd.
Citigroup Global Markets Japan Inc.
COMPANIES
EXECUTIVE VICE-CHAIRMAN
TRANSFER AGENT
The Chuo Mitsui Trust and Banking Company,
Limited
PUBLIC RELATIONS
DEPARTMENT
Tel: (03) 5371-7197
Fax: (03) 5371-7264
INTERNET HOMEPAGE
http://www.itoen.co.jp
DIRECTORS
MANAGING DIRECTORS
Yoshio Kobayashi
Akira Hirose
Kan Taguchi
DIRECTORS
Kaoru Mikuni
Yosuke Honjo
Satoshi Ando
Masami Kanayama
Osamu Namioka
Hidemitsu Sasaya
Yoshihisa Nakano
CORPORATE AUDITOR
Minoru Takahashi
AUDITORS
Yoshiaki Takazawa
Toshihiro Sato
Masayuki Takase
ITO EN Corporate Book 2011
47
Printed on paper made with wood from
forest thinning. “Mori no Chonai Kai”
(Forest Neighborhood Association) Supporting sound forest management.
The front and back covers of this report are printed on
paper that contains recycled Oi Ocha tea leaves.
Pages 1 to 46 are printed on Forest Neighborhood
Association “forest thinning support paper.”