The 100,000 m2 factory at Saeki-ku will be Calbee’s largest factory in Japan. Phase one of construction is expected to start in April 2023 and the factory is scheduled to be operational by April 2024.
The existing Hiroshima-Nishi Factory which produces potato chips will be closed and moved to the new facility in 2024. It was first opened in 1986 and has 200 employees.
A newer Hiroshima Factory producing pea snacks and other snacks which opened in 2006 will also be closed and incorporated in Phase two of construction, after 2037. There are around 200 employees.
Satoshi Yoshida, manager of public relations at Calbee said the new factory would manufacture potato chips, snacks, as well as new products beyond its traditional snacks and cereals portfolio.
It is expected to implement automated processing with improved production efficiency and a reduced environmental impact.
Calbee said this was due to labour shortages as the working-age population decreases.
The company signed an agreement with the government of Hiroshima Prefecture for the new development last month. Yoshida said the investment in land lease was revealed to be JPY3.78bn (US$35m) although total investment was not disclosed.
China expansion
Calbee is also looking to accelerate its business in China on the back of declining domestic sales. This is part of Calbee’s medium-term business plan where it identified several overseas markets including China, North America, UK and Indonesia as growth drivers.
Calbee’s cereal line Frugra, accounted for almost 50% of Japan’s domestic cereal sales, but the overall market has been in decline since 2016.
According to Euromonitor, China’s cereal market is poised to grow 8.6% to reach US$1.4bn by 2024.
China’s snack market is worth US$9.2bn and poised to grow at an annual rate of 4%. China is second behind North America (US$23bn) in the snack market.
Citing limited growth in Japan, Calbee will focus on increasing in-store sales of its cereal range Frugra and snack range including Jagarico and Jaga Pokkuru in China.
It is also eyeing significant potential in e-commerce as it taps on the high ratio of online purchases among Chinese consumers.
The firm currently has a cross-border e-commerce flagship store on Alibaba, the largest Chinese e-commerce company. Over the past years, Calbee’s Frugra was ranked first in Alibaba’s Single’s Day sales event in the cereal category.
The company is now hoping to work with key opinion leaders on social networking services to raise its brand awareness and gain more fans in China.
Calbee’s targets for 2030 was to achieve 60% of sales in its domestic market, and 40% overseas. It also hopes 20% of total sales to be in new food domains such as ready-to-eat meals.
In its FY2020 financial report, Calbee reported revenues of JPY256bn (US$2.4bn), a 2.9% increase from FY2019. However net profit fell 9.7% to reach JPY17.5bn (US$162m), citing higher costs of raw materials, packaging and distribution.
