Potato shortage bites at Japanese snack makers
Falling chip production weighs on profit outlooks for Calbee, Koike-ya
TOKYO -- Japanese snack producers are lowering profit expectations as a poor potato harvest, stemming from typhoons that struck key growing area Hokkaido last year, leaves them short on ingredients.
Calbee said Friday it sees group net profit for the fiscal year ending March 31, 2018, edging up 2% to 19 billion yen ($167 million). Domestic sales of potato chips are seen slumping 6% to 71.6 billion yen after the company suspended shipments of 33 products in April, including the popular Pizza Potato Chips. Though Calbee aims to compensate for the decline with such products as Furugra granola, it expects overall sales to rise just 3% to 260 billion yen, a sharp slowdown from the double-digit growth of the past several years.
Sales of Jagarico and Jagabee potato sticks will also be expanded to offset the chip shortage, President Shuji Ito told reporters. He said the company will urge farms growing potatoes for other uses to supply spuds for chips as well.
Calbee has been losing shelf space at some supermarkets and other retailers to rival chip brands and rice-based snacks. It hopes to resume halted shipments around the summer when the potato harvest begins in Kyushu. Even if Calbee products disappear from stores for a while, "consumers won't give up potato chips," Chairman and CEO Akira Matsumoto said hopefully.
Fellow snack purveyor Koike-ya on Friday downgraded its forecast for the fiscal year ending next June. It sees sales falling 5% to 30.8 billion yen, well below its previous estimate of 33.7 billion yen, while operating profit is expected to rise just 4% to 450 million yen, a marked decline from the earlier 630 million yen projection.
Poor potato harvests in Japan as well as in overseas base Taiwan are forcing Koike-ya to import spuds from the U.S., pushing costs higher. Operating profit for the nine months through March plunged nearly 70% on the year to 169 million yen.