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Business Trends

Businesses in Japan grapple with scorching summer heat

Record temperatures have companies struggling to meet consumer demand

Demand for seasonal items is high amid extreme heat, putting pressure on supply. (Photo by Ken Kobayashi)

TOKYO -- An unusually hot summer is proving to be a mixed blessing for corporate Japan, as food and beverage companies scramble to maintain supplies of popular items.

Frozen dessert makers have been forced to halt delivery of some items to retailers due to overwhelming demand. A spokesperson for confectionery Morinaga & Co, which stopped supplying one of its Icebox frozen snacks at the beginning of August, blamed a short rainy season and subsequent hot summer for the shortage.

The company expects to resume deliveries in mid-September, the spokesperson said, adding that the situation was "highly unusual" in the three decades since Icebox was launched.

Tochigi-based Futaba Foods on Monday said it had suspended sales of several flavors of Sacre ice snack as "it has become difficult to maintain supplies" after sales exceeded expectations "due to the extreme weather." The company will focus on offering just one flavor to maintain supplies.

Futaba Foods will offer only the lemon flavored version of its Sacre ice snack to maintain supplies .

Coca-Cola Bottlers Japan, an affiliate of U.S.-based Coca-Cola Co., also stopped sales of its frozen Aquarius sports drink last month due to supply shortages.

Record temperatures have swept the globe this summer, with South Korea marking a record 40.7 C on Aug. 1, while Portugal saw temperatures rise above 45 C. In the U.S., Northern California has experienced some of its largest wildfires in history.

Temperatures in Japan hit a record high of 41.1 C in a suburb outside Tokyo in July. More than 100 people have died countrywide, with the Japan Meteorological Agency calling the extreme heat "a threat to life."

On Monday, the agency warned that "high temperatures are expected to continue through August" in eastern and western Japan.

Meanwhile, department store operator Isetan Mitsukoshi Holdings said that July sales of summer items, including sunglasses and T-shirts for kids, exceeded last year's figure at its flagship stores. This despite a decrease in overall sales for the month due to a typhoon and heavy rains. Clothing chain Uniqlo of Fast Retailing also stated in its monthly sales report that "hot weather resulted in strong sales of summer items."

High temperatures are generally positive for the economy, according to the Dai-ichi Life Research Institute, which estimates that a 1 C rise in temperature during the July-September quarter boosts household spending by about 320 billion yen ($2.88 billion).

But it also warns that spending may cool in the October-December quarter as consumers tighten their belts.

The extreme heat has been a blow to businesses that were already suffering from labor shortages, rising logistic costs and uncertainties due to unpredictable weather and natural disasters.

Noodle restaurant chain Ringer Hut decided this week to raise prices for some items, partly due to the heat. "We have taken into consideration what happens if the extreme heat continues," said a Ringer Hut spokesperson.

The company had been considering raising prices since last year due to increased labor costs and odd weather, which was characterized by heavy rains in July that damaged crops in western Japan and drove up vegetable prices.

Suntory Beverage & Food on Monday reported a 20% increase in net profit for the January-June period. But its domestic business suffered a 24% decline in segment profit, despite a 2% rise in revenue.

The company attributed "worsening supply chain costs" -- such as transport -- for part of the decline, and said that extreme heat and torrential rains that hit western Japan in July are still causing "a shortage in transport capacity."

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