JAPAN— Japan’s leading baked goods company, Yamazaki Baking has acquired the packaged bread business of local peer, Kobeya Baking hoping to increase manufacturing efficiency and strengthen sales in western Japan.
Bread companies in the country have been hit hard by soaring material prices, as well as the declining population. In a notice on the country’s stock exchange, on which it is listed, Yamazaki Baking said the acquisition, for an undisclosed sum, will also allow it to diversify to help it cope with demographic changes.
“We have been considering future business development amid the declining population, declining birth rate and aging population. In general, we reviewed our business portfolio,” the company said.
Kobeya, the fourth-largest breadmaker in the country, manufactures packaged bread, frozen bread and delicatessen items. It also has a restaurant business which is not part of the deal.
Kobeya’s performance has been sluggish due to the impact of the corona disaster, and going forward will concentrate management resources on the restaurant business.
Yamazaki Baking said Kobeya was the instigator of the transaction which would “contribute to the advancement of Yamazaki in the 21st century”.
According to research by GlobalData, Japan’s bread and rolls market was worth JPY354.2bn (US$2.5 billion) in 2021. The Yamazaki brand accounted for 18.7% of the market in value terms, the research and intelligence group said.
Japan’s per-capita consumption of bread and rolls stood at 3kg in 2021, versus an Asia-Pacific average of 1.6kg and a global average of 8.4kg, GlobalData said.
It forecasts the category will expand at a compound annual growth rate of 1.3% from 2021 to 2026, reaching JPY378.4bn (US$2.6 billion) in sales. From 2016 to 2021, the category increased in size at a CAGR of 2.1%.
Measured in volumes, the category is forecast to expand at a CAGR of only 0.4% between 2021 and 2026.
Yamazaki Baking said that, until the deal is completed, the “target company will continue to operate as usual for all packaged bread products for the time being”.
The business is due to be transferred by the end of February, 2023. The size of the deal has not been disclosed. Kobeya will retain its restaurant chain and other businesses.
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