Japan Tobacco May Cancel Biz with Tianyang Food

Source from:  Tokyo, Mar 5, 2008 (Jiji Press) 03/07/2008

Japan Tobacco Inc. <2914> President Hiroshi Kimura on Tuesday indicated the firm's intention to cancel its food production consignment deal with Tianyang Food following a food poisoning scare in Japan caused by pesticide-tainted "gyoza" dumplings made by the Chinese company. It is impossible for the Japan Tobacco group to resume the production consignment unless it is made clear how the pesticide was added to the dumplings, Japan Tobacco President Hiroshi Kimura said at a news conference. Japan Tobacco, meanwhile, will continue production consignment to other Chinese food makers, Kimura said, noting that China is an important production base for the group. The food poisoning came to light in late January. JT Foods Co., a Japan Tobacco subsidiary, imported the dumplings to Japan. According to Japan Tobacco officials, sales in Japan of the group's frozen foods fell 60 pct from a year before in February. Sales of products for home use slumped a far steeper 90 pct. Japan Tobacco board director Mutsuo Iwai, who is in charge of the firm's food operations, told the same news conference that the group is set to conduct massive production adjustments for frozen foods. In the medium term, the company plans to scale back frozen food production on a consignment basis, according to Iwai. In a bid to ensure the safety of its food products, Japan Tobacco will expand the scope and frequency of inspections of finished food products and ingredients, it said. The company will add agrochemicals and heavy metals to the list of substances subject to inspections for possible contamination. For food products for home use, Japan Tobacco will state from next month the names of the factories where they are made, on top of country of origin of ingredients, on the product packages and the company's Web site. Japan Tobacco will also establish a food inspection center in Sakai, Ibaraki Prefecture, northeast of Tokyo, in May and another in Weihai in China's Shandong Province in July. President Kimura said that the company hopes to make frozen food maker Katokichi Co. <2873> a wholly owned subsidiary on April 18 after gaining approval at a meeting of Katokichi shareholders. His comment came after Nissin Food Products Co. <2897> earlier this year withdrew from a plan to integrate the frozen food businesses of Japan Tobacco, Katokichi and Nissin Food, in the wake of the food poisoning scare. Under the plan, Japan Tobacco, which already owns the bulk of outstanding Katokichi shares, was to take full control of the company and then transfer a 49 pct Katokichi stake to Nissin Food. Eventually, Katokichi was to take over the two others' frozen food operations. Enditem