Net sales of functional yogurt dropped 12 per cent to JPY$24.2bn (US$209m) as compared to Q3 FY2020.
The reduction in functional yogurt sales has also dragged down the company’s overall sales and operating profit of its yogurt and cheese business by 7.9 per cent and 26.7 per cent in Q1-Q3 FY2021 as compared to the same period in FY2020.
Examples of the company’s functional yogurt products include Meiji Probio R-1 and Meiji Probio Yogurt LG21.
“In addition to the levelling off of favourable sales during the previous fiscal year on demand driven by increased health management awareness and stay-at-home demand, the impact of intensifying competition resulted significant decrease in sales of functional yogurt," the company explained.
The company added that sales from its core customers remained stable, but it was struggling to attract new customers.
To drive sales, the company has introduced some marketing strategies such as highlighting doctors’ recommendations of Meiji Probio Yogurt LG21 and enhancing in-store information dissemination for Meiji Probio R-1.
Meiji Probio R-1 contains Lactobacillus delbrueckii ssp. bulgaricus OLL1073R-1. It is said to reduce the risk of contracting common cold.
A study published in Food Function in 2019 showed that the consumption of the yogurt has led to an increase in IFN-gamma production, although it did not show a significant preventive effect against influenza or enhancement in NK cell activity.
There was significant improvement in PSQI score, which signifies a better sleep quality. There was also a preventive effect on constipation.
Meiji Probio Yogurt LG21, on the other hand, contains Lactobacillus gasseri OLL2716 and the company has conducted research on its effectiveness in alleviating functional dyspepsia.
Overseas in China, the company launched both products in April last year, focusing on the Shanghai area. It said it would focus on increasing consumer awareness on the benefits of lactobacilli to grow its business.
Sports business growing
Meiji is seeing the increased use of sports nutrition amongst Japan's consumers.
The sales of its sports nutrition products, including sports protein range SAVAS, has increased 10.6 per cent in Q1-Q3 FY2021 as compared to Q1-Q3 FY2020.
The company explained that consumers were finding ways to address the lack of exercise and that there was a growing customer base for sports nutrition products.
Sales of infant formula and enteral formula were also favourable.
Sales of the company’s nutrition portfolio which includes infant formula, sports nutrition, enteral formula, and beauty supplement have increased by eight per cent in Q1-Q3 FY2021 as compared to Q1-Q3 FY2020.
Operating profit was up 20.2 per cent yoy.
Overall, the company recorded net sales of JPY$769.9bn (US$6.67bn) in Q1-Q3 FY2021, down 14.5 per cent yoy. Operating profit was also down 5.1 per cent to JPY$79bn (US$684m).
COVID-19 business impact
The company believes that COVID-19 will continue to impact the global economy and domestic consumption trends.
It is also cancelling business trips and implementing various measures such as telecommuting and teleconferences in view of the pandemic.
It added that it has not yet experienced a significant impact on production or raw materials procurement and will take measures to maintain a stable product supply when the situation changes.