The History of the Ajinomoto Group The History of the Ajinomoto Group Fiscal Years 2009 - 2019 Fiscal Years 2009 - 2019 The History of the Ajinomoto Group Fiscal Years 2009 - 2019 Greetings The Ajinomoto Group celebrated its 110th anniversary in 2019. This history has seen a mountain of difficulties and victories. Twenty years ago, in 1999, our operating profits were 33 billion yen. In the years that followed, although bulk businesses such as animal nutrition grew, profits slumped due to intensifying competition, and we were unable to achieve stable growth. Then in 2009 we marked our 100-year anniversary. During the period between 2009 and 2019—this “10-Year History”—we worked to shift our focus from an over-reliance on bulk business to one that contributes to the enrichment of people’s lives around the world. This illustrated our aim of becoming a Genuine Global Specialty Company (GGSC). We then launched strategies such as our “FIT & GROW with Specialty” and “Open New Sky (expansion into adjacent domains, Open & Linked innovation),” to achieve growth with a focus on our overseas consumer business. However, it also became clear that there were challenges to overcome. These included global digitalization and changes in the macro environment, especially more intense competition for bulk materials and the rise of local companies. In addition, we faced the internal challenge of having a business structure that made it difficult to generate economic value because we had a strong managerial focus on scale. In order to resolve these issues, we believe that improvements to capital efficiency and steady organic growth in our key businesses are essential for the growth of the Group. On the other hand, it was during this period that we established ASV (The Ajinomoto Group Creating Shared Value), which represents our unchanging commitment: with our stakeholders and businesses, we help resolve society’s issues, which leads to the creation of economic value. In the midst of the growing need for corporate social responsibility, we have been at the forefront, with global sustainability, food resources, and Health and Well-being as challenges facing society in the 21st century that we want to address. Today ASV contains the universal values at the heart of the Group. To realize the ASV vision, we strengthened and enhanced corporate governance through dialogue and cooperation with external parties and implemented measures to develop human resources from a global perspective. Our business profits are now 99.2 billion yen (FY2019), almost three times higher than in FY1999. We believe that our various initiatives in the 2010s and the experience gained from them are valuable assets for even further sustainable growth. I hope that all of our stakeholders will read this “10-Year History.” We have established a “2020 to 2025 Medium-Term Management Plan and Vision for 2030.” Our Group Vision is to become a solution-providing Group for food and health issues that helps people worldwide lead healthier lives by unlocking the power of amino acids. As such, we will promote management based on our ASV vision and strive as one to help resolve social issues. We look forward to your continued support. Takaaki Nishii Representative Director, President & Chief Executive Officer Contents Greetings Takaaki Nishii, Representative Director, President & Chief Executive Officer I The First 100 Years of the Ajinomoto Group 1. A Chronicle of the Ajinomoto Group 2 2. Our 100th Year: Where We Were, What We Were Doing 8 II Taking the First Step into the Next 100 Years - A Roadmap for Becoming a GGSC, Presented by Top Management - 1. Becoming a Global Group of Companies that Contributes to “Food,” a Fundamental for Humanity - Interview with Chairman of the Board Masatoshi Ito 12 2. Becoming a Solution-Providing Group of Companies for Food and Health Issues by Adapting to Social Change Driven by Digital Transformation and the Adoption of the SDGs - A Dialogue Between President & CEO Takaaki Nishii and Keio University Professor Masahiro Okada 21 3. The Ajinomoto Group: The Last 10 Years and Expectations for the Future - Special Contribution by Professor Masahiro Okada, Graduate School of Business Administration, Keio University 31 III Taking the First Step into the Next 100 Years - Aiming to Become a GGSC - The Ajinomoto Group FY2009 - FY2019 36 1. Grand Designs - Four Medium-Term Management Plans 37 2. The Challenge towards Structural Reform and Creating Growth Drivers - Specific Measures for “FIT & GROW with Specialty” 42 (1) Rapid portfolio transformation through sales of businesses and other means…42 (2) Cultivating new markets and acquiring technology through M&As…43 (3) Cultivating markets utilizing external resources in Japan and overseas…47 (4) Innovating and strengthening R&D to support specialties…52 (5) Market cultivation and business area expansion through global development…57 (6) Organizational reform focused on overall optimization and streamlining…58 3. ESG-Related Initiatives for Becoming a GGSC - Forging Firm Relationships with Stakeholders 62 (1) Self-reform aimed at creating a better world and group of companies…62 (2) Environmental preservation initiatives…65 (3) A prosperous coexistence with society…67 (4) Strengthening corporate governance and promoting the information disclosure…72 (5) Personnel training, job assignments, and utilization…74 (6) Reforming the organization and awareness to achieve proper operation as a global organization…78 (7) New initiatives for conveying corporate value…80 (8) New financial and IR initiatives as a global company…82 4. Overview of Main Businesses (FY2009 - 2019) - Towards “Specialty and Global” 84 (1) Food products business…84 (2) AminoScience business…87 5. ASV Management at the Ajinomoto Group - 2020 - 2025 Medium-Term Management Plan and Vision for 2030 90 IV Data 1. Financial Trends 92 (1) Main consolidated financial indicators…92 (2) Consolidated statements of financial position…94 (3) Consolidated statements of income…96 (4) Consolidated statements of cash flows…99 2. List of Director and Auditor Tenures 103 3. Executive Tenures and Changes in Number of Employees 104 (1) List of terms of office for corporate executive officers…104 (2) Changes in the number of employees…106 4. Diagram of HQ Organizational Changes and Affiliates 107 (1) Ajinomoto Co., Inc. organizational changes…107 (2) History of group companies in Japan…112 (3) History of group companies overseas…115 5. Timeline 121 Postscript [To Our Readers (“10-Year History” Project Coordination Team)] As the contents of this publication cover a wide range of subjects, we created the following table for those who wish to read about specific topics. Please use it as a guide. Chapter I Chapter II Chapter III Chapter IV Our Strategy and Specific Initiatives ○ ○ (III-1, 2) Our ESG Initiatives ○ ○ (III-3) Overview (History) of the Group Since Its Founding ○ ○ ○ (III-1, 2, 5) (IV-5) ○ Summary of Our Businesses ○ (III-2, ４) The First 100 Years I of the Ajinomoto Group I. The First 100 Years of the Ajinomoto Group 1 A Chronicle of the Ajinomoto Group May 20, 1909 was the day the umami seasoning AJI-NO-MOTO® first went on sale. At that time, Japan was expanding its power as a modern nation. The industrial revolution was underway in the nation, and Japan had prevailed in the Russo-Japanese War (1904-05). Since then, the Ajinomoto Group has grown its business, responding to changing lifestyles while contributing to the enrichment of food and improving quality of life through diversification and technology with a focus on amino acids. Here we provide an overview of the history of Ajinomoto Co., Inc. (the Company), including the events leading up to its launch. In the beginning: The iodine business MSG’s promise, and Saburosuke II accepted the offer. One of The Ajinomoto Group’s origins lie with Takiya, a grain and the motivations for Dr. Ikeda’s research was to help improve alcohol retailer. It was founded by Saburosuke Suzuki in 1866 nutrition among the Japanese public. Combined with the just before the Meiji Restoration, on the Miura Peninsula in entrepreneurial spirit of Saburosuke II, AJI-NO-MOTO® and Kanagawa Prefecture. After Saburosuke died suddenly at the the Ajinomoto Group were launched, already practicing the end of 1875, his wife Naka took over business operations. founding aspiration of the Ajinomoto Group Creating Shared The eldest son, Saburosuke II, was an ambitious man. After Value (ASV) and contributing to the resolution of social issues marrying, he became involved in rice speculation but failed. through the Group’s business activities. As the family was having a hard time, they decided to rent two rooms at the back of their house to summer vacationers to help pay for their living expenses. One of their guests was an engineer from a pharmaceutical company. He advised Saburosuke II to produce iodine from seaweed, which inspired his new business. Through the efforts of Naka and Saburosuke II’s wife Teru, they successfully produced it in 1888. In the spring of 1893, they built a new plant and established a new company, Suzuki Pharmaceutical Co. In 1895, the company began exporting iodine and, in an effort to utilize its by- products, began manufacturing saltpeter, the raw material for Dr. Kikunae Ikeda (1900) Saburosuke Suzuki in his youth gunpowder, for which demand rose sharply during the Sino- Japanese (1894-95) and Russo-Japanese (1904-05) wars. The launch of AJI-NO-MOTO® and struggles during Suzuki Pharmaceutical Co. soon became one of the leading the founding years chemical companies in the Kanto region. However, the market Saburosuke II’s younger brother, the scholar Chuji Suzuki, was was in turmoil due to a sharp decline in demand for its products placed in charge of the establishment of a production method after the war, and in 1907 the company had no choice but to for the new seasoning.