Japanese Bottler Suntory ‘Shares Profit Three Ways’

Japanese Bottler Suntory ‘Shares Profit Three Ways’

This is founder Shinjiro Torii's credo, which holds that profits from corporate activities should be divided into three: one-third returned to society, one third as services for customers, and one-third as a capital to expand the business. By Kazunori Kobayashi

Founded in 1899, Suntory is Japan's leading producer of alcohol products including beer, wine and whisky, beverages including popular drinks such as "Oolong Tea" and "South Alps Natural Water," and other products such as health foods. The company has been known for its commitment to social and cultural activities since its founding, and underlying is the idea of "sharing profits three ways." This is the credo held by founder Shinjiro Torii that profits from corporate activities should be divided into three: one-third returned to society, one third as services for customers, and one-third as a capital to expand the business.

Grounded in this credo, Suntory has grown steadily. At the end of 2002, 4,625 employees worked for the parent company, and revenues in fiscal 2002 were 816 billion yen (about U.S.$ 7.7 billion), providing an income before tax of 36.1 billion yen (about U.S.$340 million). Groupwide, the number of employees was 21,653, revenue 1.38 trillion yen (about U.S.$ 13 billion), and income before tax 69 billion yen (about U.S.$ 650 million). While 80% to 90% of sales are from within Japan, the company has also expanded its activities overseas to Europe, the Americas, and Asia. In Shanghai, China, Suntory now commands a 44% share of the local beer market.

The company also has been working on environmental issue since early on, recognizing that its products are made from nature's blessings, including water and such farm products as barley, hops, tea leaves, and coffee beans. Its commitment to preserving the environment can be clearly seen in their campaign to conserve birds, which started as far back as 1973, when corporate environmental activities were still rare. The company's slogan at the time was "Today Birds, Tomorrow Man," with the implication that whatever fate visits birds in the environment will eventually affect human beings as well.

In this newsletter, we would like to introduce Suntory's initiatives toward building a sustainable society. In particular, we will look at its activities concerning factories, containers, and water conservation.

100% Recycling of Factory By-products and Industrial Waste

First, let's look at initiatives at the factories where beverages are produced. While working on energy saving and reducing greenhouse gas emissions, the factories aggressively tackled measure to reduce industrial waste production and recycle by-products, and achieved 100% resource recycling by the end of 2000. Between 1990 and 2002, the net amount of waste decreased 30% to 130,000 tons (from 190,000 tons) and waste per unit of production by 70%, and all of this waste was then recycled as resources in other processes.

Let's look at the specifics. The largest share of the waste comes from refuse of farm products, that is, plant residue. Malt residue is sold as livestock feed, and residue from oolong tea and coffee beans is used as raw material for organic fertilizer. The second largest portion of waste is sludge from water treatment. A method has been found to reduce the volume through an anaerobic process and the by-product is also used as organic fertilizer. These fertilizers are used to grow vegetables, which are then cooked and served to customers at Suntory restaurants. This anaerobic processing produces methane gas, which then provides 6% of the fuel used at the company's factories.

Suntory is working on further measures such as introducing a sludge-free de-coloring system for wastewater, toward building a system where every output becomes an input somewhere else, including thrown-away cans.

Building a Recycling System for the Beverage Industry

Second, how about that containers and bottles that the average consumer is probably most concerned about? Suntory's first response is to reduce the weight of containers, resulting in a reduction in material inputs and energy used to transport them. For example, one of the most widely used containers is the 500-milliliter PET bottle, and its weight has been reduced by 17% from the original weight of 32 grams, to 26.5 grams in 2002. This amounts to a reduction of raw material used in PET bottles by about 2,400 tons per year, an equivalent of about 10,000 barrels of oil (180 liters each).

The second response is to build an effective recycling system in cooperation with other players in the industry. In 1997, Japan's new Containers and Packaging Recycling Law made it mandatory to recycle containers such as glass bottles, PET bottles, and paper box. Since then the collection volume and rate have been on a steady increase. In 2001, the recycling rates for glass bottles, steel and aluminum cans surpassed 80%, and according to the above-mentioned law standards, for PET bottles 45% (the target in 2004 is 50%). These rates are quite high compared with those of other countries. Meanwhile, the PET bottles not collected for recycling are reused by customers, thrown away as garbage, or shipped overseas to China and other countries. Mr. Masato Kumon, Suntory's executive general manager of the environmental affairs division, sees the next challenge as increasing the collection rate in cooperation with consumers. This is also important in order to feed enough used PET bottles to the company's new "bottle-to-bottle" recycling process, which chemically converts used bottles back into raw material for PET resin and bottles.

At the same time, the company is now working to replace its 410,000 drink vending machines around the country with more energy efficient "eco-venders."

Protecting the Forest is about Protecting the Water

Third, what kinds of initiatives are being taken to preserve water, an essential resource for the company's products? Suntory has been making efforts to nurture forests, which play a valuable role in storing water resources. Forests provide an important source of water; they allow rain and snow to be absorbed into the ground slowly through leaves, roots, and leaf mold, removing impurities and creating mineral-rich freshwater. Realizing this, Suntory works to preserve forested land surrounding the headwaters, and practices forest management, environmental research, and forest regeneration activities. In fact, about half of the 5.6 million square meters of Suntory's factory land is covered with trees.

In addition, in 2003 Suntory completed work on a project to preserve a national forest in the mountains surrounding Mt. South Aso's crater lake, in Kumamoto Prefecture, which covers about 100 hectares, calling it the "Forest of Natural Water." By setting up facilities, sidewalks and benches, the company has developed a forest that is also suitable for recreation and enjoying nature, as well as serving as a training ground for Suntory's new employees.

Here, Mr. Kumon points out that effective forest preservation cannot be done by the company alone; it requires collaboration with local residents, local government, and also other companies. One example of effective collaboration is being conducted in Tanzawa, Kanagawa prefecture, where, in addition to collaborations among various players, Kirin Breweries, Asahi Breweries, and Suntory work each other to nurture the forest. Working more closely with local government and residents will be the key, Mr. Kumon says.

Suntory is working on a challenge to reduce its CO2 emissions by an average of 7% from 1990 levels by the period 2008 to 2012. Its CO2 emissions per unit of production had been reduced by 48% (from 1990 levels), but the total emissions had not decreased due to higher shipments of food and beverages. Suntory will have to continue working hard to achieve its target. Mr. Kumon suggests that with the company's founding spirit of "sharing profit three ways," it will "not chase short-term profits but continue to make steady efforts that will succeed over time." Suntory is trying to do its part to work toward a sustainable society that has resonance between people and nature.

This article has been reprinted courtesy of Japan for Sustainability. It is the ninth article in that publication’s "Toward A Sustainable Japan - Corporations At Work" series.