Snack Maker Calbee Avoids Potato Shortage By Relying On Japanese Farmers

What happens when Asia’s biggest potato chip maker runs out of potatoes? Japanese snack brand Calbee had to learn the hard way.

Photo Insert: Circumstances have forced Calbee into working with farmers across Japan to boost its domestic supply from 320,000 tons to 400,000 tons a year by the end of the decade.

Extreme weather disruptions and supply chain snags forced the company to hike prices three times last year and rethink how it sources its most important ingredient. “That is our headache,” Calbee CEO Makoto Ehara told Michelle Toh of CNN Business.

The issue is critical to the company as it embarks on a $1 billion turnaround and overseas expansion plan that will see it plow deeper into the world’s top two economies.

Potato is serious business for the 74-year-old snack maker. Calbee uses hundreds of thousands of tons of the vegetable annually to make chips in a variety of flavors. These products rake in hundreds of millions of dollars in sales a year for the company, which posted a profit of 22.2 billion yen ($156 million) in 2022.

In Asia Pacific, Calbee sells more chips than anyone else besides Pepsi Co., its longtime partner that owns about 20% of the company via a subsidiary.

Pepsi controls about 24% of the region’s potato chip market, while Calbee has about 12%, according to data from Euromonitor International.

Calbee sources as much as 90% of its potatoes in Japan, with 80% of that supply coming from Hokkaido. But the area was ravaged by drought in 2021, and the firm’s domestic potato supply fell by 8% in 2021 and 14% the following year.

Calbee tried to make up for the shortfall by importing more from the US, which accounts for the remaining 10% of its potato supply but the shortage of shipping containers caused delays and higher prices.

It forced Calbee to work with farmers across Japan to boost its domestic supply from 320,000 tons to 400,000 tons a year by the end of the decade.

“Weather is very, very important for us,” said Ehara.

“So, in order to avoid that kind of thing, we are now trying to increase the fields in Japan, other than in Hokkaido.” It also estimates it may cut the proportion of potato imports it gets from America, its sole overseas supplier, in half.

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