Japan Food Sector

Research evidence excerpt

Japan Food Sector

Global Research

3 July 2026ab

Japan Food Sector Equities

JapanDisproportionate investment indicated by capex

and investment ratios Food & Beverage

Rei Ihara

Analyst

rei.ihara@ubs.com

Efficiency will not improve without sector consolidation, plant sharing and +81-3-5208 6227

business withdrawals

Ryunosuke Watanabe

As we noted in our report DuPont analysis identifies conditions for a sector re-rating, the Associate Analyst

sector's total asset turnover has structurally deteriorated, which we view as one reason ryunosuke.watanabe@ubs.com

why ROE is not improving. We analysed capex and sales-to-capex ratios across food +81-3-5208 6243

companies. We conclude that (1) capex reached a record high in FY2025 despite

sluggish sales growth, (2) the sales-to-capex ratio continues to trend upward, with

investment efficiency deteriorating year by year and (3) investment efficiency is unlikely

to improve unless companies promote plant sharing, sector consolidation and business

portfolio restructuring.

Sales-to-capex ratio deteriorating over long term

Among companies in our coverage (excluding Japan Tobacco, Lacto Japan and Asahi

Group Holdings), total capex was approximately ¥1trn in FY2025, the highest level on

our records. Planned capex for FY2026 looks likely to reach around ¥1.2trn, setting

another record high (Figure 1). At individual companies, capex plans include (1)

production system restructuring across dairy companies, (2) new plants in Japan and the

US at Yakult Honsha and (3) new global plants at instant noodles makers and Kikkoman.

Rising construction and equipment costs are also increasing overall investment amounts.

As a result, the sales-to-capex ratio for our covered companies reached a record high in