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Comically or tragically? Japan is experiencing a crisis of chips.

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Comically or tragically? Japan is experiencing a crisis of chips.
April 14
08:00 2017

Japan is suffering a time period of extremely low potato production. The region Hokkaido, which provides the whole region with this vegetable, has felt the effect of climate disasters. The Japan Times writes about the sales suspension of 49 types of products. Calbee and Koike-Ya, the two largest players in the potato processing market, run the risk of going bankrupt.

The Internet is crowded with photos of those shelves in supermarkets that were previously filled with potato chips.

Thanks to journalists, the current situation is called “potato crisis.” It is expected that fast food restaurant chains will bear the losses. The Japanese are big fans of French fries; but apparently, the circumstances will deprive them of their favourite snack.

Last year, the Hokkaido region survived the devastating effects of a record number of typhoons. The Japanese company Calbee expected to replenish the deficit with supplies from the USA. However, the export did not completely solve the demand; in addition, the Japanese are extremely unhappy with the quality of the American vegetable. The share of this company in the Japanese market of potato chips is 73% (20% of Calbee belongs to PepsiCo). Many of the giant’s products will be taken out of the production. This fact has caused the sharp price growth for rare chips on the online auctions.

In addition to the potato, there is an expected deficit of carrots and maize. They are also traditionally supplied by the region Hokkaido, which suffered from four typhoons during 2016.

Investors should pay attention to the shares of Japanese companies associated with processing of food and retail.


The material was prepared with the participation of  Vladimir Haritonov,
a leading analyst of the brokerage company VOSPARI.

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