It was just two days ago I was writing about how the war in Iran was disrupting supply of naphtha, a key petroleum product used in packaging, to Japan. The disruption was specifically hurting the price of natto, a popular fermented soybean dish, as it’s increasing the cost of the plastic packaging.
Just a day after that, we got an even more striking visual symbol of the disruption. A major snack food manufacturer in Japan warned that the combini chip aisle will be a little more monochrome as of late May. The root cause: a shortage of the ink needed to print the labels.
Not the (Japanese) Onion
Calbee made the announcement yesterday in a press release on its corporate site. As of May 25th, 14 products will begin shipping with black-and-white labels. The first wave, starting that week, includes Potato Chips Usushio, Kappa Ebisen, and Frugra, with Kataaage Potato following in late June.
Calbee said the decision was “due to the Middle East situation” – i.e., the closure of the Strait of Hormuz that began on February 28th. The company did not specifically name naphtha. However, the crude-derived product serves as feedstock for most printing-ink pigments.
Calbee didn’t name an end date for the move. In addition to the monochrome labels, however, FNN Prime Online reported in an exclusive that the company also silently canceled a July launch of a new brand of Sour Cream flavored potato chips – an invisible consequence of the Middle East conflict.
This isn’t a minor announcement. Founded in 1949, Calbee owns a 50%+ share of the Japan snack market and a 70%+ share of the domestic potato chip market. It’s the equivalent of the Lay’s brand in the United States. These monochrome bags, in other words, will stand out on every potato chip aisle in every store nationwide.
While the news about natto prices saddened consumers, the Calbee news seemed more shocking and disturbing – possibly because it’s such a striking visual indicator of how badly the war on Iran is poised to disrupt Japan’s economy. It went viral on social media, with many users struggling to believe it was real. In fact, the news seemed so far-fetched that Kyoko Shimbun (“Fake News”), a Japanese equivalent of satirical English-language website The Onion, had to emphasize on its X account that “this is real news.”
The Takaichi government would like a word with Calbee execs
The news is ill-timed. It comes the same week that members of Prime Minister Takaichi Sanae’s government insisted that there was no issue with Japan’s supply of naphtha.
When asked about Calbee’s decision, Satō Kei, Deputy Chief Cabinet Secretary for the government, said that, contrary to Calbee’s belly-achin’, there was nothing to worry about.
“In addition to continuing domestic naphtha refining using stockpiled crude oil, imports of naphtha from non-Middle Eastern sources have tripled in May compared to levels prior to the escalation of tensions in the Middle East,” he told reporters. Satō said 40% of the country’s naphtha supply comes from the Middle East, with 20% from other foreign sources and 40% produced domestically.
Satō further stated that the government would be having a “hearing” with Calbee over the situation.
That raises the question: Who’s telling the truth?
The government’s naphtha numbers are real. But they’re measuring the wrong thing. Aggregate tonnage is fine; the specific industrial inputs that downstream food-packaging printers need are not. The issue isn’t naphtha supply generally – it’s how instability in the naphtha market is disrupting the pigment production chain.
In addition, as I’ve reported before, Calbee isn’t the only one citing the alarm. On top of the two natto makers we discussed earlier, Itō Ham told Nikkei it’s considering lower-color runs for its packaging.
The fact that two natto makers, Calbee, and now reportedly Ito Ham are all making the same call inside two weeks suggests the issues are at the bottom of the supply chain. And the government wanting to “have a word” with Calbee strongly suggests it doesn’t have all the facts in hand.
Could Japan be headed for higher prices?
As I discussed in my last write-up, Takaichi’s government is under fire for what many perceive as inaction regarding rising consumer prices. Takaichi campaigned on a pledge to temporarily eliminate the consumption tax on groceries – an initiative that’s currently stalled out in the legislature.
This contradictory action from Calbee does more than just highlight the government’s inaction around prices. It raises the specter of more inflation in the near future.
Japan has struggled with higher prices since the pandemic and the start of the war in Ukraine, mainly in the form of rising utility and transportation costs. The largest shock in the past year has been rice, whose price skyrocketed after a harsh growing season. The situation grew so dire that the government had to release rice from the country’s strategic reserves.
In good news, the cost of rice is now coming down. Some experts predict it may even crash soon due to oversupply. However, companies in Japan have already raised prices on over 6,000 other products in the past year. Others are engaging in “shrinkflation” – decreasing package volume while keeping prices stable.
Experts warn that, if naphtha concerns continue, it could impact prices of other consumer products, including dried noodles, seasonings, toiletries, and cosmetics.
In other words, the real pain for Japanese consumers may still be waiting.
Keep reading
Sources
中東情勢の影響による一部商品仕様見直しのお知らせ (corporate press release PDF) カルビー株式会社
カルビー、ポテトチップスなど計14品パッケージを当面の間「白黒」2色に 中東情勢の影響受け【全文】 モデルプレス
ポテトチップスの袋が白黒に カルビー、中東情勢受けインク不足か 朝日新聞 (via Yahoo!ニュース)
カルビー、ポテチの包装を白黒に 中東影響でインク品薄 時事通信
カルビー、ポテトチップスなど白黒包装に インク不足で伊藤ハムも検討 日本経済新聞
【独自】カルビー「ポテトチップス」 “うすしお”や”コンソメ”などパッケージが白黒に 25日以降出荷分から FNNプライムオンライン (via Yahoo!ニュース)
「ナフサ」供給不安定で「カルビー」主力商品パッケージ「白黒化」報道 虚構新聞もびっくり「現実のニュースです」 J-CASTニュース (via Yahoo!ニュース)
カルビー ポテトチップスのパッケージが白黒に 中東情勢によるナフサ供給不足で QAB琉球朝日放送 (Quebee)
カルビー製品包装 “白黒2色” で関係企業に聴き取りへ 政府 NHK News
カルビーがポテトチップスのパッケージを白黒に変更へ 「ナフサは足りている」としている政府の受け止めは？ 節約呼びかけは？ 記者の問いに官房副長官の答えは ABEMA Times
今年の新米価格どうなる？ コメ余り…農家「たぶん暴落」 田植え最盛期に現場異変 TV Asahi News