Nippon Meat shares plummet as beef scandal widens


A sign in a Tokyo supermarket informs customers of the decision not to sell Nippon Meat's products

Staff and reports

TOKYO, Japan -- Shares in Nippon Meat Packers plunged 5.82 percent lower on Tuesday as a growing mislabeling scandal envelopes the Japanese food industry.

Nippon Meat announced on Monday that sales for August would fall 40 percent as major supermarkets and retailers such as Ito-Yokado, Seiyu and Aeon removed its products from shelves.

Analysts told the Nihon Keizai Shimbun that if the boycott continues, Nippon Meat -- which had until now steered clear of the financial trouble surrounding other meat-processing firms -- will see a serious impact on profits.

The company had previously forecast revenue rises of three to five percent for its products for the year.

At one point, trading volume in shares of Japan's largest meat packer accounted for 10 percent of the whole market volume as it briefly hit 16-year lows before closing at 777 yen on an otherwise flat day in Tokyo, where the Nikkei closed 0.61 percent lower to finish at 9,688.61 points.

Scandal over mislabeled domestic beef

Nippon Meat found itself embroiled in the scandal after illegally incinerating 1.3 tons of beef it had sent to the Japan Ham and Sausage Processors Cooperative Association, headed by Nippon Meat chairman Yoshinori Okoso, to sell to the government.

The government said it would buy domestic beef through the association produced before new stringent testing regulations to detect mad cow disease were introduced to try and halt the spread of the disease.

Although the company initially claimed the beef was incinerated because it was past its sell-by date, it then said a subsidiary in Osaka and another in Okayama had mixed foreign and domestic beef before selling it to the association.

On Tuesday the government raided the association, which cancelled contracts with Nippon Meat and eight other beef suppliers on July 12, allowing the company to destroy the beef.

Nippon Meat claims that the beef was incinerated at the association's request and says it did not abuse the government's buy-back.

Industry hit by string of scandals


Japan's outbreak of mad cow disease last September was the first outside Europe

The scandal is just the latest in a string of incidents in the embattled meat packing industry.

Snow Brand, the sixth-largest meat packer before it was liquidated, admitted that it had also mislabeled foreign beef as domestic earlier this year.

And supermarket operator Tokyu Store announced on Tuesday that it had been involved in selling beef intentionally mislabeled as a more expensive brand.

Reuters reports that one of the company's stores in Kawasaki sold beef falsely labeled as Matsuzaka beef, a premium variety more commonly referred to as "Kobe beef" outside Japan.

The company saw its share price plummet 12.94 percent on the news.

Competitors gain from Nippon's troubles

It's not all bad news in the industry, however, as other meat processors boost production to replace Nippon Meat's products.

Itoham Foods, which posted its first-ever annual net loss earlier this year, raised production by 20-30 percent by Monday and plans to raise it further.

Prima Meat Packers also increased production by 30 percent after a year of restructuring and massive job cuts.

However, Prima noted that it was not substantially upping production facilities until they can ascertain whether the increase in orders was just temporary cover for Nippon Meat, which controls 10 percent of the beef market and 23 percent of the ham and sausage market.