2011-2013 Mid-Term Business Plan
「Grow with breakthrough」

December 2, 2010
Coca-Cola West Company, Limited (2579)

Contents■ Long-term Management Concept 2020
・Environmental analysis
・・・ 3・Overall structure on the road to 2020・・・ 4・Corporate philosophy／Our principle／Basic management
stance／West Vision／Corporate message
・・・ 5
・Our long-term strategy
・・・10・Evolution the company undergo on the road to 2020
・・・11
・Steps toward Vision 2020
・・・12
・Our long-term targets
・・・13■ 2011-2013 Mid-Term Business plan
・Basic strategy
・Growth／Efficiency／Structural strategies
・Investment plan
・Our mid-term targets■ Reference

・・・15
・・・16
・・・26
・・・27
・・・29
1

Long-term Management Concept 2020

Environment analysis
Change in the external environment and issues
z
z
z
z
z
z

Long-term stagnation of the economy, deterioration of employment situation
Acceleration of decline in birth rate and aging of population
Diversification and polarization of consumption needs and purchasing behavior
Sensitivity to health and low-price-oriented thinking taking root
Continued move toward IT and rapid expansion of internet channel
Rapid globalization especially in Asia and change in industry structure stemming from
capital alliances, etc
z Increased concern for the environment and strengthening of responses and regulationsz Attention on social responsibility of corporations

Change in the internal environment and issues
z
z
z
z
z
z

Evolution
toward2020

Sluggish growth in the beverage market and decrease in the company’s market
share
Prices becoming lower (deflation)
Changes in the channel structure and stagnation in vending channel
Improvement of profit structure by shedding high costs
Decline in market execution ability and deployment power due to delay inimprovement of organization / HR / execution structure
True unification of the company has not progressed in terms of system, culture, etc

3Overall structure on the road to 2020
-Creating a happy tomorrow for everyone-

Corporate message

Long-Term Management
Long-Term
Management Concept
Concept 2020
2020
Corporate
Corporate philosophy
philosophy

West Vision

PROFITTo
To be
be thethe most
most respected
respected company
company byby allallkey
key shareholders,shareholders, encompassing
encompassing consumers,
consumers,
customers,
employees
andthecommunity!!
customers, employees and the community!!

Our
Our principle
principle

Basic
Basic management
management
stancestance510 billion yen
35 billion yen

Growthstrategy

PARTNERSPLANET

Long-term strategy
Growth strategy
Efficiency strategy
Structural strategy

PEOPLEPORTFOLIO

Growth targets
Net sales：
Operating income ：TCCC※2020 VISION

Efficiency
strategy

PRODUCTIVITY

Structural strategy※TCCC：The Coca-Cola Company

4Corporate philosophy

We will contribute to the happy lifestyleof all our stakeholders and contribute to
the development of a sustainable society
by providing value and refreshment
through our beverage portfolio.

5Our principle

Everything we do starts from the consumer.

sprit
Top of mind

Have
their
perspective

Celebratesatisfaction
Consumer

Reflect

Speed
to market

6Basic management stancezProvide all shareholders with “Happy”
・Consumer driven actions
・Community contribution
・Employee satisfaction
zHigher sense of accountability to meet our target

7

West Vision

To be the most respected company by all key stakeholders, encompassing
consumers, customers, employees and the community!!

z Our product/service
z Our activities

Consumerz Ensured quality
z Sound and stable growthz Community contribution

Happyz Job satisfaction
z Feeling of trust

Employee

Shareholder
The local
communityz Sustainable and viable
societyz Sense of pride

Set and assess quantitative/measurable targets
8Corporate message-Creating a happy tomorrow for everyone-9Our long-term strategy

Growth strategy

Efficiency strategy

z Expand Coca-Cola businessz Improve efficiency andproductivities

z Challenge to new domain

Structural strategy
z Contribute to the local community/environment,
and improve employee job satisfaction10Evolution the company undergo on the road to 2020
Thus farGoing forward
zProvide new value

zMainly in existing channels

zNew growth channels

zChannel-specific BPPC※
development

zConsumer/purchaser-oriented

Efficiency

zMulti-level organizationzAccelerate market execution
through simple organizationzIncrease efficiency throughcost reduction

zAchieve improvement in productivity anda level of operations quality that is No.1
in the industry

Structure

zPromote “hard” unificationof the company

zTrue unification of the company

zDefensive CSR activities

zProactive development ofcommunity-based CSR activities

GrowthzBuilding a leading brand(create a corporate culture unique to CCW)

※ BPPC： Brand, Package, Price, Channel(To develop and execute products with the optimum Brand, Package and Price according to different Channels, which includes
supermarket, discount store, drug store, etc)

11

Steps toward 2020
Long-term Management
Concept 2020

West VisionTo
To bebe thethe most
most respected
respected company
company byby allallkey
key stakeholders,
stakeholders, encompassing
encompassing consumers,
consumers,
customers,
customers, employees
employees andand thethe community!!
community!!
Growth targets
Net sales： 510 billion yen
Operating income： 35 billion yen

Third
Third step
step ((2017-2020)2017-2020)
Actualize
Actualize dreams
dreams && progress
progress toto thethe next
next level
level

SecondSecond step
step ((2014-2016)2014-2016)
Realize
Realize growth
growth2011-2013)
First step ((2011-2013)

Grow
Grow with
with breakthroughbreakthrough12Our long-term targets(billion yen)

2013

2010

2020

plan

difference
vs. 2010%

plan

difference
vs. 2010

%

376.9

430.0

+53.1

+14.1

510.0

+133.1

+35.3

368.8

380.0

+11.2

+3.0

430.0

+61.2

+16.6

Other business

8.1

50.0

+41.9

+517.3

80.0

+71.9

+887.7

Operating income

10.8

24.0

+13.2

+122.2

35.0

+24.2

+224.1

Coca-Cola business

10.0

16.0

+6.0

+6.0

22.0

+12.0

+120.0

Other business

0.8

8.0

+7.2

+900.0

13.0

+12.2

+1,525.0

Net profit

6.8

14.0

+7.2

+105.9

21.0

+14.2

+208.8Operating income margin (%)

2.9

5.6

+2.7

-

6.9

+4.0

-

ROE (%)

3.0

5.8

+2.8

-

7.8

+4.8

-

3.4

6.7

+3.3

-

10.5

+7.1

-

11.0 ※3

23.0

+12.0

-

30.0

+19.0

-

64.0

69.2

+5.2

-

80.5

+16.5

-

plan
Net sales
Coca-Cola business(Net profit on shareholders' equity)

ROA (%)(Recurring income on total assets)

FCF (billion yen)

※2

Net assets to total assets (%)※1※1 2010 plan is based on performance for ecast announced as of October 29, 2010.
※2 FCF = Cash flow from operating activities + Cash flow from investing activities※3 Acquired amount of Q'SAI (36.5 bil lion yen) doesn't include in FCF 2010 plan.

13

Vision 2020 First Step

2011-2013 Mid-term Business plan
「Grow with breakthrough」

Basic strategy

Growth strategy

Efficiency strategy

z Expand Coca-Cola businessz Improve efficiency and productivity■ Horizontal expansion and verticalexpansion■ Achieving consumer driven SCM■ Building of foundation for low-cost■ Evolution of trade marketing■ Improvement of market execution

z Challenge to new domain■ SCM centered periphery businesssupply structure■ Distribution process reform■ Increasing efficiency of indirect
departments■ Achieving optimum labor cost

Structural strategyz Community/environmental contribution and employee satisfaction■ Contribution to the local community■ Employee satisfaction■ Promote environmental management

15

Growth strategy

Expand Coca-Cola Business■ Horizontal expansion and vertical expansion

Growthstrategy

Achieve sales growth on two axes: horizontal
expansion and vertical expansion【sales growth on two axes: horizontal expansion and vertical expansion 】

・Expand VPO※1 via thoroughexecution of PicOS※2

Vertical expansion

・Achieve net increase in volume
through new products
・Increase the number of
new business accounts→HORECA※3 project
・M&A
・Sell over the internet

Horizontal expansion※1 VPO：sales volume per outlet※2 PicOS : To represent the ideal image of the sales floor in form of a visual guide.
The ideal sales floor.
※3 HORECA: Hotel, Restaurant, Cafe

【Sales growth due to increase of new accounts】
CS

26,000RF

386,000

Potential
accounts

23,000VD

63,000811,000

243,000

Number of outlets
in our area

Our customers

1,223,000

329,000

CS：Chain store
VD：Vending

RF：Retail・Food service

16Growth strategy

Expand Coca-Cola Business
Growthstrategy■ Evolution of trade marketing

Sales growth on two axes: horizontal expansion
and vertical expansion in each channel
Focus on core 8 brand※1【Sales volume plan by channel/basic strategy】
2010
Sales volume plan

2013
Sales volume plan

(thousand cases)(thousand cases)changeBasic strategy

Chain store

67,70072,400+6.9%

Aim to stop the decline in retail prices
by executing channel-specific OBPPC ※2
strategy and achieve profit growththrough expansion of sales locations

Vending

68,60070,100+2.2%

Evolution from vending business into
retail business

Retail・Food service

31,00032,700+5.5%

Growth in new profit-generating
business through establishment of the
HORECA business

Other

10,000

9,300

-7.0%

177,300

184,500

+4.1%

Total

※1 Core 8 brand：Coca-Cola, Coca-Cola zero, Fanta, Georgia, Sokenbicha, Aquarius, I LOHAS, Ayataka※2 OBPPC：Occasion, Brand, Package, Price, Channel

17Growth strategy

Expand Coca-Cola Business■ Reform of operational process and

Growthstrategyorganization
Achieve an effective structure adapted to trade
and area/business characteristics

marketing→Urban area: single channel branch, Non-urban area: mixed channel branch→Revise organization of chain store channel and the way of merchandising→Increase operational efficiency due to introducing on-line vending machine

Development of organized sales capability→Improve market execution ability by introducing RED※ cycle in all channels,
and by aligning employee commission incentives.
※RED：Mechanism to check whether the right execution is being carried out inthe market on a daily basis. Confirm and report how well PicOS is being
implemented in the actual market.

Improvement of IT infrastructure→Development of tools to support sales activities
18

Growth strategy

Expand Coca-Cola Business
Growthstrategy■ Reform of operational process andorganization【Organization of sales department which starts from 2011】

Sales department

Trade marketing
division

Kansai
Sales division

National Chain
division

Chugoku
Sales division

KyushuSales division(Lower-level organization is thesame as that of Kansai division)
CS

FDS

VD

Marketdevelop
ment

VD
Sales
dept

RF
Sales
dept

CS
Sales
dept

Sales
dept

Non-urban

Urban area
Non-urban

Mixed branch

Mixed branch

CS branch

CS branch

RF branch

RF branch

VD branch

VD branch

CS：Chain store
VD：Vending
RF：Retail/Food
FDS：Food service： Single channel branch： Mixed channel branch19Growth strategy

Challenge to new domain
Growthstrategy■ SCM centered periphery business

Expand periphery business utilized ourassets and functions
Vertical→Procurement→Distribution→Recycle→Environment

Value chain→Sales equipment

Sales &
Marketinghorizontal

Supply chain, etc

20

Efficiency strategy

Improving efficiency and productivity
Efficiency
strategy

SCM related■ Achieving
consumer driven
SCM

Synchroni
zation■ Building offoundation for
low-cost supply
structure

Synchroni
zation■ Distribution
process reform

EffectImprove availability

Improve-flow
Improve cash
cash-flow
due to proper stock

Cost reduction21

Efficiency strategy

Improving efficiency and productivity
SCM related

Efficiency
strategy■ Achieving consumer driven SCM

Rebuild SCM model synchronized sales activity and supply activity
Thoroughly execute plan-based activities→Strengthen coordination between supply activity and information
chain based on consumer-oriented and channel-specific sales
activity; strengthen response capability
Efficiently operate IT foundation through effectively utilizing existing
systemPromote reform of cross-sectional value chain■ Building of foundation for low-cost supply structure

Cost reduction and increasing productivity→Reduce the raw material usage, lightweight, self-manufacturing→Advance production facility (consolidation / introduction of lines, newtechnology)→Increase operating ratio of production lines

22

Efficiency strategy

Improving efficiency and productivity
Efficiency
strategy

SCM related■ Distribution process reform

Reorganize DC※1 (Cross-docking distribution network)→Carry out product transport to TC※2

Increase in sales delivery efficiency through introduction of
automated delivery planning (IT)※1 DC：Distribution Center※2 TC：Through Center【DC cross-docking (Final form in 2013)】
Warehouseadjacent to plant

DC

TC TC

TC

2011

Preparation2012

Make a test operation in Kyushu area
Operate in Kansai & Chugoku area

2013

Operate in Kyushu areaTC

23

Efficiency strategy

Improving efficiency and productivity
Other

Efficiency
strategy■ Increasing efficiency of indirect departments

Efficiency and outsourcing of operations by reviewing head office work
Unify and consolidate office work within the group
Unify office work and consolidate function■ Achieving optimum labor cost

Optimize labor cost through total labor cost management,
personnel management, and operational efficiency→Number of personnel in 2013： 9,000→Labor cost-to-net sales ratio in 2013 ： 16.8％

24Structural strategy

Community/environment contribution and employee satisfaction■ Contribution to the local community

Contribution to the nature environment /coexistence with society

Structural strategy■ Promote environmental management

Reduce greenhouse gas emissions
Build a safe and secure waste recycling system
Safeguard and promote methods to effectively utilize water resources
Support environmental education in the community■ Improvement of employee satisfaction

Implement performance allocation that is “linked with profit”
Foster a sense of unity through strategic convergence of pay standard
Rising retirement age
25

Investment plan
Proactively carry out investments in order to achieve growth in
the future and improve productivity.
(billion yen)

2011-2013 plan2010※

3 years

averagedifference
vs. 2010

Land

0.0

0.8

0.3

+0.3

Buildings

2.6

2.8

0.9

-1.7

Machinery & Equipment

6.5

41.6

13.9

+7.4

Sales equipment

7.7

27.6

9.2

+1.5

Other

3.5

10.5

3.5

+0.0

Total

20.5

83.5

27.8

+7.3

plan

※ The plan is based on performance forecast announced as of October 29, 2010.

26

Our mid-term targets -Operating income(billion yen)

Coca-Cola BusinessStreamline ofback office
operation Cost related+0.4

to IT system-0.9

Distribution+3.5

depreciation-4.7

Production+3.6
Contribution
margin fromsales department

Other
business
Increase of+7.2

SCM related
investment

Operatingincome24.0+4.1

Operatingincome10.8
2010 plan※2013 plan※ 2010 plan is based on performance forecast announced as of October 29, 2010.

27

【Reference】

Performance trend(million yen)

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010
plan

Revenues 117,991 164,731 207,827 226,111 247,737 240,825 253,248 245,874 327,821 409,521 395,556 369,698 376,900
OperatingincomeRecurringincomeNet
income12,533

15,16017,44916,634

16,704

19,63816,86011,83012,321

16,056

10,521

2,242

10,80012,51015,88918,516

16,021

17,00519,895

17,065

12,256

13,225

17,493

11,0482,085

11,500

5,872

6,823

5,700

1,420

7,086

9,380

8,564

7,305

7,570

9,375

129

-7,594

6,800

1999/7/1
Merged with
Sanyo CCBC

500,000
400,000

2001/4/5
Make Mikasa CCBC
subsidiary

2007/4/3
Capital/Businessalliance with Minami
Kyushu CCBC

2006/7/1
Integration with
Kinki CCBC

2009/1/1
Merge 4 companies(CCWH, CCWJ, Kinki,
Mikasa)Operatingincome20,000300,000

200,000

25,00015,00010,000

Net revenues

100,000

5,000

0

0

98
Revenues(million yen)

99

00

01

02

03

04

05

06

07

08

09

10
Operating
Income(million yen)

29

Financial Data
＜Operating Income/Operating Income Ratio＞
10

20,00016,05615,00011,83012,321300,000

Operatingincome8

10,521 Operating

4

4.8
3.8

5,000

3.9
2.7

2,242
0.6

0

05

06

07

08

09

＜ROA／ROE＞
5.9
5.1

6

250,463

254,025

173,608

234,521

222,816150,000

83.2

82.1

80.5

84.4

80

2

70

50,000

68.2

0

60

05

(%) (million yen)

06

07

08

09

＜EPS／PER＞
5.6

ROA

120
93.42

3.7

1,549.5

EPS

82.22

90

88.29

PER

100

4.3
2

60

3.6

(%)

0.7

3.7
ROE

0

-4

(%)

200
2,000

4

-2

90

100,000

0(million yen)

250,000

Equity Ratio

100

Net Assets

6 200,000

income ratio

10,0008＜Net Assets / Equity Ratio＞

30

0.1

29.5

33.5

40

28.0
1.25

-75.96

08

09

0

05

06

07

08

09
-3.3

-30
-60

(yen)

05

06

07

-21.6

0

-30
-100

(times)30

Coca-Cola System in Japan
Investment(percentage of shares)(as of December, 2009)⑤
Joint companies of
TCCC/CCJC and bottlers（100％）
The
Coca-Cola
Company(TCCC) ②

Coca-Cola
Tokyo Research& Development
Co., Ltd(CCTR&D) ④

Coca-Cola
Beverage Service （15.0％）
Co., Ltd (CCBSC)⑥

Coca-Cola West

（4.1％）

Co., Ltd (CCW) ①（20.0％）
Minami Kyushu
Coca-Cola BottlingCo., Ltd

Coca-Cola
CustomerCoca-Cola（100％）(Japan)Co., Ltd(CCJC)

Marketing Company （21.5％）

Coca-Cola Central(CCCMC)Japan Co., Ltd⑦

Tokyo Coca-Cola③

Bottling Co., Ltd
FV Corporation

Tone Coca-Cola

(FVC)
⑧

（21.7％）

Bottling Co., Ltd
Coca-Cola Bottling
7 Companies(CCBC)

31

Coca-Cola Related Companies and Their Roles
1. Coca-Cola West Co., Ltd. (CCW)6.

In 2006, CCWJ and Kinki CCBC merged the management ofboth companies by establishing a joint holding company
CCWH. In 2009, CCWH, CCWJ, Kinki CCBC and Mikasa
CCBC merged and the trade name changed to Coca-Cola
West Co., Ltd.

Established through joint investment by TCCC and its bottlingpartners in Japan, and the company began operations on
January 1, 2007. It is charged with providing businessconsulting services to the Coca-Cola system in Japan, as well
as developing and generally maintaining the information
systems to support such work. The company has procured raw
materials since Jan 2009.

2.

The Coca-Cola Company (TCCC)

Established 1919 in Atlanta, Georgia. Carries the rights togrant a license to manufacture and sell Coca-Colaproducts to the bottlers. TCCC (or its subsidiary) makes
franchise agreements with the bottlers.
3.

Coca-Cola (Japan) Co., Ltd. (CCJC)

Established 1957 in Tokyo, as “Nihon Inryo Kogyo K.K.,” awholly-owned subsidiary of The Coca-Cola Company. The
company name was changed in 1958 to Coca-Cola(Japan) Company, Limited. CCJC is responsible formarketing planning as well as manufacturing and distributionof concentrate in Japan.
4.

Coca-Cola Tokyo Research & Development Co., Ltd.

(CCTR&D)

7.

Coca-Cola Business Service Co., Ltd. (CCBSC)

Coca-Cola Customer Marketing Company (CCCMC)

Established through joint investment by Coca-Cola (Japan)
Co., Ltd. and all of its bottling partners in Japan, and thecompany began operations on January 1, 2007. It is charged
with holding business negotiations with major retailer outlets,
such as nationwide convenience stores and supermarket
chains, as well as developing proposals for sales promotions
and storefront activities.
8. FV Corporation Co., Ltd. (FVC)
Jointly established in May 2001 by CCBCs and CCJC. FVC
carries out sales negotiations with national chain vending
operators, and deals with non-KO products as well as KO
products.

Established in January 1993 as a wholly-owned subsidiaryof The Coca-Cola Company. Since January 1995, carries
out product development and technical support to respondto the needs of the Asian region.
5.

Coca-Cola bottlers (CCBCs)

There are 12 bottlers in Japan, which are responsible forselling Coca-Cola products in the respective territories.

32

Glossary
1. Channel (Business Unit)
Vending:
Retail sale business to distribute products
through vending machines to consumers
Chain store:
Wholesale business for supermarket chains
Convenience Store:
Wholesale business for convenience store chains
Retail:Wholesale business for grocery stores, liquor
shops, and other over-the-counter outlets
Food Service:
Syrup sale business for fast food restaurants,
movie theaters, sports arenas, “family
restaurants,” and theme parks

2. Vending
Regular vending machine:
A vending machine offered free of charge to acustomer who supervises its operation and uses it tosell products purchased from us.
Full service vending machine:
A vending machine installed and managed directly by us(product supply, collection of proceeds etc.).
Fees are paid to the location proprietors.
Out-market vending machine:
An outdoor machine whose users are relatively
unspecificOut-market vending machine:
An outdoor machine whose users are relatively
unspecificIn-market vending machine:
An indoor machine whose users are relatively specific
VPM
Sales Volume Per Vending Machine
VPPM
Sales Volume and Profit Per Vending Machine

3. Chain StoreNational chain:
National chain supermarket that CCCMC are
responsible for negotiating
Regional chain:
Chain supermarket that owns its stores in the two
or more bottlers’ territories
Local chain:
Chain supermarket that owns its stores in the
single bottler’s territory

4. OtherTrade marketing
Trade marketing is a specific function that uses
shopper and retail knowledge to develop in-store
strategies that ultimately result in higher brandequity and an increase in the quantity and valueof shopper purchases.

33

Forward-Looking Statement

The plans, performance forecasts, and strategies appearing
in this material are based on the judgment of the managementin view of data obtained as of the date this material was released.
Please note that these forecasts may differ materially from actual
performance due to risks and uncertain factors such as thoselisted below.
- Intensification of market price competition- Change in economic trends affecting business climate- Major fluctuations in capital markets- Uncertain factors other than those above

34

-Creating a happy tomorrow for everyone-