Asahi Group Holdings, Ltd.

Creating
Value forSustainable
GrowthANNUAL REPORT 2012

CORPORATEPHILOSOPHYCORPORATEBRAND STATEMENT

The Asahi Group aims to satisfy

Share the “Kando”*

its customers with the highest levels of

Always creating new value moves people’s
hearts and forms a strong bond.
Always imagining a fresh tomorrow moves
people’s hearts and helps them shine.
Sharing these emotional experiences withas many people as possible — this is
the mission of the Asahi Group.

quality and integrity,
while contributing to
the promotion of healthy living andthe enrichment of society worldwide.

* Kando is an emotion experienced in various ways. It canbe an extreme satisfaction, an extraordinary feeling
beyond one’s expectations, and/or a sensitively touching and moving sensation.

CONTENTS

01
02
04

To Our Shareholders and Friends

40

Financial Highlights
Opening Feature:
Toward long-term, stable growth06
14

Enhancing our business basefor stable, long-term growth—Realizing a value cycle —16

Review of Operations
16 Asahi Group at a Glance
18 Alcohol Beverages
24 Soft Drinks
30 Food
34 Overseas

40

Corporate Governance

44

Risk Management and Compliance

45

Board Of Directors, Corporate Auditors
and Corporate Officers

46

Interview with the President
Special Feature:

Group Management

51
99
103
105

Corporate Social Responsibility (CSR)

Financial Section
Fact Sheets
Corporate Data
Investor Information

Forward-Looking Statements
The current plans, forecasts, strategies and performance presented in this annual
report include forward-looking statements based on assumptions and opinions
arrived at from currently available information. The Asahi Group cautions readersthat future actual results could differ materially from these forward-looking
statements depending on the outcome of certain factors. All such forward-looking
statements are subject to certain risks and uncertainties including, but not limited
to, economic conditions, trends in consumption and market competition, foreignexchange rates, tax, and other systems influencing the company’s business areas.

TO OUR SHAREHOLDERS AND FRIENDS

On behalf of the Asahi Group, we would like to express our sincere appreciation for your enduring support.
This year, the Asahi Group formulated its Long-Term Vision 2020, as a new corporate vision. It also established the MediumTerm Management Plan 2015 to serve as an action plan for realizing this vision. Under this framework, the Asahi Group is stepping up measures designed to enhance its corporate value.
Under the Medium-Term Management Plan 2012, which ended last year, the Group focused on improving profitability inexisting businesses and developing a new foundation for growth. The Group executed profit structure reforms that surpassed
the plan’s expectations. For example, we developed an optimal production structure by integrating breweries, among otheractions. Core brands in each business, including Asahi Super Dry and Mitsuya Cider, were strengthened. Furthermore, measures
to develop a new foundation for growth saw us acquire all shares of Calpis Co., Ltd., a leading lactic acid drinks company. In
overseas business, we expanded our growth foundations worldwide through measures including the acquisition of five soft drink
and alcohol beverage companies.
Consequently, we finished 2012, the final year of the Medium-Term Management Plan 2012, with record net sales of ¥1,579.1
billion, an increase of 8.0% year on year. Net income was ¥57.2 billion, up 3.8% year on year, reaching an all-time high for a 12th
consecutive year.
Going forward, the outlook indicates a more challenging business environment. We expect to face a stagnant global economy as a whole, and a planned consumption tax hike in Japan, among other issues.
Under these conditions, we have redefined our vision for the Asahi Group as a whole. The newly established Long-Term Vision2020 sets forth the following vision statement for the Asahi Group: “To be a trusted corporate group in the world through offering“Kando” experiences of food (deliciousness, happiness, innovation).” Under the Medium-Term Management Plan 2015, our policy
is to enhance corporate value through Value and Network Management. Through this approach, we intend to increase capitalefficiency through such means as improving shareholder returns, in addition to boosting profitability.
Looking ahead, the Asahi Group will continue aspiring to be a corporate group that is trusted in Japan and the rest of theworld by implementing management that places a stronger emphasis on enhancing corporate value. We kindly ask for yourcontinued guidance and support as we endeavor to drive the Asahi Group’s growth into the future.

Hitoshi Ogita
Chairman of the Board (Left)

Naoki Izumiya
President and Representative
Director (Right)

Annual Report 201201

FINANCIAL HIGHLIGHTS
Asahi Group Holdings, Ltd. and Consolidated Subsidiaries
For years ended December 31, 2012, 2011 and 2010%

Thousands of
U.S. dollars

Change(2012/2011)

2012

Millions of yen
2012

2011

2010

For the year:
Net sales
Alcohol beverages
Soft drinks
Food
Overseas
OthersOperating income (loss)
Alcohol beverages
Soft drinks
Food
Overseas
Others¥1,579,077
922,250
370,836
101,627
157,932
26,432
108,437
113,306
7,379
3,669(3,873)607¥1,462,736
921,657
324,782
98,033
94,22024,044
107,190
101,025
11,3894,158(2,913)760¥1,489,461
966,331306,719
95,44097,67423,297
95,35087,2498,330
3,594(5,138)
1,145

+8.0
+0.1
+14.2
+3.7
+67.6
+9.9
+1.2
+12.2
–35.2
–11.7
+33.0
–20.2

$18,238,358
10,651,998
4,283,160
1,173,793
1,824,117
305,290
1,252,449
1,308,686
85,22742,377(44,733)
7,011(12,651)
6.9
57,183(7,229)7.3
55,093168
6.4
53,080+75.0–0.4 points+3.8(146,119)

109,292
50,170108,51340,225

125,609
36,738+0.7+24.7

1,262,324
579,464¥1,732,188
456,235
726,879¥1,529,908
390,092
643,799¥1,405,358
311,423
612,670

+13.2
+17.0
+12.9

$20,006,791
5,269,508
8,395,460¥¥¥

114.10114.00

+3.7
+3.7

$

+12.0
+12.7

Adjustment(corporate/elimination)*
Operating income ratio (%)
Net income
Net cash provided byoperating activities
Capital investments

660,464At year-end:
Total assets
Interest-bearing debt
Total net assets
Per share data(in yen and U.S. dollars):
Net income
Diluted net income
Cash dividends
applicable to the year
Total net assets

122.75
122.67118.36118.2828.00
1,553.35

25.00
1,378.19

23.00
1,315.51

8.4
7.0
1.0
41.8
32.7
0.63

8.8
7.6
1.0
41.9
32.4
0.61

9.0
7.1
1.1
43.6
30.7
0.51

Key ratios:
ROE (%)ROA (%)
Total assets turnover (times)
Equity ratio (%)
Interest coverage ratio (times)
Debt-to-equity ratio (times)* Due to a reorganization of business segments in 2011, figures for 2010 have also been restated in line with the new business segments.

02

Asahi Group Holdings, Ltd.

1.42
1.42
0.32
17.94

NET SALESOPERATING INCOME/NET INCOME(¥ billion)(¥ billion)

1,600

1,472.5

1,462.7

1,489.5 1,462.7

120

1,579.1

1,200

90

82.8

60

57.2

55.1

53.1

47.6

45.0
30

400

0

95.3

94.5

922.3

800

108.4

107.2

26.4
157.9
101.6
370.8

0

2008

2009

■ Alcohol Beverages*1■ Food*2■ Others

2010■ Soft Drinks*1■ Overseas

2011

2012

*1 Overseas business results are included inthese segments prior to 2011.
*2 For years up to and including 2009
this segment was called “Food andpharmaceuticals”

TOTAL ASSETS/ROA
1,732.2

1,800
1,529.9(¥ billion)

12.0

80

10.0

1,433.7 1,405.4

62.4
58.4

60

1,200

8.0
7.4

2010

2011

2012

■ Operating Income ■ Net Income(%)

1,299.1

900

2009

CAPITAL INVESTMENTS*/DEPRECIATION*(¥ billion)

1,500

2008

7.6

7.1

6.6

7.0

6.0

600

4.0

300

2.0

59.4
50.2

59.7

58.1

47.4
40

40.2

36.7

36.1

20

0

2008

■ Total Assets (Left Scale)

2009
■

2010

2011

2012

0

0

2008

2009

2010

2011

2012

■ Capital Investments ■ Depreciation

ROA (Right Scale)* Figures for 2009 and thereafter include effects accompanying changes in accounting standards
for lease transactions and trademarks of an Australian subsidiary at time of acquisition.

SHAREHOLDERS’ EQUITY/ROE

INTEREST-BEARING DEBT/D/E RATIO(¥ billion)

(%)

800
8.7
600

521.6

8.7
573.5

9.0
612.2

8.8
641.7

723.8
8.4

(¥ billion)

10

500

8

400

6

300

456.2
391.9

200

2008

2009

■ Shareholders’ Equity (Left Scale)

2010
■

2011

2012

ROE (Right Scale)

390.1

1.0
0.8

311.4

302.3
0.58

400

0

(Times)

0.61

0.68

0.51

0.6

0.63

4

200

0.4

2

100

0.2

0

0

2008

2009

■ Interest-Bearing Debt (Left Scale)

2010
■

2011

2012

0

D/E Ratio (Right Scale)

Annual Report 2012

03

OPENING FEATURE

Toward long-term, stable growth
ESTABLISHMENT OF LONG-TERM VISION 2020 AND
MEDIUM-TERM MANAGEMENT PLAN 2015
In response to changes in the business environment and diversifying stakeholder needs, the Asahi Group established its LongTerm Vision 2020 and the Medium-Term Management Plan 2015, an action plan for realization of the long-term vision. The
Long-Term Vision 2020 sets out our aspirations for the entire Asahi Group and also redefines our vision for our stakeholders.
Under the Medium-Term Management Plan 2015, an action plan covering a three-year period, our policy is to improve profitability in each business through Value and Network Management, and to enhance capital efficiency by improving shareholder
returns and other means.

LONG-TERMVISION 2020
To be a trusted corporate group in theworld through offering “Kando”

Our goal is to become a corporate group in the world trusted throughoffering “Kando” for the products and services it provides. The Asahi
Group defines “Kando” as “deliciousness, happiness and innovation
beyond customer expectations.”

experiences of food (deliciousness,happiness, innovation)

SHARE THE “KANDO”

04

Asahi Group Holdings, Ltd.

MEDIUM-TERM MANAGEMENT PLAN 2015
Aiming to Raise Corporate Value Through Value and Network Management
Long-Term Vision 2020 sets forth the following vision statement for the Asahi Group: To be a trusted corporate group in the world
through offering “Kando” experiences of food (deliciousness, happiness, innovation). Under the Medium-Term Management Plan
2015, our action plan that aims to realize Long-Term Vision 2020, our goal is to enhance corporate value by increasing capital efficiency
through such means as improving shareholder returns, in addition to boosting profitability through Value and Network Management.

PHILOSOPHY OF VALUE AND NETWORK MANAGEMENT
Expansion of overseas
growth networks throughM&As and alliances

AREA AXIS

Brands,technologies

Cost
competitivenessWorldwide
networks

Human
resources

New-value
products
Technologicalinnovation

Combinationof assets

New Value Creation

INNOVATION

Developed andAcquired Strengths

RESOURCES

Growth from existing businesses leveraging strengths
developed in Japan

Strengthening of thebusiness base throughexpansion of domestic
business networks

Value cycle based on enhancement of strengths

Growthsynergy

Efficiency
synergy

Value Synergies

SYNERGYSHARE AXIS

Quantitative Targets and Guidelines
VISION FOR STAKEHOLDERSCUSTOMERS
Achieve No.1 ranking for customer satisfaction in Japan and around the world.

KEY PERFORMANCE INDICATORS (KPIs)
2012 Result

BUSINESS PARTNERS
Together with business partners and alliance partners,
develop relationships that support mutual growth.
SOCIETY
Contribute to solving social problems through the Group’s businesses.
EMPLOYEES
Develop an environment conducive to vigorous workby employees.
SHAREHOLDERSWork to enhance corporate value (stock value).

2015 Target

Approx. 10%
ROE

8.4%

EPS

¥123

Before goodwill
amortization
Approx. 12%
Average annual
growth rate:

10% or higher

Annual Report 201205

INTERVIEW WITH THE PRESIDENT

In addition to promoting Value and Network
Management by leveraging our strengths,
we will increase capital efficiency with the aimof enhancing corporate value.

Naoki Izumiya
President andRepresentative Director

06

Asahi Group Holdings, Ltd.

Q1

Can you give an overview of the year ended December 31, 2012, the final year of theGroup’s Medium-Term Management Plan 2012?

P07

Q2

What kind of corporate entity does the Asahi Group aspire to become in line with the
newly established Long-Term Vision 2020?

P08

Q3

Under the Medium-Term Management Plan 2015, your policy is to enhance corporate value
through Value and Network Management. Concretely, what initiatives will you implement?

P09

Q4

Why have you adopted ROE and EPS as your Medium-Term Management Plan’s key performance indicators (KPIs)? Also, what initiatives are you using to achieve the KPIs?

P10

Q5

What are your financial and cash flow strategies as well as your policy on shareholder
returns?

P12

Q6

In closing, how do you plan to make the Asahi Group more valuable to society?

P13[OVERVIEW OF MEDIUM-TERM MANAGEMENT PLAN 2012]

you give an overview of the year ended December 31, 2012,
Q1 Canthe final year of the Group’s Medium-Term Management Plan 2012?

The Asahi Group focused on boosting profitability in existing businesses anddeveloping a new growth portfolio. As a result, earnings reached a record-high fora 12th consecutive year.
Under the Medium-Term Management Plan 2012, a three-year plan running through 2012, the Asahi Group focused on
boosting profitability in existing businesses and developing a new growth portfolio, while creating synergies across theGroup. Efforts were directed at improving the corporate value of the entire Group.

In regard to boosting profitability in existing businesses, we developed and strengthened mainstay brands centeredon the alcohol beverages and soft drinks businesses. Our flagship brand Asahi Super Dry was a case in point. Here, we
proposed new ways of enjoying Asahi Super Dry such as the “Extra cold” value proposition for enjoying the brandchilled below freezing point. We also launched our first new product in the Asahi Super Dry brand. In addition, we
reorganized breweries in Japan and streamlined unprofitable operations in South Korea and China. All told, the resulting profit structure reforms exceeded our initial plan objectives.
Meanwhile, as regards developing a new growth portfolio, we enhanced the base of our domestic soft drinks business, including the acquisition of promising brands in Japan such as Rokko no Oishii Mizu and Rokujo Mugicha, andthe acquisition of all the shares of Calpis Co., Ltd., a leading lactic acid drinks manufacturer. Overseas, we were able toexpand our growth base in Oceania and Southeast Asia through measures including the acquisition of five soft drink
and alcohol beverage companies.
Furthermore, our transition to a pure holding company structure in July 2011 has led to faster decision-making at
our operating companies, and also allows the holding company to work exclusively on formulating growth strategies
for the entire Group. As a result, we have built the proper structure for achieving full-fledged Group global
management.
In terms of quantitative targets, we did not achieve our target for the operating income ratio mainly due toincreased sales expenses accompanying the intensifying competition in the soft drinks business. Nevertheless, weachieved our target for net income based on a figure that excludes the special factors in 2012. We also posted recordhigh net income for a 12th consecutive year.

Annual Report 2012

07

[LONG-TERM VISION 2020]

Q2

What kind of corporate entity does the Asahi Group aspire to become in linewith the newly established Long-Term Vision 2020?

We are striving to be a trusted corporate group in the world through offering“Kando” experiences of food (deliciousness, happiness and innovation), thereby
pursuing the satisfaction of all our stakeholders.
In the earlier Long-Term Vision established in 2009, amid the maturing domestic market and the globally ongoing M&As,
we aimed to reach the top global level and so conducted initiatives with objectives that emphasized the expansion ofbusiness scale.

Going forward, however, our business environment has greatly changed from our initial assumptions, and is projected to become increasingly difficult. We expect a stagnant global economy as a whole, mainly due to the debt
problems in Europe, and in Japan an impending increase in the consumption tax is planned for after 2014, amid theongoing maturing of the market. At the same time, the needs of our stakeholders have been diversifying in line withchanges in our business structure and improvements in our financial position, as well as the aforementioned changes
in the business environment.
As a result, in the Long-Term Vision 2020 we have revised the earlier Long-Term Vision and, while adhering toexisting management policy, have redefined for our stakeholders our vision for the Asahi Group as a whole.
Long-Term Vision 2020 sets forth the following vision statement for the Asahi Group: To be a trusted corporategroup in the world through offering “Kando” experiences of food (deliciousness, happiness and innovation), Thismeans, we aim to be a corporate group trusted around the world in addition to Japan by means of our Kando, which
we define as providing deliciousness, happiness and innovation that exceeds the expectations of our customers.
We believe that pursuing a management policy that satisfies all our stakeholders will lead to long-term sustained
growth of the Asahi Group and the improvement of corporate value. We are clarifying the decision-making criteria of
all our management strategies by establishing individual visions for each of our stakeholders.
In Long-Term Vision 2020, we have not set company-wide quantitative targets as in the earlier Long-Term Vision.
Although this means an increase in uncertainty, there is also a risk in setting quantitative targets that have time deadlines. Going forward, we have changed to a framework in which we flexibly review our business strategies and theallocation of management resources in line with the changes in the business environment.
(For details of our vision for all stakeholders, please refer to “Toward long-term, stable growth” on page 04.)

08

Asahi Group Holdings, Ltd.

[MEDIUM-TERM MANAGEMENT PLAN 2015]

the Medium-Term Management Plan 2015, your policy is to enhance
Q3 Undercorporate value through Value and Network Management. Concretely, what
initiatives will you implement?
We aim for long-term stable sales and growth in earnings through the creation of new value concentrated in our strengths and the expansion of ourbusiness networks around the world.
In our Value and Network Management, we foresee our business environment becoming increasingly difficult overthe next three years. I believe that our most important task is to clarify the strengths that we have developed andacquired up to now, and then enhance those strengths.

First, we will focus on the strengths comprising the Asahi Group’s brands such as Asahi Super Dry, and theindustry’s highest class of cost competitiveness. We will polish these further to enhance their competitiveness.
To do this, we must strive for even greater selectivity and focus with our resources.
Next, to achieve long-term stable growth in the future, not merely in the next three years, we will leverage
the strengths of our brand assets and technology that we have developed and acquired to proceed with newvalue creation and innovation, thereby strengthening our next-generation competitiveness.
Furthermore, our policy is to create synergies from both sales growth and increased efficiency, mainly byleveraging this enhanced value and the global networks that we have built with the aim of expanding business.
In the next three years, we will work to develop overseas area sales and strengthen our market share base inJapan, by moving through a value cycle based on enhancing this value, and continuing to expand our new
business networks around the world.
As the business environment is becoming difficult we decided to return to ourstarting point and concentrate on ourstrengths in order to strengthen our longterm stable growth base.

Annual Report 201209

have you adopted ROE and EPS as your Medium-Term Management
Q4 WhyPlan’s key performance indicators (KPIs)? Also, what initiatives are you using
to achieve the KPIs?
Our goal is to enhance corporate value through Value and Network Management.
Through this approach, we intend to increase capital efficiency through suchmeans as improving shareholder returns, while giving top priority to growth.
In the past, targets were set centered on profit/loss that emphasized the expansion of business scale. In the Medium-Term
Management Plan 2015, targets have been set to give priority to further improving corporate value, by adding in balance
sheet and cash flow targets.

To improve corporate value, in addition to sustained earnings growth we must further increase the market’s senseof trust and anticipation in the Asahi Group through appropriate capital policies. Therefore, we have included ROE
and EPS, which reflect both our earnings growth and our capital policies, in the KPIs.
Our concrete targets comprise “improving ROE to around 10%” and “growing EPS by an annual average of 10% or
higher,” aiming to enhance corporate value by increasing capital efficiency through such means as improving shareholder returns, while giving top priority to sales and earnings growth based on our Value and Network Management.
In terms of measures to improve ROE, the top priority of each operating company will be to attain growth in business profits by bolstering brands that leverage each company’s strengths, while driving profit structure reforms. Other
priorities will include advancing business strategies with an emphasis on capital efficiency, including a focus on capital
investment. Raising the efficiency of working capital through such means as optimizing inventories will also be important. Meanwhile, Asahi Group Holdings will implement measures such as executing business investments designed tospur network expansion worldwide, and enhancing selectivity and focus in the business portfolio. Furthermore, Asahi
Group Holdings will implement a policy of balancing investments for growth funded by financial debt with measures
to ensure an appropriate level of equity capital, such as enhancing shareholder returns. (Refer to Fig. 1 )Looking at our profit and loss guidelines, which represent the assumptions behind our KPIs, we are assuming anannual average growth rate of 3% or higher in net sales and an annual average
growth rate of 7% or higher in net income on an existing-business basis. However,
we will continue aiming to outperform the plan’s targets through efforts to
expand our business networks through M&As and other initiatives. (Refer toFig. 2 )Meanwhile, over the next three years, we face the risk that the alcohol beverages and soft drinks markets in Japan could contract more sharply than anticipated mainly due to the impending increase in the consumption tax. We must
anticipate the negative impact this could have on our profit and loss guidelines.
Accordingly, we plan to further strengthen the Asahi Group’s cost competitiveness, which is one of its key strengths. Specifically, we will strive to generate
efficiency improvements of ¥30 billion or higher across the Group, mainly bycreating collaboration synergies with Calpis Co., Ltd. and integration synergies
within our Oceania operations. Through these measures, we aim to achieve our
KPI targets. (Refer to Fig. 3 )(For details of our Medium-Term Management Plan 2015, please refer to“Toward long-term, stable growth” on page 04.)

10

Asahi Group Holdings, Ltd.

Fig. 1:INITIATIVES FOR ROE IMPROVEMENT

Net income ratio(Net income /Net sales)

Asset turnover(Net sales /Total assets)

Financial leverage(Total assets / Shareholders’ equity)

Fig. 2Asahi Group Holdings

Operating Companies• Profit base expansion through business investment, including in network expansion in Japanand overseas• Reduction in indirect fixed costs through greater
efficiency in overall supply chain management
across the Group• Growth through nurturing and bolstering strong
brands based on Value and Network Management• Profitability improvement through implementation of profit structure reforms leveraging Group
strengths• Group business portfolio selectivity and focus• Improvement in asset efficiency through optimization of assets• Execution of business strategies that emphasize
asset efficiency, including capital investments• Reduction and optimization of working capital ineach business• Investment in growth utilizing financial debt
premised on maintenance of financial soundness• Enhancement of shareholder returns to an extent
that does not erode current equity capital—

2015 BUSINESS RESULTS GUIDELINES BY BUSINESSNet Sales
2012 Result

Operating Income Ratio

2015 Guideline(CAGR)

2012 Result2015 Guideline

Alcohol beverages¥944.0 bn.

0–1%

12.0%

12.5% or higher

Soft drinks¥375.4 bn.

10% or higher

2.7%

5.5% or higher

Food¥103.5 bn.

5% or higher

3.8%

5.5% or higher

Overseas¥158.0 bn.

5% or higher

4.4%

9.0% or higher¥1,579.1 bn.

3% or higher

6.9%

8.0% or higher

Consolidated total

Fig. 3

PROFIT STRUCTURE REFORMS (INCLUDING SEGMENT BREAKDOWN)(EFFICIENCY IMPROVEMENT TARGETS: THREE-YEAR CUMULATIVE)
Efficiency Improvement Target

Initiatives

Alcohol beverages¥10.0 bn. or higher• Streamline fixed costs by reducing depreciation through optimization of capital investments• Improve marginal profit by enhancing production efficiency andpromoting group procurement

Soft drinks¥10.0 bn. or higher• Collaborative synergies with Calpis in procurement, distribution,etc. (¥6.0 bn. or higher)• Increase insourcing of containers, optimization of production anddistribution systems

Food¥3.0 bn. or higher• Reduce manufacturing costs through manufacturing process review• Improve efficiency in advertising and promotion expenses throughfocus on strong brands and businesses

Overseas¥6.0 bn. or higher• Reduce indirect costs by integrating management, and develop
optimal production and distribution systems• Reduce raw materials costs through cooperative procurement

Consolidated total¥30.0 bn. or higher* Aim for achievement of ¥30.0 bn. or higher from further
contributions from businesses

Annual Report 201211

are your financial and cash flow strategies as well as your policy on
Q5 Whatshareholder returns?

While giving top priority to investments in growth worldwide, we will strive toenhance shareholder returns as we improve surplus investment capacity primarily
by increasing equity capital.
During the three years of the Medium-Term Management Plan 2015, we plan to generate operating cash flow of more than¥400 billion. Capital investment is projected at around ¥120 billion, including investments in boosting efficiency. We are also
targeting free cash flow of about ¥300 billion, including ¥20 billion mainly through cash expansion measures.

In terms of free cash flow allocation, we will give top priority to investments in growth worldwide, based on theprinciple of Value and Network Management. If capital requirements that cannot be met with our own funds arise due
to major investment projects or the like, we are prepared to fund these requirements using financial debt, assuming amaximum D/E ratio of around 1.0.
Regarding shareholder returns, we have sought to increase dividends in line with improvements in net income,while targeting a consolidated dividend payout ratio of 20% or higher. However, from 2008, we suspended the purchase of treasury stock because of the need to give priority to investments in growth. Going forward, given that oursurplus investment funding position has improved thanks to stronger cash flow generation and an improved D/Eratio, we have decided to raise the dividend payout ratio to around 30%. At the same time, we will strive to enhanceshareholder returns by targeting a total return ratio, including the purchase of treasury stock, of 50% or higher.
In addition, we are targeting a total return ratio of 40% or higher based on net income before amortization of
goodwill and other items. In this way, we plan to deliver shareholder returns on a par with global standards. (Refer toFig. 4 )In 2013, the Asahi Group decided to repurchase ¥30 billion of its own shares. Accordingly, the forecast for the total
return ratio is now higher than 50%, at 76%. Our decision to purchase treasury stock of ¥30 billion in the first fiscal
year of the plan reflects our strong determination to enhance corporate value. (Refer to Fig. 5 )Fig. 4

FINANCIAL AND CASH FLOW STRATEGY
Policies in Medium-Term Management Plan 201512

Operating cash flow

• Seek stable profit growth based on Value and Network Management.
Generate ¥400.0 bn. or higher in operating cash flow during the 3 years of theMedium-Term Management Plan.

Free cash flow

• Execute capital investment of approx. ¥120.0 bn. for development of optimal production and distribution systems, efficiency improvement, etc.
Generate approximately ¥300.0 bn. in free cash flow during the 3 years of theMedium-Term Management Plan 2015.
(Generate ¥20.0 bn. or higher through cash expansion measures.)

Investment in growth• Invest in growth as the highest-priority task in preparation for growth network expansion in Japan and overseas.
• Assume financial debt premised on a maximum D/E ratio of approx. 1.0 (net debt/
EBITDA of approximately 4.0) when capital requirements that cannot be met from own
funds arise.

Shareholder returns• Aim for stable dividend increases, targeting a consolidated dividend payout ratio ofaround 30% (25–35%).
• Flexibly implement share repurchases targeting a total return ratio of 50% or higher.

Asahi Group Holdings, Ltd.

Fig. 5NET INCOME AND TOTAL DIVIDENDS(¥ billion)■ Total Dividends ■ Share Buybacks■

Net Income

65.5

60

53.1
44.8

40

44.8

45.0

55.1

57.2
30.0

47.6

39.9
30.6
20

15.0

13.0

20.0

10.0
6.8
0

Q6

8.2

9.0

9.0

9.3

10.7

11.6

7.3

9.8

13.0

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013
(Plan)In closing, how do you plan to make the Asahi Group more valuable
to society?

We aim to become a trusted corporate group by helping to solve various social
issues through our businesses.
Under the Medium-Term Management Plan 2015, the most important theme is to enhance corporate value. However, we
believe that corporate value can be defined in two different ways.

First, corporate value can be narrowly defined as our stock valuation in the capital markets. Second, corporate
value can be interpreted more broadly as our worth to society. We believe that increasing corporate value in both ofthese senses will ultimately lead to enhancing our corporate value in the broadest possible sense of the term.
In regard to improving our value to society, we aim to become a corporate group that is trusted by all stakeholders
by helping to solve social issues through our businesses. To this end, we will implement a variety of measures in our
three activity areas of food and health, the environment, and people and society. This includes addressing alcoholrelated issues through initiatives such as promoting moderate and responsible drinking.
Furthermore, we will continue to strengthen corporate governance, which serves as the foundation of corporate
management. As part of this effort, we have abolished our anti-takeover measures at this year’s Annual General Meeting of Shareholders. This reflects the diminished importance of these measures, which were introduced in 2007, following the adoption of a management plan that emphasizes the enhancement of corporate value.
Looking ahead, the Asahi Group will continue striving to enhance corporate value in terms of both economic andsocial value, by pressing ahead with management focused on enhancing corporate value. In the process, we believethat it is essential to reflect the feedback we obtain through dialogue with all stakeholders in management practices.
We hope that our stakeholders will continue to share this vital input with us in the future.
(For details of CSR activities, please see the Group Management section on page 46.)

Annual Report 201213

SPECIAL FEATURE

Enhancing our business base for stable,—Realizing a value cycle —STRENGTHENING OUR BASE IN THE SOFT DRINKS BUSINESSBY MAKING CALPIS CO., LTD. PART OF THE ASAHI GROUP
In October 2012, the Asahi Group acquired all the shares of Calpis Co., Ltd., making the company
part of the Group.
Calpis has developed its business around the base of Calpis, a product long familiar to consumers as Japan’s first lactic acid drink, other fermentation and bacteria products, and the related
technology. The Calpis brand has a familiar and reassuring image of being a healthy product, andis supported strongly by consumers of all ages. Calpis is also highly regarded for its high-valueadded functional foods business and animal feed additives business that have been leveraging
the power of the microorganisms generated by the lactic acid bacteria and fermentation technologies with which Calpis has been involved for over 90 years.
In the domestic soft drinks business, the Asahi Group’s acquisition of Calpis has resulted in us
establishing ourselves in the solid position of the No. 3 market share in the Japanese soft drinks
industry, in addition to strengthening our business base by expanding our product portfolio.
Looking ahead, we are aiming to further enhance and expand our domestic and overseas softdrinks businesses through the integration of management resources.

Realizing a value cycle
SALES GROWTH From January 2013, the Calpis brand has been produced and sold by LB Co., Ltd., which

is developing our chilled beverages business. This initiative should result in us establishing an unassailable
position in the chilled lactic acid category through the development of Calpis brand chilled products.
EARNINGS GROWTH

We will create synergies by enhancing collaboration across the entire supply chain

in the Asahi Group’s developed strengths of procurement, production and logistics. Specifically, we willfurther fortify our earnings base by promoting Group-wide procurement and logistics.

STRENGTHS OF CALPIS CO., LTD.
RESOURCES

Business baseof Calpis

INNOVATIONSYNERGY

Combining assets

Strong brandcapabilities

Development
capabilities
Business base of
Asahi Group

Technologicalinnovation

Cost
competitiveness• Concentrated Beverages Business• Ready-to-drink Beverages Business• Alcohol Beverages
Business• Dairy Products Business

Development of
new categories

TECHNOLOGICAL ASSETSSUCH AS MICROORGANISMAPPLICATIONASSETS OF CALPIS
BRAND• Microorganism
Application Business

Calpis:C
alppis: F
For
or
Over
90
Years
Ov
O
ver
e 9
0 Ye
Y
ears

• Functional Foods
Business• International Beverages
Business

President’s message

Fujio Yamada
President and Representative
Director
Calpis Co., Ltd.

14

Asahi Group Holdings, Ltd.

Derived from the starting point of our Calpis lactic acid drinks that we have been producing for over 90 years, Calpis
has been providing new value in a wide variety of fields by leveraging our business base centered on our lactic acidbacteria and fermentation technologies. In this environment, in October last year Calpis became a member of the
Asahi Group, thereby making a new start. Going forward, amid ongoing changes in our business environment such as
the impending rise in the consumption tax, we are building a solid earnings base by further enhancing the Calpis
brand and accelerating the development of the brand overseas. Furthermore, Calpis will leverage the microorganism
technology it possesses to aggressively expand our probiotic animal feed additives business and functional foods
business, among others.
Looking ahead, we will further improve our earnings structure by creating synergies by promoting collaboration
with Asahi Group companies.

INNOVATION

long-term growth

RESOURCESSYNERGYOUR AMBITION WITH ASAHI SUPER DRY IS TO BECOME“ASIA’S NO. 1 PREMIUM BRAND”*1
Currently, we are producing Asahi Super Dry at 8 bases in 7 overseas countries for sale inaround 70 countries and regions around the world, and are engaged in aggressive marketing activities in many countries to establish it as a global brand.
Our Medium-Term Management Plan 2015 calls for the strengthening of our area marketing functions centered on a division dedicated to overseas marketing established in2012. In line with the plan, we formulate and implement brand and marketing strategies
that leverage the Asahi Group’s strengths of technological capabilities and quality after
conducting surveys of market trends and consumer needs. Furthermore, we are enhancing
our brand development capabilities locally by forming tie-ups with promising business
partners that have powerful sales networks. Overall, we are targeting a sales volume higher
than 10 million cases in 2015, an increase of 59% from 2012, aiming at establishing Asahi
Super Dry as “Asia’s No. 1 premium brand.”*1: The Asahi Group aims to capture the No. 1 position among Asian beer companies in terms of sales volume of premium beer overseas.

OVERSEAS SALES OF ASAHI BEER BRAND
Million cases (equivalent to 20 x 633 ml bottles), year-on-year

150%

OCEANIA
116%

131%

110%

113%

114%

116%

7.30

113%
98%

93%

5.10

81%

5.45
4.72

4.44

10.00
million cases
or higher

6.28
5.53

4.91

3.39
2.28

UNITED KINGDOM

2.59

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
(Plan)

2015(Plan)

Examples of business initiatives
SOUTH KOREA
In 2000, we started to export
Asahi Super Dry and other Asahi
brands to South Korea. In both the commercialuse and home-use markets, we conductedthorough tasting campaigns and actively
pursued other initiatives to persuade customers of the products’ deliciousness. As a result,
we became the market leader for two consecutive years in terms of our share of theSouth Korean imported beer market. Moreover, in July 2012 we launched Asahi Super
Dry –Dry Black– for the first time overseas.

Last year, in Oceania
we reorganized thebeer sales framework, which had outsourced
sales, by transferring them to an Asahi Group
company. This company has started to sell
Asahi Super Dry, aiming to further raise thepresence of the product in both thecommercial-use and home-use markets.

HONG KONG
In September 2009, we concluded a sales agency contract
with Carlsberg Hong Kong Limited, and sincethen have been working to increase thenumber of restaurants and bars serving Asahi
Super Dry. We will work to increase sales inboth the commercial-use and home-use
markets by proactively developing transportation advertising and consumer campaigns
to raise the brand recognition of Asahi.

In the United Kingdom, weaggressively worked to enhance
our business capabilities by expanding thenumber of sales representatives dedicated to
the Asahi brand at Shepherd Neame Ltd., withwhom we had concluded a licensing contract.
Other proactive initiatives included cosponsoring events during the period of the
Olympics. These efforts led to greater recognition of the locally produced Asahi Super Dry andan increase in the number of pubs and otherrestaurants and bars serving the beer in kegs.

UNITED STATESIn North America, where we
started business by exportingbeer from Japan in 1988, we have enhanced
sales of Asahi Super Dry mainly by establishing a local sales company in 1998. In
November 2009, we began offering Asahi
Super Dry in kegs in the U.S. market, and weare now strengthening our inroads in both thecommercial-use and home-use markets.

Annual Report 201215

REVIEW OF OPERATIONSASAHI GROUP AT A GLANCE

The Asahi Group’s five business segments, as represented in consolidated accounting, are alcohol beverages, soft drinks, food,overseas, and other businesses. In each business segment, the entities that generate major profits are: Asahi Breweries, Ltd. forthe alcohol beverages business; Asahi Soft Drinks Co., Ltd. and Calpis Co., Ltd. for the soft drinks business; Asahi Food &Healthcare Co., Ltd. and Wakodo Co., Ltd. for the food business; and Schweppes Australia Pty Limited and the Independent
Liquor Group of New Zealand for the overseas business.

NET SALES (¥ billion)

Alcohol Beverages

OPERATING INCOME (Loss) (¥ billion)

1,200

113.3

120
966.3

921.7

900

101.0

922.3

90

87.2

Asahi Breweries, Ltd.
The Nikka Whisky Distilling Co., Ltd.

600

58.4%

Sainte Neige Wine Co., Ltd.
Satsumatsukasa Shuzo Co., Ltd.

300

0Soft Drinks

30

2010

2011

400

300

60

0

2012

12

370.8
306.7

2010

2011

11.4

324.8
9

8.3

7.4

Asahi Soft Drinks Co., Ltd.
Calpis Co., Ltd.

200

23.5%

LB Co., Ltd.
100

0

100

Food

2012

6

3

2010

2011

2012

95.4

98.0

101.6

0

2010

4.5

2011

2012

4.2

3.7

3.6
75
3.0

Asahi Food & Healthcare Co., Ltd.
Wakodo Co., Ltd.

50

6.4%

Amano Jitsugyo Co., Ltd.

1.5
25

0

Overseas
OCEANIA

CHINA

Schweppes Australia Pty Limited
Independent Liquor (NZ) Limited
Independent Distillers (Aust) Pty Ltd
Yantai Beer Tsingtao Asahi Co., Ltd.
Beijing Beer Asahi Co., Ltd.

SOUTHEAST ASIA Permanis Sdn. Bhd.
EQUITY-METHOD Tingyi-Asahi Beverages Holding Co., Ltd.
AFFILIATES
Tsingtao Brewery Co., Ltd.

Others

2010

2011

0

2012

157.9

160

2010

2011

2012

0

120
97.7

–2

94.2

80

–2.9

10.0%
–4

–3.9

40
–5.1
0

2010

2011

30

–6

2012

1.2

26.4
23.3

2010

2011

2012

1.1

24.0
0.9

0.8

20

1.7%

0.6

0.6

10
0.3

0

16

Asahi Group Holdings, Ltd.

2010

2011

2012

0

2010

2011

2012

(Business segments were reorganized from 2011.)

REVIEW OF MEDIUM-TERM MANAGEMENT PLAN 2012

TARGETS OF MEDIUM-TERM MANAGEMENT PLAN 2015

■ Net sales fell short of target due to a larger-than-anticipated contraction in the market for■ In the alcohol beverages business, we aim to become the lead-beer-type beverages reflecting the earthquake and other factors.
■ The operating income ratio target was achieved mainly because profit structure reforms

exceeded initial plan objectives due to the reorganization of breweries.
■ Full-scale development of Asahi Super Dry –Dry Black–, the Asahi Super Dry brand’s firstextension product, and Asahi Super Dry “Extra cold,” a value-added proposal of a new way
to enjoy Asahi Super Dry in servings chilled below the freezing point.

ing integrated alcohol beverages company with an emphasis onmarket innovation through the creation of added value obtainedby focusing on the 3Cs (consumers, channels and competitors).
■ Net sales: Average annual growth rate of 0–1%

* Market for beer-type beverages: Average annual growth of –1
to –2%■ Launched products offering new value such as Asahi Dry Zero and Ste. Neige Rela.

■ Operating income ratio: 12.5% or higher■ Achieved sales target by expanding sales volume for a 10th consecutive year mainly by■ In the soft drinks business, we will establish an industry-leading

strengthening core brands.
■ Fell short of the operating income ratio target primarily due to a large increase in sales

expenses in 2012, although an optimal production and logistics system was establishedthrough such means as conducting internal production of PET bottles, and reducing theweight of containers.
■ Acquired all shares of Calpis Co., Ltd.
■ Acquired the Rokko no Oishii Mizu and the Rokujo Mugicha brands.
■ Integrated LB Co., Ltd. (Tokyo) and LB Co., Ltd. (Nagoya), to launch a “reborn” LB.

■ Asahi Food & Healthcare Co., Ltd. achieved favorable sales of mainstay brands MINTIA

breath mint tablets and BALANCEUP nutritionally balanced snack bars. Sales were driven
mainly by assertive advertising campaigns and sales promotions.
■ Wakodo Co., Ltd. fell below targets as a result of a contraction in the market for powderedinfant formula due to the impact of foot-and-mouth disease and the nuclear accident,
despite steady sales growth atop efforts to upgrade and expand the range of items for its
mainstay Goo-Goo Kitchen baby food.

(Operating income ratio excluding the liquor tax: 22.5% or higher)* Total efficiency target for alcohol beverage business: ¥10 billion
or higher

profit foundation by focusing management resources on strong
core brands, while expanding our powerful sales capabilities andnetworks.
■ Net sales: Average annual growth rate of 10% or higher* Growth rate excluding the impact of the consolidation of Calpis
Co., Ltd.: 3% or higher■ Operating income ratio: 5.5% or higher* Total efficiency target for the soft drinks business: ¥10 billion or
higher■ In the food business, we will cultivate the Group’s future profit

foundation by promoting greater selectivity and focus on strong
core brands and businesses, and the businesses we will nurture.
■ Net sales: Average annual growth rate of 5% or higher■ Operating income ratio: 5.5% or higher* Total efficiency target for the food business: ¥3 billion or higher■ Amano Jitsugyo Co., Ltd. achieved favorable sales due to the vigorous launch of new

products and effective advertising campaigns in the direct marketing business. Anotherfactor was the upgrading and expansion of lineups of core brands in the mass distribution
sales business.

■ Sales fell short of target due to the sale of unprofitable businesses, but profitability improved significantly.
■ Concluded a share transfer agreement to sell the shares of Haitai Beverage Co., Ltd.
■ Concluded share transfer agreements to sell the shares of Hangzhou Xihu Beer Asahi Co., Ltd. and Zhejiang
Xihu Beer Asahi Co., Ltd.
■ Invested in TING HSIN (CAYMAN ISLANDS) HOLDING CORP., a major Chinese food and distribution group.
■ Acquired shares of former Flavoured Beverages Group Holdings Limited, a major alcohol beverages groupin New Zealand.
■ Acquired shares of Charlie’s Trading Company Limited, a non-alcohol beverages company in New Zealand.
■ Acquired the mineral water and juice operations of former P&N Beverages Australia Pty Ltd, a non-alcohol
beverages company in Australia.
■ Acquired all shares of Permanis Sdn. Bhd., a non-alcohol beverages company in Malaysia.
■ Established joint ventures with PT Indofood CBP Sukses Makmur TBK to manufacture and sell soft drinks inIndonesia.

■ In overseas business, we seek to expand the Group’s growth

foundation by bolstering its global network while leveraging
strengths such as brand power, technological capabilities, andcost competitiveness.
■ Net sales: Average annual growth rate of 5% or higher■ Operating income ratio: 9.0% or higher* Total efficiency target for overseas business: ¥6 billion or higher

In other businesses, sales increased thanks to expansion of the cargo transportation business. However, operating income decreased, due to a continuous increasein costs associated with deterioration of the supply-demand balance for vehicles in the cargo transportation industry.

Annual Report 201217

REVIEW OF OPERATIONS

Alcohol
Beverages

Aiming to become the leading integrated alcohol
beverages company with an emphasis on market innovation
through the creation of added value
The entire domestic alcohol beverages market is projected to continue to experience aharsh business environment, including an anticipated rise in the consumption tax amid thetrend of fewer childbirths and ongoing aging of the Japanese population.
In this climate, in the domestic alcohol beverages business, which is a core business of
the Asahi Group, we aim to become the leading integrated alcohol beverages company

Akiyoshi Koji
Director in charge of
Alcohol Beverages Businesswith an emphasis on market innovation centered on the creation of added value that leverages our strengths, as called for by the Asahi Group’s Medium-Term Management Plan
2015.
Specifically, we will maximize our brand assets by further enhancing our value proposals
based on our strengths, including by brand extension, which we have been pursuing, and byproposing new styles of drinking, in addition to further enhancing core brands such as Asahi
Super Dry. Moreover, we will continue to create new demand by prioritizing the latent needsof consumers and enhance our sales structures prioritizing the needs of sales channels.
At the same time, our policy is to further strengthen our cost competitiveness at the
top global level through the promotion of profit structure reforms that include boostingproductivity and by using fixed costs more efficiently, aiming to raise the operating income
ratio to 12.5% or higher (22.5% or higher, excluding the liquor tax).

18

Asahi Group Holdings, Ltd.

Achievements of Medium-Term Management
Plan 2012

Future Topics

Enhancing brand value by amassing management resources

Responding to diversifying needs of consumers
and customers

Share of domestic beer
category No. 1– Build total marketing, including at the product development stage

50.6%– Create new demand and new customers by anticipating
the diversifying value and lifestyles demanded byconsumers

Asahi Super Dry
Achieved annual sales volume
of over 100 million cases*1
for a 24th consecutive year
*1 One case is equivalent to 20
large bottles (663 ml each).

Launched products that
propose new value

108.80

Responding to high-income centralization ofcustomers

million cases

Responding to environmental changes and risks– Hedge against changes in external environment(currency rates, market prices, natural disasters)

Asahi Super Dry –Dry Black–
Asahi Dry Zero
Ste. Neige Lela

– Make capital investments (new technology) and strategic
investments to raise productivity

Profit Structure Reform– Production technology enabling mass production ofdiverse products with short lead times at low cost

Improved production efficiency by integrating the Nishinomiya Brewery’s beer-type beverage production functions into the Suita Brewery– Stable procurement of raw materials qualitatively andquantitatively, and relaxation of market price risk

Business Environment

SIZE OF DOMESTIC BEER MARKET(TAXABLE SHIPMENT VOLUME)

Possible acceleration of downward trend due to raised
consumption tax and revised alcohol tax(Million cases)

Rising awareness of consumers about health, the assurance
and quality of food, and the environment

600

Polarization of consumption (cheap prices vs. premium prices)400■ Beer ■ Happoshu ■ New genre

500
155

300

Increasing number of upscale restaurants

63

200

Expansion of alcohol-taste beverages market

220

100

Increasing costs accompanying tight demand/supply of raw
materials due to rise of emerging markets

0

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Medium-Term Management Plan 2015: Targets and Strategies●

Strengthen core brands such as Asahi Super Dry andmaximize “brand assets”–

Strengthen advantageous technology and R&D, and create newvalue and demand by utilizing Group assets–

Maximize brand assets through the brand extension of Asahi
Super Dry and value proposals such as “Extra cold”
Expand the market by brand extension of Clear Asahi and bystrengthening functional brands
Aim to become top in the alcohol-taste beverages business bystrengthening the Asahi Dry Zero brand
Expand product portfolio, including by enhancing BrownForeman Corporation products (Jack Daniel’s, Early Times)●

Enhance sales structures based on the needs of sales
channels–Strengthen solution-oriented marketing for mass-retail storesand restaurant chains
Build collaborative and mutually beneficial structures for homeand commercial-use distribution channels

–
–
–
●

Create new value and new demand around consumer
needs

–

Implement total marketing that precisely understands potential
as well as obvious consumer needs–●

Cost competitiveness at the top global level–

Aim to increase efficiency by over ¥10 billion by the promotionof profit structure reforms (improve production efficiency, review
procurement methods, curb fixed expenses, etc.)

Annual Report 201219

REVIEW OF OPERATIONSALCOHOL BEVERAGESBEER

HAPPOSHU

Asahi Super Dry

Asahi Super Dry–Dry Black–Market Environment
In 2012, although Japan’s alcohol beverages industry experienced
an emerging rebound in consumer sentiment, including a push for
greater consumption, it was impacted by a number of negative
factors. Along with a diminishing amount of drinks consumed due
to Japan’s falling birthrate and aging population, these factors
include a shift in consumer preferences to inexpensively priced
products to save money, as well as more time spent at home in linewith work-life balance considerations. In beer-type beverages, while
new genre beverages grew (up 1.1% year on year), shipment volumes for beer and happoshu were down 0.3% and 7.9%, respectively. Consequently, overall taxable shipment volume for beer-type
beverages declined 1.0% from the previous year. By category, beer
was 50.3%, happoshu 14.3%, and new genre beverages 35.4% of
the beer-type beverages market. Of these figures, while the decline
in the beer category appeared to be halted, there was no change
in the major trend, namely, growth in new genre beverages, albeit it
was a degree more subdued than in the previous year.
In categories other than beer-type beverages, wine and readyto-drink (RTD) beverages continued to grow, but the overallmarket for alcohol beverages contracted. Non-alcohol beer-taste
beverages, meanwhile, grew around 36% year on year on a sales
volume basis.

Asahi Style FreeSpecifically, in April we launched new value proposition products
such as Asahi Super Dry –Dry Black–, the first extension product ofAsahi Super Dry. Moreover, we developed the promotion of Asahi
Super Dry “Extra cold,” a value-added proposal of a new way toenjoy Asahi Super Dry in servings chilled below freezing point(between –2ºC and 0ºC). At the same time, we continued to spreadthe information and implemented vigorous marketing policies in abid to enhance brand power for the “Extra cold” value-added
proposal by expanding the limited-time opening of “Asahi SuperDry Extra Cold Bar” locations to four cities—Ginza in Tokyo, Nagoya,
Osaka and Fukuoka. These factors lifted taxable shipment volume
for Asahi Super Dry above 100 million cases (one case equivalent to
20 large bottles (633 ml each)) for a 24th consecutive year, despite
declining 0.1% in taxable shipment for overall beer category.
Happoshu Category In happoshu, we continued to boost thebrand value of Asahi Style Free, now entering its sixth year of sales,
as a pioneer in “zero-carbohydrate”*3 happoshu. Actions included
raising the quality and more robust sales promotion activities. As aresult, while sales volume for the overall market contracted sharply(down 7.9% year on year), with taxable shipment volume in thehapposhu category falling 5.9% year on year, our happoshu market
share rose 0.5 of a percentage point to 25.0%.
New Genre Beverages Category In new genre beverages, we2012 Business Overview
In alcohol beverages operations in Japan, core operating company
Asahi Breweries, Ltd. worked to leverage customer trust and cultivate a sense of familiarity by making products with quality as the
top priority, aiming to be a “market innovation company” thatprovides customers with alcohol beverages with a new value as acommunication tool that deepens the bonds between people. At
the same time, as regards profits, we were able to steadily achieve
benefits by aggressively implementing measures designed to
improve growth and profitability, including setting up an efficientand improved production brewery by integrating the Nishinomiya
Brewery’s beer-type beverage production functions into the Suita
Brewery. As a result, total sales for the alcohol beverages business,
including Asahi brand sales overseas, were ¥922.3 billion, up 0.1%
year on year, and, operating income increased 12.2% to ¥113.3
billion for the same period.

Beer-type Beverages
Our market share of taxable shipment volume for beer-type beverages in 2012 was 37.5%*1, down 0.4 of a percentage point year on
year. Nevertheless, we remained the market leader*2 for a third
consecutive year.
Beer Category In the beer category, we focused on cultivating andenhancing the brand value of our core product Asahi Super Dry.

20

Asahi Group Holdings, Ltd.

enhanced and nurtured our core brand Clear Asahi, moved to
improve the taste and packaging quality of Asahi Off, and strengthened our advertising and sales promotion activities. Moreover,Asahi Breweries, which was one of the JOC Gold Partners at the
London Olympics, in July last year launched Japan Gold as a new
genre “National Product to Support Japan,” and it performed well.
However, there was a year-on-year drop in taxable shipment
volume of 5.7%, and a decrease in market share of 1.7 percentage
points to 24.0%.
*1 Beer market share based on statistical data on taxable shipment volume fromJapan’s top five beer companies.
*2 Based on taxable shipment volume for beer from Asahi Breweries, Ltd. in 2012
*3 Based on nutrition labeling standards, sugar content of less than 0.5 g (per 100 ml)
is indicated as ”zero carbohydrate.”

Shochu, RTD Beverages, Whisky and Spirits, Wine
Total monetary sales of shochu, RTD beverages, whisky and spirits,
and wine in 2012 rose 8.0% year on year. In addition to good
performances from wine and RTD beverages, the new productAsahi Dry Zero launched in February was a hit and significantly
boosted sales of alcohol-taste beverages.
In shochu, we worked to reinforce the Kanoka brand, a core brand.
Specifically, from August we revamped the packaging of Barley
Shochu Kanoka, in September we launched Kanoka Shochu Highball, and launched for a limited-period a 2,000 ml cardboard pack

NEW GENRE

Clear Asahi

SHOCHU

Clear Asahi
Prime Rich

Honkaku
Imo-Jochu
Satsuma Tsukasa

Mugi-Jochu
KanokaAsahi Offthat was 200 ml bigger than the existing 1,800 ml product. With
potato-based shochu brands, efforts to broaden their presence inrestaurants centered on Honkaku Imo-Jochu Satsuma Tsukasa andKoku-Murasaki. Nevertheless, overall sales in the shochu category
declined by 18.9% on a monetary basis.
In RTD (ready-to-drink) beverages, the core product Asahi
Cocktail Partner Fuwarich series was revamped in April, which won
increased support mainly from younger consumers. Furthermore,
Asahi Slat with its juicy taste with real fruit pulp continued to sellwell, offering the value of a low 88 kcal for each can (350 ml), andestablished itself as a representative low-calorie product for the
RTD market. Asahi Chu-hi Kajitsu-no-shunkan, a brand made fromPom Juice, was revamped in September as Asahi Chu-hi Kajitsu-noshunkan Rich Tangerine Taste, and drove the category. As a result,sales of RTD beverages rose by 2.1% overall on a monetary basis
year on year.
In whisky and spirits, we focused on increasing sales byrevamping the packaging of Black Nikka Clear in April, and conducting linked sales promotion activities together with suggesting new ways to drink them centering on highballs. Moreover,Taketsuru Pure Malt 17 Years was named “World’s Best Blended
Malt Whisky” at the World Whiskies Awards*4 in 2012 for the firsttime. In commemoration of this award, we launched a limitedvolume Nikka Taketsuru Pure Malt 17 Years Non Chill Filtered. To
provide consumers new to malt whiskey with a product that is aneasily obtainable size at a price that is more acceptable for trying
a new product, we then launched Taketsuru Pure Malt 12 Years in
a 500 ml bottle, and overall Taketsuru brand sales have increased
year on year. Because the product was well received overseas,
exports for Europe centered on France performed well, and from
December we started to export two items to the U.S.: Taketsuru
Pure Malt 12 Years and Single Malt Yoichi 15 Years. However, overall,sales on a monetary basis in this category fell by 3.4% year on year.
In wine, our domestic wine brands performed well, improving
over the previous fiscal year. This was because a new product ofSte. Neige Rela, a brand launched in April 2011, was added to thelineup in September: a small volume of the wine in a 320 ml plastic

bottle. For imported wines, along with boosts to sales volume fromsuch daily wine products as Chilean wines Caliterra and Santa
Helena, and Italian wines Gancia and Zonin, the French wine Louis
Latour in the fine wine category also sold well with an improved
year-on-year performance. As a result, overall sales in this category
increased by 8.1% year on year on a monetary basis.
Turning to alcohol-taste beverages, in February 2012, Asahi
Breweries launched Asahi Dry Zero, a low-calorie beer-taste beverage featuring “a dry finish and clear aftertaste.” Asahi Dry Zero has
sold briskly, surpassing initial forecasts. We also revamped the
packaging of Asahi Double Zero Cocktail, a cocktail-taste beverage, and renamed the product Asahi Zero Kaku, a catchier namethat is easier to remember. As a result, overall sales in this category
increased by 353.2% year on year on a monetary basis.

SHARE OF SALES BY PRODUCT IN 2012 (ASAHI BREWERIES, LTD.)

ALCOHOL BEVERAGES SALES AND OPERATING INCOME*4 An international competition focused exclusively on whisky, chiefly sponsoredby U.K.-based Whisky Magazine.

Sales of Asahi Brand Products Overseas *Excluding China
Overview of 2012 In terms of sales of Asahi brand products over-seas, in South Korea, we aggressively developed our local sales
promotion activities by launching Asahi Super Dry –Dry Black– inJuly 2012 for the first time overseas, among other measures. This
helped us to maintain our position as the leading imported beerbrand by sales volume for a second consecutive year. This andother actions enhanced our presence, especially in markets acrossAsia and Oceania.

Plans and Strategies for 2013
The alcohol beverages business is likely to face unprecedented
challenges in terms of market conditions. In the run-up to Japan’s
consumption tax hike in 2014, these challenges will include the flowof personal consumption to durable consumer goods, along withdeclining consumer sentiment and increased belt-tightening due
to a weakening economy with slower growth. Furthermore, consumption patterns of customers should be shaped by a stronger(¥ billion)

Shochu, RTD
Beverages, Whisky
and Spirits, Wine

11.2%
New genre

13.2%
Happoshu

6.5%

Alcohol-taste beverages

2.3%

1,000

921.7

922.3

944.9

120

113.3

113.3

2012

2013

101.0

Other contracted
manufacturing, etc.

800

2.2%

600

90

60

Beer

64.6%

400

Beer-typebeverages

200

84.3%

0

30

2011

2012

2013
(Plan)

02011(Plan)■ Sales ■ Operating income

Annual Report 201221

REVIEW OF OPERATIONSALCOHOL BEVERAGES

RTD BEVERAGESWHISKY ANDSPIRITS
SPIR
IRIT
ITS
S

Asahi Cocktail
Partner Dear Pink

Asahi HiLiki
The Special

trend for consumers to choose products offering more added value
with higher cost performance. In this context, Asahi Breweries, Ltd.
will offer value propositions that accurately seize on customer
needs and market trends by aligning ever more closely to thecustomer’s perspective. In doing so, Asahi Breweries aims tobecome a company of first choice for customers by providing
products that they choose over others. Consequently, we are targeting sales of ¥944.9 billion (up 2.5% year on year) and operating
income of ¥113.3 billion (mostly the same as the previous year).

Beer-type Beverages
The market for beer-type beverages in 2013 is predicted tocontract between 1 and 2% overall. In this environment, weare targeting total sales volume of 164 million cases, up 0.5%
year on year.
Beer In the beer category, while there are indications that the
downturn in demand has leveled off somewhat, the overall market
is expected to decline between 1 to 2%. In this climate, Asahi
Breweries will remain focused on bolstering its core brand Asahi
Super Dry, as it aims for positive year-on-year growth. In 2013,
Asahi Super Dry will mark its 27th year of sales. Asahi Super Dry“Extra cold,” has proven popular among consumers for allowing
enjoyment of Asahi Super Dry in servings chilled below freezing
point. In an effort to drive expansion of this product, we have successfully developed a New Dispenser System (Cooling Type) specially designed as a dispenser for Asahi Super Dry “Extra cold.”
The new dispenser achieves even greater savings in terms of costand space compared with the original space-saving dispenser.
Asahi Breweries will begin installing the new dispenser in earnest
from 2013, with the aim of completing installation at a total of 5,000
establishments. Furthermore, we will upgrade the quality of Asahi
Super Dry –Dry Black– to acquire new drinking-age consumers andpenetrate and embed in the beer market. Launched in 2012, Asahi
Super Dry –Dry Black– is the first extension of the Asahi Super Dry
lineup and has been the driving force behind the growing darkbeer market.

NET SALES FOR SHOCHU, RTD BEVERAGES, WHISKY ANDSPIRITS, AND WINE* AND OPERATING INCOME RATIO (¥ billion)
10.0%

150

100

3.7
0.1
12.4

6.8
0.1
11.5

6.0% 25.9

30.4

28.9

4.6
0.1
10.6

21.0
0.1
11.5
29.8

30.8

7.0%

30.6

31.2

50.3

48.3

6.0%
28.2

50

10.0%

28.8

40.3

32.7

0.1
12.6
38.0

2010

2011

2012

2013 (Plan)■ Shochu ■ RTD (Low-alcohol) ■ Whisky and Spirits ■ Wine ■ Other■ Alcohol-taste Beverages ■ Operating Income Ratio *Including alcohol-taste beverages

22

Asahi Group Holdings, Ltd.

New Genre Beverages The market for new genre beverages is

expected to grow between 2 and 3% overall, despite signs ofslower market growth in 2012. This outlook is based on factors suchas a weakening economy with slower growth, and consumer preferences for low prices in the run-up to Japan’s consumption tax hike.
In response, Asahi Breweries will strengthen the new genre beverages category even more than before. Specifically, the company
will focus on reinforcing the brand power of core product Clear
Asahi, which has grown into a leading brand in this category and anengine behind the market for new genre beverages. To this end,
besides improving the quality of Clear Asahi, we will launch Clear
Asahi Prime Rich, the first product to extend the lineup of thisbrand. Furthermore, Asahi Breweries will continue to strengthen
and nurture health-conscious brands. It plans to roll out Asahi
Funwari, which will feature one of the category’s lowest calorie
contents*5, alongside Asahi Off, which continues to post a solid
performance against the backdrop of rising health consciousness
among consumers. Asahi Off is noted for its low purine and carbohydrate content*6.
*5, 6 Comparison with the Company’s malt liquors (1) based on happoshu.

Shochu, RTD Beverages, Whisky and Spirits, and Wine
Continued steps will be taken in 2013 to boost profitability acrossshochu, RTD beverages, whisky and spirits, and wine. We will concentrate on cultivating and strengthening core brands in each category,targeting year-on-year growth in sales of 17% for the year.
In shochu, we will make every effort to improve the value of Kanoka
as our highest priority brand in the home-use market. In October
2013, Kanoka will mark its 20th anniversary of launch. We will also
drive growth by concentrating our marketing investments. In the

SHARE BY BEER-TYPE BEVERAGE CATEGORY(ASAHI BREWERIES, LTD.)

(%)

60
50

50.6%

40

37.5%

30

25.0%
24.0%

20
33.4

Jack Daniel’s

Happoshu The overall happoshu market is projected to decline by
between 8 and 9%. The core brand Asahi Style Free entered its
seventh year of sales in 2013. Notably, it is a pioneer in “zero carbohydrate” happoshu. Asahi Breweries will continue to implement
aggressive measures to bolster this brand.

32.0

0

2009

Black Nikka
Clear

10
0

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12■■

Total beer-type beverages ■ Beer
Happoshu ■ New genre beverages

WINE

ALCOHOL-TASTE
BEVERAGES
BEVE
VERA
RAGE
GES
S

Asahi
Dry ZeroSte. Neige Rela

commercial-use market, Asahi Breweries will strive to boost its
presence in the authentic (singly distilled) shochu market by
expanding the number of new restaurants that offer the company’s
products, centered on the potato-based Honkaku Imo-Jochu
Satsuma Tsukasa and Koku-Murasaki.
In RTD beverages, growth is evident in the market for beverages with a low alcohol content of 3% or less and the market forbeverages with a high alcohol content of 7% or higher. Therefore,
Asahi Breweries will strengthen measures aimed at invigoratingeach of these two markets. Specifically, we will offer new value
propositions by enhancing Asahi Cocktail Partner lineups in the low
alcohol market and the new brand Asahi HiLiki The Special in thehigh alcohol market.
In whisky and spirits, we have positioned Black Nikka Clear,which is popular for its clear taste, and Taketsuru malt whisky as ourmost important domestic whisky brands. We will continue toincrease their stature among domestic whisky brands throughmeasures that further heighten their appeal to customers. In
imported whisky, we will put emphasis on increasing sales ofBrown-Foreman Corporation whisky products. We will vigorously
implement product proposals and advertising and sales promotion
activities unique to Asahi Breweries, as we strive to drive further
expansion in imported whisky sales. Our efforts will be centered on
mainstay products like Jack Daniel’s, which is the world’s No. 1
American whisky brand in terms of sales volume, and Early Times.
In wine, Asahi Breweries has positioned Ste. Neige Rela, atable wine that can be enjoyed without formality, as its mostimportant domestic wine brand. We will propose new settings fordrinking wine that will enable consumers to enjoy wine on a daily
basis. In imported wines, Asahi Breweries will expand sales of key
brands in the home-use daily wine sector such as Chilean wine
Alpaca, and Spanish wine Albali. In the commercial-use sector, key
brands will include Chilean wine Caliterra and French wine SaintVincent. In fine wines, Asahi Breweries will seek to expand sales offine wines centered on French wine Louis Latour, in addition to

Asahi Zero
Kakuwines from a variety of other countries, including Italy and New
Zealand. Asahi Breweries will fulfill the needs of many different
customers with an enhanced, diverse lineup of wine for both homeand commercial use.
In alcohol-taste beverages, Asahi Breweries will promote vigorous total marketing initiatives for Asahi Dry Zero, a beer-taste beverage which was launched in February 2012 and has provenpopular for featuring a “dry finish and clear aftertaste.” In doing so,
Asahi Breweries will further enhance its presence in the market andenhance its brands. Additionally, Asahi Breweries will continue tostrengthen measures to boost sales of the cocktail-taste beverage
Asahi Zero Kaku. This product will serve as a pioneer in cocktailtaste beverages in both the home-use and commercial-use markets.

Sales of Asahi Brand Products Overseas *Excluding China
Plans for 2013 As regards sales overseas, we will pursue horizontal
development in countries and regions that can follow the modelsof countries like South Korea where sales are firm. Furthermore, wewill bolster relationships with existing local partners while conducting marketing investment, in order to raise the brand recognition of
Asahi, especially Asahi Super Dry, with the overall aim of increasing
sales volume in each country.

Profit Structure Reform
Improving the profitability of existing businesses is set forth as apriority in the Asahi Group’s Medium-Term Management Plan 2015.
In terms of profit structure reform for the domestic alcohol
beverages business, the Group’s policy is to gain efficiencies totaling more than ¥10 billion during the 3 years from 2013 to 2015, andraise the operating income ratio to 12.5% or higher. In 2013, we aim
to improve the marginal profit ratio mainly by promoting Groupwide procurement. Another goal is to raise the efficiency of fixed
expenses primarily by reducing depreciation and amortization
through the optimization of capital investment.

SALES TARGETS AND ACTUAL RESULTS BY ALCOHOL BEVERAGES CATEGORY (ASAHI BREWERIES, LTD.)
Beer-type beverages (total)
Beer
Happoshu
New genre
Beverages other than beer-type beverages (total)
ShochuRTD beverages
Whisky and spirits
Wine
Other alcohol beverages, etc.
Alcohol-taste beverages
Other contracted manufacturing, etc.
Total

2012

2011

776.4
595.2
59.6
121.6
102.9
32.7
28.8
29.8
11.5
0.1
21.0
20.6
920.8

785.1
593.2
63.3
128.6
110.1
40.3
28.2
30.8
10.6
0.1
4.6
19.7
919.6

(¥ billion)

Year-on-year% of Total

2013 Target

Year-on-year% of Total

–1.1
0.3
–5.9
–5.5
–6.6
–18.9
2.1
–3.4
8.1
–11.9
353.2
4.3
0.1

84.3
64.6
6.5
13.2
11.2
3.5
3.1
3.2
1.2
0.0
2.3
2.2
100.0

778.7
595.2
56.1
127.4
116.1
33.4
32.0
38.0
12.6
0.1
28.9
21.3
945.0

0.3
0.0
–5.8
4.8
12.9
2.2
11.3
27.5
9.5
–2.9
37.4
3.5
2.6

82.4
63.0
5.9
13.5
12.3
3.5
3.4
4.0
1.3
0.0
3.1
2.3
100.0

Annual Report 201223

REVIEW OF OPERATIONSSoftDrinksEstablishing an industry-leading profit foundation by focusing
management resources on core brands and by expanding ourpowerful sales capabilities and networks
The entire domestic soft drinks market is projected to experience a continued harsh businessenvironment, including an anticipated rise in the consumption tax amid the trend of intensifying competition.
In this environment, in the soft drinks business, we aim to establish an industry-leading
profit foundation, both by focusing management resources on core brands, which are each

Shiro Ikeda
Director and Corporate Officer
in charge of Soft Drinks Businesscompany’s strengths, and by expanding our powerful sales capabilities and business networks, as called for by our Medium-Term Management Plan 2015.
At Asahi Soft Drinks Co., Ltd., we will implement structural reforms to achieve profitable
growth by such measures as improving the product mix by strengthening mainstay brands
Mitsuya Cider, WONDA and Asahi Juroku-cha, and raising sales expense efficiency. Elsewhere, Calpis Co., Ltd. aims to generate group synergies by collaborating with other groupcompanies while improving the value of the Calpis brand and expanding the brand’s assets
around the world.
Furthermore, we will aim for an average annual net sales growth of 10% or higher and an
operating income ratio of 5.5% or higher by promoting further capital and operational alliances by leveraging the company’s network development capabilities as a key strength.

24

Asahi Group Holdings, Ltd.

Achievements of Medium-Term Management Plan
2012

Future Topics
Asahi Soft Drinks Co., Ltd.
– Establish a management framework designed
to balance growth and profitability

Asahi Soft Drinks Co., Ltd.
Obtained the No. 4 positionin the industry

Market share of– Strengthen brand power, aiming to build
WONDA, Mitsuya Cider and Asahi Juroku-cha
as future No. 1 and No. 2 brands

10.7%– Achieve an optimal supply framework andcost reductions

Growth of Core Brands
WONDA
Cemented the No. 3 positionin Japan’s canned coffee market

Asahi Juroku-cha
Expanded sales volume
for a third consecutive year

Calpis Co., Ltd.

Asahi Soft Drinks’
first

40 million case brandReached the– Enhance the functionality of the “Peace Bottle”– Strengthen the product competitiveness of
mainstay brands Calpis Water, Calpis Soda, andCalpis Fruit Parlor, and expand the lactic acidproducts field by launching new Calpis brandproducts.

20 million casemark for the first time in 12 years

LB Co., Ltd.

Established an optimal production and logistics system throughmeasures such as internal production of PET bottles– Upgrade and expand product development
utilizing Group brands

LB Co., Ltd.

– Promote the unique value of chilled and longlife beverages

Created synergies through the successful integration of two former LB companies

SALES IN DOMESTIC SOFT DRINKS MARKET,BY CATEGORY

Business Environment
Faster shift to lower prices and increasing industry
consolidation among the top 5 soft drink manufacturers
Intensified competition due to the maturing soft drinks
market, and falling prices(Million cases)■■

Tea-based drinks ■ Coffee ■ Carbonated beverages
Fruit and vegetable drinks ■ Lactic acid drinks ■ Other soft drinks

600

498.0
410.5
392.0

500
400

Increase in new products, ever shorter product life cycles

300

Declining consumer sentiment due to the consumption tax hike

200

Increased use of convenience stores reflecting a higher
share of the elderly population

100
0

264.0
214.0
31.5
2008

2009

2010

2011

2012

Medium-Term Management Plan 2015: Targets and Strategies●

Asahi Soft Drinks Co., Ltd.: Achieve
profitable growth●(2015 Guidelines: Average annual net sales growth of
3% or higher, operating income ratio of 4% or higher)
–

–

–

–

Enhance market position centered on the company’s
three core brands (Mitsuya Cider, WONDA, and Asahi
Juroku-cha)Broaden the use of brand development expertise from
Mitsuya Cider, WONDA and other brands, while creating new value and demand by leveraging strengths
Enhance profitability by raising sales expense efficiency
and improving the mix of sales channels and drink
containers
Promote further profit structure reforms (expand measures to internalize drink container production andoptimize production and logistics systems)

Calpis Co., Ltd.: Enhance growth and cost competitivenessby leveraging Group-wide synergies(2015 Guidelines: Average annual net sales growth of 3% or higher(on a full-year basis), operating income ratio of 6.0% or higher)––

Enhance the value of Calpis, a top lactic acid drinks brand, and develop this “brandasset” worldwide
Create collaborative synergies (¥6.0 billion or higher) in procurement, logistics andother fields by strengthening collaboration throughout the Group●LB Co., Ltd.: Drive growth in the “chilled and long-life
soft drinks business” utilizing Group assets–

Develop value-added strategies utilizing Group assets such as Calpis and Bireley’s●

Promote further capital and operational alliances by leveraging thecompany’s network development capabilities in Japan as a key
strength

Annual Report 201225

REVIEW OF OPERATIONSSOFT DRINKS

Asahi Soft Drinks Co., LLtd.
td.

Asahi Soft Drinks Co., Ltd.

TEA-BASEDDRINKS

COFFEE

WONDA
Otonano(for adults)
WONDA
The Standard

W
WONDA
M
Morning Shot

Asahi Juroku-cha

Market Environment

WONDA
Kinnobitou(low-sugar)

In the soft drinks business, Asahi Soft Drinks Co., Ltd. achieved
growth substantially exceeding that of the market’s growth byenhancing its growth strategies centered on core brands. Moreover, the entire business achieved significantly increased earnings
due to the contribution of the performance of Calpis Co., Ltd.
which became a newly consolidated subsidiary in October. However, earnings significantly declined mainly due to increased
advertising and sales promotion expenses at Asahi Soft Drinks
and a fall in sales and earnings at LB Co., Ltd. This was despite
the fact that we enhanced our cost competitiveness by suchinitiatives as building the optimum production and logistics
frameworks, while maintaining the highest level of quality assurance from the customers’ perspective.
As a result, sales for the soft drinks business were ¥370.8
billion, up 14.2% year on year, with operating income down 35.2%
to ¥7.4 billion.

Asahi Soft Drinks Co., Ltd.
Asahi Soft Drinks Co., Ltd. posted a record sales volume and net
sales increased year on year for a tenth consecutive year. As aresult, Asahi Soft Drinks achieved a share of 10.7% of the Japanese soft drinks market.
In soft drink operations in Japan, core operating company Asahi
Soft Drinks enacted initiatives designed to strengthen and nurture
core brands and invigorate long-seller brands through a basic
policy addressing two key issues: growth strategies and improving profitability.
In regard to growth strategies, Asahi Soft Drinks worked tostrengthen and nurture its three core brands: WONDA, Mitsuya
Cider and Asahi Juroku-cha. At the same time, the company invigorated long-seller brands such as Wilkinson, Bireley’s and Asahi
Oishii Mizu mineral water. It also launched Monster Energy to
generate new demand, along with new products like Fiber 7500, a
carbonated drink approved for sale as a Food for Specified HealthUse (FOSHU). Through these and other initiatives, Asahi Soft
Drinks achieved far higher growth than the industry average.
In core brands, the WONDA brand has grown into Asahi Soft
Drink’s first 40 million case brand. As a result, the WONDA brandhas cemented the No. 3 position in Japan’s canned coffee
market. Sales volume of Asahi Juroku-cha surpassed 20 million
cases for the first time in 12 years, marking a third consecutive
year of growth. Sales volume of the Mitsuya Cider brand rose 7%
year on year.

SOFT DRINKS SALES COMPOSITION BY COMPANY (2012)

SALES AND OPERATING INCOME IN SOFT DRINKS BUSINESS*Actual results for October to December 2012(¥ billion)500

In 2012, sales volume in the Japanese soft drinks industry is estimated to have grown by around 3% overall, increasing for a third
straight year. Market expansion was driven by factors including
favorable weather in the peak summer sales season for softdrinks, demand for stocking mineral water, and the invigoration of
the market through new products.

2012 Business Overview

Calpis Co., Ltd.*

6.3%

LB Co., Ltd.

5.3%

400

Asahi Soft Drinks
Co., Ltd.

300

88.3%

200

464.8

14.3

15
11.4

370.8
324.8

10
7.4
5

100
0

2011

2012

2013
(Plan)■ Sales ■ Operating income

26

Asahi Group Holdings, Ltd.

0

2011

2012

2013
(Plan)Asahi Soft Drinks C
Co.,, Ltd.

Asahi Soft Drinks Co., Ltd.

Asahi Soft Drinks Co., Ltd.

CARBONATED
TED
BEVERAGESSFRUIT ANDD
VEGETABLEE
DRINKS

WATER

Mitsu
a
Mitsuya
Cide
Cider

Wilki
Wilkinson
Tansa
TansanBireleBireley’s
Oran
OrangeOishii Mizu

In regard to long-seller brands, Asahi Soft Drinks revamped
its product lineup of mineral water in June. Sales of the newly
relaunched Asahi Oishii Mizu brand achieved substantial growthof 37% year on year, compared with preceding products. Sales ofWilkinson Tansan also grew dramatically, increasing 55% year on
year. This was the result of proposing a new way of enjoying thisdrink as table water, along with the addition of new products tothe lineup. Consequently, Wilkinson Tansan became the No. 1
carbonated mineral water brand*1 in Japan. Asahi Soft Drinks also
actively proposed new additions to the lineup such as Wilkinson
Ginger Ale. Overall Wilkinson brand sales increased 44% year on
year, for a fifth consecutive year of higher sales.
Furthermore, Monster Energy was launched in May 2012 forthe purpose of creating new demand. It surpassed its annual sales
target of 1 million cases in September that year, and further outpaced the upwardly revised target of 1.2 million cases to finish theyear at a sales volume of 1.57 million cases. Sales of Fiber 7500, a
carbonated FOSHU drink rolled out in November 2012, havebeen growing steadily since surpassing their annual target of
300,000 cases in the first month of sales.
Thanks to these developments, total sales volume for Asahi
Soft Drinks grew 11.6%, recording a tenth consecutive year of
growth at an all-time high. As a result, Asahi Soft Drinks sales rose
7.7% year on year to ¥327.6 billion.
As regards improving profitability, Asahi Soft Drinks renovatedits mineral water production line at its Mt. Fuji Factory with an eye

to future growth, achieving increased capacity as a production
hub for Eastern Japan. This measure was implemented in conjunction with the construction of an optimal production and logistics system and the integration of mineral water products into the
Asahi Oishii Mizu brand. However, as a result of increased advertising and sales promotion expenses, operating income declined
42.3% to ¥6.6 billion.

SHARE BY CATEGORY (ASAHI SOFT DRINKS CO., LTD.)

BREAKDOWN OF SALES OF CALPIS CO., LTD. (2012)(%)*No. 1 carbonated water brand: Surveyed by INTAGE MBI. Based on actual
monetary sales from January 2012 to December 2012.

Calpis Co., Ltd.
Calpis Co., Ltd. became a consolidated subsidiary of the Asahi
Group in October 2012. In 2012, the company contributed ¥23.5
billion in sales and ¥0.5 billion in operating income (full-year basis).
Calpis Co., Ltd. worked to drive expansion in the microorganism
application business, by taking full advantage of its proprietary
technologies. In addition, the company strove to enhance thevalue of the Calpis brand in Japan and strengthen the international beverage business. It also redesigned the container for its
mainstay pre-diluted Calpis lactic acid beverages for the first timein 17 years. The functionality of the new containers, including theability to preserve quality and ease of use, has been well received
by consumers. As a result, overall concentrated beverage sales
increased 6% year on year. Calpis also posted a steady performance in its direct marketing business, where it conducts direct
sales of functional food products based on proprietary technologies and materials.

(%)

Functional Foods
Business

International Beverages
Business

15

2.9%

5.5%

10

Dairy Products
Business

20

18.4%
10.7%
10.4%
10.3%
8.3%

5.1%

1.5%

5

0

■

2007

2008

Tea-based drinks■■ TotalCoffee

2009
■

2010

2011

Carbonated beverages

2012■

Mineral water

Microorganism
Application
Business

Institutional &Industrial Products
Business

5.2%

Domestic
Beverages
Business

80.0%

Annual Report 201227

REVIEW OF OPERATIONSSOFT DRINKS

Calpis Co., Ltd.

CalpisCalpis Water

On the profit front, Calpis pressed ahead with measures toreduce manufacturing costs, including reducing the weight ofpackaging materials such as PET bottles and labels, as well as
improving the in-house manufacturing ratio.

LB Co., Ltd.
LB Co., Ltd. positioned 2012 as a year for dramatic growth inexpanding its business fields, and worked to strengthen andexpand its operating base.
In the lactic drinks category in chilled beverages, LB posted significantly higher sales volume than in the previous year, mainly
due to the continuous launch of new products designed to capture market growth. However, sales of products in the tea-based
category were lackluster in the convenience store sector. Consequently, LB recorded lower overall sales than in the previous year.
On the other hand, LB worked to streamline manufacturing
and logistics costs. Measures included reducing raw materials
costs for sweeteners, packaging and other items mainly by promoting the consolidation of suppliers, group purchasing andother initiatives. The company also worked to adopt area production systems for chilled beverages.

Plans and Strategies for 2013
In 2013, the soft drinks market in Japan is predicted to performroughly on par with 2012, despite the impacts of demand forstocking mineral water running its course and the absence of thehigh temperatures of the previous year’s summer.

Calpis Fruits Parlor
Fully ripened mango withlemon juice

Calpis Soda

Under these conditions, in the soft drinks business the Asahi
Group will expand sales at each Group company by implementing proactive initiatives to improve the Calpis brand value, as wellas continuing to strengthen core brands at Asahi Soft Drinks.
As regards earnings, we will endeavor to improve profitability
primarily by such measures as raising sales expense efficiency at
Asahi Soft Drinks and improving the sales channels and productcontainer mix. At the same time, we will strive to maximize collaborative synergies by working with Calpis in logistics andprocurement through enhanced inter-business coordination.
As a result, the Asahi Group is targeting sales of ¥464.8 billion(up 25.3% year on year) and operating income of ¥14.3 billion (up93.9% year on year).

Asahi Soft Drinks Co., Ltd.
Asahi Soft Drinks Co., Ltd. will work to establish the profit baseneeded to advance to a new stage, while speeding up the paceof growth in response to changes in the market environment inJapan. Through these measures, Asahi Soft Drinks is targeting
sales volume of 198 million cases for 2013, an increase of 2.6%
year on year. This would mark its 11th consecutive year of sales
volume growth.
With respect to growth strategies, Asahi Soft Drinks will workto establish a product portfolio aimed at further growth. This willentail implementing category and brand strategies that take fulladvantage of its proprietary strengths, based on diversifying
customer needs. Through clear-cut marketing investment, thecompany will strive to invigorate best-seller brands such as

SALES AND FORECAST BY ASAHI SOFT DRINKS BRAND AND CATEGORY

28(Million bottles)

2012

Year-on-year (%)

Composition (%)

2013 (plan)

Carbonated beverages total

48.70

12.26

25.24

53.40

Coffee total

40.42

4.78

20.95

Tea-based beverages total

41.23

14.62

21.37

Mineral water total

21.85

9.45

Juice total

16.17

Health & functional beverages
totalYear-on-year (%)

Composition (%)

9.7

27.0

41.30

2.2

20.9

41.05

–0.4

20.7

11.32

22.30

2.1

11.3

20.76

8.38

15.75

–2.6

8.0

8.62

4.76

4.47

8.00

–7.2

4.0

Other beverages total

2.50

41.44

1.30

2.00

–20.0

1.0

Goods purchased

13.45

16.39

6.97

14.20

5.6

7.2

Total

192.9311.63

100.00198.002.6

100.0

Asahi Group Holdings, Ltd.

LB Co., Ltd.

CHILLED
BEVERAGES

Ocha

Tasty Calpis

WONDA, Mitsuya Cider, Asahi Juroku-cha, Wilkinson, and Asahi
Oishii Mizu, roll out new brands representing new value propositions, while striving to entrench these brands in the marketplace.
The goal is to nurture leading brands within each category.
In terms of structural reform, Asahi Soft Drinks will build an
optimal supply framework straddling R&D, production, supply
chain management (SCM) and purchasing. Building on the optimal production framework established to date, Asahi Soft Drinks
will implement measures based on quality, cost and stable supply
from a medium- and long-term perspective encompassing anticipated increases in sales volume set forth in the Medium-Term
Management Plan 2015, and conditions in 2015 and beyond. The
company will explore and promote upgrades to the in-house
container production system, as well as develop and introduce
new production technologies, among other priorities. It will also
add a new production line at the Mt. Fuji Factory, with the start ofoperations planned for 2014.

Calpis Co., Ltd.
In concentrated beverages, Calpis will work to increase market
recognition of the advantages of the Calpis Peace Bottle (multilayered structure to preserve delicious taste, easy to hold, easy toadjust pouring volume, easy to recycle with no sorting necessary).
At the same time, the company will implement measuresdesigned to enable a broad range of customers to experience
the delicious taste of Calpis drinks. In ready-to-drink beverages,
the company will work to increase sales by enhancing its threemainstay brands, namely Calpis Water, Calpis Soda and Calpis

Bireley’s
chilled style

Fruits Parlor. Efforts will also be made to rapidly capture synergies
through such means as developing Calpis brand products within
the Group, promoting Group-wide procurement, and utilizing theGroup’s logistics system.
In the international beverage business, Calpis will work to
expand business in areas where it is already active, such as
Indonesia, Thailand, Taiwan, the U.S. and Mexico. The company
will also cultivate markets in emerging countries at a faster paceby capturing synergies with the Asahi Group. In these ways,
Calpis aims to expand business areas for the Calpis brand, which
offers value in terms of deliciousness and health.

LB Co., Ltd.
LB Co., Ltd. will work to expand its presence in convenience
stores and mass-retail stores. To this end, the company will proactively develop chilled and long-life products that offer unique,high added value by leveraging brands within the Group. In addition, LB will commence production and sales of six chilled beverage and long-life product items that comprise the existing
business of the company Calpis, while at the same time working
to introduce new products. On the profit front, LB will make acompany-wide effort to refine business processes through theintroduction of a new core system and other measures, as it
strives to provide customers with higher value.

CALPIS CO., LTD. TARGETS FOR SYNERGY CREATION THROUGH COOPERATION
Efficiency target

Sugar-free
black vinegar(¥ billion)

Initiative

Logistics

3.0~

Increase efficiency by leveraging the Group’s logistics network

Procurement

1.5~

Procure raw materials and ingredients

Production

1.0~

Build the optimum production framework

Other

0.5~

Increase efficiency of all fixed expenses, including for personnel and indirect materials

Total

6.0~

Annual Report 201229

REVIEW OF OPERATIONS

Food

Promoting the prioritization of strong brands andbusinesses, and the businesses we will nurture,
to cultivate the Group’s future profit base
The entire domestic food market continues to face a contraction of structural demandmainly due to a shrinking and aging population. At the same time, customer needs arediversifying as a result of changes in each generation’s lifestyle.
In this environment, in the food business, we will promote the prioritization of thestrong brands and businesses that we possess, and of the businesses to be nurtured,

Katsuyuki Kawatsura
Senior Managing Director andSenior Managing Corporate
Officer in charge of Food Businesswith a view to cultivating the Group’s future profit base, as called for by our MediumTerm Management Plan 2015.
We will enhance the industry’s highest class of brands and businesses such as
MINTIA breath mint tablets from Asahi Food & Healthcare Co., Ltd., the baby foodbusiness of Wakodo Co., Ltd. and the freeze-dried business of Amano Jitsugyo Co.,
Ltd., and also leverage our strengths such as yeast extract. The overall aim is to develop
our future competitiveness.
Moreover, we will aim for an average annual net sales growth of 5% or higher andan operating income ratio of 5.5% or higher, mainly by continuously realizing lower
production costs and other profit structure reforms, and by making use of our global
network to expand the overseas development of our strong brands and businesses.

30

Asahi Group Holdings, Ltd.

Achievements of Medium-Term
Management Plan 2012
Asahi Food & Healthcare Co., Ltd.
Growth of mainstay product brands
Up over
MINTIA

Dear-Natura

Future Topics
Asahi Food & Healthcare Co., Ltd.
–Develop competitive products and reform the profit structure
according to changes in the market–Establish Asahi Food & Healthcare Co., Ltd.’s unique, unrivalledstrengths

22% from 2009

Wakodo Co., Ltd.

Up over–Revitalize operations and enhance profitability by improving thevalue of baby products

93% from 2009

–Ensure stable profit through consulting-based sales according tochanges in the market

Wakodo Co., Ltd.

Amano Jitsugyo Co., Ltd.

Growth of core businesses such as baby food–Develop products according to customer needs

Increase in share ofJapanese baby foodmarket45.5%

Growth in share ofJapanese market for
powdered infant formula

18.5%(Up 4.5 points from 2009)(Up 3.6 points from 2009)* Based on SDI data (all business sectors, monetary amounts) from
INTAGE Inc. for January–December 2012 and 2009

Amano Jitsugyo Co., Ltd.
Dramatic growth in direct marketing business and mass
distribution sales businessUp higher than
Direct marketing business

Mass distribution sales
business–Enhance profitability by conducting reviews of the corporate business

55% from 2009
Up higher than

67% from 2009

Business Environment
Declining consumer sentiment due to the consumption tax hike
Aging society with fewer children, plus declining birthrate
in Japan
Increases in single-person and elderly households, and many
more occasions to eat alone
Burgeoning need for increased shopping convenience instep with a higher percentage of working womenContinuing preferences for food safety and security inresponse to anxieties about foodDeclining prices due to the emergence of mass-retail storesand private labels

Medium-Term Management Plan 2015: Targets and Strategies●

Asahi Food & Healthcare Co., Ltd.: Energize strong
brands and execute prioritization(2015 Guidelines: Average annual net sales growth of 5% orhigher, operating income ratio of 5% or higher)––●

Shift management resources to overseas business andthe seniors business, and execute profit structure reforms
covering overall selling expenses and fixed expenses●

Amano Jitsugyo Co., Ltd.: Expand businesses
that leverage freeze-dried food technology as acore strength

Concentrate management resources on energizing mainstay
brands such as MINTIA and BALANCEUP
Nurture businesses that leverage strengths, such as yeast, andreform the profit structure of the business as a whole

Wakodo Co. Ltd.: Expand business by leveraging thecompany’s high share of the baby food market, andpromote profit structure reforms(2015 Guidelines: Average annual net sales growth of 5% orhigher, operating income ratio of 5% or higher)––

Establish the undisputed dominant position in baby food products (baby food and powdered infant formula)(2015 Guidelines: Average annual net sales growth of 5% orhigher, operating income ratio of 5% or higher)––●

Enhance brands that leverage competitive freeze-dried foodtechnology and the creation of new value and demand
Improve profitability through technological innovation andprioritization of sales channels

Drive overseas business expansion by leveraging
the strong brands and technologies of eachfood company

Annual Report 201231

REVIEW OF OPERATIONS

FOODAsahi Food & Healthcare Co., Ltd.

MINTIA

Wakodo Co., Ltd.

BALANCEUP

Dear-Natura

2012 Business Overview

Infant formula Lebens
Milk Hai Hai

In the food business, net sales increased year on year owing toefforts by each operating company to strengthen mainstay
brands. Consequently, sales in the food business rose 3.7% year
on year to ¥101.6 billion. However, operating income declined
11.7% year on year to ¥3.7 billion, mainly due to higher salesrelated expenses at Wakodo Co., Ltd.

On the profit front, Asahi Food & Healthcare saw operating
income increase 14.2% year on year to ¥2.3 billion, mainly due toefficient use of sales promotion expenses and cuts in raw materials costs. This was despite losses on the disposal of products forwhich “best by” dates had expired as a result of the disruption in
the supply-demand balance caused by the Great East Japan
Earthquake.

Asahi Food & Healthcare Co., Ltd.
Asahi Food & Healthcare Co., Ltd. worked to expand sales bycultivating new sales channels, in addition to further enhancing
mainstay brands and developing and launching new products.
Specifically, the mainstay processed foods business saw sales
increase year on year due to the continuous launch of new andrevamped products, assertive advertising campaigns, and sales
promotions. Asahi Food & Healthcare recorded higher sales ofmainstay products such as MINTIA breath mint tablets and
BALANCEUP nutritionally balanced snack bars, along with candy
packaged in bags such as MITSUYA CIDER CANDY. Sales growth
was also driven by Ippon Manzoku Bar nutrition bars. In the healthand beauty business, sales increased steadily as new quasi-drug
products were launched for the EBIOS and Dear-Natura brands.
In skincare products, Suhada Shizuku was rolled out and achieved
its full-year sales target in only seven months. In addition, inroads
were made into the development of the market for food seasonings, mostly among processed food manufacturers in Japan andoverseas, despite contraction in the Japanese market. These
efforts were supported by the launch of the high-value-added
yeast extract HYPER MEAST and other products. As a result, sales
for Asahi Food & Healthcare rose 5.3% year on year to ¥49.5
billion, setting a record high for a ninth consecutive year.

Wakodo Co., Ltd.
Wakodo Co., Ltd. followed a management policy of boldly
advancing to the next stage, taking steps to enhance its presencein the markets for baby food and powdered infant formula, whileworking to strengthen its profit base by winning new customers
for commercial-use products. In the baby and senior business,sales grew strongly for the company’s mainstay product, theGoo-Goo Kitchen baby food series, along with the relaunched
Eiyo Marche with included a tray. For seniors, Wakodo posted
steady sales of elderly care products centered on the Oral Plus
dental care product, along with food products for the elderly centered on the Shokuji wa Tanoshii series. This reflected efforts tostrengthen the sales structure eyeing expansion in the senior nursing care market. However, Business-to-Business activities posted
lower sales as major customers shifted to internal production andused alternative low-cost overseas raw materials. Consequently,
sales for Wakodo decreased 1.4% year on year to ¥36.1 billion.
In terms of profit, operating income (before amortization of
goodwill) decreased 62.2% to ¥0.5 billion. This decrease wasprimarily due to increased sales promotions, discounts and othermeasures in response to intensified competition in the baby foodmarket, despite cost cutting measures such as reducing raw
materials and plant production costs.

FOOD SALES COMPOSITION BY COMPANY (2012)

FOOD SALES AND OPERATING INCOME

Other(¥ billion)
150

6

0.1%
Amano JitsugyoCo., Ltd.

100

98.0

101.6

108.5

4.4

4.2
4

3.7

15.7%
50

WakodoCo., Ltd.

35.5%

Asahi Food &Healthcare Co., Ltd.

48.7%

32

Asahi Group Holdings, Ltd.

0

2

2011

2012

2013
(Plan)■ Sales ■ Operating income

0

2011

2012

2013
(Plan)

Amano Jitsugyo Co., Ltd.

In the Goo-Goo Kitchen
series, flounder risotto

In the Shokuji wa Tanoshii
series, easy-to-cook sukiyaki

Eggplant miso soup

Amano Jitsugyo Co., Ltd.
Amano Jitsugyo Co., Ltd. worked to expand its business andboost profitability by increasing sales channels, developing products in line with customer needs, and augmenting production
facilities. Efforts were also focused on upgrading and expanding
core brand lineups, launching new products such as Genen type
Omiso-shiru (reduced sodium miso soup), and increasing thenumber of stores handling its products in the mass-retail store
sector centered on the Tokyo metropolitan area. As a result,Amano Jitsugyo achieved substantial growth both in the mass
distribution sales business and the direct marketing business.
Sales rose 11.0% year on year to ¥16.0 billion, for a fourth consecutive year of record sales.
Turning to profit, operating income was ¥0.8 billion, mostly
the same as the previous fiscal year. Profit was reduced by higher
advertising expenses and depreciation and amortization following the expansion of freeze-dried food production capacity. However, this decrease was offset primarily by fixed cost reductions
through the automation of certain packaging processes, alongwith reduced procurement costs for raw materials, and a large
improvement in disposal costs.

Plans and Strategies for 2013
In 2013, we will work to ensure steady growth by concentrating on
mainstay brands and core businesses, while promoting cost cutting. Specifically, we will focus on measures to enhance our competitiveness in existing mainstay businesses, categories, andproducts, with a view to enhancing our position in Japan’s processed food market. From these actions, we are aiming for higher
sales and earnings in the food business in 2013, targeting sales of¥108.5 billion (up 6.7% year on year) and operating income of ¥4.4
billion (up 18.9% year on year).

Asahi Food & Healthcare Co., Ltd.
In its mainstay business of processed foods, Asahi Food & Healthcare Co., Ltd. aims to further enhance and expand its existingproducts such as MINTIA breath mint tables, BALANCEUP nutritionally balanced snack bars and Ippon Manzoku Bar nutrition
bars. For MINTIA, the main focus will be on upgrading sales
promotions for existing products centered on strong mint products, while actively developing new products that extend thelineup. In the health and beauty business, the company will position Dear-Natura brand supplements, the quasi-drug productNyumen Sumashi Yuzu

In the Chiisame Donburi series, asmall chicken-and-egg rice bowl

EBIOS, the Slim Up Slim line of diet support food and the skincare product Suhada Shizuku as core brands, while working tofurther enhance existing products and actively expand advertisingand sales promotion activities. In the food seasonings business,
Asahi Food & Healthcare will propose yeast extract-based seasonings that match customer needs by strengthening ties withmajor food manufacturers. The company will also strengthen
measures targeting overseas markets centered on Southeast Asia.

Wakodo Co., Ltd.
Wakodo Co., Ltd. will work to enhance earnings through measures that leverage its high market share of Japan’s baby foodmarket, along with streamlining production and sales divisions.
Specifically, the company will focus on strengthening mainstay
brands, such as Lebens milk Hai Hai and Gun Gun in its powderedinfant formula category and Goo-Goo Kitchen baby food, while
seeking to expand sales by conducting efficient and effective
sales activities. The market for seniors’ products has been undergoing continued expansion. Here, Wakodo aims to boost sales by
upgrading and expanding the range of items in the Shokuji wa
Tanoshii brand of retort pouch food products for elderly care,while conducting proactive sales activities centered on the drugstore channel. At the same time, the company will continue todevote efforts to elderly care products centered on the Oral Plus
dental care product, while strengthening sales activities. In overseas business, Wakodo aims to drive business expansion mainly
by reconfiguring its sales structure in major Asian countries where
it is developing business.
Amano Jitsugyo Co., Ltd.
In the mass distribution business, Amano Jitsugyo Co., Ltd. willcontinue working to increase the number of mass-retail stores
handling its products centered on the Tokyo metropolitan area.
In the direct marketing business, the company will strive tocreate and nurture new categories, while at the same timetaking measures to enhance brand recognition. Measures will
include proactive advertising campaigns via TV commercials,
online advertisements and other channels. Moreover, the company will expand satellite shops designed to promote the attraction of freeze-dried food products. The company will also
continuously reduce raw materials, logistics, and other costs,
while pursuing higher efficiency, mainly by automating certain
manufacturing processes.

Annual Report 201233

REVIEW OF OPERATIONS

Overseas

Expanding our growth base through enhancing our global
network by leveraging our strengths such as brand capabilities,
technological capabilities and cost competitivenessAmid the maturing of the entire domestic market, the Asahi Group must tackle theimportant matters of expanding its global business foundation and building new
growth structures.
In our overseas business, we aim to expand our growth base by enhancing our global
network usage by leveraging our strengths such as brand capabilities, technologicalToshio Kodato
Director and Corporate Officer
in charge of Overseas Businesscapabilities and cost competitiveness, as called for by our Medium-Term Management
Plan 2015.
In our Oceania operations, we will grasp the structural changes in each market and build
a new growth portfolio, and at the same time maximize our integration synergies by integrating the management of five operating companies under one local holding company.
In addition to expanding our growth network in Southeast Asia centered on Permanis
Sdn. Bhd. of Malaysia and the soft drinks joint venture businesses in Indonesia, we will
also expand our growth base by leveraging our strong networks with equity method
affiliates in China, namely, Tsingtao Brewery Co., Ltd. and Tingyi-Asahi Beverages
Holding Co., Ltd.
Furthermore, we will aim for an average annual net sales growth of 5% or higher andan operating income ratio of 9% or higher, mainly by working to make Asahi Super Dry
Asia’s No. 1 premium beer brand and strengthening our area marketing.

34

Asahi Group Holdings, Ltd.

Achievements of Medium-Term Management Plan 2012

Future Topics

Oceania Operations

Oceania Operations

Established foundations for growth of the soft drinks and alcohol beverages
subsidiaries we acquired
Formulated and initiated PMI (post-merger integration) aimed at capturingsynergies through unified management– Strengthen and expand the business base topave the way for growth– Enhance cost competitiveness of overall operations through earnings structure reforms

China Operations

China Operations

Achieved structural reforms of the beer business, such as the sale ofunprofitable operations and concentration of production functions
Strengthened ties with two equity-method affiliates– Expand the presence of the Asahi brand in themarket– Support the growth of the two equity-method
affiliates and expand the business base bystrengthening ties with themSoutheast Asia Operations
Established a business base.

Entered the Malaysian non-alcohol beverages market through the acquisition of
Permanis Sdn. Bhd. (Permanis), Malaysia’s second largest soft drink producer
Established manufacturing and sales joint ventures with PT Indofood CBP
Sukses Makmur TBK (Indofood) in preparation for full-scale entry into theIndonesian non-alcohol beverages market

Southeast Asia Operations– Strengthen market stature and enhance profitability in the Malaysian market– Establish a foothold in the Indonesian beverages businessBusiness Environment
Oceania Operations

China Operations– Gradual growth in the Australian non-alcohol beverages market
and the New Zealand RTD market– The Australian RTD market is contracting due to the flow of
consumers to other categories– Emergence of mass-retail stores and private labels– Growth in overseas brands and the premium beer market due
to expansion in the middle income segment– Intensified competition for positions in the high-end of the market

Southeast Asia Operations– Heightened consumer awareness of healthy soft drinks– Diversifying container sizes and types, and packaging formats
by sales channel

Medium-Term Management Plan 2015: Targets and Strategies
●

–

–

–
●

–

Tingyi-Asahi Beverages Holding Co., Ltd.) and strengthening
ties with them
Expand the presence of Asahi Super Dry in China’s premiumbeer market and promote higher efficiency at production sites

Oceania Operations: Build a growing portfolio thatreflects structural changes in the market and capture
integration synergies–(Guidelines 2015: Average annual net sales growth of 5% orhigher, operating income ratio of 10% or higher)●

Southeast Asia Operations: Expand the growth networkwith Permanis and Indonesian joint venture businesses
at the core–

Permanis: Achieve sustainable growth by further enhancing its
strong sales network
Indonesia: Leveraging product development and technologicalcapabilities, conduct brand development and establish an optimal production structure in preparation for full-scale market entry(Non-alcohol beverages business) Strengthen key brands centered on carbonated beverages brands of Schweppes Australia
Pty Limited and create new demand by utilizing group assets(Alcohol beverages business) Rebuild foundations for growth byinvigorating key brands for ready-to-drink (RTD) low-alcohol
beverages and by developing brands in growing categories
Maximize integration synergies from unified management ofacquired business units in Oceania

China Operations: Support the growth of the equitymethod affiliates and strengthen the business baseby leveraging networks
Expand the growth foundation by supporting the growth of thetwo equity-method affiliates (Tsingtao Brewery Co., Ltd. and–●Strengthen area marketing aimed at establishingAsahi Super Dry as “Asia’s No. 1 premium brand”–

Target overseas sales volume of 10 million cases by bolstering global
marketing functions and enhancing and expanding sales networks

Annual Report 201235

REVIEW OF OPERATIONSOVERSEAS

Oceania Operations(Non-alcohol Beverages)

Schweppes

Solo

2012 Business Review
In 2012, sales from the overseas business increased 67.6% to¥157.9 billion mainly due to contributions from newly consolidated subsidiaries in Oceania and Malaysia. The operating loss
associated with the overseas business worsened ¥1.0 billion year
on year due to amortization of goodwill of newly consolidated
subsidiaries and other items.

Oceania Operations
In our Oceania operations, we built foundations for the growth of
an integrated beverages business combining the non-alcohol
beverages and alcohol beverages businesses, including by enhancing each company’s core brands and creating integration synergies, centered on Asahi Holdings (Australia) Pty Ltd, which is aregional headquarters to manage the companies in the region. As
a result, sales from the Oceania business increased 60.3% to ¥129.7
billion partly due to contributions from newly consolidated subsidiaries. The operating loss associated with the Oceania businessworsened ¥0.6 billion year on year due to due to amortization of
goodwill of newly consolidated subsidiaries and other items.
Non-alcohol Beverages
In 2012, the growth rate of the Australian soft drinks market involume sales and the convenience store business format wasestimated at about 3% on a sales volume basis and about 4% on
a value basis. Consequently, results for the entire business
improved year on year. In this environment, Schweppes Australia
Pty Limited posted year-on-year growth in net sales, about on
par with the growth rate of the market as a whole. The increase

SOFT DRINKS CONSUMPTION IN AUSTRALIA

102%
3,200

100%
3,189

101%
3,218

101%
3,254

101%
3,277

101%
3,294

FrantelleCharlie’sin sales was mainly achieved through favorable performances ofcore brands such as Schweppes and Pepsi, which saw the launchof a new major product. Profits also increased year on year
mainly due to an improved product mix from a sales expansion in
the impulse and on-premise channels, as well as the positiveeffects of higher sales. Moreover, we enhanced our sales structures and increased efficiency through the integration of the juice
and water operations of the former P&N Beverages Australia Pty
Ltd that we acquired in 2011.
Furthermore, we strived to enhance the earnings structure by
expanding sales, building an optimum production framework andconducting the joint procurement of raw materials within thegroup companies including Charlie’s Trading Company Limited, a
New Zealand company specializing in the manufacturing andsales of premium soft drinks, and with Mountain H2O Pty Ltd, anAustralian bottled water manufacturer.

Alcohol Beverages
In 2012, the alcohol beverages business in Oceania underwent
various changes in the operating environment, including intensifying competition in New Zealand and the contraction of the RTD
low-alcohol beverages market in Australia. Against this backdrop,
we focused on strengthening our mainstay RTD low-alcohol beverages, including by renewing our core brands and launching new
products by Independent Liquor (NZ) Limited and Independent
Distillers (Aust) Pty Ltd. We enhanced imported premium beers
and craft beers that exhibited striking growth in the market, andentered the cider category of beverages. As regards the sales
functions in Oceania for Asahi Super Dry for which we had

SOFT DRINKS SALES COMPOSITION BY CATEGORY AT
SCHWEPPES AUSTRALIA(Thousand KL)

4,000

Pepsi

100

Juices

Other

3.1%

6.1%

(%)

Water

3,000

75

2,000

50

3.3%
Energy Drinks

1,000

25

3.7%
Concentrated
Juices

6.2%
0

2007

■ Volume (left scale)
Source: Euromonitor

■

2008

2009

2010

Growth rate (right scale)

2011

2012

0

Sports Drinks

8.8%(January–December 2012)

36

Asahi Group Holdings, Ltd.

CarbonatedBeverages

68.9%

Oceania Operations(Alcohol Beverages)

Cody’sSomersby

Cruisertransferred sales to the outside, we worked to expand our businessportfolio by transferring the functions to the two companies.

China Operations
In 2012, growth in China’s beer market was held to about 3–4%
year on year mainly due to the impact of the country’s sluggish
economic growth. In this kind of market environment, net sales inthe beer business in China fell 5.9% year on year to ¥10.8 billion.
Although there was sales volume growth in the Asahi brand products and the Asahi Group increased its contract production at
Yantai Beer Tsingtao Asahi Co., Ltd. (Yantai Beer), this businessperformance could not cover the drop in sales due to the sale ofHangzhou Xihu Beer Asahi Co., Ltd. (Hangzhou Beer) in August
2011. On the profit side, the operating loss improved ¥0.7 billion.
In addition to improved earnings from the sales volume increase
in Asahi brand products, the sales growth of Yantai Beer, and thebenefit of selling Hangzhou Beer that had been making a loss,
progress was made in the integration of Asahi brand production
functions at Beijing Beer Asahi Co., Ltd. (Beijing Beer).
In November 2010, the Asahi Group acquired a stake in TING
HSIN (CAYMAN ISLANDS) HOLDING CORP., the holding company of one of China’s largest food and distribution companies,
the Ting Hsin Group. Since then, we have launched project teams
to examine ways to develop a food business in China that canleverage the Asahi Group’s strengths.
Equity-method Affiliates
Tsingtao Brewery Co., Ltd. (Tsingtao Brewery)
Tsingtao Brewery achieved overall sales volume growth far above

SOFT DRINKS SALES COMPOSITION BY CATEGORY AT
INDEPENDENT LIQUOR (NEW ZEALAND)(%)

Woodstock

the market growth rate, owing to brisk sales of mainstay lowpriced brands such as Laoshan, in addition to the medium- topremium-priced Tsingtao brand. Tsingtao Brewery posted higher
net income year on year, despite the impact of higher marketing
expenses and increased raw materials prices.

Tingyi-Asahi Beverages Holding Co., Ltd.
(Tingyi-Asahi Beverages)
In China’s soft drink market in 2012, sales volume grew by about
9%. In contrast, monetary sales rose by about 16%. This was due
to increased unit prices reflecting a shift in demand among softdrink categories due to changes in consumer preferences. In thismarket environment, Tingyi-Asahi Beverages strengthened its
business portfolio by successfully entering the carbonated softdrinks category by completing the transfer of Chinese bottlingoperations from PepsiCo, Inc. in March 2012. In addition, TingyiAsahi Beverages, on a standalone basis, promoted measures torestore sales. Measures included launching new brands in the milk
tea and the traditional beverage categories.
Southeast Asia Operations
In Southeast Asia, we established a foothold in the Indonesian
soft drink market, which is expanding rapidly in step with economic growth and a burgeoning population. In September 2012,
we established two joint ventures to manufacture and sell beverages with PT Indofood CBP Sukses Makmur TBK, a major Indonesian food company. This follows our acquisition of Permanis Sdn.
Bhd., Malaysia’s second largest soft drink producer.

SOFT DRINKS SALES COMPOSITION BY CATEGORY AT
INDEPENDENT DISTILLERS (AUSTRALIA)

Contracted production

Spirits

Cider

5.8%

1.7%

1.3%

Spirits

Exports

9.4%

7.0%

Beer

Exports

11.5%
Beer

26.5%
(January–December 2012)(%)

RTD drinks

49.5%

10.8%
Contracted
production

RTD drinks

64.9%

11.9%
(January–December 2012)

Annual Report 201237

REVIEW OF OPERATIONSOVERSEAS

China

Tsingtao Brewery

Tsingtao Beer
Classic

Asahi Super Dry

Permanis Sdn. Bhd.
In Malaysia’s soft drink market in 2012, the competitive environment worsened as the country’s major beverages companies viedfor market leadership. For the soft drink market as a whole, sales
volume increased by about 2% year on year, while monetary salesrose about 4% year on year. In this environment, Permanis, whichbecame a newly consolidated subsidiary in 2012, worked to further strengthen its sales network by enlarging its direct sales
structure. At the same time, Permanis expanded sales channels
by bolstering the brand power of mainstay brands such as
Tropicana, Revive, and Pepsi, along with actively rolling out refrigerated showcases. As a result, Permanis posted net sales of ¥15.5
billion. However, although sales growth contributed to earnings,
Permanis recorded an operating loss of ¥1.1 billion due to theamortization of goodwill and other items, as well as increased
sales promotion expenses.

Plans and Strategies for 2013
In 2013, we will promote measures to bolster our brand power
and improve the earnings structure of each of our businesses,
centered on Oceania operations. From these actions, we areprojecting net sales of ¥177.0 billion (up 12.1% year on year)
and an improvement in operating income of ¥2.4 billion inoverseas business.

business. We will build a business platform that flexibly adapts tochanges in the business environment, while bolstering initiatives
aimed at creating integration synergies. Through these measures,in Oceania operations, we are targeting net sales of ¥145.0 billion,
an increase of 11.8% year on year, and an improvement in operating income of ¥1.9 billion.
In the non-alcohol beverages business, we continue to anticipate steady market growth. In this climate, we will strive to boost
sales by strengthening sales activities through the supply of products according to each sales space, based on key brands in categories such as carbonated beverages and water. On theearnings front, efforts will be focused on enhancing profitability
by further promoting productivity enhancements. Measures will
include efficiently allocating advertising and sales promotion
expenses, as well as consolidating production sites.
In the alcohol beverages business, we will step up marketinginvestments in mainstay RTD low-alcohol beverage brands, which
form the nucleus of this business, with a view to enhancing ourmarket position. Furthermore, we will pour more energy into allbusiness formats including the on-premise market for imported
premium beers, including Asahi Super Dry, and craft beers which
are experiencing significant growth in the market, as we
strengthen our portfolio in growing categories. Through thesemeasures, we will work to expand our business platform.

Oceania Operations
In Oceania operations overall, our key priorities are to strengthen
and expand our product portfolio in the growing fields of each

China Operations
In the beer business, we will strive to expand sales centered on
the Asahi brand, mainly by further developing existing markets
along with cultivating new markets and business formats. Based

BEER CONSUMPTION IN CHINAPERFORMANCE OF TSINGTAO BREWERY(Million KL)(Million yuan)

60

110%

45

34

112%

108%
41

38

105%

104%

43

45

109%
49

120

2,000
1,500

60
1,000

15

0

30

2006

■ Market total (left scale)
Source: Impact Data 2012

2007■

Asahi Group Holdings, Ltd.

2008

2009

Growth rate (right scale)

2010

2011

23,1582,500

016,023
13,709
1,007

2,142

18,026
1,589

25,781

20,000

1,936
15,000

1,179
10,000500
025,0002,138

19,89890

30

38

Tsingtao
Beer Draft

5,000

2007

2008

■ Operating income (left scale)
Source: Impact Data 2012

2009
■

2010

2011

Net sales (right scale)

2012

0

Tingyi-Asahi

PermanisBeverages

Green Tea

Ice Tea

Daily Con these measures, we are targeting net sales of ¥11.1 billion, up
3.0% year on year, in China. On the earnings front, we will strive toimprove capacity utilization by increasing the sales volume of
Beijing Beer, while promoting reforms of the earnings structure byraising the efficiency of sales promotion expenses. From theseactions, we aim to restore profitability by posting operating
income of ¥0.3 billion, an increase of ¥0.5 billion year on year.
In the food business, we will continue working to swiftly
launch businesses through project teams with TING HSIN
(CAYMAN ISLANDS) HOLDING CORP. We aim to develop businesses that leverage sales of the Asahi Group’s products and theuse of high value-added materials.

Equity-method Affiliates
Tsingtao Brewery
Tsingtao Brewery will further strengthen its “1+3” strategy ofchanneling management resources into the medium- to premium-priced Tsingtao brand and three mainstay low-priced
brands. Through this strategy, Tsingtao Brewery aims to improve
its market position through sales expansion while achieving stableearnings growth.
Tingyi-Asahi Beverages
Tingyi-Asahi Beverages will strengthen marketing investments
aimed at capturing an even greater market share in the growing
traditional beverages and milk tea categories. Another measure
is to overhaul the company’s sales strategy in order to restore
the brand power of its core tea brand. On the earnings front,

SOFT DRINKS CONSUMPTION IN CHINA

Excel 8

Bleu

Chill

Tingyi-Asahi Beverages will strive to enhance Group-wide costcompetitiveness through stronger collaboration with Pepsi, witha view to building a dominant earnings base that is unmatchedby rival companies.

Southeast Asia Operations
Permanis Sdn. Bhd. will promote a growth strategy that emphasizes balanced sales and earnings growth. In terms of net sales,
the company will work to bolster brand power through marketinginvestments including the roll out of refrigerated showcases,
along with strengthening the direct sales structure, centered on
its three mainstay categories of juices, carbonated beverages,
and isotonic beverages. Through these measures, Permanis istargeting net sales of ¥18.8 billion, up ¥3.2 billion year on year. In
terms of operating income, Permanis will seek to improve productivity by introducing the Asahi Group’s advanced production anddevelopment technologies. In addition, the company will promote pricing strategies that flexibly adapt to each brand andsales channel, as well as roll out refrigerated showcases. Throughthese measures, Permanis is targeting an improvement of ¥0.3
billion year on year.
In the Indonesian soft drinks business, we will work to establish a solid operating base in preparation for our full-scale entry
into the market. Initiatives will include developing proprietarybrands that harness the Group’s strong marketing, productdevelopment and technological capabilities, as well as its costcompetitive production system and other strengths.

PERFORMANCE OF TINGYI-ASAHI BEVERAGES(SOFT DRINKS BUSINESS)(Million KL)(Million dollars)
80

114%

113%

112%

113%
58

60

41

109%
63

107%
67

400

253
60

200

20

30

100

0

0

2007

■ Market total (left scale)
Source: Euromonitor

2008
■

2009

287

300

40

0

6,000

2010

Growth rate (right scale)

2011

2012

4,932

326
90

51

46

120

4,500

4,001
3,532
208

203

167
2,542
1,519

1,924

2007

2008

■ Operating income (left scale)
Source: AC Nielsen

2009
■

3,000

1,500

2010

2011

2012

0

Net sales (right scale)

Annual Report 201239

GROUP MANAGEMENTCORPORATE GOVERNANCE
1. Basic Policy
The Asahi Group recognizes all our stakeholders as “customers”
who provide us with support, starting with the consumers of our
products and also including shareholders, investors, suppliers,
employees and local communities. We also recognize the importance of communicating with all our stakeholders, and of thinking
and acting in harmony with them.
To ensure our corporate activities meet the expectations of allthese stakeholders, and to quickly adapt to an ever-evolving
business environment, we have identified enhancing corporate
governance as a priority for management. We are therefore
striving to strengthen Group management, reinforce our relationship of trust with society and enhance our social responsibility
and management transparency.

2. Characteristic Features of Our Corporate
Governance Structure
Asahi Group Holdings, Ltd. is bolstering corporate governancewith the goal of maintaining management soundness, transparency and efficiency. Specifically we have adopted a “company
with corporate auditors” governance framework, under which we
strengthen management oversight functions and preserve transparency by appointing outside directors. The Company has also
introduced a Corporate Officer System, designed to separate
management duties from business execution, as well as boost
management decision-making speed, and realize more efficientmanagement overall.

CORPORATE GOVERNANCE STRUCTURE

General Meeting of Shareholders
Appointment/
Dismissal

Appointment/
Dismissal

Appointment/
Dismissal
Advise/Respond

Cooperation

Board ofAuditors

Cooperation

Audit

Board of Directors

Compensation
Committee

Appointment/Dismissal/
Supervision

Audit

Independent Auditor

Chairman and
Representative
Director

President andRepresentative
Director

Advise/Respond

Audit

Advise/Respond

Advise/RespondCorporate Strategy Board

Cooperation

Audit
SectionGroup Companies
Alcohol
Beverages

Food

Soft Drinks

Overseas

Internal Audit

Internal Regulations(Including Basic Principles for Internal Control System and Asahi Group’s Corporate Ethics Rules)

40

Asahi Group Holdings, Ltd.

Committees
Information
Disclosure
RiskManagement

Governance/
Surveillance

Audit

Nomination
Committee

Move to a Pure Holding Company Structure
The Company moved to a pure holding company structure on
July 1, 2011. This move is enhancing Group governance functions,developing manufacturing skills across the entire Group, andstrengthening management infrastructure by integrating common
operations across the Group and by improving specialty service
functions. It is also developing human resources capable ofresponding to diverse customers and businesses. In addition, the
new structure allows the Company to make bold resource allocations to growth areas in Japan and overseas, enabling the Groupto grow more quickly.

Board of Directors
The Board of Directors consists of 11 directors, including 3 outside directors (as of March 26, 2013). Outside directors arechosen from a pool of exceptional external candidates who
qualify as independent directors as defined by the rules of theTokyo Stock Exchange and other bodies. Outside directors havevaried career backgrounds, with some having served as corporate executives, educators, and economic policy experts prior totheir appointments. The wealth of experience and keen insightof our current outside directors are reflected in the continued
transparency of the Board’s decision-making processes andmanagement oversight.
In 2012, the Board of Directors held 10 regular meetings, withoutside directors Ms. Mariko Bando, Mr. Naoki Tanaka and Mr.
Ichiro Ito attending 10, 9 and 8 meetings, respectively.

Nomination and Compensation Committees
Complete fairness and transparency in the appointment andcompensation of senior officers are achieved by the Nomination Committee and the Compensation Committee, which
serve as advisory bodies to the Board of Directors. Outside

directors are present among the directors that comprise themembership of each committee.
The Nomination Committee consists of a total of four officers,of whom two are Company-employed directors and two are
outside directors. The committee is chaired by a Companyemployed director, and is responsible for recommending candidates for director, corporate officer or corporate auditor to theBoard of Directors. The committee met once in 2012, mainly tomake proposals for corporate officer personnel.
The Compensation Committee is also comprised of four officers, of whom two are Company-employed directors and two are
outside directors. The committee is chaired by an outside director, and is responsible for making resolutions as agenda items
regarding compensation systems and packages for directors andcorporate officers for the Board of Directors. The committee met
three times in 2012, and mainly forwarded proposals regarding
the amount of bonuses for senior officers.

Board of Auditors
The Board of Auditors is responsible for supervising and auditing
the management of the Company and the performance of duties
by directors. The Board of Auditors consists of five auditors,
including three outside corporate auditors. Selected from a poolof exceptional candidates who qualify as independent auditors,
the experience and insight gained from the varying backgroundsof the outside corporate auditors, a former top executive, alawyer and a university professor, are evident as they audit the
management of Asahi Group Holdings from multiple perspectives. In 2012, the Board of Auditors held eight meetings, withoutside corporate auditors Mr. Takahide Sakurai and Mr. Tadashi
Ishizaki attending 8, and Mr. Naoto Nakamura attending 6 meetings, respectively.

Comments from an Outsider Director

Naoki Tanaka
Outsider Director

Protecting the global environment has become a theme that encapsulates the elements affecting
our wellbeing, like the very air and water we each breathe and drink. Meanwhile, businesses arebeing called to address the demands of developing countries from more people seeking to live indignity. This so-called base of the pyramid (BOP) model has given rise to new global management
challenges in how to combine business resources.
For the Asahi Group, this will entail building a new supply chain globally, while honing the brandnames our predecessors helped develop.
In some management circles, globalization has been brushed aside as a corollary outcome in the
choice of M&A partners. But from our Group’s perspective, the issue of finding the right global combination of management talent, products and services has never been more important in sharpening
our appeal to the top of the pyramid (TOP) without losing sight of the BOP.
To this end, we will look to our brand names as benchmarks in confirming the Asahi Group’s
founding principles, and cultivate them to bear fruit as we globalize.

Annual Report 201241

GROUP MANAGEMENT

3. Corporate Officer System
Introduction of a Corporate Officer System
Asahi Group Holdings has introduced a Corporate Officer System
to ensure timely execution of operations and clarify responsibilities and authority. Corporate officers are granted the authority by
the Board of Directors to execute operations and are responsible
for the timely execution of operations. Meanwhile, directors are
entrusted with the mission of formulating Group management
strategies and making key decisions on Group management forstrengthening and developing the Group, in addition to supervising the execution of operations.

Corporate Strategy Board
The Corporate Strategy Board holds high-level meetings to fulfill
its responsibility of quickly executing decisions made by the
Board of Directors. The Corporate Strategy Board deliberates
matters pertaining to the direction of the entire Group. The Corporate Strategy Board is chaired by the president and representative director. Its meetings maintain the accountability of directors
for the entire Group and the responsibility of the president andrepresentative director and corporate officers for the operatingcompanies, thereby clarifying responsibilities and accelerating
decision-making. To maximize operational efficiency, at eachmeeting, progress is controlled and assessed based on an objective and rational management index. In order to ensure the legality of the decision-making process employed for major issues andto further enhance compliance management, each meeting is
attended by at least one standing corporate auditor.
In 2012, as the third year of Medium-Term Management Plan
2012, the themes deliberated at the meetings were growth strategies for completing the medium-term plan, including capitaland business alliances overseas, the management structure andhuman resources development following the transition to aholding company system, profit structure reform, Group policy
and business plans for 2013, and the topics for the next MediumTerm Management Plan.

Internal Audits and Accounting Audits
To enable corporate auditors to efficiently conduct their auditing
duties, Asahi Group Holdings assigns three full-time staff toattend to the needs of the Board of Auditors, enabling auditors’
full attendance at important meetings and facilitating the review
of authorized documents at all times.
With respect to internal audits, the Group has established aninternal audit organization comprising eight people at Asahi Group
Holdings, Ltd., five people at Asahi Breweries, Ltd., six people at
Asahi Soft Drinks Co., Ltd., and four people at Calpis Co., Ltd. asinternal auditing departments. These cooperate with each other to
conduct audits based on Group-wide auditing policies to ensure
proper and effective business execution across the entire Group. In
addition to reports individually filed with each audit, twice a year,

42

Asahi Group Holdings, Ltd.

general reviews of the audits are submitted to the Corporate
Strategy Board to be used as the basis for new policies.
The corporate auditors, Audit Section and independent auditor
work in concert by exchanging information through briefings and bytransmitting copies of auditing reports periodically, and as needed.
In 2012, the Board of Auditors held five briefings with the independent auditor and three briefings with the Audit Section, respectively.
The Audit Section held four meetings with the independent auditor.

4. Compensation for Directors and Corporate
Auditors, and Independent Auditor
Resolutions regarding compensation for senior officers become
agenda items for the Board of Directors following deliberations
that take into account the compensation systems and packages
for directors and corporate officers proposed by the Compensation Committee. In 2012, fixed salaries (basic compensation)
comprised around 80% of compensation for directors, with theperformance-based portion roughly accounting for another 20%.
(Note: 100% of performance-based compensation was shortterm, none was long term). For corporate auditors, basic compensation consisted entirely of fixed salaries (monthly compensation), reflecting the abolishment of the Company’s system ofbenefits from April 2009. (Refer below.)

Compensation for Directors and Corporate Auditors(2012)(¥ million)

Basic Compensation

Bonus

Total

Company-employed Directors (Total: 9)
Outside Directors (Total: 3)Standing Corporate Auditors (Total: 3)
Outside Corporate Auditors (Total: 3)

306.2
31.2
63.6
32.4

94.3
11.1
—
—

400.5
42.3
63.6
32.4

The Company decided at a meeting of the Board of Directors
held on February 6, 2007, to abolish the system of retirement
benefits for directors and auditors and to include the relevant
amount in their annual salaries. Retirement benefits were traditionally paid as compensation to directors and corporate auditors at afuture date, and the decision to include compensation equivalent
to retirement benefits in the annual salary was made in responseto the adoption of a one-year term of office. At the same February
6 meeting, the Board of Directors also decided to make no new
allotments to the stock option system that had been implemented
as part of the compensation system for directors, corporate auditors and corporate officers, on the grounds that even if they wereable to execute their rights under insider trading regulations, it
might be difficult legally to sell the rights immediately afterward,
so that their function as an incentive was not sustainable.

Independent Auditor Compensation
In 2012, audit fees and other compensation payable to the independent auditor amounted to ¥126 million for an attestationagreement and ¥233 million in other compensation.

5. Internal Control System
Development of Internal Control System Based on
the Companies Act
Following the transition to the holding company system in 2011,
we newly established Basic Principles for Asahi Group Holdingsthat carry on the philosophy of the Basic Principles for Establishing an Internal Control System established by Asahi Breweries in2006. In drafting these Basic Principles, we analyzed and evaluated the current system at the Company and the Asahi Group to
determine the proper course of action. Based on these Basic
Principles, we are presently developing an internal control systemthat will encompass the entire Asahi Group. With respect to bothrisk management and compliance, we are establishing internal
rules that reflect the system and Basic Principles as we conduct
control activities (see p. 44 for more details). All major Group
companies, specifically Asahi Breweries, Ltd., Asahi Soft Drinks
Co., Ltd., Asahi Food & Healthcare Co., Ltd., and Wakodo Co.,
Ltd. have also drafted their own basic principles in this area.
Going forward, we anticipate that business growth will trigger
expansion in both the number of Group companies and theregions where we operate. This growth notwithstanding, we arecommitted to extensively embedding our internal control systemthroughout the entire Group. At the same time, we will constantly
strive to remain aware of regulatory reforms and social trends ineach business and operating region, responding proactively to
any changes that emerge.

Response to the Financial Instruments and Exchange
Act (Japanese SOX Act)In response to the Japanese SOX Act, Asahi Group Holdings has
put an evaluation and reporting framework in place that includes
a set of guidelines, “Basic Regulations for Evaluation and Reporting of Internal Control for Financial Reporting,” and the establishment of the Internal Control Evaluation Office as an organization
to conduct independent evaluation of managers.
Based on evaluation results for 2012, the Company has determined that, as of December 31, 2012, it has an effective internal
control system with respect to financial reporting. This assessment
was corroborated by an audit of the internal control system performed by the outside corporate auditors.

6. Abolishment of Takeover Defense Measures
At a meeting held on February 8, 2010, the Board of Directors of
the Company (then “Asahi Breweries, Ltd.”) passed a resolution
on countermeasures against the large-scale purchase of its shares(“takeover defense measures”). Subsequently, with the approvalof shareholders at the Company’s 86th Annual Shareholders’Meeting held on March 26, 2010, the period of the takeover
defense measures was extended. The takeover defense measureswould remain effective until the close of the Company’s 89th
Annual Shareholders’ Meeting to be held in 2013. However, at a

meeting held on February 13, 2013, the Board of Directors of theCompany passed a resolution to abolish the takeover defense
measures and not extend them.
The Company has made proactive efforts to implement Group
global management. To this end, the Company transitioned to apure holding company system in July 2011, while focusing on
boosting profitability in existing businesses and developing a new
growth portfolio under the Medium-Term Management Plan
2012, which ran through 2012. Management believes that steady
execution of the Long-Term Vision 2020 and the Medium-Term
Management Plan 2015 is vital to further strengthening relationships of trust between the Asahi Group and its stakeholders. In
addition, management believes that this will also help to increase
the Company’s corporate value while maintaining and enhancing
the common interests of shareholders.
The Company has carefully considered the handling of the
takeover defense measures, which will expire in 2013. In theprocess, the Company considered these measures from thestandpoint of maintaining and enhancing corporate value andthe common interests of shareholders, while referring to theopinions of the independent committee members, institutional
investors in Japan and overseas, and other parties. As a result,management determined that the need for takeover defense
measures at the Company has diminished compared with when
they were first introduced. This is also true given that the Groupis now working to achieve the Long-Term Vision 2020 and theMedium-Term Management Plan 2015, while making further
efforts to improve corporate value by generating sustained
earnings and returning profits to shareholders, among othermeasures. This decision also takes into account changes in thebusiness environment surrounding the Group since the period
when the takeover defense measures were introduced. Accordingly, the Board of Directors has passed a resolution to abolishthe takeover defense measures without extending them at theclose of the 89th Annual Shareholders’ Meeting.
Going forward, the Group will continue to make concerted
efforts to maintain and enhance corporate value and the common
interests of shareholders over the medium and long term, regardless of whether or not the takeover defense measures are in place.
Furthermore, even after the non-extension (abolishment) of the
takeover defense measures, the Group will continue to seek necessary and sufficient disclosure of information from any party
attempting a large-scale purchase of its shares to ensure thatshareholders can appropriately determine their stance on such alarge-scale purchase of shares. At the same time, the Group will
implement appropriate measures within the scope afforded by the
Financial Instruments and Exchange Act, the Companies Act andother relevant laws and regulations, such as the disclosure of theopinion of the Board of Directors of the Company and the provision of enough time for the shareholders to consider any largescale purchase.

Annual Report 201243

GROUP MANAGEMENTRISK MANAGEMENTCOMPLIANCE

In conjunction with the move to a pure holding company structure
in 2011, the Asahi Group established the Asahi Group Risk Management Rules and the Asahi Group Risk Management Manual.
The Risk Management Rules define the basic issues related to risk
management. The Risk Management Manual defines specificmanagement processes based on the Risk Management Rules.
The goal in drafting these rules and procedures is to prevent all
types of risks surrounding the business and to strengthen our risk
management system for responding to emergency situations.
The Asahi Group Risk Management Committee, established inline with these Group Rules, is comprised of all the directors of
Asahi Group Holdings and one general manager of the General
Affairs/Legal Management Department. In addition to reporting
about examples of risk management and compliance, the committee meets to discuss and decide policies for related activities
as a whole, as well as assign priorities to the measures to betaken, based on the results of a risk survey, and reviews the content of measures and the progress of plans concerning major risks
as the Group’s top discussion and advisory panel for managing
risk. The committee also conducts preventative activities at theorganizational level to avoid the occurrence of risks on a daily
basis in collaboration with staff responsible for promoting risk
management at each Group company.
In 2012, the committee conducted a fundamental review ofexisting disaster manuals in line with the needs of the times,
and formulated a basic BCP (business continuity plan) at Asahi
Breweries, Ltd. and Asahi Soft Drinks Co., Ltd. In 2013, thecommittee plans to work on formulating basic BCPs for othermajor Group companies.

Based on “fair, open corporate ethics” as stipulated in The Asahi
Group Guidelines for Corporate Activity, the Company has established Corporate Ethics Guidelines, and requires directors, corporate auditors and employees to observe these guidelines. The
Asahi Group Risk Management Committee oversees compliancethroughout the Asahi Group based on the Asahi Group Risk
Management Rules.
In accordance with the Asahi Group Corporate Ethics Rules,
we have stationed an appropriate number of compliance promoters with a certain degree of compliance knowledge at the Company and Group companies, to increase compliance awarenessand disseminate legal knowledge. As of the end of 2012, compliance promoters comprised around 150 Legal Promoters (LPs) and
28 Senior Legal Promoters (SLPs).
In 2012, the Company held one training session for all LPs, andtwo training sessions for all SLPs. These training sessions emphasized case studies based on a group debate-style format, while
striving to share the latest knowledge and information concerningcompliance and risk management.
In addition, training sessions focused on business sites werealso held for product development staff at Group companies. All
participants reviewed their legal knowledge concerning trademarks and other intellectual property, and product labeling.

RISK MANAGEMENT AND COMPLIANCE STRUCTURE
Asahi Group Risk Management Committee

Each Asahi Group Holdings’
Department

Risk Management Secretariat(Asahi Group Holdings)(General Affairs/
Legal Management Department;
Quality Assurance Department)

Asahi Group Companies

Personnel responsible for promotion of risk management
Personnel responsible for promotion of compliance(LPs, SLPs)

44

Asahi Group Holdings, Ltd.

BOARD OF DIRECTORS, AUDITORS AND CORPORATE OFFICERS (As of March 26, 2013)
Board of Directors
Hitoshi Ogita

Naoki Izumiya

Chairman of the Board

President andRepresentative Director

Apr. 1965 Joined the Company
Mar. 1997 Director
Mar. 2000 Managing Director
Mar. 2002 Senior Managing Director
Sep. 2002 Vice President and Corporate
Officer, Asahi Soft Drinks
Co., Ltd.
Mar. 2003 President and Representative
Director, Asahi Soft Drinks
Co., Ltd.
Mar. 2006 President and Representative
Director, Asahi Breweries, Ltd.
Mar. 2010 Chairman of the Board(current position)

Apr. 1972 Joined the Company
Mar. 2000 Corporate Officer
Mar. 2003 Director
Mar. 2004 Managing Director
Mar. 2009 Senior Managing Director
Mar. 2010 President and Representative Director(current position)

Katsuyuki Kawatsura

Toshio Kodato

Senior Managing Director andSenior Managing Corporate Officer

Director and Corporate Officer
Apr. 1978 Joined the Company
Mar. 2008 Corporate Officer
Mar. 2010 Director and Corporate Officer (current position)

Apr. 1975 Joined the Company
Mar. 2005 Corporate Officer
Mar. 2009 Managing Corporate Officer
Mar. 2010 Managing Director and Managing
Corporate Officer
Mar. 2013 Senior Managing Director andSenior Managing Corporate Officer(current position)

Shiro Ikeda

Katsutoshi Takahashi

Director and Corporate Officer

Director and Corporate Officer

Apr. 1980 Joined the Company
Mar. 2009 Corporate Officer
Jul. 2011 Director and Corporate Officer,
Asahi Breweries, Ltd.
Mar. 2012 Director and Corporate Officer(current position)

Apr. 1977 Joined Yoshida Kogyo K.K.
(currently, YKK Corporation)
May 1991 Joined the Company
Apr. 2006 President and Representative Director,
Asahi Breweries Engineering Co., Ltd.
(currently, Asahi Group Engineering Co., Ltd.)Mar. 2008 Corporate Officer
Mar. 2013 Director and Corporate Officer (current position)

Yoshihide Okuda

Akiyoshi Koji

Director and Corporate Officer

Director

Apr. 1978 Joined Konishiroku Honten(currently, Konica Minolta Holdings, Inc.)
Sep. 1988 Joined the Company
Mar. 2010 Corporate Officer
Mar. 2013 Director and Corporate Officer(current position)

Apr. 1975 Joined the Company
Sep. 2001 Corporate Officer
Mar. 2003 Managing Director, Asahi Soft Drinks Co., Ltd.
Mar. 2006 Senior Managing Executive Director,
Asahi Soft Drinks Co., Ltd.
Mar. 2007 Managing Director and Managing
Corporate Officer
Jul. 2011 Director (current position)

Mariko Bando

Naoki Tanaka

Outside Director

Outside Director

Oct. 2003 Vice President,
Showa Women’s University
Apr. 2004 Head, Women’s Cultural ResearchInstitute, Showa Women’s University(current position)
Apr. 2007 President, Showa Women’s University(current position)
Mar. 2008 Director (current position)

Apr. 2007 President, Center for International Public Policy
Studies (current position)
Mar. 2009 Director (current position)

Ichiro Ito
Outside Director
Apr. 2010 Chairman and Representative
Director, Asahi Kasei Corporation(current position)
Mar. 2011 Director (current position)

Auditors

Corporate Officers

Sta
StandiStanding
n ng
Corporate Auditors

OutsideCorporate Auditors

Corp ate
Corporate
CorporOfficers

Yoshihiro Tonozuka
Yukio Kakegai

Takahide Sakurai
Naoto Nakamura
Tadashi Ishizaki

Kiminari Maruta
Yasutaka Sugiura
Yasuyuki Ohtake

Annual Report 201245

GROUP MANAGEMENTCORPORATE SOCIAL RESPONSIBILITY (CSR)
The Asahi Group and CSR
Based on its corporate philosophy of pursuing customer satisfaction, and under the Medium-Term Management Plan 2015, whichseeks to enhance corporate value, the Asahi Group will strive toenhance social value by applying the strengths of its businesses
to help solve social issues through its business activities.

Specifically, the Asahi Group has reviewed its top priorities
and is strengthening its initiatives after having determined ninepriorities in the three areas of food and health, the environment,
and people and society. Moreover, the Asahi Group will strive toenhance its corporate governance, the foundation of its corporate management, with the aim of achieving the enhancement ofcorporate value.

CSR ACTIVITIESLONG-TERM VISION 2020

46

GUIDELINES FOR CORPORATE ACTIVITYCORPORATE PHILOSOPHY

To be a trusted corporate group in theworld through offering “Kando” experiences of food (deliciousness, happiness,innovation)

Asahi Group Holdings, Ltd.

MEDIUM-TERM
MANAGEMENT PLAN 2015
Aimingcorporate
Ai
i tto enhanceht valuelthrough Value and Network Management• Based on the three areas of food and health, the environment, and people and society, we will pursue initiatives in line with our nine priorities• We will maximize the strengths of each operating company in the Asahi Group, and apply initiatives to help
solve social issues through business activities, with theaim of becoming a trusted corporate group
Activity Areas(1) FOOD AND HEALTH
Priority
Activities(2) THE ENVIRONMENT
Priority
Activities

ASAHI GROUP CSR POLICY
The Asahi Group seeks to contribute to
the development of a sustainable society
through all our business activities worldwide. Not only will we comply with thevarious laws and rules of all countries andregions where we operate, but we will
also take the initiative to actively engage
in activities aimed at fulfilling our social
responsibility with a global viewpoint.
Furthermore, we hope to share theexcitement with all the peoples of theworld through the creation of new social
values. We will continue to think about
what we can do to bring this about andtake action, together with all the stakeholders that surround us.

• Address alcohol-related problems• Contribute to food safety and security• Pass on a healthy food and alcohol culture• Contribute to development of low-carbon societies• Contribute to development of recycling societies• Contribute to biodiversity preservation(3) PEOPLE AND SOCIETY
Priority
Activities• Respect for humanity• Contribute to building safe, fulfilling societies• Contribute to ensuring sustainable water resources

Corporate GovernanceLEGAL
COMPLIANCECOMPLIANCE

ACCOUNTABILITY

FAIRNESS/IMPARTIALITY/
TRANSPARENCY• As regards the four domains of corporate governance,
we will continue initiatives aimed at building thefoundation of corporate management

Our Aspirations for the Asahi Group
Asahi Group companies in Japan will rebuild the CSR promotion
framework and implement concrete CSR activities in order toaddress various social issues. Overseas, the Asahi Group will
strengthen its CSR activities by focusing on key issues based on an
Activity Areas(1) FOOD AND HEALTH–The mental and physicalhealth of people everywhere–(2) THE ENVIRONMENT–Preservation of the bounty ofnature for the future–(3) PEOPLE AND SOCIETY–Happiness and fulfillment
for all–understanding of local CSR priorities. Based on progress with measures to be undertaken through 2015, we will also advance initiatives
directed at realizing our aspirations for the Asahi Group in 2020,
while at the same time addressing social conditions and changes in
the Asahi Group’s business environment.

Social Issues

Our Aspirations for the Asahi Group in 2020

• The spread of dietary habits that damage health• The spread of anxiety and distrust about foodand diet• Disregard for unique food cultures• Become a company that is essential tosociety in solving social issues in each of thethree activity areas.

• Climate change/Global warming• Resource depletion (concern about difficulties
in resource procurement)• Loss of ecosystem services• Earn the trust of society as a corporate groupthat is considered to be essential to good
health and fulfillment in people’s daily lives.

• Acceptance of and support for diverse values• Deterioration of living infrastructure• Become recognized as an advanced company in Japan and around the world inenvironmental preservation.

Fiscal 2012 Initiatives(1) Initiatives for Food and HealthThrough research and development activities related to alcohol
beverages, soft drinks and food, the Asahi Group aims to contribute to the food and health fields.
In the alcohol beverages business, we launched a non-alcoholbeer-taste beverage Asahi Dry Zero and a cocktail-taste beverage
Zero Kaku with no calories and carbohydrate content. We also
conducted medical research on the relationship between alcoholand health to promote moderate and responsible drinking basedon scientific knowledge. Also, in May 2012, through joint researchwith Kagome Co., Ltd., a business and capital alliance partner, we
confirmed that water-soluble components of tomatoes have theability to decompose alcohol in blood faster after drinking, andannounced these results at an academic conference.
In the soft drinks business, we are conducting research activities related to health and beauty drinks such as Asahi Juroku-cha
Plus, which is classified as a Food for Specified Health Uses
(FOSHU) and designed to suppress the body’s absorption of fat
after eating. Research is also focused on Fiber 7500 + Vitamin C,
a beverage rich in dietary fiber, and the health benefits of microorganisms such as Calpis lactic acid bacteria. Calpis Co., Ltd. hasconfirmed that its proprietary Calpis® Cultured Milk helps to promote blood circulation, in addition to lowering blood pressure andimproving vascular function. In October 2012, we announced at an
academic conference that Lactobacillus amylovorus, a strain of
Calpis lactic acid bacteria, helps to reduce body fat. In December
2012, we announced at another academic conference that cultured milk made from Lactobacillus helveticus, another strain of

Calpis lactic acid bacteria, has the benefits of improving memoryand concentration.
In the food business, we develop and provide a wide variety ofhealthcare-related foods including nutritionally balanced foods,
diet-support food and various supplements. For example, we provide a range of products such as powdered infant formula, as well as
food products for infants and toddlers, and for expectant and nursing mothers. Other examples include food products for the elderly,
which are designed to be soft and easy to consume, along with thenutrition support drink Nomu Eiyo Plus, which provides an easy way
to obtain essential nutrition. In July 2012, we announced at an academic conference the existence of a mechanism whereby creeping
bugleweed, acting in conjunction with glucosamine, helps to easejoint pain. Also, in March 2013 we announced at an academic conference that apple polyphenols have the power to suppress theonset of aging by acting as an anti-oxidant within the body. In thefood seasonings business, we confirmed that yeast extract derived
from yeast containing an abundant supply of amino acids and othernutrient has the effect of magnifying the taste of salt as a naturally
derived food seasoning that adds savoriness and smoothness. As aresult, yeast extract is being
increasingly used as a seasoning
for low-salt foods.
Through these and otherinitiatives, we will work to promote healthy living and theenrichment of society.

Annual Report 201247

GROUP MANAGEMENT(2) Initiatives for the Environment
Development of the World’s First Reverse Production
Process for Combined Sugar and Ethanol Production
The Research and Development Laboratories for Sustainable
Value Creation of Asahi Group Holdings, Ltd. and the Kyushu
Okinawa Agricultural Research Center of the National Agriculture
and Food Research Organization (NARO) have worked since 2002
to develop a species of sugarcane that has a higher yield per unit
area than existing species, and to develop an efficient production
process for sugar and ethanol from the new sugarcane species.
Last year, the researchers succeeded in developing the world’s
first reverse production process, which solves the problem of low
sugar yields associated with traditional processes. In traditional
processes, sugar is produced before ethanol. In the reverse production process, special yeasts are used to convert reducing
sugars into ethanol before producing sugar, because the reducing sugars inhibit the production of sugar. This method has madeit possible to ensure stable sugar yields.

Through this achievement, the Asahi Group has been commended highly for its technologies and commitment to tacklingfood and energy issues directly. Notably, this breakthrough won
the 22nd Grand Prize for the Global Environment Award. Goingforward, the Asahi Group plans to implement further technicalverification, with the aim of commercializing the technology
worldwide in 2015.

Fukushima Brewery has introduced
the reverse production process

COMBINED PROCESS FOR PRODUCING SUGAR AND ETHANOL
Conventional
process

Suc

Glc

Fru

Sugarcanejuice

High-biomass sugarcane (right)/
Conventional sugarcane (left)

Suc Sucrose

Suc

Fru Reducing sugars

ORDINARYFERMENTATION

Suga
Suga
g rs Suc

Reducing sugars contained insugarcane juice inhibit sucrose
crystallization and part ofthe sucrose is converted tomolasses.

Glc

Glc

Fru

Molasses

Reverseproduction
process

Sugarcane

Suc
Sugarcanejuice

SELECTIVEFERMENTATION

Glc

Fru

Reducing sugars which inhibit
sucrose crystallization areconverted into ethanol first.

Saccharomyces dairenensis

Conventional yeast

Ethanol

Sugars Suc

Suc
Sugarcane juice
after selective
fermentation

Ethanol

Suc
Molasses

Adjustment
possible
ORDINARYFERMENTATION

SugarsSuc

Ethanol
Conventional yeast

Inclusion in SRI Indexes
The Asahi Group has been included in several major Socially Responsible Investment(SRI) indexes and funds worldwide. SRI is an investment approach that uses valuation
criteria for investment decisions based on social perspectives, such as environmental
consideration and corporate citizenship, in addition to financial considerations.
As of January 2013, Asahi Group Holdings was included in global sustainablebenchmarks such as the Dow Jones Sustainability Asia Pacific Index and FTSE4Good
Global Index, as well as the Ethibel Excellence Investment Register investment universe and Morningstar Socially Responsible Investment Index in Japan.

48

Asahi Group Holdings, Ltd.

Dow Jones Sustainability Indexes were jointly
developed by Dow Jones & Company of the U.S.
and Sustainable Asset Management AG (currently
RobecoSAM). From among approximately 2,500 of
the world’s leading companies, CSR is evaluated interms of economic, environmental and social
criteria. Companies within the top 10% based on
this evaluation are included in the indexes.

(3) Initiatives for People and Society
Asahi Group Kids Project
The Asahi Group is engaged in the Kids Project, which gives
children who live apart from their biological parents more opportunities to come into contact with society. This is to ensure thatthe children master the social skills they will need to lead theirlives in the future. Launched in 1998, the origin of the project was
the fact that there was one Asahi Breweries employee who volunteered to help out at a children’s shelter. His assistance was recognized by the shelter, and the proposal for the program wasapproved by the company, leading to the official inception of theKids Project to support children’s shelters. In 1998, the first Kids
Project event was held. In this event, children were invited to aviewing of the Sumida River Fireworks Festival.
This year, the Kids Project entered its 15th year. Events areheld in various areas at least once a year for children in nine children’s shelters across Japan as well as for foster children. The
program plans a variety of activities, including visits to aquariums
and zoos, tide pool fishing, barbecues, kite crafting and dodgeball to name but a few. The events allow employees of the Asahi
Group and other companies and the children to spend quality
time together. One feature of the program is the “buddy rule,”
which pairs up a grown-up with a child and requires the pair tospend the whole day together. This is because the program recognizes the importance of allowing these children, who have very
little time to interact with adults, to spend the entire day with anadult who is totally dedicated to each child. Furthermore, allparticipants refer to each other by their “camp names” (nicknames), and various creative ideas have been put in place toenable every one to enjoy the day.
More than 130 Kids Project events have been held nationwide
to date. The number of participants has surpassed 7,000 people,
including children, staff members of shelters, and employees. The
circle of participants has expanded to the point where joint

The FTSE4Good Global Index is a stock index
developed by FTSE International Limited, established by The Financial Times Ltd. and London
Stock Exchange Group plc. FTSE International
surveys approximately 2,000 leading companies
from countries around the world based on social,environmental, and ethical perspectives, including
conformity with Supply Chain Labour Standards.
Based on this survey, FTSE evaluates the sustainability of each company, and selects companies
that satisfy its criteria for inclusion in the
FTSE4Good Global Index.

events are now held together with other companies.
More than 50% of the children admitted to children’s shelters inrecent years were taken in because of child abuse by their biological parents. In the Kids Project, each participating adult interacts
directly with the children and spends time with them. This aids inthe psychological care and healing of these children, who often
bear emotional scars. And to break the cycle of child abuse, theAsahi Group will continue to
implement and improve theprogram, to bring smilingfaces back to the children. The
happiness of the children isalso a highly motivating force
for employees.

KIDS PROJECT MAP
Chugoku KIDS (From 2008)

The first Kids Project eventin the Chugoku region washeld at the Greenpier
Setouchi leisure facility.
Kyushu KIDS (From 2000)

Celebrating the 10th
anniversary of the program in2009, 21 employees from the
Kyushu Regional Headquarters, Kyushu Branch and
Hakata Brewery participatedin the Kyushu KIDS event
held at the Fukuoka City
Zoological Park.

Hokkaido KIDS (From 1999)
Hokuriku KIDS
(From 2003)

Jointly held with Mitsui
Sumitomo Insurance Co.,
Ltd. since 2005

Employees marked the 10th
anniversary of the Hokkaido
KIDS program in 2009 bypresenting childcare shelterswith a commemorative
panel of activities over the
past decade.
Tohoku KIDS (From 2002)

Events in 2009 included
making soba (buckwheat
noodles), harvesting daikon(Japanese radish) andcollecting insects.
Shutoken KIDS (From 1998)

Kinki KIDS (From 2009)

Shikoku KIDS (From 2001)

In 2007, the event was heldat the New Reoma World
amusement park at therequest of the children.

The Ethibel Excellence Investment Register is aninvestment universe managed by Forum ETHIBEL,
an NPO headquartered in Belgium. Companies
that demonstrate superior performance from a
CSR perspective are included in the Ethibel
Excellence Investment Register.

The first Kinki KIDS event was a
two-day program with an overnightstay, featuring a hands-on learning
experience led by an instructor.
Centered on outdoor riveractivities, the program included alesson on how to catch sweetfish
with your bare hands.

The first event was aviewing of the Sumida River
Fireworks Festival from the
Headquarters Building in
Azumabashi.
Nagoya KIDS (Since 2008)

Events have been held at
the Port of Nagoya Public
Aquarium. The children
also enjoy tackling difficult
quiz questions prepared by
the staff.

The Morningstar Socially Responsible Investment
index is Japan’s first socially responsible shareindex. Morningstar Japan K.K. selects for inclusionin the index 150 publicly listed Japanese companies that have been evaluated as possessing
outstanding social credentials.

Annual Report 201249

GROUP MANAGEMENT

Human Resource Development at the Asahi GroupThe Asahi Group will fully support those who strive todevelop themselves together with encouraging independence for each individual as a professional, based on thegroup consensus that people are the most important organizational resource and the development of our employees

directly relates to the development of our Asahi Group.
Furthermore, the key HR principles for the Asahi Group will
be used as a platform to establish an appropriate HR management system tailored to each country, region and business
unit within the Asahi Group that will reflect each country/
region’s laws, history, culture and customs.

KEY HR PRINCIPLES
1. To respect every Asahi Group employee’s character, individuality and rights– To respect diversified values without unfair discrimination pertaining to employee’s race, nationality, gender and so on

2. Asahi Group will fully support those who are challengers and innovators—
the ultimate source of our company’s development is in the development of our employees
Support our employees’ personal development via the implementation of the cycle below while offering a fair opportunity to all
employees across the Asahi Group– Conduct a fair and clear performance management process; (Evaluation)– together with appropriate support for personal development based on one’s evaluation; (Development)– while placing employees in the right position that will allow them to use their full capabilities; (Application)– rewarding those who continue to challenge and innovate (Rewards)

3. To support a healthy work-life balance depending on each employee’s various individual values and life plan
– To respect various work and private life balance styles and make reasonable efforts to support employees so that they canachieve their planned work and life balance—not only in their daily work life but also throughout all aspects of their lives

Implementing the Global Challengers Program
Since 2010, the Asahi Group has implemented the “Global Challengers Program,” an HR development program designed tofoster human resources capable of flourishing in business operations on a global stage. In 2012, program participants conductedbusiness activities in overseas operating companies and obtained

wide-ranging hands-on experience, aiming to swiftly master thebasic abilities for doing business abroad and contribute to building their future careers. It was a top priority for us to foster humanresources that can take charge of key job positions when they aresent overseas, particularly in the context of the Asahi Groupdeveloping business overseas.

Opinions of Global Challengers

50

Ami Saito Asahi Soft Drinks Co., Ltd.

Naoshi Takeuchi Asahi Breweries, Ltd.

Currently, I am mainly engaged in business related to market data
analysis at Permanis Sdn. Bhd. of Malaysia. There are very many differences here in Malaysia compared to Japan or Asahi as regards markets,
culture in general, corporate culture, and so forth. However, I go about
my daily work with the attitude that some of these differences between
Malaysia and Asahi can also be opportunities to learn and adopt better
practices from one another.

I am an assistant brand manager for Woodstock and Cody’s, which arepivotal brands in the marketing sector of Independent Liquor (NZ)
Limited. As such, I am in effect working as a line manager. At our workplace we have a strong emphasis on innovation and speed, and frequently a new product moves from being an idea to appearing in themarket in less than three months. I myself have been learning to act
internationally and have accumulated a lot of experience by virtue ofbeing in charge of sales promotion activities here, directing sponsored
events and suchlike. Going forward, I will doubtless experience more,and I am thinking daily how to proactively and successively rise tochallenges and learn from them.

Asahi Group Holdings, Ltd.

FINANCIAL SECTION
52

Eleven-Year Summary

54

Management’s Discussion and Analysis

66

Consolidated Balance Sheets

68

Consolidated Statements of Income

69

Consolidated Statements of Comprehensive Income

70

Consolidated Statements of Changes in Net Assets

71

Consolidated Statements of Cash Flows72

Notes to Consolidated Financial Statements

98

Independent Auditor’s Report

Annual Report 2012

51

ELEVEN-YEAR SUMMARY
Years ended December 31

Millions of yen
2012

2011

2010

2009

2008

For the year:
Net sales¥1,579,077¥1,462,736¥1,489,461¥1,472,469¥1,462,748

Operating income

108,437

107,190

95,34982,777

94,520

Income before income taxes
and minority interests

99,84090,422

92,46588,07882,938Net income

57,18355,09353,08047,64545,014

Capital investments*

50,17040,22536,73862,37636,135

Depreciation*2

59,366

58,13559,71058,37247,353

2<Segment information>*3
Sales:
Alcohol beverages

922,250

921,657

966,331

958,156

995,703

Soft drinks

370,836

324,782306,719355,162

316,737

Food

101,627

98,033

95,44092,40079,203

Overseas

157,932

94,22097,674——

Others26,432

24,04423,29766,751

71,105

113,306

101,025

87,25078,87990,762

7,379

11,389

8,330

695

616
1,944

Operating income (loss):
Alcohol beverages
Soft drinks
Food

3,669

4,158

3,594

2,745

Overseas(3,873)(2,913)(5,138)——Others

607

760

1,145

889

1,006

Financial position:
Total assets

1,732,188

1,529,908

1,405,358

1,433,653

1,299,059

Interest-bearing debt

456,235

390,092

311,423

391,876

302,259

Total net assets*4

726,879

643,799612,670

577,703534,628

Yen

Per share data:
Net income¥

122.75¥118.36¥114.10¥102.49¥96.31

Diluted net income

122.67118.28114.00102.42

96.14

Cash dividends applicable to the year

28.00

25.00

23.00

21.00

20.00

1,553.35

1,378.19

1,315.51

1,233.25

1,122.13

Total net assets%

Ratios:
ROE

8.4

8.8

9.0

8.7

8.7

Operating income ratio

6.9

7.3

6.4

5.6

6.5

Operating income ratio(exclusive of alcohol tax)

9.4

10.2

9.0

8.1

9.6

Equity ratio

41.8

41.9

43.6

40.0

40.2

*1 U.S. dollar amounts are translated from Japanese yen, for convenience only, at the rate of ¥86.58 to U.S.$1, the exchange rate prevailing at December 31, 2012.
*2 Includes effects accompanying changes in accounting standards for lease transactions and trademarks of an Australian subsidiary at time of acquisition.
*3 Due to a reorganization of business segments in 2011, figures for 2010 have also been restated in line with the new business segments.
*4 Total net assets through fiscal 2005 represents total shareholders’ equity under the former accounting standards, while after fiscal 2006 they were computed in accordance with new
accounting standards.

52

Asahi Group Holdings, Ltd.

Thousands of
U.S. dollars*1

Millions of yen
2007

2006

2005

2004

2003

2002

2012

¥1,464,072¥1,446,385¥1,430,027¥1,444,226¥1,400,302¥1,375,267$18,238,358

86,95688,71390,249101,273

78,984

69,341

1,252,449

81,741

81,16575,72558,36948,681

32,483

1,153,154

44,79844,77539,87030,59623,21014,754660,464

44,48136,89443,94140,13438,184

41,257579,464

45,25048,79350,02851,33953,10151,546685,678

1,012,256

1,007,558

1,025,447

1,078,931

1,067,136

1,057,029

10,651,998

299,663

283,121267,003

217,380

185,738

173,773

4,283,160

67,08953,79225,28622,163

21,547

14,232

1,173,793

—

—

—

—

—

—

1,824,117

85,064

101,914112,291

125,752

125,881130,233

305,290

79,28578,18678,08990,87272,452

69,145

1,308,686

4,593

7,746

8,632

8,114

2,645

(4,086)85,227

1,344

445

805

(599)

169

8

42,377

—

—

—

—

—

—

(44,733)

1,724

2,173

2,559

2,935

3,399

3,855

7,011

1,324,392

1,288,501

1,218,227

1,250,818

1,244,410

1,294,738

20,006,791

332,458

290,101

289,202

303,089

336,285

402,206

5,269,508

529,782509,775

454,892

417,828

398,153

387,5398,395,460

Yen

¥

94.94

¥

94.02

¥

82.22

U.S. dollars

¥

62.52

¥

46.80

¥

28.90

$

1.42

94.74

93.85

80.98

60.64

44.58

27.46

1.42

19.00

19.00

17.00

15.00

13.00

13.00

0.32

1,089.33

1,012.77

951.12860.66810.19770.86

17.94

%

9.0

9.6

9.1

7.5

5.9

3.8

5.9

6.1

6.3

7.0

5.6

5.0

9.0

9.4

9.8

11.4

9.2

8.3

38.9

37.0

37.3

33.4

32.0

29.9

Annual Report 2012

53

MANAGEMENT’S DISCUSSION AND ANALYSIS

Overview

Net Sales

Market Trends
In the fiscal year ended December 31, 2012, the global economy
remained mired in a slowdown due mainly to concerns of a decline
in the economic growth rate of emerging countries centered on
China and India, in addition to Europe’s sovereign debt problem.
Japanese economic conditions were weak despite the strong
reconstruction demand following the Great East Japan Earthquake, largely due to the impact of weak exports caused by theslowdown of overseas economies.
Against this backdrop, the Asahi Group reinforced its business base in Japan during fiscal 2012, the last year of the MediumTerm Management Plan 2012. Measures included improving the
profitability of each of its businesses and strengthening manufacturing skills based on the principles of safety and reliability. The
Group also endeavored to enhance the corporate value of theGroup as a whole. The Group worked to build a business portfoliothat can achieve sustainable growth and to capture Group-wide
synergies, including synergies with newly acquired business bases.

In fiscal 2012, net sales for the Asahi Group increased ¥116.3 billion, or 8.0% year on year, to ¥1,579.1 billion.
Sales in the alcohol beverages business increased ¥0.6 billion,
or 0.1% year on year, to ¥922.3 billion, largely reflecting higher
sales for beer-type beverages and beer-taste beverages. In thesoft drinks business, sales rose ¥46.1 billion, or 14.2%, to ¥370.8
billion, while sales in the food business increased ¥3.6 billion, or
3.7%, to ¥101.6 billion. In the overseas business, sales increased¥63.7 billion, or 67.6%, year on year, to ¥157.9 billion.
In sales composition by segment, the alcohol beverages
business’s share decreased from 63.0% in the previous fiscal year
to 58.4%, while the soft drinks business’s share increased from
22.2% to 23.5%. The food business’s share, meanwhile, decreased
from 6.7% to 6.4%, and the overseas business’s share increased
from 6.4% to 10.0%.

NET SALES BY SEGMENT(¥ billion)
1,600

PRODUCT SHARE IN THE BEER-TYPE BEVERAGESMARKET BY GENRE

1,200

355.2

23.3
97.7
95.4
306.7

24.0
94.2
98.0
324.8

26.4
157.9
101.6
370.8

958.2

966.3

921.7

922.3

71.1
79.2

66.8
92.4

316.7

995.7

(%)
100

23.7

32.8

29.3

34.7

35.4
800

80
23.3
20.1

17.0

15.4

14.3

50.2

50.0

50.3

60
53.1

50.6

40

400

0

2008

2009

2010

2011

2012

■ Alcohol beverages* ■ Soft drinks* ■ Food* ■ Overseas ■ Others

20* Overseas business results are included in other segments prior to 2011
0

2008

2009

2010

■ Beer ■ Happoshu ■ New genre* Based on taxable shipments

54

Asahi Group Holdings, Ltd.

2011

2012

Operating Income

Income Taxes

For the consolidated fiscal year, operating income increased ¥1.2
billion, or 1.2%, year on year, to ¥108.4 billion. This result was
mainly due to significant growth in profit from beer-taste beverages and improvement of overall fixed costs in the alcohol beverages business and improved profitability in China in the overseas
business. Also, the Group saw newly consolidated subsidiaries
contribute to profits. These factors were partly offset by lower
operating income in the soft drinks business mostly due to higher
sales expenses, along with increased amortization of goodwill inline with acquisitions in Japan and overseas.

The actual effective tax rate, including the corporate tax for fiscal
2012, increased from 38.6% in the previous fiscal year to 42.4%.
The difference between the actual effective tax rate of 42.4% andthe statutory tax rate of 40.4% was primarily caused by the positiveeffects of 4.8% in amortization of goodwill (including impairment
loss), and an adjustment of goodwill of 3.2%, and the negative
effects of 4.3 % in loss from investments in equity-method affiliates
and 3.3 % in a gain on change in equity. The major factor behind
the increase in the actual effective tax rate was the 6.5% increase invaluation reserves despite the 3.3% decrease in the gain onchange in equity.

Net Income

OPERATING INCOME/OPERATING INCOME RATIO(¥ billion)

(%)

120
107.2

108.4

15

95.3

94.5

Net income rose 3.8%, or ¥2.1 billion year on year, to ¥57.2 billion.
The net income ratio was 3.6%, down 0.2 of a percentage pointfrom the previous fiscal year. ROE was down 0.4 of a percentage
point year on year, at 8.4%. Net income per share (diluted)
increased from ¥118.28 to ¥122.67.

82.8
80

10

6.5
6.4

7.3

5.6

40

NET INCOME/ROE

6.9
5(¥ billion)

(%)

60
55.1

53.1

0

2008

2009

■ Operating income (left scale)

2010

2011

2012

40

8.7

8.7
■

15

47.6

45.0

0

57.2

9.0

Operating income ratio (right scale)

10
8.8

8.4

20

5

Other Income and Expenses
Other loss of ¥8.6 billion was recorded, an ¥8.2 billion improvement on the loss recorded in the previous year. This improvement
was largely attributed to recording a gain on change in equity of¥8.1 billion and the absence of the earthquake-related expensesof ¥17.9 billion associated with the Great East Japan Earthquake
from the previous year. This was despite recording a loss on
impairment of fixed assets of ¥3.1 billion and an adjustment of
goodwill of ¥8.0 billion.

0

2008

2009

■ Net income (left scale)

■

2010

2011

2012

0

ROE (right scale)

Annual Report 2012

55

Review of Operations by Segment

Dividends
Under the Medium-Term Management Plan 2012, which ended in
the fiscal year under review, the Company placed priority on
returning profits to shareholders. The Company adhered to a basic
policy of implementing returns to shareholders taking businessperformance and a range of other factors into account, while
seeking to enhance the profitability and strengthen the financial
position of the Group. Furthermore, we strive to make consistentand stable dividend payments by generally referring to a benchmark of at least 20% for the consolidated dividend payout ratio.
Based on this policy, we paid an interim dividend of ¥14 and a
year-end dividend of ¥14 per share, for a full-year dividend of ¥28.0
per share, ¥3 higher than in the previous fiscal year.
Under the Medium-Term Management Plan 2015, which
begins in fiscal 2013, we will give top priority to using free cash
flow generated by the Group to fund investments in growth,
including expansion in our business networks worldwide. In termsof shareholder returns, given the Group’s improved surplus investment funding position due to a stronger cash flow generation
capacity and an improved debt-equity ratio, the Group aims tosteadily increase dividends, targeting a dividend payout ratio ofaround 30% (25%–30%) by 2015. Efforts will also be made toenhance total shareholder returns by targeting a total return ratio,
including share buybacks, of 50% or higher. Under this policy, infiscal 2013, ending December 31, 2013, we plan to pay an interim
dividend of ¥21.5 and a year-end dividend of ¥21.5 per share, for afull-year dividend of ¥43.0 per share. In addition, we plan to buyback ¥30 billion of our own shares.

DIVIDENDS/DIVIDEND PAYOUT RATIO
(¥)

(%)
30

50

28
25

40

23
20

21

20

30
20.8

20.5

20.2

22.8

21.1

20
10
10

0

2008

■ Dividends (left scale)

56

Asahi Group Holdings, Ltd.

2009
■

2010

2011

2012

Dividend payout ratio (right scale)0

SALES AND OPERATING INCOME BY SEGMENT(2012/2011)
Millions of yen
2012

2011

PercentchangeSales
Alcohol beverages
Soft drinks
Food
Overseas
Others¥922,250
370,836
101,627
157,932
26,432¥921,657
324,782
98,033
94,22024,044

+0.1
+14.2
+3.7
+67.6
+9.9

Operating income
Alcohol beverages
Soft drinks
Food
Overseas
Others113,305
7,379
3,669(3,873)607

101,025
11,3894,158(2,913)
760

+12.2
–35.2
–11.8
—
–20.3

Alcohol Beverages Business(Related information on page 18)
Asahi Breweries, Ltd.
Asahi Breweries, Ltd., the core operating company in the alcohol
beverages business, continued to face a severe market climate.
Although consumer psychology, including consumer sentiment,
has started to improve, there has been a decline in alcohol beverage consumption due to Japan’s aging society with fewer children,
low-price preferences among consumers amid heightened belttightening, and a tendency to stay at home reflecting changes inpeople’s work-life balance. In this climate, Asahi Breweries worked
to leverage customer trust and cultivate a sense of familiarity bymaking products with quality as the top priority, aiming to be a“market innovation company” that provides customers with alcohol beverages with a new value as a communication tool thatdeepens the bonds between people. The key theme of the company’s activities was “Re-Energize.” Designed to encapsulate thevalue that customers are currently seeking from alcohol beverages,
the “Re-Energize” theme has three components: “Reality,” meaning reliability and certainty; “Relation,” meaning inter-personal
relationships; and “Refresh,” meaning a source of vitality andrefreshment. Through these activities, Asahi Breweries endeavored
to “re-energize” all of Japan.

Consequently, overall sales in the alcohol beverages segment,
comprised of Asahi Breweries, Ltd. and other operating companies,
rose 0.1% year on year, to ¥922.3 billion, mainly due to higher sales
volume of beer and beer-taste beverages. Operating income wasup ¥12.3 billion, or 12.2% year on year, to ¥113.3 billion. The main
contributing factors were a large increase in sales volume of beertaste beverages, reduced fixed costs centered on depreciation,
improved production efficiency owing to the integration of the
Nishinomiya Brewery’s production functions into the Suita Brewery,and efforts to curb advertising and sales promotion expenses byconcentrating marketing investment on mainstay brands.

Beer-type beverages
Taxable shipment volume for domestic beer-type beverages
from Asahi Breweries, Ltd. declined 1.8% year on year to 163.2
million cases.
As a result, sales of beer-type beverages declined ¥8.8 billion,
or 1.1% from the previous year, to ¥776.4 billion.
The company’s share of the overall domestic beer-type
beverages market was 37.5%, down 0.4 of a percentage point
year on year.

BEER-TYPE BEVERAGES BY SHARE (2012)
0.8%
10.3%
13.2%

BEER
25.1%

25.0%

HAPPOSHU
70.7%

0.9%
25.0%

NEW GENRE

In the beer category, we launched new value proposition products
such as Asahi Super Dry –Dry Black– in April. We also took action
to develop the Asahi Super Dry “Extra cold” (–2°C to 0°C) concept
by expanding the number of sites generating information. As partof aggressive marketing efforts to reinforce the brand power ofAsahi Super Dry, we also continued to expand the limited-time
opening of the “Asahi Super Dry Extra Cold Bar” locations to four
cities, including Ginza in Tokyo . The result was an annual sales
volume of over 100 million cases*1 for a 24th consecutive year, with
our share increasing 0.1 of a percentage point year on year to50.6%*2 of Japan’s beer market. Accordingly, beer sales volume
increased 0.2% year on year to 111.0 million cases, with beer sales
increasing ¥2.0 billion, or 0.3%, to ¥595.2 billion.

HapposhuIn the happoshu category, amid the significantly contracting
market, we made quality improvements to and vigorously enacted
sales promotion activities for Asahi Style Free, our pioneering
product in the “zero carbohydrate”*3 category. Consequently,
happoshu sales volume decreased 6.2% year on year to 15.5
million cases and sales decreased ¥3.8 billion, or 5.9%, to ¥59.6
billion. However, Asahi Breweries, Ltd.’s share of the domestic
happoshu market increased 0.5 of a percentage point to 25.0%*2.

New genre beverages
50.6%

1.3%
0.8%
2.3%

Beer

24.0%

In new genre beverages, we enhanced and nurtured our core
brand Clear Asahi and moved to improve the quality of Asahi Off
and Asahi Blue Label. Despite these initiatives, sales volume
declined 5.4% from the previous year to 36.8 million cases andAsahi Breweries, Ltd.’s share of the domestic market for new genre
beverages declined 1.7 percentage points to 24.0%*2. Sales in thiscategory decreased ¥7.0 billion, or 5.5%, to ¥121.6 billion.
*1 One case is equivalent to 20 large bottles (663 ml each).
*2 Beer market share based on statistical data on taxable shipment
volume from Japan’s top five beer companies.
*3 Based on nutrition labeling standards, sugar content of less than 0.5 g(per 100 ml) is indicated as “zero carbohydrate.”

13.7%
36.4%

■ Asahi Breweries ■ Company A ■ Company B ■ Company C■ Company D

Annual Report 201257

Alcohol beverages other than beer-type beverages
Overall sales of alcohol beverages other than beer-type beverages—shochu, RTD beverages, whisky and spirits, wine and beertaste beverages—increased ¥9.2 billion, or 8.0%, to ¥123.9 billion.
The increase in sales largely reflected successful efforts to heighten
the market presence of mainstay brands in each category.

SALES BY CATEGORY(BEER, HAPPOSHU, NEW GENRE, AND OTHERS)(¥ Billion)
1,200

129.7
900

ShochuFor shochu, we worked to expand the user base of the Kanoka
brand further by renewing the packaging of Kanoka and increasing
the settings in which shochu is consumed through the launch of
the new product Kanoka Shochu Highball. Despite these efforts,
however, sales declined 19.0% year on year to ¥32.7 billion.

Ready-to-drink (RTD) beverages
In ready-to-drink (RTD) beverages, we sought to further cultivate
the brands Asahi Cocktail Partner and Asahi Slat. In addition tothese, Asahi Chu-hi Kajitsu-no-shunkan Rich Tangerine Taste, abrand made from Pom Juice, a beverage produced by Ehime
Beverage Inc., was revamped in September 2012. As a result, salesof RTD beverages increased 2.1% year on year to ¥28.8 billion.

Whisky and Spirits
In whisky and spirits, Taketsuru Pure Malt 17 Years was named“World’s Best Blended Malt Whisky” at the World Whiskies
Awards* in April 2012. This marked the fifth time and the fourthconsecutive year that the Taketsuru brand has won this award.
Although sales promotions such as TV commercials and consumer
sales campaigns were implemented for the core Black Nikka Clear
brand, sales of this brand declined slightly. As a result, sales
declined 3.6% from the previous year to ¥29.8 billion.

Wine
In wine, our domestic wine brands performed well, improving overthe previous fiscal year. This was because a new product of Ste. Neige
Rela, a wine offering an easy-to-drink taste, a brand launched in April
2011, was added to the lineup: a small volume of the wine in a 320 ml
bottle. For imported wines, such daily wine products as Chileanwines Caliterra and Santa Helena, and Italian wine Gancia sold well.
As a result, sales increased 8.5% to ¥11.5 billion.

58

Asahi Group Holdings, Ltd.

77.5

123.1
101.6

110.3
600

685.7

128.4
120.6

96.2
646.5

114.7

123.9

128.6

121.6

63.3

59.6
595.2

71.5
620.4

593.2

300

0

2008

2009

2010

2011

2012

■ Beer ■ Happoshu ■ New genre ■ Others

Other alcohol beverages segment
In the other alcohol beverages segment, in February 2012, Asahi
Breweries launched Asahi Dry Zero, a low-calorie beer-taste beverage featuring “a dry finish and clear aftertaste.” Commended forthis feature, Asahi Dry Zero achieved annual sales volume of 5.02
million cases, roughly 70% higher than the initial target of 3.00
million cases.
We also revamped the packaging of Asahi Double Zero
Cocktail, a cocktail-taste beverage, and renamed the productAsahi Zero Kaku, a catchier name that is easier to remember.
Meanwhile, the sales volume of beer-taste beverages increased
sharply in the absence of the impact of the Great East Japan
Earthquake. As a result, sales of the other alcohol beverages segment increased substantially by 352.4% to ¥21.1 billion.
* An international contest focused exclusively on whisky, chiefly sponsored by U.K.-based Whisky Magazine.

Overseas Alcohol Beverages BusinessIn terms of sales of Asahi brand products overseas, in South Korea,
we aggressively developed our local sales promotion activities bylaunching Asahi Super Dry –Dry Black– in July 2012 for the firsttime overseas, among other measures. This helped us to maintainour position as the leading imported beer brand by sales volume
for a second consecutive year. This and other actions enhanced
our presence, especially in markets across Asia and Oceania.

Soft Drinks Business (Related information on page 24)

Tea-based drinks

In the domestic soft drinks business, core operating company
Asahi Soft Drinks Co., Ltd. took measures for realizing dramatic
growth based on fundamental strategies for growth and structuralreform. Calpis Co., Ltd., which became a newly consolidated subsidiary in October 2012, also contributed to business results. As aresult, sales in the soft drinks business, including Asahi Soft Drinks
Co., Ltd., rose 14.2% year on year to ¥370.8 billion. Operating
income, meanwhile, decreased 35.2% to ¥7.4 billion, due to theincrease in advertising and sales promotion expenses at Asahi Soft
Drinks Co., Ltd.

In our core Asahi Juroku-cha brand, sales volume topped 20
million cases for the first time in 12 years, increasing for a third
consecutive year, mainly spurred by aggressive brand investment.
As a result, annual sales volume for the Asahi Juroku-cha brandrose 9.2% year on year to 20.1 million cases. Consequently, annual
sales volume for the entire tea-based drinks category increased
14.6% year on year, to 41.2 million cases.

Asahi Soft Drinks Co., Ltd.
Asahi Soft Drinks Co., Ltd. aggressively worked to strengthen andcultivate brands centered on Asahi Oishii Mizu, a new mineralwater brand unveiled in June 2012, in addition to mainstay brands
Mitsuya Cider, WONDA and Asahi Juroku-cha. We also pursued
initiatives for revitalizing our long-selling brands including Bireley’sand Wilkinson. As a result, overall sales volume at Asahi Soft
Drinks Co., Ltd. increased at a faster pace than the market growthrate, reaching an all-time high for a 10th consecutive year.
In the course of its endeavors to achieve optimum production
and logistics systems to become the industry leader in terms of
cost competitiveness, Asahi Soft Drinks renovated the productionlines of its Mt. Fuji Factory in anticipation of increasing sales in themineral water market, which is expected to grow.

Fruit and vegetable drinks and other soft drinks
In fruit and vegetable drinks, we focused on revitalizing longselling brands, including Bireley’s and Wilkinson. Annual sales
volume for the fruit and vegetable drinks category increased 20.8%
overall year on year, to 16.2 million cases.
In other soft drinks, total sales volume was up 11.5% year on
year to 46.4 million cases. Growth was primarily due to contributions from the mineral water category, namely the Asahi Oishii
Mizu brand, which was newly launched by revamping the mineralwater product lineup in June 2012. Sales volume of the Asahi
Oishii Mizu brand rose 37.0% year on year to 19.0 million cases.

SALES BY CATEGORY(CARBONATED BEVERAGES, COFFEE, TEA-BASED DRINKS,FRUIT AND VEGETABLE DRINKS AND OTHER SOFT DRINKS)(Million cases)
200

46.4

Carbonated beverages
For our mainstay Mitsuya Cider brand, sales volume increased year
on year mainly due to aggressive efforts to strengthen and cultivate the brand. As a result, annual sales volume of Mitsuya Cider
brand beverages increased 7.0% year on year to 39.1 million cases,
topping 30 million cases for another year. Consequently, the total
sales volume for carbonated beverages increased 12.3% year on
year to 48.7 million cases, due in large part to sales remaining
strong in the Wilkinson brand.

CoffeeIn our core WONDA brand, sales volume surpassed 40 million
cases for the first time at Asahi Soft Drinks Co., Ltd. thanks toaggressive sales promotion activities and campaigns. Overall
coffee sales volume was up 4.8% year on year to 40.4 million cases.

41.6
32.8

150
27.4

26.3

48.7
43.2

43.4

36.1

41.3

11.2
35.9

11.1
36.9

11.7
35.7

13.4
38.6

16.2
40.4

34.7

31.2

35.6

36.0

41.2

100

50

0

2008

2009

2010

2011

2012

■ Tea-based drinks ■ Coffee ■ Fruit and vegetable drinks■ Carbonated beverages ■ Other soft drinks

Annual Report 201259

Food Business (Related information on page 30)
In the food business, Asahi Food & Healthcare Co., Ltd. enjoyedsolid sales of its mainstay products, while Amano Jitsugyo Co., Ltd.
saw its mass distribution sales business expand. Mainly as a resultof the foregoing, sales in the food business climbed 3.7% year on
year to ¥101.6 billion. Operating income declined 11.7% year on
year to ¥3.7 billion, due primarily to an increase in advertising andsales promotion expenses at Wakodo Co., Ltd.

activities relating to the products. Amano Jitsugyo also aggressively promoted sales in its direct marketing business to achieve acompany-wide increase in sales from the previous year.
In terms of earnings, Amano Jitsugyo made efforts toenhance its freeze-dried food production equipment and reduce
costs by improving efficiency through such means as automating
certain packaging processes.

Overseas Business (Related information on page 34)
Asahi Food & Healthcare Co., Ltd.
Asahi Food & Healthcare Co., Ltd. endeavored to expand sales
primarily through the cultivation of new sales channels, in addition
to further strengthening its core brands along with developing andlaunching new products.
Asahi Food & Healthcare saw an increase in sales from theprevious year as a result of aggressive advertising for MINTIA
breath mint tablets and Dear-Natura brand supplements, androlling out new products or relaunching modified versions of existing products under these brands, as well as sales promotions for
products such as BALANCEUP nutritionally balanced snack bars.
In terms of earnings, Asahi Food & Healthcare also worked
not only on reducing advertising and sales promotion expenses
mainly through the effective use of advertisements, but also on
reducing inventories through appropriate stock management.

Oceania Operations

Wakodo Co., Ltd. followed a management policy of boldly advancing to the next stage, taking steps to enhance its presence in themarkets for baby food and powdered infant formula, while working
to strengthen its profit base by winning new customers forcommercial-use products.
In its mainstay baby food segment, Wakodo expanded the
product lineup of Goo-Goo Kitchen and renewed Eiyo Marche
products. The business for senior citizens is expected to grow into acore business. Here, the company reinforced its product lineup andsales structure for retort pouch foods for nursing care. However,overall sales decreased from the previous year, due in part to adecrease in the contract manufacture of commercial-use products.
At the same time, Wakodo worked to improve its profitability
by promoting the reduction of dairy product and other raw material costs and production costs.

In Oceania, we built a growth base for an integrated beverages
business combining the alcohol beverages and soft drinks businesses, including by enhancing each company’s core brands andcreating cost synergies, centered on Asahi Holdings (Australia) Pty
Ltd (AHA), which is a regional headquarters to manage the companies in the region.
In the soft drinks business, the establishment of an efficient
structure through the integration of the companies in the region,
as well as the launch of a new cola beverage by Schweppes
Australia Limited Limited, resulted in an increase in soft drink sales.
In the alcohol beverages business, operating companies endeavored to strengthen their presence in growing sectors. Measures
included commencing sales of Asahi Super Dry, which has provenpopular in Oceania as a premium beer, in addition to enhancing
product portfolios by renewing mainstay RTD beverage brands
and launching new products.
Furthermore, the operating companies sought to strengthen
their profit bases primarily through the consolidation of their backoffice sections, establishment of optimum production systems formineral water and other products in the soft drinks business, andimprove the efficiency of the joint procurement of raw materials
and the procurement of indirect materials.

Amano Jitsugyo Co., Ltd.

China Operations

Amano Jitsugyo Co., Ltd. sought to expand its business andimprove profitability through expansion of sales channels, development of products that meet customer needs, and enhancementof production equipment.
In the mass distribution sales business, there was a considerable increase in the number of mass-retail stores that carry Amano
Jitsugyo’s products owing to the launch of set products of freezedried miso soup, Genen type Omiso-shiru (reduced sodium misosoup), Freeze Dried Curry recommended by Yukio Hattori andother products, along with enhancement of sales and marketing

In China, efforts were made to improve profitability and enhancequality by expanding sales of Asahi brand products and strengthening the local production system.
Despite a boost in sales activities targeting Japanese restaurants and convenience stores, along with an expansion of the sales
area covered by Yantai Beer Tsingtao Asahi Co., Ltd., the China
business segment saw a decrease in overall sales from the previous year. This was due mainly to the exclusion of the net sales ofHangzhou Xihu Beer Asahi Co., Ltd. and Zhejiang Xihu Beer Asahi
Co., Ltd., whose entire equity interests had been transferred in the

Wakodo Co., Ltd.

60

In the overseas business, sales increased 67.6% to ¥157.9 billion
mainly due to additional sales of the newly consolidated subsidiaries in Oceania and Malaysia. Despite the improved profitabilityof the Chinese business and the positive contributions of the
newly consolidated companies, the operating loss worsened by¥1.0 billion year on year to ¥3.9 billion. This was due to increased
amortization of goodwill and other items of the newly consolidated subsidiaries.

Asahi Group Holdings, Ltd.

previous year, from the scope of consolidation.
Meanwhile, the Group endeavored to improve profitability byconcentrating the production of Asahi brand products for salewithin China in Beijing Beer Asahi Co., Ltd.

Southeast Asia Operations
In Southeast Asia, efforts were made to expand the business basecentered on Permanis Sdn. Bhd., in addition to improving its position in the Malaysian beverage market.
Permanis Sdn. Bhd. made aggressive marketing investments
mainly in its core brands, while endeavoring to increase profitability
by improving the efficiency of raw materials procurement throughreduction of the unit prices primarily of sugar and aluminum cans.
Additionally, the Group established beverage joint ventureswith PT Indofood CBP Sukses Makmur Tbk, the largest food products company in Indonesia, in order to establish a base in theIndonesian beverage market, which is expected to continue togrow going forward.

Other Businesses
In other businesses, sales increased by 9.9% year on year to ¥26.4
billion, thanks to expansion of the cargo transportation business.
However, operating income decreased by 20.1% year on year to¥0.6 billion, due to a continuous increase in costs associated withdeterioration of the supply-demand balance for vehicles in the
cargo transportation industry.

Outlook for Fiscal 2013
In fiscal 2013, we will work to concentrate management resources
on bolstering core product brands in each business. At the sametime, we will further enhance the profitability of the Group as awhole by continuing to strengthen our cost competitiveness.
Furthermore, fiscal 2013 is the first year of the Medium-Term
Management Plan 2015. Accordingly, we aim to enhance ourcorporate value by promoting value and network management.
Under this management approach, we will endeavor to achieve
steady long-term growth by driving further expansion in our networks worldwide. In addition, we will concentrate on the strengths
we have nurtured and developed to date, such as our brands,
technologies and cost competitiveness, as we harness thesestrengths to create new value and achieve innovation. We will
strive to increase capital efficiency mainly by enhancing shareholder returns, while giving top priority to sales and earnings
growth. Through these measures, the entire Group will work toattain sustained improvement in its targeted indicators of returnon equity (ROE) and earnings per share (EPS).
Consequently, we are forecasting net sales of ¥1,720.0 billion(up 8.9% year on year), operating income of ¥118.0 billion (up8.8%) and net income of ¥65.5 billion (up 14.5%) for the fiscal year
ending December 31, 2013.

Liquidity and Capital Resources
Asahi Group Holdings, Ltd. gains its capital resources principallyfrom cash flows generated by operating activities, loans fromfinancial institutions, and the issuance of company bonds, and as amanagement policy, regards the reduction of interest-bearing
debt as a priority issue. However, we make flexible use of our
financial liabilities according to the need for capital resources toinvest. Potential investments include capital expenditure toenhance the management base and increase efficiency, and strategic investments such as M&As. When financing needs arise, we
respond with due consideration to procurement methods that will
result in the lowest possible interest cost. Daily financing needs
are, in principle, met through short-term loans and the issuance ofcommercial paper.
Asahi Group Holdings, Ltd. and its consolidated subsidiaries
have also introduced a cash management service (or CMS) thatchannels excess funds of each Group company to Asahi Group
Holdings, Ltd., where these funds are centrally managed. This
service enables the Group to take steps aimed at both improving
capital efficiency and minimizing financing costs.
The outstanding balance of interest-bearing debt amounted
to ¥456.2 billion as of the end of 2012, up ¥66.1 billion from theprevious fiscal year-end. This balance primarily reflected funds
procured for business investment in 2012. The outstanding balance was below one-third of its all-time peak in fiscal 1992. In
addition, during the year under review the debt-equity ratio was
0.6, compared to 4.9 in fiscal 1992.
The Asahi Group has earned an A+ rating from Rating andInvestment Information, Inc., and an AA– rating from the Japan
Credit Rating Agency, Ltd.

INTEREST-BEARING DEBT AND D/E RATIO(¥ billion)(Times)

500

456.2
391.9

400

1.2

390.1
0.9

300

311.4

302.3
0.68

0.63

0.58

0.6

0.61

200

0.51
0.3

100

0

2008

2009

■ Interest-bearing debt (left scale)

2010
■

2011

2012

0

D/E ratio (right scale)

Annual Report 201261

Capital Investments

Assets, Liabilities and Net Assets

Capital investments for the fiscal year ended December 31, 2012,
increased ¥9.9 billion from ¥40.2 billion in the previous fiscal year
to ¥50.2 billion. This increase resulted primarily from several
sources, among them investments in profit structure reform in thealcohol beverages business centered on production system development in Japan’s Kansai region and ongoing facilities investment,
including construction to upgrade existing facilities and energyefficiency measures. Other factors included strategic facilities
investment in the soft drinks business by Asahi Soft Drinks Co.,
Ltd. in an ongoing drive to boost production efficiency, as well as
various initiatives in the food business. Steps in the latter included
strategic investment in new businesses and sales expansion
efforts, along with facilities investment designed to improve quality and streamline production.
Consolidated depreciation costs totaled ¥59.4 billion.

Consolidated total assets as of the end of fiscal 2012 increased by¥202.3 billion, or 13.2% compared with the previous fiscal yearend, to ¥1,732.2 billion. This increase was mainly attributable toan increase in cash and time deposits reflecting the need toensure liquidity in hand, and growth in assets accompanying theinclusion of Calpis Co., Ltd. in the scope of consolidation, alongwith an increase in goodwill associated with the acquisition of thiscompany. Another contributing factor was an increase in theassets of overseas subsidiaries reflecting foreign exchange rate
movements. Return on assets (ROA) worsened 0.6 of a percentage point to 7.0%.
Current assets increased ¥72.0 billion, or 15.8%, year on year,
to ¥529.2 billion. This was mainly due to an increase in cash andtime deposits. Trade receivable turnover remained at 5.3 times, on
par with the previous fiscal year. Inventories turnover was 14.6
times, decreasing from 14.8 times recorded for the previous year.
Property, plant and equipment increased ¥47.2 billion, or8.8%, year on year, to ¥583.4 billion. The main reasons were an
increase in assets from the newly consolidated Calpis Co., Ltd. andan increase in the assets of overseas subsidiaries reflecting foreignexchange rates.
Investments and other assets increased ¥83.1 billion, or
15.5%, to ¥619.6 billion. The main contributing factor was anincrease in goodwill arising from corporate acquisitions.
Total liabilities increased ¥119.2 billion, or 13.5%, from theprevious fiscal year-end, to ¥1,005.3 billion. Current liabilities
increased ¥77.9 billion, or 12.9% year on year, to ¥680.1 billion.
This reflected a 76.6% increase in bank loans and a 142.9%
increase in commercial paper. Non-current liabilities increased¥41.3 billion, or 14.5%, to ¥325.2 billion, primarily due to a year-onyear increase of 376.2% in deferred income tax liabilities.
Total net assets increased ¥83.1 billion, or 12.9%, to ¥726.9
billion. Total net assets minus minority interests were ¥723.8 billion,up ¥82.1 billion, or 12.8%, compared to ¥641.7 billion in the previous fiscal year. This resulted from an increase in retained earnings
due to net income as well as an increase in foreign currency translation adjustments associated with foreign exchange rate movements in currencies such as the Australian dollar.
As a result, the equity ratio fell 0.1 of a percentage point fromthe previous fiscal year-end to 41.8%.

CAPITAL INVESTMENTS AND DEPRECIATION(¥ billion)
80

62.4

59.7

58.4

60

50.2

47.4
40

59.4

58.1

36.7

36.1

40.2

20

0

2008

2009

2010

■ Capital investments ■ Depreciation

62

Asahi Group Holdings, Ltd.

2011

2012

Cash FlowsTOTAL ASSETS AND ROA(¥ billion)(%)

1,732.2

1,800

12

1,529.9

1,500

1,433.7

1,405.4

1,299.1
1,200

9
7.1

7.4

7.6

7.0

6.6
900

6

600
3
300

0

2008

2009

■ Total assets (left scale)

■

2010

2011

2012

0

ROA (right scale)

7.6
TRADE RECEIVABLE TURNOVER AND
INVENTORIES TURNOVER

For the fiscal year ended December 31, 2012, net cash provided byoperating activities increased ¥0.8 billion year on year to ¥109.3
billion. This result largely reflected an increase in income before
income taxes and minority interests, along with increases in depreciation, amortization of goodwill and other non-cash expenses.
These factors were partly offset by outflows such as an increase inincome taxes paid and an increase in notes and accounts
receivable—trade.
Net cash used in investing activities were ¥134.3 billion, adecrease of ¥36.9 billion from the previous year. The decreaseprimarily reflected the absence of the purchase of stock in subsidiaries in the Oceania region and Southeast Asia carried out in 2011.
Net cash provided by financing activities decreased ¥24.1
billion year on year to ¥43.0 billion. This was primarily due to therepayment of long-term loans payable and the redemption ofbonds, despite an increase in short-term loans payable.
As a result, cash and cash equivalents at the fiscal year-end
increased ¥18.2 billion to ¥34.3 billion.

(Times)20

CASH FLOWS
15.6

15.5

15.1

15

14.8

14.6

(¥ billion)
200
125.6

10
100
5.4

5.5

5.4

106.1

78.5

67.1
41.8

5.3

5.3

109.3

108.5

106.4

43.0

5
0

0

■

–46.4
–58.2

2008

2009

Trade receivable turnover

2010
■

2011

2012

–100

–134.3–200

TOTAL NET ASSETS AND EQUITY RATIO(¥ billion)

(%)

800

726.9
612.7

577.7

600

–90.8

Inventories turnover–171.2–180.6

2008

2009

2010

2011

2012

■ Cash flows from operating activities■ Cash flows from investing activities■ Cash flows from financing activities

80

643.8
60

534.6
40.0

40.2

43.6

41.9

400

41.8
40

200

0

20

2008

2009

■ Total net assets (left scale)

2010
■

2011

2012

0

Equity ratio (right scale)

Annual Report 201263

Research and Development

4. Food safety

R&D expenses for the year under review were ¥9.6 billion, representing an increase of 7.8% year on year.

The Asahi Group upholds its management principle of delivering
the highest quality to customers, and ensures food safety byimplementing an uncompromising system of inspection and control throughout the Group. Nevertheless, the food industry currently faces various problems, including fears of radiation
contamination, bird flu, BSE, foot-and-mouth disease, residual
agricultural chemicals, genetic engineering, and the proper indication of allergy-causing substances. The Asahi Group is strengthening its efforts to proactively identify such risks, and to implement
countermeasures before they materialize. Nevertheless, the occurrence of incidents beyond the scope of such measures implemented by the Group may affect the business performance andfinancial condition of the Asahi Group.

R&D EXPENSES(¥ billion)
10
9.1

9.3

9.6

9.4
8.9

8

6

4

5. Fluctuations in raw material prices

2

0

2008

2009

2010

2011

2012

Business Risk
1. Effects of market and economic trends and demographic
change in JapanThe alcohol beverages business accounts for approximately 58%
of sales for the Asahi Group, a considerable portion of which is
generated by the Japanese market. Future trends in the Japanese
economy may have a significant effect on domestic consumptionof alcohol beverages. Furthermore, a continually declining population, fewer childbirths and the ongoing aging of the Japanese
population may affect consumption of soft drinks and food as well
as alcohol beverages, and in turn may affect the business performance and financial condition of the Asahi Group.

2. Higher liquor tax rates
In the event that consumption tax or liquor tax rates are raised,consumption of alcohol beverages, soft drinks, or food may
decline due to higher sales prices, potentially affecting the business performance and financial condition of the Asahi Group.

3. Dependence on a specific product
Beer-type beverage sales constitute an important part of sales for
the Asahi Group. The Asahi Group endeavors to increase sales byimproving its lineup of products for alcohol beverages apart frombeer-type beverages, while also expanding businesses other than
the alcohol beverages business, including soft drinks and food.
Nevertheless, unforeseen circumstances, such as a significant dropin consumption of beer-type beverages due to trends in market
demand, may affect the business performance and financial condition of the Asahi Group.

64

Asahi Group Holdings, Ltd.

The prices of main raw materials used for Asahi Group products
fluctuate according to such factors as weather conditions andnatural disasters. Rising costs may lead to higher production costs
that cannot be passed on to sales prices depending on prevailingmarket conditions, and may affect the business performance andfinancial condition of the Asahi Group.

6. Effects of weather conditions, natural disasters and others
With respect to the alcohol beverage and soft drink sales of the
Asahi Group, stagnant markets caused by abnormal weather orvariable weather conditions may affect the volume of sales. Furthermore, sudden occurrences of various catastrophes, natural
disasters and unforeseeable accidents that could damage production and logistics facilities may result in loss of assets, the reportingof losses on unshipped products, expenditures on facility repairs
and opportunity loss due to disruptions in production and logistics, and in turn, affect the business performance and financial
condition of the Asahi Group.

7. Risks related to information systems
The Asahi Group possesses personal information on a great
number of customers obtained through sales promotion campaigns, direct marketing and other activities. To prevent suchinformation from being lost, misused or falsified, the Group implements appropriate security measures related to the system andother aspects of information management. Nevertheless, theoccurrence of unpredictable incidents, including power outages,
disasters, defective software or equipment, computer virus infections and illegal access may present risks including the breakdown,
shutdown or temporary disruption of the information system, andtherefore, could cause the erasure, leakage or falsification of internal information, including customer information. Such incidents
may impede operations and in turn affect the business performance and financial condition of the Asahi Group.

8. Risks related to overseas business12. Risks related to litigation

The Asahi Group pursues business operations in Asia andOceania, mainly in China, as well as in Europe and North America.
The Group endeavors to proactively identify risks and to implement concrete and appropriate countermeasures before theymaterialize. Nevertheless, occurrences of incidents such as thoselisted below, which are unforeseeable or beyond the scope ofprediction, may affect the business performance and financial
condition of the Asahi Group.
• Unpredictable revisions in the tax system, laws and regulations• Changes in political and economic factors• Social and economic disruption caused by the outbreak of
epidemics such as SARS or bird flu• Changes in the market or foreign exchange rates that are
beyond prediction• Social and economic disruption caused by acts of terrorism orwar• Occurrence of natural disasters such as earthquakes

In pursuing its businesses, the Asahi Group complies with relevantlaws and regulations and makes the utmost effort to ensure
employees understand and practice regulatory compliance. Nevertheless, the Group faces risks of litigation in undertaking its
businesses both in Japan and abroad. Lawsuits against the Asahi
Group and/or the impact of such lawsuits may affect the businessperformance and financial condition of the Asahi Group.

9. Risks related to the environment
The Asahi Group endeavors to thoroughly implement waste recycling, energy conservation, reduction of CO2 emissions, and therecycling of containers, and complies with the relevant environmental laws and regulations while conducting its businesses. Nevertheless, regulatory revisions that drive significant increases incosts due to investments in new facilities and changes in methodsof waste disposal may affect the business performance and financial condition of the Asahi Group.

10. Risks related to changes in laws and regulations
In pursuing its businesses in Japan, the Asahi Group is placed
under the regulatory control of various laws, including the Liquor
Tax Law, the Food Sanitation Law, and the Product Liability Law.
The Group also operates under the control of laws and regulationsin other countries in which it operates. Changes in such laws andregulations, or the unexpected introduction of new laws and regulations, may affect the business performance and financial condition of the Asahi Group.

11. Trends in the control of alcohol beverages
To fulfill its corporate social responsibility (CSR) as a company that
produces and sells alcohol beverages, the Asahi Group exercises
the utmost care in expressions used in advertisements and information on container labels, and is actively involved in educating
the public on responsible drinking to prevent underage drinking
and consumption by pregnant and breast-feeding women. Nevertheless, considering that problems related to alcohol have become
an international issue, regulations that significantly exceed expectations and result in a decline in consumption may affect the business performance and financial condition of the Asahi Group.

13. Fluctuations in value of owned assets
Sudden drops in the value of land, marketable securities, andother assets owned by the Asahi Group, or changes in the business environment, could affect the business performance andfinancial condition of the Asahi Group.

14. Retirement benefits
Retirement benefit liabilities and retirement benefit costs for
employees and former employees of the Asahi Group are calculated based on the discount rate used in actuarial calculations andthe rate of expected returns on pension assets. Major fluctuationsin preconditions, including changes in the market price of pension
assets, interest rates and/or pension system, may affect the business performance and financial condition of the Asahi Group.

15. Business and capital alliances
The Asahi Group pursues business and capital alliances with companies in Japan and overseas to establish bases for growth in linewith its Medium-Term Management Plan. There is the possibility,
however, that these alliances could fail to yield synergies as initiallyprojected due to the impact of changes in the business environment on the Asahi Group, its alliance partners, or companies inwhich the Group is invested, or other factors.
Moreover, changes of this kind in the business environment
could cause deterioration in the businesses, management, or
financial condition of alliance partners and invested companies.
Adverse effects of this type could negatively impact the businesses, operating results and financial condition of the Asahi
Group. Furthermore, the need to amortize a substantial amount of
goodwill stemming from investment, or to post significant impairment losses caused by slumping business performance at invested
companies, could adversely affect the operating results of the
Asahi Group.

Annual Report 2012

65

CONSOLIDATED BALANCE SHEETS
Asahi Group Holdings, Ltd. and Consolidated Subsidiaries
As of December 31, 2012, 2011 and 2010

Thousands of
U.S. dollars(Note 1)Millions of yen

AssetsCurrent assets:
Cash and time deposits (Notes 3 and 5)
Notes and accounts receivable:
Trade (Note 5)
Other
Allowance for doubtful accounts
Inventories (Note 4)
Deferred income tax assets (Note 11)
Other current assets
Total current assets

Property, plant and equipment (Notes 9 and 15):Land
Buildings and structures
Machinery and equipment
OthersConstruction in progress
Less accumulated depreciation
Net property, plant and equipment

Investments and other assets:
Goodwill (Note 15)
Investment securities (Notes 5 and 6)
Investments in unconsolidated subsidiaries andaffiliated companies (Notes 5 and 6)
Long-term loans receivable (Note 5)
Deferred income tax assets (Note 11)
Other non-current assets
Total investments and other assets
Total assets
See accompanying notes.

66

Asahi Group Holdings, Ltd.

2012

¥

34,573

2011¥

16,893

2010¥

11,534

2012$

399,319

317,008
16,301(4,914)
113,519
12,62340,079529,189

279,596
19,750(3,327)
102,631
12,98328,620457,146

274,379
12,391(5,685)95,35914,62318,452421,053

3,661,446
188,277(56,757)
1,311,146
145,796
462,913
6,112,140

205,554431,654681,962
38,3237,829
1,365,322(781,923)
583,399

176,054
399,003621,532
29,361
5,355
1,231,305(695,069)
536,236

182,570
398,687
611,664
19,353
6,714
1,218,988(661,888)
557,100

2,374,151
4,985,609
7,876,669
442,630
90,425
15,769,484(9,031,220)
6,738,264

203,765
91,457

184,408
76,87584,172
76,1202,353,488
1,056,329

176,786
4,232
18,212
125,148
619,600¥1,732,188

160,967
5,104
28,95080,222536,526¥1,529,908

161,390
6,603
30,45068,470427,205¥1,405,358

2,041,880
48,880210,349
1,445,461
7,156,387$20,006,791

Thousands of
U.S. dollars(Note 1)Millions of yen

Liabilities and net assets
Current liabilities:
Bank loans (Notes 5 and 9)
Commercial paper (Notes 5 and 9)
Long-term debt due within one year (Notes 5 and 9)
Notes and accounts payable (Note 5):
Trade
Other
Alcohol tax and consumption taxes payable
Deposits received (Note 5)
Income taxes payable (Note 11)
Accrued liabilities
Other current liabilities
Total current liabilities
Non-current liabilities:
Long-term debt (Notes 5 and 9)
Employees’ severance and retirement benefits(Note 10)
Allowance for retirement benefits for directors andcorporate auditors
Deferred income tax liabilities (Note 11)Long-term deposits received
Other long-term liabilities
Total non-current liabilities
Total liabilities2012¥ 159,331
68,00015,367

2011¥

90,21828,00071,462

2010

¥

2012

60,10514,00024,155$ 1,840,275
785,401
177,489

117,569
68,115130,321
21,201
23,20260,377
16,586680,069

104,128
61,621
128,476
18,93225,01861,877
12,434602,166

102,715
52,795
127,922
19,60932,49456,461
9,619
499,875

1,357,923
786,729
1,505,209
244,872
267,983
697,355
191,569
7,854,805

213,537

200,413

213,164

2,466,355

23,852

21,85524,739275,491480
31,43336,363
19,575325,240
1,005,309

372
6,602
35,711
18,990283,943886,109598
4,831
35,831
13,650292,813792,6885,544
363,052
419,993
226,091
3,756,526
11,611,331

182,531150,641
383,177(27,764)
688,585

182,531
150,789
338,809(28,296)643,833

182,531
150,910295,229(28,721)599,949

2,108,235
1,739,905
4,425,699(320,675)
7,953,164

3,260(2,685)

199

37,653(5)
31,97935,234
3,060
726,879¥1,732,188

1584(2,100)2,066
643,799¥1,529,908

693
11,351
12,243
478
612,670¥1,405,358(58)
369,358
406,953
35,3438,395,460$20,006,791

Commitments and contingent liabilities (Note 13)
Net assets (Note 12)
Shareholders’ equity (Note 17):
Common stock:
Authorized—972,305,309 shares
Issued—483,585,862 shares
Capital surplus
Retained earnings
Treasury stock, at cost
Total Shareholders’ equity
Accumulated other comprehensive income
Unrealized gains(losses) on available-for-salesecurities, net of taxes
Unrealized gains(losses) on hedging derivatives,
net of taxes
Foreign currency translation adjustments
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets

Annual Report 2012

67

CONSOLIDATED STATEMENTS OF INCOME
Asahi Group Holdings, Ltd. and Consolidated Subsidiaries
For years ended December 31, 2012, 2011 and 2010

Net sales (Note 19)
Costs and expenses (Note 19):
Cost of sales (Note 7)
Alcohol tax
Selling, general and administrative expenses (Note 7)
Operating income (Note 19)

2012

Millions of yen
2011

2010

Thousands of
U.S. dollars(Note 1)2012

¥1,579,077¥1,462,736¥1,489,461$18,238,358

552,311422,391
495,938
1,470,640
108,437

491,518
415,725
448,303
1,355,546
107,190509,337
433,987
450,788
1,394,112
95,3496,379,198
4,878,621
5,728,090
16,985,909
1,252,449

1,739(4,043)

1,470(3,668)

1,705(4,328)20,085(46,697)

10,617
94

5,480
535

9,846
670

122,626
1,086

201
8,088

4,677
—

32,336—

2,322
93,416(3,035)(889)(3,070)(1,459)(5,944)—(7,954)(2,942)(8,597)
99,840(1,087)(2,192)—(735)(3,615)(17,914)—281(16,768)
90,422(5,337)(1,004)(13,573)(19,781)———(3,418)(2,884)
92,465(35,054)(10,268)(35,459)(16,851)(68,653)—(91,869)(33,979)(99,295)
1,153,154

33,8548,454
42,30857,53229,9384,949
34,88755,53553,548(12,626)
40,922
51,543391,014
97,644
488,658
664,496

(349)

(442)

1,537

(4,032)Other income (expenses):
Interest and dividend income
Interest expenses
Equity in net income of unconsolidated subsidiaries
and affiliated companies
Gain on sale of securities—net (Note 6)
Gain on sales of investments in subsidiaries andaffiliated companies
Gain on change in equity
Loss on sale and disposal of property, plant andequipment—net
Loss on devaluation of investment securities
Loss on impairment of fixed assets (Notes 15 and 19)
Loss on factory restructuring
Business integration expenses
Earthquake related expenses
Adjustment of goodwill (Note 14)
Other—net
Income before income taxes and minority interests
Income taxes (Note 11):
Current
DeferredIncome before minority interests
Minority interests in net loss (gain) ofconsolidated subsidiaries
Net income

Amounts per share of common stock:
Net income
Diluted net income
Cash dividends applicable to the year
See accompanying notes.

68

Asahi Group Holdings, Ltd.

¥57,183¥55,093¥53,080

2012

Yen
2011

2010

¥122.75
122.6728.00¥118.36118.2825.00¥114.10114.0023.00$

660,464
U.S. dollars(Note 1)
2012

$1.42
1.42
0.32

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Asahi Group Holdings, Ltd. and Consolidated Subsidiaries
For years ended December 31, 2012 and 2011

Thousands of
U.S. dollars(Note 1)Millions of yen
2012

2011

¥57,532¥ 55,536$ 664,496

2012

Income before minority interests
Other comprehensive income (Note 21):
Unrealized gains (losses) on available-for-sale securities, net of taxes
Unrealized gains (losses) on hedging derivatives, net of taxes
Foreign currency translation adjustments
Share of other comprehensive income of affiliated companies
accounted for using equity method
Total other comprehensive income
Comprehensive income (Note 21)

5,945
(7)
31,015(2,884)(692)(11,462)

68,665(81)358,224

302
37,255¥94,787(623)(15,661)¥ 39,875

3,488
430,296$1,094,792

Comprehensive income attributable to:Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests¥94,516¥ 271¥ 40,750¥ (875)$1,091,662$
3,130

See accompanying notes.

Annual Report 2012

69

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (NOTE 17)
Asahi Group Holdings, Ltd. and Consolidated Subsidiaries
For years ended December 31, 2012, 2011 and 2010

Balance at December 31, 2009
Net income
Cash dividends paid
Purchases of treasury stock
Disposal of treasury stock
Increase resulting from change of scope ofequity method
Decrease resulting from merger withunconsolidated subsidiaries
Net changes of items in accumulated gains (losses)
from revaluation and translation adjustments
Decrease in minority interests
Balance at December 31, 2010
Net income
Cash dividends paid
Purchases of treasury stock
Disposal of treasury stock
Decrease resulting from change in scope of
consolidation
Decrease resulting from change in scope ofequity method
Net changes of items in accumulated losses fromrevaluation and translation adjustments
Increase in minority interests
Balance at December 31, 2011
Net income
Cash dividends paid
Purchases of treasury stock
Disposal of treasury stock
Decrease resulting from change in scope ofequity method
Net changes of items in accumulated gains (losses)
from revaluation and translation adjustments
Increase in minority interests
Balance at December 31, 2012

Capital surplus¥182,531¥151,048¥(29,283)

Foreigncurrencytranslation
adjustments

Minority
interests¥ 4,230¥ 2,445¥ (7)¥ 14,592(2,246)700(3,241)

¥ 199

¥ 693

¥ 11,351(2,884)(692)(10,767)

(22)
584
15
(13)

¥182,531¥150,910¥295,229
55,093(11,170)¥(28,721)(3,752)
¥ 478

(11)
436

(121)
(125)
(218)

¥182,531¥150,789¥338,809
57,183(12,808)¥(28,296)¥(2,685)

¥

1

¥

584

1,588
¥ 2,066

(13)
545

(148)
(7)

¥182,531¥150,641

Capital surplus

Balance at December 31, 2011
$2,108,235
Net income
Cash dividends paid
Purchases of treasury stock
Disposal of treasury stock
Decrease resulting from change in scope ofequity method
Net changes of items in accumulated gains (losses)
from revaluation and translation adjustments
Increase in minority interests
Balance at December 31, 2012
$2,108,235$1,741,615

Asahi Group Holdings, Ltd.

¥252,147
53,080(10,000)(138)

Common stock

See accompanying notes.

70

Common stock

Millions of yen
Unrealized gains Unrealized gains(losses) on(losses) on
available-for-salehedging
Treasury stock,securities,
derivatives,
Retained earnings
at costnet of taxes
net of taxes

5,945

(6)

31,395¥ 3,260¥ (5)¥ 31,979

994¥ 3,060

Thousands of U.S. dollars (Note 1)
Unrealized gains Unrealized gains(losses) on(losses) on
available-for-salehedging
Treasury stock,securities,
derivatives,
Retained earnings
at costnet of taxes
net of taxes

Foreigncurrencytranslation
adjustments

Minority
interests$$23,862¥383,177$3,913,248
660,464(147,933)¥(27,764)$(326,819)$(31,012)

$ 12

6,745

68,665(70)362,613$ 37,653$(58)$369,358

(150)
6,294

(1,710)(80)$1,739,905$4,425,699$(320,675)

11,481$35,343

CONSOLIDATED STATEMENTS OF CASH FLOWS
Asahi Group Holdings, Ltd. and Consolidated Subsidiaries
For years ended December 31, 2012, 2011 and 2010

Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation and amortization
Loss on impairment of fixed assets
Increase (decrease) in provision for retirement benefits
Decrease in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Equity in net income of unconsolidated subsidiaries andaffiliated companies
Gain on sale of securities—net
Loss on devaluation of investment securities
Gain on sales of investments in subsidiaries and affiliated companies
Loss on sale and disposal of property, plant and equipment—net
Loss on factory restructuring
Gain on change in equity
Adjustment of goodwill
Increase in notes and accounts receivable—trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable—trade
Increase (decrease) in accrued alcohol tax payable
Increase (decrease) in accrued consumption taxes
Bonuses paid to directors and corporate auditors
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Proceeds from sales of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of investments in subsidiaries
Proceeds from sales of investments in subsidiaries
Purchase of investments in subsidiaries resulting in change inscope of consolidation
Proceeds from sales of investments in subsidiaries resulting inchange in scope of consolidation
Payments for transfer of business
Payments for loans receivableCollection of loans receivable
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Increase (decrease) in short-term loans payable
Repayments of lease obligations
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders
Proceeds from stock issuance to minority shareholders
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting from merger withunconsolidated subsidiaries
Cash and cash equivalents at end of year (Note 3)
See accompanying notes.

2012

Millions of yen
2011

2010

Thousands of
U.S. dollars(Note 1)
2012

¥ 99,840
59,366
3,070
1,694
(510)
(1,739)4,043¥ 90,422
58,135—(1,423)(1,811)(1,470)3,668¥ 92,465
59,71013,5732,141(234)(1,705)
4,328$ 1,153,154
685,678
35,45919,566(5,891)(20,085)
46,697(10,617)
(94)
889
(201)
3,035
1,459
(8,088)
7,954(8,798)(5,373)(3,399)
1,209
1,531
(383)
12,175
157,063
5,021(4,276)(48,516)
109,292(5,480)(535)
2,192(4,677)
1,087
735
—
—
(838)
(3,090)(890)(9,294)(1,423)(377)
27,973
152,904
5,745(3,345)(46,791)
108,513(9,846)(670)
1,004(32,336)
5,337
19,781
—
—
(256)
1,717
2,255
(4,128)(351)(356)
12,805
165,234
6,965(4,090)(42,500)
125,609(122,626)(1,086)
10,268(2,322)35,054(101,617)(93,416)
91,86916,851(62,058)(39,258)
13,964
17,683(4,424)
140,619
1,814,079
57,993(49,388)(560,360)
1,262,324

(136)
676
(35,221)753(5,121)—(4,742)
1,040
—
552

(583)
734
(23,494)
4,855(3,101)87(8,353)
977
—
—

(845)
1,528
(25,367)
2,502(4,779)85(50,264)
46,489(2,920)—(1,571)
7,808(406,803)
8,697(59,148)—(54,770)
12,012—
6,376(88,270)(142,143)—(1,019,520)——(1,478)
1,190(3,563)(134,320)

3,014—(1,026)
1,281(3,483)(171,235)—(5,340)(2,074)2,135(2,940)(41,790)——(17,071)
13,745(41,153)(1,551,398)

106,842(7,254)566(46,514)28,000(25,000)(14)(12,808)(1,551)
1,390(655)
43,002
208
18,182
16,13849,278(5,140)5,048(5,495)50,000(15,000)(11)(11,170)—42(462)
67,090820
5,188
10,813(71,330)(3,082)
10,717(22,799)
20,000(15,000)(23)(10,000)——
689(90,828)(262)(7,271)
18,082

1,234,026(83,784)
6,537(537,237)
323,400(288,750)(162)(147,933)(17,914)
16,055(7,564)
496,674
2,402
210,002
186,394—¥ 34,320137¥ 16,138

2¥ 10,813$—
396,396

Annual Report 201271

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Asahi Group Holdings, Ltd. and Consolidated Subsidiaries

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Asahi Group Holdings, Ltd. (the “Company”) and its consolidated subsidiaries have been
prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations,and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to applicationand disclosure requirements of International Financial Reporting Standards.
The accompanying consolidated financial statements have been reformatted and translated into English with some expanded descriptions fromthe consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. Certain supplementary information included in the statutory Japanese language consolidated financial statements is not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers outside Japan, using the prevailingexchange rate at December 31, 2012, which was ¥86.58 to U.S. $1.00. The translations should not be construed as representations of what the Japanese
yen amounts have been, could have been, or could in the future be when converted into U.S. dollars at this or any other rate of exchange.

2. Significant Accounting Policies
CONSOLIDATIONThe consolidated financial statements include the accounts of the Company and its significant subsidiaries (collectively, the “Companies”) (33 domestic
and 51 overseas subsidiaries for 2012, 32 domestic and 47 overseas subsidiaries for 2011 and 35 domestic and 16 overseas subsidiaries for 2010). All
significant intercompany transactions and account balances are eliminated in consolidation.
In the elimination of investments in subsidiaries, the assets and liabilities of subsidiaries, including the portion attributable to minority shareholders, are evaluated using the fair value at the time the Company acquired control of the respective subsidiaries.

GOODWILL
Goodwill is amortized over 5 to 20 years on a straight-line basis.

EQUITY METHOD
Investments in certain unconsolidated subsidiaries and affiliated companies are accounted for by the equity method and, accordingly, stated at costadjusted for equity in undistributed earnings and losses from the date of acquisition.
Effective from the year ended December 31, 2011 the Companies adopted “Accounting Standard for Equity Method of Accounting for Investments” (ASBJ Statement No. 16, issued on March 10, 2008) and “Practical Solution on Unification of Accounting Policies Applied to Associates
Accounted for Using the Equity Method” (ASBJ Practical Issue Task Force (PITF) No. 24 issued on March 10, 2008). This change had no impact on the
consolidated financial statements for the year ended December 31, 2011.

(Additional information)
Matters relating to application of the equity method
Although the equity on earnings of affiliates for Tingyi-Asahi Beverages Holding Co., Ltd. and its affiliates had heretofore been calculated using closing figures from December, when the company’s fiscal year ends, the Company has adopted the method of calculating equity in earnings of affiliates
using financial statements based on the provisional fiscal year ending at September 30 (calculated by a reasonable procedure in accordance withlegitimate accounting methods) effective from the fiscal year ended December 31, 2012 in order to expedite disclosures and decision making relating
to financial performance.
However, because equity on earnings based on the company’s financial statements as of the consolidated closing on December 31 was recognized in the previous consolidated fiscal year, the equity based on the company’s closing figures for a nine-month period is recognized for the current
fiscal year.

CONSOLIDATED STATEMENT OF CASH FLOWSIn preparing the consolidated statement of cash flows, cash on hand, readily available deposits and short-term highly liquid investments with maturities
not exceeding three months at the time of purchase are considered to be cash and cash equivalents.

ALLOWANCE FOR DOUBTFUL ACCOUNTS
Allowance for doubtful accounts is provided in an amount sufficient to cover probable losses on collection. It consists of the estimated uncollectible
amount with respect to certain identified doubtful receivables and an amount calculated using the actual percentage of collection losses.

72

Asahi Group Holdings, Ltd.

SECURITIESSecurities are classified as (a) securities held for trading purposes (hereafter, “trading securities”), (b) debt securities intended to be held to maturity(hereafter, “held-to-maturity debt securities”), (c) equity securities issued by subsidiaries and affiliated companies, or (d) all other securities that are notclassified in any of the above categories (hereafter, “available-for-sale securities”). The Companies do not have trading securities.
Held-to-maturity debt securities are stated at amortized cost. Equity securities issued by subsidiaries and affiliated companies which are not consolidated or accounted for using the equity method are stated at moving-average cost.
Available-for-sale securities with available fair market values are stated at fair market value. Unrealized gains and losses on these securities arereported, net of applicable income taxes, as a separate component of net assets. Realized gains and losses on sale of such securities are computed
using moving-average cost.
If the market value of held-to-maturity debt securities, equity securities issued by unconsolidated subsidiaries and affiliated companies, andavailable-for-sale securities declines significantly, such securities are stated at fair market value and the difference between fair market value and thecarrying amount is recognized as a loss in the period of the decline. Debt securities with no available fair market value are stated at amortized cost, netof the amount considered not collectible. If the fair market value of equity securities issued by unconsolidated subsidiaries and affiliated companies noton the equity method is not readily available, such securities should be written down to net asset value with a corresponding charge in the statementof income in the event the net asset value declines significantly. In these cases, such fair market value or the net asset value will be the carrying amountof the securities at the beginning of the next year.

INVENTORIESInventories held for sale in the ordinary course of business are measured at the lower of cost or net realizable value, which is defined as the selling priceless additional estimated manufacturing costs and estimated direct selling expenses. Replacement cost may be used in place of the net selling value,
if appropriate.

PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are carried substantially at cost. Depreciation is provided by the straight-line method with respect to production facilities
and by the declining-balance method with respect to remaining assets, except for the buildings acquired on or after April 1, 1998, which are depreciated using the straight-line method due to the amendments to the Corporation Tax Law. Estimated useful lives of the assets are as follows:
Buildings and structures
Machinery and equipment

3–50 years
2–20 years

Japanese tax regulations allow a company to defer capital gains on the sale of real estate if the company intends to offset such gains against thecost of newly acquired property, plant and equipment. When such accounting is followed, the cost of the new property, plant and equipment is reduced
to the extent of the deferred capital gains, thereby affecting related depreciation charges and accumulated depreciation.

ACCOUNTING FOR LEASE TRANSACTIONS AS LESSEEFinance leases which commenced prior to January 1, 2009 and have been accounted for as operating leases, continue to be accounted for as operatingleases with disclosure of certain “as if capitalized” information. Depreciation or amortization expense is calculated by a straight-line method over theleases term.

INCOME TAXESThe Companies recognized deferred income tax assets and liabilities for temporary differences between the carrying amounts of assets and liabilities
for tax and financial reporting. The asset and liability approach is used to recognize deferred income tax assets and liabilities for the expected future
tax consequences of temporary differences.

EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITSThe Companies’ basic severance and retirement benefits consist of two types of plans; a defined benefit pension plan and an unfunded lump-sum
payment plan. In addition, certain of the Company’s consolidated subsidiaries have a defined contribution pension plan and an advance payment
system for the employees’ retirement plan.
The liabilities and expenses for severance and retirement benefits are determined based on the amounts actuarially calculated using certain
assumptions.
The Companies provided allowance for employees’ severance and retirement benefits at the balance sheet date based on the estimated amounts
of projected benefit obligation and the fair value of the plan assets at that date.
Actuarial gains and losses are amortized by the straight-line method over the average of the estimated remaining service lives of mainly 10 years
commencing with the following period.
Prior service costs are amortized by the straight-line method over the average of the estimated remaining service lives of mainly 10 years.
Effective from the year ended December 31, 2010, the Company and consolidated domestic subsidiaries adopted the “Partial Amendments to
Accounting Standard for Retirement Benefits (Part 3)” (ASBJ Statement No. 19, issued on July 31, 2008). The new accounting standard requires domestic companies to use the rate of return on long-term government bonds, government agency bonds or high quality corporate bonds as of the end of
the fiscal year for calculating the projected benefit obligation of a defined-benefit plan. Previously, domestic companies were allowed to use a discountrate determined by taking into consideration fluctuations in the yield of long-term government bonds, government agency bonds or high quality corporate bonds over a certain period. This change had no impact on the consolidated financial statements for the year ended December 31, 2010.

Annual Report 201273

ALLOWANCE FOR RETIREMENT BENEFITS FOR DIRECTORS AND CORPORATE AUDITORS
Directors and corporate auditors of certain consolidated subsidiaries are entitled, in most circumstances, to lump-sum severance payments based on
current rates of pay, length of service and certain other factors. These consolidated subsidiaries accrue 100% of obligations based on their rules
required under the assumption that all directors and corporate auditors retired at the balance sheet date. Payments of retirement benefits to directors
and corporate auditors are subject to approval at the shareholders’ meeting.
At the annual shareholders’ meeting of the Company and several of its consolidated subsidiaries held in March 2007, the proposal for the termination of their retirement benefit programs for directors and corporate auditors (under which payments would be made at the time of each person’s
retirement) was approved. Accordingly, the Company and those consolidated subsidiaries reversed the entire amount of their allowances for retirement
benefits for directors and corporate auditors, and recorded unpaid balances of these retirement benefits as of December 31, 2007, in “Other long-term
liabilities” in the balance sheet.

TRANSLATION OF FOREIGN CURRENCY ACCOUNTS AND FINANCIAL STATEMENTS
Receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates prevailing on the balance sheet
dates, and differences arising from the translation are included in the statement of income as a gain or loss.
The financial statements of foreign subsidiaries and affiliated companies are translated into Japanese yen at the exchange rates prevailing on thebalance sheet dates for assets and liabilities, and at historical exchange rates for shareholders’ equity. All revenue and expense accounts are translated
at average exchange rates for during the fiscal period.

DERIVATIVE FINANCIAL INSTRUMENTS
The accounting standard for financial instruments requires companies to state derivative financial instruments at fair value and to recognize changes in
the fair value as gains or losses unless derivative financial instruments are used for hedging purposes.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Companies defer recognition of gains or losses resulting from changes in the fair value of derivative financial instruments until the related losses or gains on the hedged items are recognized.
However, in cases where interest rate swap contracts are used as hedge and meet certain hedging criteria, the net amount to be paid or received
under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap contract was executed.

ACCOUNTING STANDARD FOR BUSINESS COMBINATIONS
Effective from the year ended December 31, 2010, the Company adopted “Accounting Standard for Business Combinations” (ASBJ Statement No. 21),
“Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22), “Partial amendments to Accounting Standard for Researchand Development Costs” (ASBJ Statement No. 23), “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7), “Accounting Standard
for Equity Method of Accounting for Investments” (ASBJ Statement No. 16) and “Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures” (ASBJ Guidance No. 10) issued or revised on December 26, 2008, respectively.

ACCOUNTING STANDARD FOR ASSET RETIREMENT OBLIGATIONS
Effective from the year ended December 31, 2011, the Company and its consolidated domestic subsidiaries adopted “Accounting Standard for Asset
Retirement Obligations” (ASBJ Statement No. 18, issued on March 31, 2008) and “Guidance on Accounting Standard for Assets Retirement Obligations” (ASBJ Guidance No. 21, issued on March 31, 2008).
As a result of the adoption of the new accounting standard, operating income decreased by ¥39 million and income before income taxes andminority interests decreased by ¥500 million for the year ended December 31, 2011.

ACCOUNTING STANDARD FOR PRESENTATION OF COMPREHENSIVE INCOME
Effective from the year ended December 31, 2011, the Company adopted “Accounting Standard for Presentation of Comprehensive Income” (ASBJ
Statement No. 25, issued on June 30, 2010).
As a result of the adoption of this standard, the Company presented the consolidated statement of comprehensive income in the consolidated
financial statements for the year ended December 31, 2012 and 2011. Comprehensive income for the year ended December 31, 2010 is disclosed in
Note 21.

ACCOUNTING STANDARD FOR ACCOUNTING CHANGES AND ERROR CORRECTIONS
Effective from the year ended December 31, 2012, the Company and its consolidated domestic subsidiaries adopted “Accounting Standard for
Accounting Changes and Error Corrections” (ASBJ Statement No. 24 issued on December 4, 2009) and “Guidance on Accounting Standard for
Accounting Changes and Error Corrections” (ASBJ Guidance No. 24, issued on December 4, 2009) for accounting changes and corrections of priorperiod errors which are made from the beginning of the current fiscal year.

AMOUNTS PER SHARE OF COMMON STOCK
Net income per share is computed based upon the average number of shares of common stock outstanding during the period.
Cash dividends per share have been presented on an accrual basis and include dividends to be approved after the balance sheet date, but
applicable to the year then ended.

74

Asahi Group Holdings, Ltd.

3. Cash Flow Information
A. Reconciliation of cash and time deposits shown in the consolidated balance sheet and cash and cash equivalents shown in the consolidated statement of cash flows as of December 31, 2012, 2011 and 2010 were as follows:
Thousands of
U.S. dollars

Millions of yen

Cash and time deposits
Less: Time deposits with maturities exceeding three months
Cash and cash equivalents

2012

2011

2010

¥34,573(253)¥34,320¥16,893(755)¥16,138¥11,534(721)¥10,813

2012$399,319(2,923)$396,396

B. Assets and liabilities of newly consolidated subsidiaries through acquisition of shares:
Assets and liabilities of acquired companies and its subsidiaries and net cash outflow for such acquisition, which are included in “Purchase of investments in subsidiaries resulting in change in scope of consolidation” for the years ended December 31, 2012, 2011 and 2010 were as follows:
Thousands of
U.S. dollars

Millions of yen

Current assets
Fixed assets
Goodwill
Current liabilities
Long-term liabilities
Foreign currency translation adjustments
Acquisition cost of shares
Expenditures for acquiring the common shares
Cash and cash equivalents of acquired companies
Net cash used for acquisition of acquired companies

2012

2011

¥ 44,622
86,24529,889(36,793)(23,178)—
100,785—(12,515)¥ 88,270¥ 18,528
31,900107,878(13,608)(8,981)
7,175
142,892
2,975(3,724)¥142,143

2010

¥—
—
—
—
—
—
—
—
—
¥—

2012

$ 515,385
996,131345,218(424,960)(267,706)—
1,164,068—(144,548)$1,019,520

4. Inventories
Inventories at December 31, 2012, 2011 and 2010 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Finished goods
Work in process
Raw materials
Supplies
Merchandise
Others
Total

2012

2011

2010

2012

¥ 37,765
33,764
27,169
7,197
7,624
—
¥113,519¥ 29,205
33,36025,078
7,152
6,325
1,511
¥102,631¥23,085
34,712
24,941
6,239
6,382
—
¥95,359$ 436,186
389,975
313,802
83,12688,057—$1,311,146

5. Financial Instruments
The information related to financial instruments for the year ended December 31, 2012, 2011 and 2010 were as follows.

(1) QUALITATIVE INFORMATION ON FINANCIAL INSTRUMENTS(a) Policies for using financial instruments
The Companies raise funds through commercial paper and bond issuances, borrowing from financial institutions and through other methods with theobjective of balancing direct and indirect financing with long-term and short-term financing needs while considering financing costs and risk diversification in the changing business environment.
The Companies have adopted a Cash Management System (CMS) utilized between the Company and its consolidated domestic subsidiaries for
effective use of funds and with the objective of reducing interest-bearing liabilities incurred by the Companies. Accordingly, surplus funds are only
invested in financial instruments with low risk.
Derivative transactions are undertaken only for the purpose of hedging risks outlined below, as a matter of policy, and are not undertaken for
speculative purposes.

Annual Report 201275

(b) Details of financial instruments and the related risks
Notes and accounts receivable and long-term loans receivable which are accounted for in each consolidated subsidiary are exposed to the credit risks
of customers. Foreign currency-denominated notes and accounts receivable are also exposed to foreign exchange risk.
Investment securities which are accounted for in the Companies are shares issued by business partners and held-to-maturity debt securities, andare exposed to market price fluctuation risk. Some investment securities are foreign currency-denominated investment securities which are also
exposed to foreign exchange risk.
Notes and accounts payable which are accounted for in each consolidated subsidiary are mainly settled within one year. Foreign currencydenominated notes and accounts payable are exposed to foreign exchange risk.
Commercial paper, bank loans and bonds issued by the Company are exposed to liquidity risk that the Company would not be able to reimburse
such debts due to a deterioration in the financial market. A certain amount of borrowing is undertaken by using floating interest rates which is exposed
to interest rate fluctuation risk, however, this risk is hedged through the adoption of interest rate swap contracts. Foreign currency-denominated longterm debts are also exposed to foreign exchange risk.
Derivative transactions entered into by the Companies are forward currency exchange contracts to hedge foreign exchange risk involving foreign
currency-denominated payables and receivables; interest rate swap contracts to hedge interest rate fluctuation risk involving borrowing; and commodity swap contracts and currency option contracts to hedge price fluctuation risk involving procurement of raw materials in the Company’s consolidated
overseas subsidiaries.
Refer to Note 8, “Derivative Financial Instruments” for information about the hedging instruments and hedged items, hedging policy and themethod of evaluating hedging effectiveness for the hedge accounting methods adopted by the Companies.

(c) Policies and processes for risk management(i) Management of credit risk (risk associated with nonfulfillment of contracts by counterparties)
With respect to notes and accounts receivable and long-term loans receivables, in order to control the credit risk of customers, each business andsales management division within each consolidated subsidiary conducts periodic monitoring of parties to key transactions to assess the risk inaccordance the internal credit policy. In addition, each consolidated subsidiary regularly monitors the status of occurrence and collections of bad
debts, and manages them in collaboration with their respective Sales Department.
Derivative transactions are conducted with selected financial institutions with high credit ratings in order to reduce the credit risks.
(ii) Management of market risk (risks associated with fluctuations in foreign currency exchange rates, interest rates, etc,)
In order to mitigate the risk from foreign exchange fluctuations for foreign-currency denominated cash flows, the Company has established a foreignexchange hedging policy based on the current condition and forecasts for the foreign exchange market and in compliance with the Company’s
authorization rules. The Company also conducts interest rate swap contracts to avert interest rate fluctuation risk involved in borrowing.
Investment securities are periodically assessed by each consolidated subsidiary with respect to market value and the financial status of theissuing entities (business partners), and the merits and demerits of holding such securities are continually reviewed, taking into consideration therelationship with the respective business partners.
Derivative transactions are undertaken by the Finance Section based on a system that limits transactions and amounts. The performance oftransactions is periodically reported to the Manager and Executive Officer in compliance with the Company’s authorization rules. Management oftransactions at consolidated subsidiaries is undertaken in a same manner.
(iii) Management of liquidity risk associated with procurement (risk of inability to make payments on due date)
The Company and its consolidated domestic subsidiaries have adopted a CMS and liquidity risk management at participating companies is therefore undertaken by the Company.
The Company manages the liquidity risk process where its Finance Section formulates and updates cash flow plans on a timely basis based on
the reports from consolidated subsidiaries and operational departments and through a policy to control liquidity in hand for effective procurement.

(2) FAIR VALUE OF FINANCIAL INSTRUMENTS
Book value, fair value and the difference between them for the financial assets and liabilities as of December 31, 2012, 2011 and 2010 were as follows.
Millions of yen
2012(1) Cash and time deposits(2) Notes and accounts receivable—trade
Allowance for doubtful accounts *1
Notes and accounts receivable—trade—net(3) Investment securities(i) Investments in unconsolidated subsidiaries and affiliated companies(ii) Held-to-maturity debt securities(iii) Available-for-sale securities(4) Long-term loans receivable *2
Allowance for doubtful accounts *1
Long-term loans receivable—net
Assets—total(1) Bank loans(2) Commercial paper(3) Notes and accounts payable(4) Deposits received(5) Long-term debt *3
Liabilities—total
Derivative transactions *476

Asahi Group Holdings, Ltd.

Book value

Fair value¥ 34,573
317,008(3,635)313,373¥ 34,573

Difference

313,373—

74,116500
76,7507,387(2,796)
4,591¥503,903
159,331
68,000185,685
21,201
228,903¥663,120¥(147)

135,780
501
76,75061,6641—

4,597¥565,574
159,331
68,000185,685
21,201
232,468¥666,685¥(147)

6¥61,671
—
—
—
—
3,565
¥ 3,565¥—¥—

Millions of yen
2011(1) Cash and time deposits(2) Notes and accounts receivable—trade
Allowance for doubtful accounts *1
Notes and accounts receivable—trade—net(3) Investment securities(i) Investments in unconsolidated subsidiaries and affiliated companies(ii) Held-to-maturity debt securities(iii) Available-for-sale securities(4) Long-term loans receivable *2
Allowance for doubtful accounts *1
Long-term loans receivable—net
Assets—total(1) Bank loans(2) Commercial paper(3) Notes and accounts payable(4) Deposits received(5) Long-term debt *3
Liabilities—total
Derivative transactions *4Book value

Fair value¥ 16,893
279,596(3,123)
276,473¥ 16,893

Difference

276,473—

72,616500
64,247
7,013(2,982)4,031¥434,760
90,21828,000165,750
18,932271,874¥574,774¥(323)

116,938505
64,24744,322
5—

4,054¥479,110
90,21828,000165,750
18,932
274,521¥577,421
¥
(323)

23
¥44,350
—
—
—
—
2,647
¥ 2,647¥—¥—

Millions of yen
2010(1) Cash and time deposits(2) Notes and accounts receivable—trade
Allowance for doubtful accounts *1
Notes and accounts receivable—trade—net(3) Investment securities(i) Investments in unconsolidated subsidiaries and affiliated companies(ii) Held-to-maturity debt securities(iii) Available-for-sale securities(4) Long-term loans receivable *2
Allowance for doubtful accounts *1
Long-term loans receivable—net
Assets—total(1) Bank loans(2) Commercial paper(3) Notes and accounts payable(4) Deposits received(5) Long-term debt *3
Liabilities—total
Derivative transactions *4Book value

Fair value¥ 11,534
274,379(5,329)269,050¥ 11,534

Difference

269,050—

72,290502
65,7886,990(3,023)
3,967¥423,131
60,10514,000155,510
19,609237,319¥486,543¥ 1,043

117,400510
65,78845,1108—

3,977¥468,259
60,10514,000155,510
19,609240,991¥490,215¥ 1,04310¥45,128
—
—
—
—
3,672
¥ 3,672¥—¥—

Thousands of U.S. dollars
2012(1) Cash and time deposits(2) Notes and accounts receivable—trade
Allowance for doubtful accounts *1
Notes and accounts receivable—trade—net(3) Investment securities(i) Investments in unconsolidated subsidiaries and affiliated companies(ii) Held-to-maturity debt securities(iii) Available-for-sale securities(4) Long-term loans receivable *2
Allowance for doubtful accounts *1
Long-term loans receivable—net
Assets—total(1) Bank loans(2) Commercial paper(3) Notes and accounts payable(4) Deposits received(5) Long-term debt *3
Liabilities—total
Derivative transactions *4Book value

Fair value$ 399,319
3,661,446(41,984)
3,619,462$ 399,319

Difference

3,619,462—

856,041
5,775
886,463
85,320(32,294)53,026$5,820,086
1,840,275
785,401
2,144,664
244,872
2,643,832$7,659,044$(1,698)1,568,261
5,787
886,463712,22012—

53,095$6,532,387
1,840,275
785,401
2,144,664
244,872
2,685,008$7,700,220$(1,698)69$712,301————
41,176$ 41,176$—$—*1 Notes and accounts receivable-trade and Long-term loans receivable are presented, net of the individual allowance for doubtful accounts.
*2 Current portion of long-term loans receivable is included in “Long-term loans receivable”.
*3 Current portion of long-term debt is included in “Long-term debt”.
*4 Receivables and payables incurred in derivative transactions are presented on a net basis.

Annual Report 201277

(a) Valuation methodology for the fair value of financial instruments and information on marketable securities and derivatives
Assets(1) Cash and time deposits and (2) Notes and accounts receivable—trade
Cash and time deposits and Notes and accounts receivable—trade are presented at book value because they are settled in the short-term and theirfair value approximates their book value.
(3) Investment securities
The fair value of listed stocks is based on the quoted market price and the fair value of debt securities is based on the quoted price which are estimated by correspondent financial institutions.
(4) Long-term loans receivable
The fair value of long-term loans receivable is based on the present value of the total of principal and interest discounted by the interest rate thatwould be applied if similar new loans were entered into.
Liabilities(1) Bank loans, (2) Commercial paper, (3) Notes and accounts payable and (4) Deposits received
Bank loans, Commercial paper, Notes and accounts payable and Deposits received are presented at the book value because they are settled in the
short-term and their fair value approximates their book value.
(5) Long-term debt
The fair value of long-term debt is based on the present value of the total of principal and interest discounted by the interest rate that would beapplied if similar new loans were entered into.
Certain long-term debts with floating rates are tied to interest rate swap transactions and subject to special treatment.
Derivative transactions
Market value offered by correspondent financial institutions is used as fair value. However, as a specially treated interest rate swap is accounted foras an integral part of Long-term loans payable that is subject to be hedged, or the subject of hedging, the fair value of the swap is included in thefair value of Long-term debt.

(b) The book values of financial instruments whose fair value was extremely difficult to estimate were as follows.
Thousands of
U.S. dollars

Millions of yen
2012

2011

2010

2012

Investments in unconsolidated subsidiaries and affiliated companies
Stocks of unlisted companies¥100,675¥86,608¥89,100$1,162,797

Available-for-sale securities
Stocks of unlisted companies
OthersTotal

14,240467¥115,382

11,642487¥98,7379,314
516¥98,930

164,472
5,394$1,332,663

The stocks of unlisted companies and others are not included in investments in unconsolidated subsidiaries, affiliated companies and availablefor-sale securities in the table above because their market price is not available and their future cash flow cannot be estimated, and, accordingly, it isextremely difficult to estimate their fair value.

78

Asahi Group Holdings, Ltd.

(c) Expected repayments of monetary assets and securities with maturities after the fiscal year end were as follows.
Millions of yen
2012

Type

Cash and time deposits
Notes and accounts receivable—trade
Available-for-sale securities:
Corporate bonds
Others
Held-to-maturity debt securities:
Corporate bonds
Total

Within one
year

Over one year
but within fiveyears

¥ 34,573
317,008

¥—
—

¥—
—

¥—
—

¥ 34,573
317,008

—
—

20
55

—
—

—
—

20
55

500
¥352,081

—
¥75

—
¥—

—
¥—

500
¥352,156

Over five years
but within ten
years

Over ten years

Total

Millions of yen
2011

Type

Cash and time deposits
Notes and accounts receivable—trade
Available-for-sale securities:
Others
Held-to-maturity debt securities:
Corporate bonds
Total

Within one
year

Over one year
but within fiveyears

¥ 16,893
279,596

¥ —
—

¥—
—

¥—
—

¥ 16,893
279,596

—

55

—

—

55

—
¥296,489

500
¥555

—
¥—

—
¥—

500
¥297,044

Over five years
but within ten
years

Over ten years

Total

Millions of yen
2010

Type

Cash and time deposits
Notes and accounts receivable—trade
Available-for-sale securities:
Corporate bonds
Others
Held-to-maturity debt securities:
Foreign securities
Corporate bonds
Total

Within one
year

Over one year
but within fiveyears

¥ 11,534
274,379

¥ —
—

¥—
—

¥—
—

¥ 11,534
274,379

80
—

—
55

—
—

—
—

80
55

—
—
¥285,993

2
500
¥557

—
—
¥—

—
—
¥—

2
500
¥286,550

Over five years
but within ten
years

Over ten years

Total

Thousands of U.S. dollars
2012

Type

Cash and time deposits
Notes and accounts receivable—trade
Available-for-sale securities:
Corporate bonds
Others
Held-to-maturity debt securities:
Corporate bonds
Total

Within one
year

Over one year
but within fiveyears

$ 399,319
3,661,446

$ —
—

$—
—

$—
—

$ 399,319
3,661,446

—
—

231
635

—
—

—
—

231
635

5,775
$4,066,540

—
$866

—
$—

—
$—

5,775
$4,067,406

Over five years
but within ten
years

Over ten years

Total(d) See Note 9 “Bank Loans, Commercial Paper and Long-term Debt” for the aggregate annual maturities of long-term debt at December 31,
2012, 2011 and 2010.

Annual Report 201279

6. Securities
A. The following tables summarize book values and fair values of held-to-maturity debt securities with fair values available as of December 31, 2012,2011 and 2010:
Millions of yen
2012
Type

Securities with fair values exceeding book values:
Corporate bonds

Book value

Fair value

Difference

¥500
500

¥501
501

¥1
1

—
¥500

—
¥501

—
¥1

Securities with fair values not exceeding book values:
Total

Millions of yen
2011
Type

Securities with fair values exceeding book values:
Corporate bonds

Book value

Fair value

Difference

¥500
500

¥505
505

¥5
5

—
¥500

—
¥505

—
¥5

Securities with fair values not exceeding book values:
Total

Millions of yen
2010
Type

Securities with fair values exceeding book values:
Foreign bonds
Corporate bonds

Book value

Fair value

Difference

¥ 2
500
502

¥

2
508
510

¥0
8
8

—
¥502

—
¥510

—
¥8

Securities with fair values not exceeding book values:
Total

Thousands of U.S. dollars
2012
Type

Securities with fair values exceeding book values:
Corporate bonds

Book value

Fair value

Difference$5,775
5,775$5,787
5,787

$12
12

—
$5,775—$5,787—$12

Securities with fair values not exceeding book values:
Total

B. The following tables summarize acquisition costs and book values of available-for-sale securities with fair values available as of December 31, 2012,2011 and 2010:
Millions of yen
2012
Type

Securities with book values exceeding acquisition costs:
Equity securities
OthersSecurities with book values not exceeding acquisition costs:
Equity securities
OthersTotal

80

Asahi Group Holdings, Ltd.

Acquisition cost

Book value

Difference¥22,160
47
22,207¥34,350
55
34,405¥12,1908
12,19847,52072
47,592¥69,799

42,281
64
42,345¥76,750(5,239)(8)(5,247)¥ 6,951

Millions of yen
2011
Type

Securities with book values exceeding acquisition costs:
Equity securities
OthersSecurities with book values not exceeding acquisition costs:
Equity securities
Others
Total

Acquisition cost

Book value

Difference¥19,80347
19,850¥25,977
49
26,026¥ 6,174
2
6,176

47,161
76
47,237¥67,087

38,161
59
38,220¥64,246(9,000)(17)(9,017)¥(2,841)

Millions of yen
2010
Type

Securities with book values exceeding acquisition costs:
Equity securities
OthersSecurities with book values not exceeding acquisition costs:
Equity securities
Others
Total

Acquisition cost

Book value

Difference¥18,04148
18,089¥27,90755
27,962¥ 9,866
7
9,873

45,882
82
45,964¥64,053

37,761
65
37,826¥65,788(8,121)(17)(8,138)¥ 1,735

Thousands of U.S. dollars
2012
Type

Securities with book values exceeding acquisition costs:
Equity securities
OthersSecurities with book values not exceeding acquisition costs:
Equity securities
Others
Total

Acquisition cost

Book value

Difference$255,948
543
256,491$396,743
635
397,378$140,795
92
140,887

548,857831
549,688$806,179

488,346739
489,085$886,463(60,511)(92)(60,603)$ 80,284

C. Total sales of available-for-sale securities in the years ended December 31, 2012, 2011 and 2010 amounted to ¥879 million ($10,152 thousand), ¥946
million and ¥3,256 million, respectively. The related gains amounted to ¥188 million ($2,171 thousand), ¥536 million and ¥1,739 million, and therelated losses amounted to ¥94 million ($1,086 thousand), ¥1 million and ¥1,069 million, respectively.

7. Research and Development Expenses
Research and development expenses are expensed when incurred. Research and development expenses included in cost of sales and selling, generaland administrative expenses were ¥9,613 million ($111,030 thousand), ¥8,920 million and ¥9,399 million for the years ended December 31, 2012, 2011
and 2010, respectively.

8. Derivative Financial Instruments
The Companies use interest rate swap and forward currency exchange contracts only for the purpose of mitigating the risk of fluctuations in interest
rates and foreign exchange rates, and commodity swap contracts and currency option contracts only for the purpose of managing the risk arising fromfluctuations in the market price of raw materials.
Forward currency exchange and currency swap, and interest rate swap contracts are subject to the risk of foreign exchange rate changes andinterest rate changes, respectively.
The derivative transactions are executed and managed by the Company’s Finance Section in accordance with established policies and within
specified limits on the amounts of permitted derivative transactions. The Company’s Finance Section reports information on derivative transactions to
the Manager and Executive Officer of the Finance Section whenever necessary.

Annual Report 201281

The following summarizes hedging derivative financial instruments used by the Companies and items hedged:
Hedging instruments:
Forward currency exchange contracts
Interest rate swap contracts
Hedged items:
Foreign currency transactions
Interest on foreign currency bank loans
Fair value information of the derivative transactions which were not accounted for by applying hedge accounting is as follows:
Millions of yen
2012Classification

Type

Forward currency exchange contracts
Long (buy) (U.S. dollar)
Long (buy) (Euro)
Currency option contracts
Short (put) (U.S. dollar)
Total
Commodity swap contracts
Payable fixed price/Receivable floating price
Total

Notional
amount ofcontract

Notional
amount due
over one year

¥2,878
265

—
—

195
¥3,338——¥¥3,065¥3,065——¥(142)¥(142)¥(142)¥(142)

Fair market
value

Difference

¥

¥

(8)
6
(1)
(3)

¥

(8)
6
(1)
(3)

Millions of yen
2011Classification

Type

Forward currency exchange contracts
Long (buy) (U.S. dollar)
Long (buy) (Euro)Long (buy) (AU dollar)
Currency option contracts
Long (call) (U.S. dollar)
Short (put) (U.S. dollar)
Total
Commodity swap contracts
Payable fixed price/Receivable floating price
Total

Notional
amount ofcontract

Notional
amount due
over one year

Fair market
value

Difference¥4,771
164
4,080

—
—
—

¥ 41
(7)
(18)

¥ 41
(7)
(18)

23

—

1

1

54
¥9,092

—
—

(1)
¥ 16

(1)
¥ 16

¥3,418¥3,418——¥(343)¥(343)¥(343)¥(343)

Millions of yen
2010

Classification

Type

Forward currency exchange contracts
Long (buy) (U.S. dollar)
Long (buy) (Euro)
Total
Commodity swap contracts
Payable fixed price/Receivable floating price
Total

Notional
amount ofcontract

Notional
amount due
over one year

Fair market
value

Difference¥8,89469¥8,963———¥7,99561¥8,056¥(899)(8)¥(907)¥2,349¥2,349——¥3,136¥3,136

¥ 787
¥ 787

Thousands of U.S. dollars
2012Classification

Type

Forward currency exchange contracts
Long (buy) (U.S. dollar)
Long (buy) (Euro)
Currency option contracts
Short (put) (U.S. dollar)
Total
Commodity swap contracts
Payable fixed price/Receivable floating price
Total

82

Asahi Group Holdings, Ltd.

Notional
amount ofcontract

Notional
amount due
over one year

$33,241
3,061

—
—

2,252
$38,554——$$35,401$35,401——$(1,640)$(1,640)

Fair market
value

$

(92)
69
(12)
(35)

Difference

$

$

(92)
69
(12)
(35)

$(1,640)$(1,640)

Fair value information of the derivative transactions which were accounted for by applying hedge accounting is as follows:
Millions of yen
2012Classification

Type

Forward currency exchange contracts
Long (buy) (U.S. dollar)
Long (buy) (Euro)Long (buy) (Yen)
TotalInterest rate swap contracts
Payable fixed price/
Receivable floating price
Total

Hedged item

Notional
amount ofcontract

Notional
amount due
over one year

Fair market
value

481
6
77
564

—
—
—
—

¥(1)
(0)
(1)
¥(2)

¥11,000¥11,000——*1¥
Foreign currency transactions¥

Long-term bank loans

Millions of yen
2011Classification

Type

Forward currency exchange contracts
Long (buy) (U.S. dollar)
Long (buy) (Euro)
Total
Interest rate swap contracts
Payable fixed price/
Receivable floating price
Total

Hedged item

Notional
amount ofcontract

Notional
amount due
over one year

Fair market
value

178
1
179

—
—
—

¥5
(0)
¥5

¥52,000¥52,000¥14,500¥14,500*1¥
Foreign currency transactions¥

Long-term bank loans

Millions of yen
2010

Classification

Type

Forward currency exchange contracts
Long (buy) (U.S. dollar)
Total
Interest rate swap contracts
Payable fixed price/
Receivable floating price
Total

Notional
amount ofcontract

Notional
amount due
over one year

Fair market
value

Foreign currency transactions¥25,212¥25,212——¥26,375¥26,375

Long-term bank loans¥52,000¥52,000¥52,000¥52,000*1

Hedged item

Thousands of U.S. dollars
2012Classification

Type

Forward currency exchange contracts
Long (buy) (U.S. dollar)
Long (buy) (Euro)Long (buy) (Yen)
TotalInterest rate swap contracts
Payable fixed price/
Receivable floating price
Total

Hedged item

Foreign currency transactions

Long-term bank loans

Notional
amount ofcontract

Notional
amount due
over one year

Fair market
value$ 5,556
69
889$ 6,514

—
—
—
—

$(12)
(0)
(12)
$(24)

$127,050$127,050——*1*1 The above specially treated interest rate swap is accounted for as an integral part of Long-term loans payable, or is subject to hedging, so that the fair value of the swap
is presented by being included in the fair value of Long-term debt.

Annual Report 201283

9. Bank Loans, Commercial Paper and Long-term Debt
Bank loans at December 31, 2012, 2011 and 2010 were represented by short-term notes or overdrafts bearing interest at average rates of 0.68% perannum for 2012, 0.62% per annum for 2011 and 1.57% per annum for 2010.
The Company has entered into a yen domestic commercial paper program with a current maximum facility amount of ¥200,000 million ($2,310,002
thousand). There were outstanding balances of ¥68,000 million ($785,401 thousand), ¥28,000 million and ¥14,000 million at December 31, 2012, 2011
and 2010 respectively.
Long-term debt at December 31, 2012, 2011 and 2010 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2012

Domestic debentures:
1.55% debentures due in 2011
1.72% debentures due in 2012
0.63% debentures due in 2012
1.88% debentures due in 2014
0.92% debentures due in 2014
0.63% debentures due in 2015
0.52% debentures due in 2016
0.76% debentures due in 2018
0.33% debentures due in 20170.55% debentures due in 2019
Zero coupon convertible bonds due in 2023
Zero coupon convertible bonds due in 2028
Long-term loans, principally from banks, insurance companies and agricultural cooperatives:
Secured loans due through 2020 at interest rates of mainly 1.15% to 4.41%
Unsecured loans due through 2020 at interest rates of mainly 0.31% to 8.39%
Amount due within one year

¥

—
—
—
10,00010,00020,00030,00020,00018,00010,00035,12135,0001,349
39,434228,904(15,367)¥213,537

2011

¥

2010

2012

—
10,00015,00010,00010,00020,00030,00020,000——35,13335,000¥ 15,000
10,00015,00010,00010,00020,000————35,14535,000$———115,500
115,500
231,000
346,500
231,000
207,900
115,500
405,650
404,250

1,480
85,262271,875(71,462)¥200,413

4,099
83,075
237,319(24,155)¥213,164

15,581
455,4632,643,844(177,489)$2,466,355

Assets, at book value, were pledged as collateral for loans totaling ¥1,349 million ($15,581 thousand), ¥1,480 million and ¥4,099 million, at December
31, 2012, 2011 and 2010 respectively, were as follows:
Thousands of
U.S. dollars

Millions of yen

Land
Buildings and structures
Machinery and equipment

2012

2011

2010

2012

¥ 9,1883,970
1,845¥15,003¥9,1884,120
1,511¥14,819¥16,057
6,129
406¥22,592$106,122
45,854
21,310$173,286

Millions of yen

Thousands of
U.S. dollars¥ 15,367
25,366
26,49230,514
28,833102,332¥228,904$ 177,489
292,977
305,983
352,437
333,0221,181,936$2,643,844

The aggregate annual maturities of long-term debt at December 31, 2012 were as follows:
Years ending December 31,

2013
2014
2015
2016
2017
2018 and thereafter

84

Asahi Group Holdings, Ltd.

10. Employees’ Severance and Retirement Benefits
Employees’ severance and retirement benefits included in the liability section of the consolidated balance sheet as of December 31, 2012, 2011 and2010 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Projected benefit obligation
Less fair value of pension assets
Less fair value of employees’ retirement benefit trust
Unrecognized actuarial differences
Unrecognized prior service cost
Prepaid pension cost
Employees’ severance and retirement benefits

2012

2011

2010

2012

¥101,546(55,427)(23,091)(11,525)389
11,960¥ 23,852¥ 91,850(44,948)(21,495)(17,258)
716
12,990¥ 21,855¥ 92,933(44,545)(22,310)(15,695)
1,730
12,626¥ 24,739$1,172,857(640,182)(266,701)(133,114)
4,493
138,138$ 275,491

The discount rates used by the Companies are mainly 2.0% for the years ended December 31, 2012, 2011 and 2010, respectively.
The pension assets of the funded contributory pension plan are not included in the fair value of pension assets above because the amount ofpension assets cannot be calculated reliably. The contribution to the funded contributory pension plan is reported as severance and retirement benefit expenses.
Included in the consolidated statement of income for the years ended December 31, 2012, 2011 and 2010 are severance and retirement benefit
expenses which comprised of the following:Thousands of
U.S. dollars

Millions of yen

Service costs—benefits earned during the year
Interest cost on projected benefit obligation
Expected return on plan assets
Amortization of actuarial differences
Amortization of prior service cost
OthersSeverance and retirement benefit expenses

2012

2011

2010

¥4,471
1,912
(411)
2,788
(324)
698
¥9,134¥4,232
1,802
(701)
2,399
(341)
722
¥8,113¥ 4,691
1,828(1,342)
2,090
(390)
493
¥ 7,370

2012$ 51,640
22,084(4,747)32,201(3,742)
8,062$105,498

The rates of expected return on plan assets used by the Companies are mainly 0.0% per annum for 2012, 1.0% per annum for 2011 and 3.0% perannum for 2010. The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally to each service year using
the estimated number of total service years. Actuarial gains and losses are amortized by the straight-line method over the average of the estimatedremaining service lives of mainly 10 years commencing with the following period. Prior service costs are amortized by the straight-line method over the
average of the estimated remaining service lives of mainly 10 years.

Annual Report 201285

11. Income Taxes
The Company is subject to corporation, enterprise and inhabitants’ taxes, which resulted in an aggregate normal effective tax rate of approximately
40.4% for the years ended December 31, 2012, 2011 and 2010.
The following table summarizes the significant differences between the statutory tax rate and the actual effective tax rate:
Statutory tax rate
Non-deductible expenses
Non-taxable dividend income
Per capita inhabitants’ taxes
Valuation allowance
Amortization of goodwill
Adjustment of goodwill
Equity in net income of unconsolidated subsidiaries and affiliated companies
Gain on change in equity
Temporary differences on investment in affiliated companies
Tax rate changes due to tax reform
Others
Effective tax rate

2012

2011

2010

40.4%
2.1%
(0.1%)
0.4%(0.4%)
4.8%
3.2%(4.3%)(3.3%)—
0.7%(1.1%)
42.4%

40.4%
1.7%
(0.1%)
0.5%(6.9%)
3.0%—(2.4%)
—
—
0.9%
1.5%
38.6%

40.4%
1.9%
(1.9%)
0.4%
0.2%
7.9%
—
(4.3%)—(2.4%)
—
2.1%
44.3%

Significant components of deferred income tax assets and liabilities as of December 31, 2012, 2011 and 2010 were as follows:
Thousands of
U.S. dollars

Millions of yen

Deferred income tax assets:
Allowance for doubtful accounts
Employees’ severance and retirement benefits
Accrued enterprise taxes
Loss on factory restructuring
Depreciation
Loss on impairment of fixed assets
Loss on devaluation of investment securities
Loss on securities contributed to employees’ retirement benefit trust
Net operating loss carryforwards
Unrealized gain on sale of non-current assets eliminated on consolidation
Accrued expenses
Temporary differences on investment in affiliated companies
OthersValuation allowance
Total deferred income tax assets
Deferred income tax liabilities:
Reserve deductible for Japanese tax purposes
Unrealized gains on available-for-sale securities
Land revaluation gain
Retained earnings of foreign subsidiaries
Adjustment of book value based on fair value
Prepaid pension cost
OthersTotal deferred income tax liabilities
Net deferred income tax assets

2012

2011

2010

2012

¥ 3,255
13,497
1,571
1,166
280
2,759
2,571
—
5,425
4,674
1,631
—
9,812
46,641(9,100)37,541¥ 2,90713,309
2,005
7,310
130
4,693
2,486
—
5,627
4,667
1,622
—
10,57755,333(8,560)46,773¥ 2,943
14,956
2,267
7,716
204
3,825
2,810
1,483
10,993
7,206
1,791
3,770
10,69070,654(21,087)
49,567$ 37,595
155,891
18,145
13,467
3,234
31,866
29,695—62,65953,985
18,838—113,329538,704(105,105)
433,599(2,019)(2,417)(12,241)(374)(21,039)(32)(193)(38,315)¥ (774)

(824)
(456)
(5,035)(282)(4,372)(501)(66)(11,536)¥ 35,237(1,042)(700)(5,750)
—
—
(858)
(976)
(9,326)¥ 40,241(23,319)(27,916)(141,384)(4,320)(243,001)(370)(2,229)(442,539)$ (8,940)

The net deferred income tax assets as of December 31, 2012 consisted of deferred income tax assets included in current assets and fixed assets
amounting to ¥12,623 million ($145,796 thousand) and ¥18,212 million ($210,349 thousand) respectively, and deferred income tax liabilities included incurrent liabilities and non-current liabilities amounting to ¥176 million ($2,033 thousand) and ¥31,433 million ($363,052 thousand) respectively.
The net deferred income tax assets as of December 31, 2011 consisted of deferred income tax assets included in current assets and fixed assets
amounting to ¥12,983 million and ¥28,950 million respectively, and deferred income tax liabilities included in current liabilities and non-current liabilities
amounting to ¥95 million and ¥6,602 million respectively.
The net deferred income tax assets as of December 31, 2010 consisted of deferred income tax assets included in current assets and fixed assets
amounting to ¥14,623 million and ¥30,450 million respectively, and deferred income tax liabilities included in current liabilities and non-current liabilities
amounting to ¥0 million and ¥4,831 million respectively.

86

Asahi Group Holdings, Ltd.

12. Net Assets
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However, a company may,by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of the new shares as additional paid-in capital, whichis included in the Capital surplus.
Under the Japanese Corporate Law (“the Law”), companies are required to set aside an amount equal to at least 10% of cash dividends and othercash appropriations in a legal earnings reserve until the total of the legal earnings reserve and additional paid-in capital equals 25% of common stock.
Under the Law, the legal earnings reserve and additional paid-in capital can be used to eliminate or reduce a deficit by a resolution of the shareholders’ meeting or can be capitalized by a resolution of the Board of Directors.
Additional paid-in capital and the legal earnings reserve may not be distributed as dividends. Under the Law, however, additional paid-in capitaland legal earnings reserve may be transferred to retained earnings by a resolution of the shareholders’ meeting as long as the total amount of the legal
earnings reserve and additional paid-in capital remained equal to or exceeded 25% of common stock.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of theCompany in accordance with the Law.
At the annual shareholders’ meeting held on March 26, 2013, the shareholders resolved cash dividends amounting to ¥6,524 million ($75,352
thousand). Such appropriations have not been accrued in the consolidated financial statements as of December 31, 2012, and are recognized in the
period in which they were resolved.

13. Commitments and Contingent Liabilities
The Companies were contingently liable as guarantors for borrowings of unconsolidated subsidiaries, affiliated companies, employees and others,
including letters of awareness and keep-well agreements, in the amount of ¥691 million ($7,981 thousand) as of December 31, 2012.

14. Adjustment of Goodwill
The adjustment of goodwill recognized as other expense mainly comprises loss attributable to circumstances that the Company found out after theacquisition of Flavoured Beverages Group Holdings Limited (currently Independent Liquor (NZ) Limited), an alcohol beverage company in New Zealandacquired in 2011, that there was false information in the financial information provided by the seller side, which served as the basis for the purchase priceof the company. The Company filed lawsuit of a claim for damages on February 14, 2013 in order to recover the damages incurred. The amount ofexpense recognized by the Company for accounting purposes differs from the amount of damages incurred in the legal sense, which will be determined by the Court based on legal principles and expert evidence.

Annual Report 201287

15. Impairment of Fixed Assets
The Company and its consolidated domestic subsidiaries have grouped their fixed assets principally based on their offices or factories, while considering mutual supplementation of the cash flows.
For fixed assets in the real estate business and idle properties, each property is considered to constitute a group. Headquarters and welfare facilities are classified as corporate assets because they do not generate cash flows independently from other assets or groups of assets. The recoverable
amount of each group of assets is the higher amount of net selling price (fair value less costs to sell) or value in use.
Loss on impairment of fixed assets for the year ended December 31, 2012 consisted of the following:
Use

Location

Type of assets

Others—Goodwill

A portion of the goodwill reported in the soft drink business was devalued to its recoverable amount, since the expected future revenue wasconsidered to be unrealizable. As a result, the Company recognized a loss on impairment of ¥3,070 million ($35,459 thousand).
The Company used the value in use which was calculated by discounting future cash flows at an interest rates of 7.3%.
No loss on impairment was recognized for the year ended December 31, 2011.
Loss on impairment of fixed assets for the year ended December 31, 2010 consisted of the following:
Use

Location

Type of assets

Asset for rent
OthersTakatsuki (Osaka) and 1 other—

Buildings and structures, Land
Goodwill

Carrying amounts of certain assets for rent were devalued to their recoverable amounts, since they were considered not to be recoverable due totheir fair market value substantially declining. A portion of the goodwill reported in the soft drink business and the food business was devalued to its
recoverable amount, since the expected future revenue was considered to be unrealizable. As a result, the Company recognized a loss on impairmentof ¥13,573 million, which consisted of buildings and structures of ¥366 million, land of ¥1,229 million and goodwill of ¥11,978 million.
The Company used the net selling price based on real-estate appraisals for the related assets, and the value in use was calculated by discounting
future cash flows at interest rates of 4.3% to 7.3%.

16. Information on Certain Leases
As discussed in Note 2, finance leases commenced prior to January 1, 2009 which do not transfer ownership to the lessees are accounted for as operating leases.
A summary of the assumed amount for acquisition cost, accumulated depreciation and net book value at December 31, 2012, 2011 and 2010 wereas follows:
Thousands of
U.S. dollars

Millions of yen

Machinery, furniture and fixtures and others
Acquisition cost
Accumulated depreciation
Net book value

2012

2011

2010

2012

¥19,090
16,231
2,859¥33,268
26,1507,118¥44,758
30,323
14,435$220,490
187,468
33,022Future lease payments as of December 31, 2012, 2011 and 2010, net of interest, under such leases were summarized as follows:
Thousands of
U.S. dollars

Millions of yen

Due within one year
Due after one year

88

Asahi Group Holdings, Ltd.

2012

2011

2010

2012

¥2,105535¥2,640¥5,346
2,188¥7,534¥ 8,401
6,844¥15,245$24,3136,179$30,492

Lease payments, depreciation equivalents and amounts representing interest under the finance leases which are accounted for in the samemanner as operating leases for the years ended December 31, 2012, 2011 and 2010 were as follows:
Thousands of
U.S. dollars

Millions of yen

Lease payments
Depreciation equivalents
Amounts representing interest

2012

2011

2010

2012

¥5,5935,050
179¥8,594
7,918
417¥11,343
10,479660$64,599
58,3282,067

Differences between total lease expenses and acquisition costs of the leased properties comprise the interest expense equivalent. The interest
expense equivalent is allocated using the interest method over the lease terms.

17. Shareholder’s Equity
Changes in the number of common stock issued and treasury stock outstanding during the years ended December 31, 2012, 2011 and 2010 wereas follows:
Common stock issued
Balance at the beginning of the year
Decrease due to retirement of treasury stocks
Balance at the end of the year

2012

2011

2010

483,585,862—
483,585,862

483,585,862—
483,585,862

483,585,862—
483,585,862

Treasury stock outstanding
2012

Balance at the beginning of the year
Increase due to purchase of odd stock
Decrease due to exercise of stock options
Decrease due to stock exchanges
Decrease for other reasons
Balance at the end of the year

17,950,000
7,673(346,100)—(89)
17,611,484

2011

18,220,056
7,246(276,800)—(502)
17,950,000

2010

18,576,966
13,827(300,900)(69,271)(566)
18,200,056

Annual Report 201289

18. Stock Option Plans
The following tables summarize the contents of stock options as of December 31, 2012, 2011 and 2010.

90

Company nameDate of the annual shareholders’ meeting
Position and number of grantee
Class and number of stock
Date of issue
Condition of settlement of rights
Period the grantees must provide service in return for stock options
Period subscription rights can be exercised

Asahi Group Holdings, Ltd.
March 29, 2001
Directors and Executive Officers: 30
Common Stock 344,000
March 29, 2001
No provisions
No provisions
From January 1, 2005 to March 28, 2011

Company nameDate of the annual shareholders’ meeting
Position and number of grantee
Class and number of stock
Date of issue
Condition of settlement of rights
Period the grantees must provide service in return for stock options
Period subscription rights can be exercised

Asahi Group Holdings, Ltd.
March 28, 2002
Directors and Executive Officers: 43
Common Stock 610,000
March 28, 2002
No provisions
No provisions
From January 1, 2005 to March 27, 2012

Company nameDate of the annual shareholders’ meeting
Position and number of grantee
Class and number of stock
Date of issue
Condition of settlement of rights
Period the grantees must provide service in return for stock options
Period subscription rights can be exercised

Asahi Group Holdings, Ltd.
March 28, 2003
Directors, Corporate Auditors and Executive Officers: 49
Common Stock 645,000
March 28, 2003
No provisions
No provisions
From March 28, 2005 to March 27, 2013

Company nameDate of the annual shareholders’ meeting
Position and number of grantee
Class and number of stock
Date of issue
Condition of settlement of rights
Period the grantees must provide service in return for stock options
Period subscription rights can be exercised

Asahi Group Holdings, Ltd.
March 30, 2004
Directors, Corporate Auditors and Executive Officers: 44
Common Stock 585,000
March 30, 2004
No provisions
No provisions
From March 30, 2006 to March 29, 2014

Company nameDate of the annual shareholders’ meeting
Position and number of grantee
Class and number of stock
Date of issue
Condition of settlement of rights
Period the grantees must provide service in return for stock options
Period subscription rights can be exercised

Asahi Group Holdings, Ltd.
March 30, 2005
Directors, Corporate Auditors and Executive Officers: 45
Common Stock 600,000
March 30, 2005
No provisions
No provisions
From March 30, 2007 to March 29, 2015

Company nameDate of the annual shareholders’ meeting
Position and number of grantee
Class and number of stock
Date of issue
Condition of settlement of rights
Period grantees provide service in return for stock options
Period subscription rights can be exercised

Asahi Group Holdings, Ltd.
March 30, 2006
Directors, Corporate Auditors and Executive Officers: 48
Common Stock 620,000
March 30, 2006
No provisions
No provisions
From March 30, 2008 to March 29, 2016

Asahi Group Holdings, Ltd.

The following table summarizes the volume and movement of stock options for the year ended December 31, 2012.
Exercisable stock options
Company nameDate of the annual shareholders’ meeting
Stock options outstanding at January 1, 2012
Stock options exercised
Forfeitures
Stock options outstanding at December 31, 2012

March 30,
2000

March 29,
2001

—
—
—
—

—
—
—
—

Asahi Group Holdings, Ltd.
March 28,
March 28,
March 30,
2002
2003
2004

March 30,
2005

March 30,
2006

99,60098,6001,000—

415,300
133,300—
282,000

578,900
54,200—524,700

619,000
7,000—
612,000

86,00053,000—33,000The following table summarizes the price information of stock options as of December 31, 2012.
Company nameDate of the annual shareholders’ meeting
Exercise price
Average market price of the stock at the time of exercise

March 30,
2000

March 29,
2001

Asahi Group Holdings, Ltd.
March 28,
March 28,
March 30,
2002
2003
2004

March 30,
2005

March 30,
2006

¥1,115¥—¥1,185¥—¥1,090¥1,718¥1,374¥1,748¥1,688¥1,757¥ 830¥1,746¥1,205¥1,758The following table summarizes the volume and movement of stock options for the year ended December 31, 2011.
Exercisable stock options
Company nameDate of the annual shareholders’ meeting
Stock options outstanding at January 1, 2011
Stock options exercised
Forfeitures
Stock options outstanding at December 31, 2011

March 30,
2000

March 29,
2001

Asahi Group Holdings, Ltd.
March 28,
March 28,
March 30,
2002
2003
2004

March 30,
2005

March 30,
2006

—
—
—
—

74,70052,20022,500—251,400
151,800—
99,600484,500
69,200—415,300

580,500
1,600—
578,900

619,000——
619,000

88,0002,000—
86,000The following table summarizes the price information of stock options as of December 31, 2011.
Company nameDate of the annual shareholders’ meeting
Exercise price
Average market price of the stock at the time of exercise

March 30,
2000

March 29,
2001

Asahi Group Holdings, Ltd.
March 28,
March 28,
March 30,
2002
2003
2004

March 30,
2005

March 30,
2006

¥1,115¥—¥1,185¥1,570¥1,090¥1,558¥1,374¥1,557¥1,688¥—¥ 830¥1,566¥1,205¥1,566

The following table summarizes the volume and movement of stock options for the year ended December 31, 2010.
Exercisable stock options
Company nameDate of the annual shareholders’ meeting
Stock options outstanding at January 1, 2010
Stock options exercised
Forfeitures
Stock options outstanding at December 31, 2010

March 30,
2000

March 29,
2001

Asahi Group Holdings, Ltd.
March 28,
March 28,
March 30,
2002
2003
2004

March 30,
2005

March 30,
2006

18,00014,0004,000—

196,600
121,900—
74,700330,000
78,600—251,400

517,900
33,400—484,500

587,500
7,000—
580,500

620,000
1,000—
619,000

133,000
45,000—88,000The following table summarizes the price information of stock options as of December 31, 2010.
Company nameDate of the annual shareholders’ meeting
Exercise price
Average market price of the stock at the time of exercise

March 30,
2000

March 29,
2001

Asahi Group Holdings, Ltd.
March 28,
March 28,
March 30,
2002
2003
2004

March 30,
2005

March 30,
2006

¥1,115¥1,748¥1,185¥1,708¥1,090¥1,694¥1,374¥1,740¥1,688¥1,740¥ 830¥1,709¥1,205¥1,724

Annual Report 201291

19. Segment Information(1) GENERAL INFORMATION ABOUT REPORTABLE SEGMENTS
Each reportable segment of Asahi Group is a business unit in the Asahi Group, for which separate financial information is available. Reportable segments are reviewed periodically at the Board of Directors Meeting in order to determine the allocation of management resources and evaluate businessresults by each reportable segment.
The Asahi Group mainly engages in the manufacturing and sale of Alcohol Beverages, Soft drinks and Food for the domestic market, and the
manufacture and sale of Alcohol Beverages and Soft Drinks for the Overseas market. Therefore, the reportable segments of Asahi Group are composedof four segments, “Alcohol Beverages”, “Soft Drinks”, “Food” and “Overseas”.
The type of primary products and services of each reportable segment and “Others” are as follows.
“Alcohol Beverages” includes the manufacture and sale of Alcohol products such as Beer, Happoshu, Shochu and Whisky, the restaurant business,
the wholesale business and others. “Soft Drinks” includes the manufacture and sale of Soft Drinks and others. “Food” includes the manufacture andsale of food and chemicals. “Overseas” includes the manufacture and sale of Alcohol products such as Beer, Soft Drinks and others. “Others” includes
the distribution business and others.

(2) BASIS OF MEASUREMENT OF REPORTED SALES, SEGMENT PROFIT OR LOSS, SEGMENT ASSETS AND OTHER
MATERIAL ITEMSThe accounting methods of each reportable segment are the same as those set forth in the “Significant accounting policies”. The amount of segment
profit corresponds to that of operating income. Intersegment sales and transfer prices are calculated based on market value.

(3) INFORMATION ABOUT REPORTABLE SEGMENT PROFIT OR LOSS, SEGMENT ASSETS AND OTHER MATERIAL ITEMS
Segment information for the year ended December 31, 2012
Millions of yen
Reportable segment
Year ended December 31, 2012

Sales:
External customers
Intersegment
Total sales
Segment income (loss)
Segment assets
Other
Depreciation
Amortization of goodwill
Equity in earnings (loss) of affiliates
Investment in affiliates
Increase in property, plant andequipment and intangible assets

Alcohol
Beverages

Soft Drinks

Food

Overseas*1
Others¥922,250
21,767944,017¥113,306¥683,588¥370,836
4,614
375,450¥ 7,379¥338,340¥101,627
1,871
103,498¥ 3,669¥ 88,064¥157,932
22
157,954¥ (3,873)¥498,079¥26,432
48,02474,456¥ 607¥17,145¥1,579,077
76,298
1,655,375¥ 121,088¥1,625,216¥—(76,298)(76,298)¥ (12,651)¥106,972¥1,579,077—
1,579,077¥ 108,437¥1,732,188¥ 30,253———¥ 14,455
2,374
—
—

¥

¥

¥

¥

¥

¥

18,096

15,884

3,368
298
(142)
—
5,211

8,915
7,457
10,580174,531
9,966

309
—
—
—

Total

220

*2
Adjustment

57,30010,12910,438
174,531
49,377

2,066
—
179
1,458

*3
Consolidated

59,366
10,12910,617
175,989793

50,170*2
Adjustment*3
Consolidated

Thousands of U.S. dollars
Reportable segment
Alcohol
Beverages

Soft Drinks

Food

Overseas*1
OthersTotal$10,651,998
251,409
10,903,407$ 1,308,686$ 7,895,449$4,283,160
53,292
4,336,452$ 85,227$3,907,831$1,173,793
21,6101,195,403$ 42,377$1,017,140$1,824,117
254
1,824,371$ (44,733)$5,752,818$305,290
554,678
859,968$ 7,011$198,025$18,238,358
881,243
19,119,601$ 1,398,568$18,771,263$$

349,423———$ 166,955
27,420——$38,901
3,442(1,640)—$ 102,968
86,128122,199
2,015,835$$$

209,009

183,460

60,187

115,108

Year ended December 31, 2012

Sales:
External customers
Intersegment
Total sales
Segment income (loss)
Segment assets
Other
Depreciation
Amortization of goodwill
Equity in earnings (loss) of affiliates
Investment in affiliates
Increase in property, plant andequipment and intangible assets

3,569
—
—
—
2,541

661,816
116,990
120,559
2,015,835
570,305— $18,238,358(881,243)—(881,243) 18,238,358$ (146,119) $ 1,252,449$1,235,528 $20,006,791
23,862—
2,067
16,8409,159$

685,678
116,990122,626
2,032,675
579,464

In accordance with a change in governance, Asahi group changed the segment of Asahi Group Engineering Ltd., a non-consolidated subsidiary
which is accounted for using the equity method, from “Alcohol Beverages” to “Adjustment” for the year ended December 31, 2012.

92

Asahi Group Holdings, Ltd.

For the year ended December 31, 2011, Asahi Group Engineering Ltd. was included in the segment “Alcohol Beverages”, because it did notmaterially impact on the total segment information.
*1 “Others” includes the distribution business and others.
*2 Adjustment is as follows:(a) Adjustment to Segment income (loss) of ¥(12,651) million ($(146,119) thousand) includes corporate expenses of ¥(12,435) million ($(143,624) thousand) which is notallocated to reportable segments and the elimination of inter-segment transactions, etc. of ¥(216) million ($(2,495) thousand).
(b) Adjustment to Segment assets of ¥106,972 million ($1,235,528 thousand) includes corporate assets of ¥124,707 million ($1,440,367 thousand) which is not allocatedto reportable segments, and the inter-segment receivables and payables elimination of ¥(17,736) million ($(204,851) thousand). Corporate assets are primarily theassets held by the Company.
(c) Adjustment to Depreciation of ¥2,066 million ($23,862 thousand) is the depreciation related to corporate assets.
(d) Adjustment to Equity in earnings (loss) of affiliates of ¥179 million ($2,067 thousand) is the equity in earnings (loss) of affiliates related to corporate assets.
(e) Adjustment to Investment in affiliates of ¥1,458 million ($16,840 thousand) is the investment in affiliates related to corporate assets.
(f) Adjustment to the Increase in property, plant and equipment and intangible assets of ¥793 million ($9,159 thousand) is the amount of purchases of property, plantand intangible assets related to corporate assets.
*3 Segment income (loss) was reconciled with Operating income presented in the Consolidated statement of income.

(4) INFORMATION ABOUT PRODUCTS AND SERVICES
Year ended December 31, 2012
Information about products and services is omitted here since it is the same as that disclosed in (1) General Information about Reportable Segments.

(5) INFORMATION ABOUT GEOGRAPHICAL AREAS
Year ended December 31, 2012(a) Sales
Millions of yenJapan¥1,416,790

Others¥162,287

Thousands of U.S. dollars
Total

Japan

OthersTotal¥1,579,077$16,363,941$1,874,417$18,238,358*1 Sales are classified into a country or an area on the basis of the customer’s location.
*2 Major countries and areas included in “Others” are Oceania.

(b) Property, plant and equipment
Millions of yen

Thousands of U.S. dollars

Japan

OthersTotal¥524,153¥59,246¥583,399

Japan

Others$6,053,973

Total$684,292$6,738,265(6) INFORMATION ABOUT MAJOR CUSTOMERSYear ended December 31, 2012
Millions of yen
Name of customers

Sales

Kokubu & Co., Ltd.
Itochu-Shokuhin Co., Ltd.

¥178,388¥186,428

Thousands of
U.S. dollars
Sales$2,060,383$2,153,246

Segment

Alcohol Beverages, Soft Drinks, Food
Alcohol Beverages, Soft Drinks, Food

(7) INFORMATION ABOUT LOSS ON IMPAIRMENT OF FIXED ASSETS BY REPORTABLE SEGMENT
Year ended December 31, 2012
Millions of yen

Loss on impairment of fixed assets

Alcohol
Beverages

Soft Drinks¥—¥3,070Food

Overseas¥—¥—

Others¥—Adjustment

¥—

Total

¥3,070Thousands of U.S. dollars

Loss on impairment of fixed assets

Alcohol
Beverages

Soft Drinks$—$35,459

Food$—

Overseas$—

Others$—Adjustment

$—

Total

$35,459

Annual Report 201293

(8) INFORMATION ABOUT AMORTIZATION AND THE UNAMORTIZED BALANCE OF GOODWILL BY REPORTABLE SEGMENT
Year ended December 31, 2012
Millions of yen

Amortization of goodwill
Unamortized balance of goodwill

Alcohol
Beverages

Soft Drinks¥——¥ 2,374
54,875

Food

Overseas

¥ 298
6,056

¥

Others

7,881
142,834

Adjustment

¥—
—

¥—
—

Total

¥ 10,553
203,765

Thousands of U.S. dollars

Amortization of goodwill
Unamortized balance of goodwill

Alcohol
Beverages

Soft Drinks

Food

$—
—

$ 27,420
633,807$ 3,442
69,947

Overseas$

Others91,025
1,649,734

Adjustment

Total

$—
—

$—
—

$ 121,887
2,353,488*2
Adjustment*3
Consolidated(1) SEGMENT INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2011
Millions of yen
Reportable segment
Year ended December 31, 2011

Sales:
External customers
Intersegment
Total sales
Segment income(loss)
Segment assets
Other
Depreciation
Amortization of goodwill
Equity in earnings (loss) of affiliates
Investment in affiliates
Increase in property, plant andequipment and intangible assets

Alcohol
Beverages

Soft Drinks

Food

Overseas

Others*1
Total¥921,657
20,767
942,424¥101,025¥698,124¥324,782
5,033
329,815¥11,389¥199,237¥98,033
2,032
100,065¥ 4,158¥86,783¥ 94,22017
94,237¥ (2,913)¥446,596¥24,044
46,51670,560¥ 760¥16,774¥1,462,736
74,365
1,537,101¥ 114,419¥1,447,514¥— ¥1,462,736(74,365)—(74,365) 1,462,736¥ (7,229) ¥ 107,190¥ 82,394 ¥1,529,908¥ 36,519—
80
864¥ 11,069
2,804——¥ 2,807
303
(177)
101

¥

¥

¥

¥

11,157

17,773

6,090

6,933
3,265
5,473
158,624
4,380

304
—
—
—
91

57,632
6,372
5,376
159,589
39,491

503
—
104
486

¥

734

58,1356,372
5,480
160,075
40,225*1 “Others” includes the distribution business and others.
*2 Adjustment is as follows:(a) Adjustment to Segment income (loss) of ¥(7,229) million includes corporate expenses of ¥(7,826) million which is not allocated to reportable segments and the elimination of inter-segment transactions, etc. of ¥597 million.
(b) Adjustment to Segment assets of ¥82,394 million includes corporate assets of ¥98,031 million which is not allocated to reportable segments, and the inter-segment
receivables and payables elimination of ¥(15,637) million. Corporate assets are primarily the assets held by the Company.
(c) Adjustment to Depreciation of ¥503 million is the depreciation related to corporate assets.
(d) Adjustment to Equity in earnings (loss) of affiliates of ¥104 million is the equity in earnings (loss) of affiliates related to corporate assets.
(e) Adjustment to Investment in affiliates of ¥486 million is the investment in affiliates related to corporate assets.
(f) Adjustment to the Increase in property, plant and equipment and intangible assets of ¥734 million is the amount of purchases of property, plant and intangible assets
related to corporate assets.
*3 Segment income (loss) was reconciled with Operating income presented in the Consolidated statements of income.

(2) INFORMATION ABOUT PRODUCTS AND SERVICES
Year ended December 31, 2011
Information about products and services is omitted here since it is the same as that disclosed in (1) General Information about Reportable Segments.

(3) INFORMATION ABOUT GEOGRAPHICAL AREAS
Year ended December 31, 2011(a) Sales
Domestic sales in Japan amounted to more than 90% of net consolidated sales. Therefore, sales are not disclosed by geographical region.

(b) Property, plant and equipment
The balance of property, plant and equipment located in Japan amounted to more than 90% of the total balance of property, plant and equipment.
Therefore, property, plant and equipment are not disclosed by geographical region.

(4) INFORMATION ABOUT MAJOR CUSTOMERSYear ended December 31, 2011
Millions of yen

94

Name of customers

Sales

Kokubu & Co., Ltd.
Itochu-Shokuhin Co., Ltd.

¥158,021¥167,360

Asahi Group Holdings, Ltd.

Segment

Alcohol Beverages, Soft Drinks, Food
Alcohol Beverages, Soft Drinks, Food

(5) INFORMATION ABOUT AMORTIZATION AND THE UNAMORTIZED BALANCE OF GOODWILL BY REPORTABLE SEGMENT
Year ended December 31, 2011
Millions of yen
Alcohol
Beverages

Soft Drinks¥——¥2,80433,860

Amortization of goodwill
Unamortized balance of goodwill

Food

Overseas

¥ 302
6,354

¥

Others

3,690
144,194

Adjustment

¥—
—

¥—
—

Total

¥

6,796
184,408

Segment information for the year ended December 31, 2010, which was prepared under the previous standard and formally reported is as follows:
The Companies primarily engage in the manufacturing and sale of products in three major segments grouped on the basis of similarities in thetype and nature of products.
(1) Business segment information for the year ended December 31, 2010 was as follows:
Millions of yen
Year ended December 31, 2010

Sales:
External customers
Intersegment
Total sales
Operating expenses
Operating income
Identifiable assets
Depreciation
Loss on impairment of fixed assets
Capital investments

Alcohol Beverages¥935,850
17,285
953,135
868,568¥ 84,567¥680,117
38,636—
10,537

Soft Drinks¥391,566
2,377
393,943
389,021¥ 4,922¥335,325
16,461931
18,625

Elimination and/or Corporate

Food

Others¥95,440
1,787
97,227
93,594¥ 3,633¥83,120
2,582
11,046
6,503¥ 66,605
53,552
120,157
118,652¥ 1,505¥ 73,092
2,029
1,596
1,073

¥

—
(75,001)(75,001)(75,723)¥722¥233,7042—0Consolidated¥1,489,461—
1,489,461
1,394,112¥ 95,349¥1,405,358
59,71013,57336,738From the year ended December 31, 2010 the “Food and Pharmaceutical” segment was shifted to the “Food” segment. This change in businesscategories had no impact on segment information.
(2) Geographical segment information for the year ended December 31, 2010 was as follows:
Millions of yen
Year ended December 31, 2010

Sales:
External customers
Intersegment
Total sales
Operating expenses
Operating income
Identifiable assets

Japan¥1,391,871
227
1,392,098
1,292,754¥ 99,344¥1,029,117

Others¥ 97,590
997,599101,595¥ (3,996)¥127,135

Elimination and/or
Corporate

¥

—
(236)
(236)
(237)
¥
1
¥249,106

Consolidated¥1,489,461—
1,489,461
1,394,112¥ 95,349¥1,405,358

Geographical distances are considered in classification by country or area. However, sales and identifiable assets in each country or area except
for Japan are less than 10% of the total amount of consolidated sales and consolidated identifiable assets. Therefore, countries or areas except forJapan is displayed as “Others”.
Major countries and areas included in “Others” are Australia and China.
Sales to foreign customers are less than 10% of the Company’s consolidated net sales for 2010. Therefore, overseas sales information is not disclosed.

20. Business Combinations
Business combinations resulting from acquisitions during the year ended December 31, 2012

(1) OUTLINE OF THE TRANSACTIONS(a) Name and business of acquired company
Calpis Co., Ltd. (“Calpis”)
Soft drinks business(b) Outline and purpose of the transaction
Calpis has been successfully growing its business by focusing on lactobacilli and fermentation technologies and its core lactic acid beverage,
Calpis—Japan’s first lactic acid drink which has been popular among consumers for many years—and its brand which is associated with a healthy
image and has been widely accepted in the market. Additionally, Calpis is highly recognized for its initiatives in high-value added health beverages,
foods and feedstuff businesses which utilize microbial technology developed from lactic acid bacteria and fermentation technologies handed down
for over 90 years. Furthermore, Calpis has been developing a more solid earnings foundation for its domestic business, and focusing on expanding
its overseas beverage operations since becoming a wholly owned subsidiary of Ajinomoto in 2007.

Annual Report 201295

Partnerships between Asahi and Calpis date back to May 2001 when Asahi Soft Drinks and Calpis started sharing vending machines to sell eachother’s products. In December 2007, Asahi Calpis Beverage Co., Ltd. was established to integrate the beverage vending machine operations of thetwo companies, and further collaborate to achieve Asahi’s Midterm Management Plan.
The acquisition of Calpis will strengthen Asahi’s domestic beverage business platform to establish its position as the third largest soft drink
company in Japan. By combining the management resources of Asahi and Calpis, the two companies will be able to jointly seek to further strengthen
and expand both the domestic and overseas beverage businesses.

(c) Effective date of the business combination
October 1, 2012(d) Legal form of the business combination
Share acquisition by cash(e) Name of the company after the business combination
Calpis Co., Ltd.

(f) Share of the voting rights acquired
100%(g) Main reason determining the acquiring company
Due to share acquisition by Asahi Group Holdings, Ltd.

(2) PERIOD OF OPERATION OF THE ACQUIRED COMPANY INCLUDED IN THE ACCOMPANYING CONSOLIDATEDFINANCIAL STATEMENTS
From October 1, 2012 to December 31, 2012

(3) ACQUISITION COST OF THE ACQUIRED COMPANY
The acquisition cost of the acquired company is ¥95,206 million ($1,099,630 thousand).

(4) GOODWILL, THE REASON FOR RECOGNIZING GOODWILL, THE AMORTIZATION METHOD AND THE AMORTIZATIONTERM(a) Amount of goodwill¥26,331 million ($304,123 thousand)(b) Reason for recognizing goodwill
Estimated future excess earnings power based on expected future business operations.

(c) Amortization and amortization term
Straight-line method over 20 years(5) ASSETS AND LIABILITIES OF THE ACQUIRED COMPANY AS OF THE DATE OF THE BUSINESS COMBINATION

Current assets
Fixed assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities

Millions of yen

Thousands of
U.S. dollars¥ 43,426
84,729¥128,155¥ 36,102
23,178¥ 59,280$ 501,571
978,621$1,480,192$ 416,979
267,706$ 684,685

Note: The amount of goodwill as mentioned in (4) (a) is not included in the above amounts of assets and liabilities.

(6) ESTIMATED IMPACT ON THE CONSOLIDATED FINANCIAL RESULT IF THE BUSINESS COMBINATION HAD BEENCOMPLETED AT THE BEGINNING OF THE FISCAL YEAR (JANUARY 1, 2012)
The Company did not calculate the estimated impact due to the difficulty of the calculation.

21. Consolidated Statement of Comprehensive Income(1) Comprehensive income for the year ended December 31, 2010 was as follows:
Millions of yen

Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests
Total¥48,294(1,656)¥46,638(2) Other comprehensive income for the year ended December 31, 2010 was as follows:
Millions of yen

Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Share of other comprehensive income of associates accounted for using the equity method
Total

96

Asahi Group Holdings, Ltd.

¥(2,247)706
28(3,392)¥(4,905)22. Related Party Transactions
There were no related party transactions for the years ended December 31, 2012 and 2011.
During the year ended December 31, 2010, the Company and its consolidated subsidiaries had operational transactions with China Food
Investment Corp., a 25.9% owned affiliate of the Company.
Summary of significant transactions with China Foods Investment Corp. for the year ended December 31, 2010 were as follow:
Millions of yen

Sales of investment in an affiliate
Allocation of new shares to shareholder¥43,498
43,494

Condensed financial information of whole 98 equity-method affiliates including Tingyi-Asahi Beverages Holding Co. Ltd (“TAB”) and its 88 affiliates, 59 equity-method affiliates including TAB and its 51, 40 equity-method affiliates including TAB and its 33 affiliates for the years ended December
31, 2012, 2011 and 2010, respectively, is disclosed as follows:
Thousands of
U.S. dollars

Millions of yen

Total current assets
Total fixed assets
Total current liabilities
Total long-term liabilities
Total shareholders’ equity
Net sales
Income before income taxes and minority interests
Net income

2012

2011

2010

2012

¥225,326
640,066
315,474
70,828480,038
695,175
68,75952,522¥163,997
555,345
245,840
74,053400,800
632,151
49,48934,459¥173,693
439,630
192,534
38,998383,246
602,844
58,923
44,466$2,602,518
7,392,770
3,643,728
818,0645,544,444
8,029,279
794,167
606,630

23. Subsequent Events
Appropriations of retained earnings
The following appropriations of retained earnings, which have not been reflected in the accompanying consolidated financial statements for the year
ended December 31, 2012, were approved at the general shareholders’ meeting of the Company held on March 26, 2013:

Cash dividends (¥14.0 per share)

Millions of yen

Thousands of
U.S. dollars¥6,524$75,352

Purchase of treasury stock
Concerning acquisition of treasury stock, the Company, at a Board of Directors’ meeting held on February 13, 2013, resolved the acquisition method oftreasury stock in accordance with the provision of Article 156 of the Japanese Corporate Law (“the Law”) as applied by replacing the relevant terms
pursuant to Article 165, Paragraph 3 of the Law.
1. Reason for purchasing treasury stock
The Company is purchasing its own shares to further improve the return to shareholders, as well as to enable the implementation of flexible capital policies that meet the changes in the business environment.
2. Details purchase of treasury stock
Type of stock to be purchased
Common stock of Asahi Group Holdings, Ltd.
Total number of stocks to be acquired 20,000,000 stocks (maximum)(4.29% of the number of stocks outstanding excluding treasury stock)Total amount of purchase¥30,000 million ($346,500 thousand) (maximum)
Purchase period
From February 14, 2013 through August 13, 2013
Method of purchase
Purchase in the market through entrustment
The Company has completed the purchase resolved at its Board of Directors meeting held on February 13, 2013.
Total number of stocks purchased
13,217,100 stocks
Total amount of purchase¥30,000 million ($346,500 thousand)Purchase period
From February 14, 2013 through March 1, 2013

Annual Report 201297

INDEPENDENT AUDITOR’S REPORT

98

Asahi Group Holdings, Ltd.

FACT SHEETSMARKET INFORMATION
Global beer market
01 Beer consumption—top 10 countries*1(Millions of barrels*2)

2000

2005

2006

2007

2008

2009

2010

2011

China

190.2

263.6

288.9

324.8

351.9

368.1

383.1

417.6

United States

195.9

200.3

202.9

205.1

205.8

202.1

198.6

195.5

Brazil

70.4

77.9

81.3

87.1

88.3

89.1

98.9

104.8

Russia

47.1

74.3

81.8

94.6

94.2

84.8

83.8

81.3

Germany

87.9

81.0

81.4

78.3

77.7

76.6

74.9

74.7

Mexico

42.9

49.0

51.7

54.0

54.8

55.2

54.1

55.8

*3

Japan

60.5

53.9

54.0

53.4

52.1

51.0

49.5

47.7

United Kingdom

48.6

48.1

47.4

45.3

43.8

43.0

39.9

38.5

Spain

24.8

26.1

27.9

30.2

30.6

27.5

29.3

29.7

Poland

19.0

26.7

27.8

28.3

27.8

27.8

27.7

28.0

*1 Excludes non-alcohol beverages. *2 One U.S. barrel = 1.173477653 hectoliters.
Source: Impact Databank 2012 Edition

02 World’s top 10 beer brands* in 201103 Per capita beer consumption in major nationsin 2011(Millions of barrels)80*3 Includes happoshu and new genre.

(Gallons per person*)

78.4

30

28.2
24.1

60

19.4

19.1

20
43.5
40

34.1

32.4

30.7

29.0

26.4

20

11.7
25.6

21.3

9.6

10

21.3

11.9
0

0
Snow

Bud Light Tsingtao Budweiser

Skol

CoronaGermany

Brahma Heineken Coors Light Yanjing Super Dry* Includes exports and license volume.
Source: Impact Databank 2012 Edition

PolandUnitedKingdom

UnitedStates

Japan

China

* Based on total population. One U.S. gallon = 3.785 liters.
Source: Impact Databank 2012 Edition

04 Tax per unit of concentration of alcohol inmajor countries*2,3,4■ Beer ■ Wine(%)

05 Beer tax*1,2,3 in major nations
(Yen)
150

500
440

139

400
100
300
72
200
50
100

73100
67

0

Japan

12 1

14 0

5 5

FranceGermany

UnitedStates1099UnitedStatesFranceGermany0

UnitedKingdomJapan

UnitedKingdom*1 Cash values (liquor tax) shown in yen per 633 milliliters. *2 Foreign exchange rates were: €1 = ¥98.74; U.S.$1 = ¥79.31; £1 = ¥123.12 (based on TTM rate as of June 2012).
*3 Figures for the U.S. based on survey conducted in New York. *4 Comparison by alcohol type against distilled alcohol where tax on distilled alcohol = 100
Source: Brewers Association of Japan (January 2012)

Annual Report 201299

FACT SHEETSJapan’s alcohol beverages market
06 Taxable shipment volume in Japan in 2012
Whisky

1.2%

Sake

Other

7.1%

1.2%

Shochu
Beer

10.7%

31.8%

Total

Spirits (includes RTD beverages)

3.7%

8,896,369 kl

Wines (includes RTD beverages)

3.9%
Liqueurs (includes new genre beverages and RTD beverages)

Happoshu

23.8%

9.0%

Zasshu (includes new genre beverages)

7.6%*Compiled from National Tax Agency reference materials.

07 Comparison of liquor taxes per 350 milliliters
Alcohol beverages

Malt component ratio

Alcohol content

67% and above

5.0%

Happoshu*

Below 25%

5.5%

Liqueurs*

Below 50%

5.0%

28

Zasshu*

0%

5.0%

28

Liqueurs (canned chu-hi)

—

7.0%

28

Sparkling Wine (low-alcohol)

—

8.0%

28

Wines

—

12.0%

28

Beer*

Tax amount (Yen)7747* Beer-type beverages: Tax amounts are derived from representative products in the market.

08 Distribution route of Japan’s alcohol beverages industry
RetailerBars and restaurants

Supermarket
Maker

Wholesaler

ConsumerConvenience store

License required for wholesaling
alcohol beverages.

Discount store (outlet)
License required for retailing over-the-counter alcohol beverages.

100

Asahi Group Holdings, Ltd.

09 Beer, happoshu and new genre: market
share in Japan by major company (1954–2012)

10 Beer, happoshu and new genre: shipment
volume in Japan (January–December 2012)ASAHI BREWERIES(%)

Asahi BreweriesCompany A

Company B(Million cases)

Company C

Year-on-yearchange (%)

Volume

70

60

Beer

111.50–0.1(–0.1%)

50.6%(+0.1)

Happoshu

15.66

–1.0

(–5.9%)

25.0%(+0.5)New genre

50

Market share(Increase/Decrease)

Total

37.14

–2.3

(–5.7%)

24.0%(–1.7)

164.30–3.3(–2.0%)

37.5%(–0.4)

37.5%

40

35.6%
30

INDUSTRY OVERALL(Million cases)

Year-on-yearchange (%)

Volume
20

10

14.2%

Beer

11.8%

Happoshu

62.65

–5.4

(–7.9%)

14.3%(–1.1)New genre

155.02+1.7(+1.1%)

35.4%(+0.7)

Total

438.11–4.3(–1.0%)

—

—

0

1960

1970

1980

1990

2000

2012

Source: Asahi Breweries, Ltd.

220.45–0.6

Breakdown(Increase/Decrease)(–0.3%)

50.3%(+0.3)

Sources: Brewers Association of Japan and Happoshu online website

Asahi Breweries beer-type beverages sales
11 Sales composition by container type in 2012
■ Bottle ■ Can ■ Keg(%)

YEAR-ON-YEAR SALES RATIO, BY CONTAINER TYPE
(2012/2011)
Bottle

Can

Keg

Total

Beer

–3.5%

+1.7%

+0.4%

+0.2%

80

Happoshu

+1.7%

–6.3%

+16.2%–6.2%

60

New genre

—

–6.3%

+39.1%

–5.4%

–3.5%

–2.2%

+1.3%

–1.8%

100

0.5
99.2

26.9

2.7
97.3

19.0

66.3

51.4
40

Total

20
21.6

14.7

0.3

0

Beer

Happoshu

New genreTotal

12 Sales composition by marketing channel
2011 results
Beer

Convenience stores

Happoshu andnew genre (total)

2012 results
Total

Beer

Happoshu andnew genre (total)

Total

8.2%

13.0%

9.8%

8.5%

13.6%

10.1%

Supermarkets

18.9%

42.2%

26.6%

19.6%

40.5%

26.3%

Discount stores (outlets)

15.6%

21.6%

17.6%

14.9%

21.7%

17.1%

Mass-retail outlets total

42.7%

76.8%

54.0%

43.0%

75.8%

53.5%

Commercial-use liquor retailers

36.2%

3.4%

25.3%

36.2%

3.8%

25.8%

General liquor shops, etc.

21.1%

19.9%

20.7%

20.8%

20.5%

20.7%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

Total* Composition of commercial-use liquor retailers does not equal the consumption rate for commercial-use liquor.
Source: Asahi Breweries, Ltd.

Annual Report 2012

101

FACT SHEETSJapan’s soft drinks market and Asahi Soft Drinks sales

Source: Asahi Soft Drinks Co., Ltd.

13 Sales in domestic soft drinks market, by category
INDUSTRY OVERALL(Million cases)

ASAHI SOFT DRINKS

Tea-based drinks
CoffeeFruit and vegetable drinks

600

Carbonated beverages
Other soft drinks

500

498.0

400

442.0
392.0

300

264.0
214.0

200

(Million cases)

Tea-based drinks
CoffeeFruit and vegetable drinks

50

Carbonated beverages
Other soft drinks
48.7
46.4
41.2
40.4

40
30
20

16.2

10

100
0

0

2008

2009

2010

2011

2012

2008

2009

2010

2011

(Million cases)

2008

2009

2010

2011

2012

Tea-based drinks

505.0

487.5

503.0

493.5

498.0

Coffee

396.5

391.5

384.5

386.0

Fruit and vegetable drinks

192.5

179.5

190.0

193.0

Carbonated beverages 225.0

235.0

246.0

421.0

400.5

411.5

Other soft drinks
Total

2012

(Million cases)

2008

2009

2010

2011

2012

Tea-based drinks

34.7

31.2

35.6

36.0

41.2

392.0

Coffee

35.9

36.9

35.7

38.6

40.4

214.0

Carbonated beverages

36.1

41.2

43.2

43.4

48.7

244.5

264.0

Fruit and vegetable drinks

11.2

11.1

11.7

13.4

16.2

432.0

442.0

Other soft drinks

1,740.0 1,694.0 1,735.0 1,749.0 1,810.0

Total

27.4

26.3

32.8

41.6

46.4

145.3

146.7

159.0

172.8

192.9

14 Sales in domestic soft drinks market, by container type in 2012
INDUSTRY OVERALL

Paper container
and others

Glass bottle

4.9%

3.3%
Total

1,803.0

8.8%

Glass bottle

2.6%
Total

PET bottle

192.9

60.5%

(Million cases)

Can

Paper container and others

ASAHI SOFT DRINKS

PET bottle

52.0%(Million cases)

31.3%

Can

36.6%

15 Sales composition in domestic soft drinks market, by marketing channel in 2012
INDUSTRY OVERALLASAHI SOFT DRINKS

Other

Other

10.3%
Convenience
stores

20.4%
Supermarkets

36.7%

20.5%
Total

1,803.0(Million cases)

Total

Vending machines

32.6%

Convenience
stores13.4%
Supermarkets

38.1%

102

Asahi Group Holdings, Ltd.

192.9
(Million cases)

Vending machines

28.0%

CORPORATE DATA
(As of December 31, 2012)

Major Group companies (domestic)
Company

Capital (¥ billion)

Percentage of voting rights

Sales in 2012 (¥ billion)

20.0

100.0%

920.8

Domestic alcohol beverages businessAsahi Breweries, Ltd.
Domestic soft drinks businessAsahi Soft Drinks Co., Ltd.

11.1

100.0%

333.6

Calpis Co., Ltd.

13.1

100.0%

113.7

LB Co., Ltd.

0.5

100.0%

20.4

Domestic food businessAsahi Food & Healthcare Co., Ltd.

3.2

100.0%

51.3

Wakodo Co., Ltd.

2.9

100.0%

36.4

Amano Jitsugyo Co., Ltd.

0.1

100.0%

19.7

Plants and manufacturing bases (domestic)
Plants

Products

Locations

Asahi Breweries, Ltd.

Company

9Beer, happoshu, new genre, fruit wine andbeer-taste, carbonated beverages

Hokkaido, Fukushima, Ibaraki, Kanagawa,
Aichi, Osaka, Hyogo, Ehime, Fukuoka

The Nikka Whisky Distilling Co., Ltd.

7

Whisky, shochu, RTD beverages

Hokkaido, Aomori, Miyagi, Tochigi,
Chiba, Hyogo, Fukuoka

Sainte Neige Wine Co., Ltd.

1

Wine

Yamanashi

Satsumatsukasa Shuzo Co., Ltd.

1

Otsu-type shochu

Kagoshima

Asahi Soft Drinks Co., Ltd.

4

Coffee drinks, carbonated drinks, tea-based Shizuoka, Toyama, Hyogo
beverages, other soft drinks and RTD
beverages

Calpis Co., Ltd.

2

Calpis, Calpis Water and RTD beverages

LB Co., Ltd.

2

Chilled beverages such as tea-based drinks, Saitama, Aichi
soft drinks and other drinks
Black vinegar drinks for home-delivery andother products

Asahi Food & Healthcare Co., Ltd.

4

Brewer’s yeast extract, supplements andother products

Ibaraki, Tochigi, Nagano, Osaka

Wakodo Co., Ltd.

3

Milk powder for infants, baby food, milk
powder for commercial-use, skincare
products and foodTochigi, Nagano, Shizuoka

Amano Jitsugyo Co., Ltd.

2

Manufacture of caramel, powdered
Okayamaseasonings, and freeze-dried food products

Asahi Beer Malt, Ltd.

2

Malt, malt powder, barley tea and otherproducts

Gunma, Okayama

Tochigi, Shiga

Sales and marketing bases (overseas)
Branch / OfficePrincipal business

Locations

EuropeAsahi Breweries, Ltd.
Europe Branch

Sales and marketing of beer 3F Mimet House, 5A Praed Street, London W2 1NJ, U.K.

Asia
Asahi Breweries, Ltd.
Bangkok Representative Office

Sales and marketing of beer 12th Floor, Room No.1213, Qhouse Asoke Building, 66 Sukhumvit(Other than Thailand)
21, North Klongtoey, Wattana, Bangkok 10110, Thailand

Annual Report 2012

103

CORPORATE DATA

Major Group companies (overseas)
Company

CapitalPercentage ofvoting rights

US$32 million

100.0%

Principal business

Locations

United States
Asahi Beer U.S.A., Inc.

Headquarters & Los Angeles Branch:
Sales andmarketing of beer 3625 Del Amo Blvd., Suite 250, Torrance, CA
90503, U.S.A.

New York Branch:
300 Hamilton Ave., Suite 209, White Plains,
NY 10606, U.S.A.

Europe£40.0 million

100.0%

Denham Court Drive, Denham,
Ownership andmanagement of a Buckinghamshire UB9 5PG, U.K.
golf club

Asahi Beer (China)
Investment Co., Ltd.

RMB737
million100.0%

Sales of beer

No. 712 Room, Citic Square No.1168, Nanjing Rd.
(W), Shanghai 200041, China

Yantai Beer Tsingtao Asahi
Co., Ltd.

RMB219million

51.0%

Production andsales of beer

100 Huanshan Road, Yantai, Shandong, China

Beijing Beer Asahi Co., Ltd.

RMB609million

72.8%

Production andsales of beer

North 1 Yanqi Road, Yanqi Industrial Development
Zone, Huairou District, Beijing, China

Asahi Holdings(Australia) Pty Ltd

AU$214
million100.0%

Control of opera- Suite 104, 68-72 York Street, South Melbourne,
Vic 3205, Australia
tions in Oceania

Schweppes Australia
Pty Limited

AU$372
million100.0%

Level 5, 111 Cecil Street, South Melbourne, Vic
Production andsales of soft drinks 3205, Australia

Permanis Sdn. Bhd.

RM111
million100.0%

Level 10 Menara Yayasan Tun Razak, 200 Jalan
Production andsales of soft drinks Bukit Bintang, 55100 Kuala Lumpur, Malaysia

Buckinghamshire Golf
Co., Ltd.

Asia-Oceania

104

Asahi Group Holdings, Ltd.

INVESTOR INFORMATION(As of December 31, 2012)

Head Office
1-23-1, Azumabashi
Sumida-ku, Tokyo 130-8602, Japan
Tel: +81-3-5608-5126
Fax: +81-3-5608-7121
URL: http://www.asahigroup-holdings.com/en/
Date of Establishment
September 1, 1949

Composition of Shareholders(%)

Financial institutions
Foreign corporations
Other corporations
Individuals, other
Treasury stock
Brokerage

37.0
28.0
16.7
12.2
3.6
2.5

Major Shareholders

Number of Employees
Consolidated: 17,956
Fiscal Year-End Date
December 31, on an annual basis
Dividends
Year-end: To shareholders of record on December 31
Interim: To shareholders of record on June 30
Paid-In Capital¥182,531 million
Number of Shares of Common Stock Issued
483,585,862
Number of Shareholders
120,251
Ordinary General Meeting of Shareholders
The ordinary general meeting of shareholders of the Company is normally held in March each year in Tokyo, Japan. In
addition, the Company may hold an extraordinary meetingof shareholders as necessary, giving at least two weeks priornotice to shareholders.

Shareholder Name

Percentage ofvoting rights (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
Asahi Kasei Corporation
The Dai-ichi Life Insurance Company, Limited
Fukoku Mutual Life Insurance Company
JP Morgan Chase Bank 38055
Sumitomo Mitsui Banking Corporation
SSBT OD05 OMNIBUS ACCOUNT–TREATY CLIENTS
Sumitomo Mitsui Trust Bank, Limited
MELLON BANK ABN AMRO GLOBAL CUSTODY N.V.

5.4%
4.4%
4.0%
3.6%
3.6%
2.1%
1.9%
1.9%
1.7%
1.6%

* While Asahi Group Holdings, Ltd. owns 17,611 thousand shares of treasury stock, it
is not included with the major shareholders listed above.

Stock Exchange Listings
Tokyo Stock Exchange, Osaka Securities Exchange
Newspaper for Official Notice
Nihon Keizai Shimbun
Transfer Agent and Registrar
Stock Transfer Agent:
Sumitomo Mitsui Trust Bank, Limited
4-5-33 Kitahama, Chuo-ku, Osaka
Handling Office:
Sumitomo Mitsui Trust Bank, Limited
Stock Transfer Agency Department
2-3-1 Yaesu, Chuo-ku, Tokyo
Independent Auditor
KPMG AZSA LLC

Share Price Range and Trading Volume on the Tokyo Stock Exchange (Common Stock)
(¥)
1,800
1,600
1,400
1,200

2012/1

2012/3

2012/5

2012/7

2012/92012/11(million shares)
25
20
15
10
5
0

Annual Report 2012

105

ASAHI GROUP HOLDINGS, LTD.
http://www.asahigroup-holdings.com/en/

For more IR information,please contact our Investor Relations Section
1-23-1, Azumabashi, Sumida-ku, Tokyo 130-8602, Japan
Tel: +81-3-5608-5126 Fax: +81-3-5608-7121
E-mail: ir@asahigroup-holdings.com