Asahi Group Holdings, Ltd.

ANNUAL REPORT 2011

Still Refreshing

CORPORATE PHILOSOPHY
The Asahi Group aims to satisfy its customers
with the highest levels of quality and integrity,
while contributing to the promotion ofhealthy living and the enrichment of society worldwide.

CORPORATE BRAND STATEMENT

Share the “Kando”*
Always creating new value moves people’s hearts andforms a strong bond. Always imagining a fresh
tomorrow moves people’s hearts and helps them shine.
Sharing these emotional experiences with as many
people as possible—this is the mission of
the Asahi Group.
* Kando is an emotion experienced in various ways. It can be an extreme satisfaction, an extraordinary feeling
beyond one’s expectations, and/or a sensitively touching and moving sensation.

CONTENTS

02

04

06

14

Financial
Highlights

To OurShareholders
and Friends

Interview with
the President

Review ofOperations

16

22

Alcoholic
Beverages

Feature:Asahi Group at a Glance

Asahi Super Dry 2012
Brand Strategy

23

26Soft Drinks

Food

31

28
Overseas
Operations

Feature:Growth strategy of the
Oceania Operations

32

41

91

Group Management

Financial Section

Fact Sheets

32
36
37
38

Corporate GovernanceRisk Management and Compliance
Board of Directors, Auditors and Corporate Officers
Corporate Social Responsibility (CSR)

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.
Asahi Breweries cautions readers that 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, foreign exchange rates, tax, and other systems influencing thecompany’s business areas.

Annual Report 201101

FINANCIAL HIGHLIGHTS
Asahi Group Holdings, Ltd. and Consolidated Subsidiaries
For years ended December 31, 2011, 2010 and 2009

Millions of yen
2011

2010

2009

¥1,462,736¥1,489,461¥1,472,469

Alcoholic beverages*

921,657

966,331

Soft drinks*1

324,782306,719%

Thousands of
U.S. dollars

Change(2011/2010)2011

For the year:
Net sales
1–1.8$18,815,745

958,155–4.6

11,855,634

355,162+5.9

4,177,798

Food (“Food and pharmaceuticals”
in 2009)

98,033

95,44092,399+2.7

1,261,037

Overseas

94,22097,674––3.5

1,211,989

24,04423,29766,751+3.2

309,287

Operating income (loss)

Others107,190

95,34982,777+12.4

1,378,827

Alcoholic beverages

101,025

87,25078,879+15.8

1,299,524

11,389

8,330

694

+36.7

146,501

1

Soft drinks*

Food (“Food and pharmaceuticals”
in 2009)

4,158

3,594

2,744

+15.7

53,473

Overseas(2,913)(5,138)––(37,471)

OthersElimination and/or corporate*2
Operating income ratio (%)

760

1,145

889

–33.7

9,776

(7,229)

168

(430)

–

(92,989)

7.3

6.4

5.6

+0.9 point

Net income

55,09353,08047,645+3.8

708,683

Net cash provided by operating activities

108,513

125,609106,358–13.6

1,395,845

Capital investments*3

40,22536,73762,376+9.5

517,430

At year-end:
Total assets¥1,529,908¥1,405,358¥1,433,653+8.9$19,679,804

Interest-bearing debt

390,092

311,423

391,876+25.3

5,017,906

Total net assets

643,799612,670

577,703+5.1

8,281,438

102.49+3.7

102.42+3.8

Per share data (in yen and U.S. dollars):
Net income
Diluted net income
Cash dividends applicable to the year¥

118.36118.28¥114.10114.00

¥

$

1.52
1.52

25.00

23.00

21.00

+8.7

0.32

1,378.19

1,315.51

1,233.25

+4.8

17.73

ROE (%)

8.8

9.0

8.7

ROA (%)

7.6

7.1

6.6

Total assets turnover (times)

1.0

1.1

1.1

Equity ratio (%)

41.9

43.6

40.0

Interest coverage ratio (times)

32.4

30.7

23.1

Debt-to-equity ratio (times)

0.61

0.51

0.68

Total net assets
Key ratios:

1* Overseas operations results are included in these segments in fiscal 2009.
*2 Due to a reorganization of business segments in 2011, figures for 2010 have also been restated in line with the new business segments.
*3 Includes effects accompanying changes in accounting standards for lease transactions and trademarks of an Australian subsidiary at time of acquisition.

02

Asahi Group Holdings, Ltd.

FINANCIAL HIGHLIGHTSNet Sales

Operating Income/Net Income(¥ billion)(¥ billion)

1,600

1,464.1 1,462.7 1,472.5 1,489.5 1,462.7

120

24.0
94.2
98.0
324.8

1,200

107.2
95.3

94.5
90

87.0

82.8

921.7
800

60

400

30

0

2007

2008

2009

2010

0

2011

2007

2008

2009

55.1

53.1

47.6

45.0

44.8

2010

2011

■ Alcoholic Beverages*1 ■ Soft Drinks*1 *1 Overseas operations results are included inthese segments prior to 2011.
■ Food*2■ Overseas*2 For years up to and including 2009
■ Others■ Operating Income ■ Net Income

Total Assets/ROA

Capital Investments*/Depreciation*

this segment was called “Food andpharmaceuticals”(¥ billion)

1,529.9

1,600
1,324.4 1,299.1

1,433.7 1,405.4

7.6

1,200

7.1

7.4

6.9

(%)

(¥ billion)

10.0

80

7.5

60

62.4
58.4

6.6
5.0

40

400

2.5

20

0

0

0

2007

■ Total Assets (Left Scale)

2008
■

2009

47.4

44.545.3

800

2010

2011

58.1

59.7

2007

40.2

36.7

36.1

2008

2009

2010

2011

■ Capital Investments ■ Depreciation

ROA (Right Scale)* Includes effects accompanying changes in accounting standards for lease transactions andtrademarks of an Australian subsidiary at time of acquisition.

Shareholders’ Equity/ROE

Interest-Bearing Debt/D/E Ratio(¥ billion)

(%)

800

600

9.0

8.7

8.7
573.5

514.7

9.0
612.2

10
8.8
641.7
8

521.6

(¥ billion)

390.1

391.9

400
332.5

311.4

302.3

0.9

300

6
200

400

0.61
0.65

4
200

0

2

2007

2008

■ Shareholders’ Equity (Left Scale)

2009
■

2010

2011

ROE (Right Scale)

0

0.68

0.58

0.6

0.51
0.3

100

0

(Times)
1.2

2007

2008

■ Interest-Bearing Debt (Left Scale)

2009
■

2010

2011

0

D/E Ratio (Right Scale)

Annual Report 201103

TO OUR SHAREHOLDERS AND FRIENDSIn the fiscal year ended December 31, 2009, the Asahi Group drafted its Long-Term Vision 2015 and assembled theMedium-Term Management Plan 2012 as a set of milestones for achieving this vision.
During the fiscal year ended December 31, 2011, the second year of the plan, the Japanese economy showedsigns of improvement, spurred by spiking demand from recovery efforts in the wake of the Great East Japan Earthquake. The operating environment, however, remained challenging, largely due to sluggish global economic performance and the protracted strength of the yen. In this climate, we sought to push forward with the full-scale rolloutof Group global management by transitioning to a pure holding company structure on July 1, 2011. In parallel, we
saw steadily emerging benefits from efforts to boost profitability in the Group’s existing businesses, which has thehighest priority in our medium-term management plan, as well as from capital and business alliances overseas. For
existing businesses, we moved to enhance and cultivate core brands. At the same time, we reviewed our frameworkfor producing beer-type beverages in Japan, and improved production processes in the alcoholic beverages andsoft drinks businesses. The resulting profit structure reforms exceeded our initial plan objectives. In overseas operations, we continued to streamline unprofitable operations in South Korea and China. Elsewhere, we moved in
Oceania to acquire part of the operations of Australia’s third-largest soft drinks manufacturer, and purchased New
Zealand’s top producer of ready-to-drink beverages. In Malaysia, we acquired the country’s second-largest softdrinks maker. Through these actions, we effectively expanded the Group’s business base in overseas operations.
Under Long-Term Vision 2015, we are striving for transforming the bounty of nature into the “Kando” of food
while becoming a trusted company with global quality. This vision embodies our goals for the Asahi Group in
2015: to pursue customer satisfaction by leveraging our strong manufacturing capabilities that utilize naturalingredients, and to earn the trust of customers by striving to upgrade the quality of all products and activities toa world-class level.
In the final year of the Medium-Term Management Plan 2012, the Group will strive to steadily complete the planby continuing to boost profitability in our existing businesses and develop our new growth portfolio. As we takedecisive action, we hope you will continue to support the Asahi Group.

04

Asahi Group Holdings, Ltd.

Hitoshi Ogita

Naoki Izumiya

Chairman of the Board (Left)

President and Representative Director (Right)

TO OUR SHAREHOLDERS AND FRIENDSAnnual Report 201105

INTERVIEW WITH THE PRESIDENT

To achieve our Medium-Term Management Plan 2012, we steadily implemented our strategies
and created an organizational structure to support full-scale globalization of management.

Long-Term Vision 2015

Striving for transforming the bounty of nature into the “Kando” of food while becoming a trusted
company with global quality.

Medium-Term Management Plan 2012

• Improve profitability at existing businesses as a means to attain Long-Term Vision 2015
• Aim for operating income ratio of around 8% (excl. alcohol tax, 12%).
• Aim for net income of ¥65.0 billion• Aim to achieve the Long-Term Vision 2015 by promoting capital and business alliances in andoutside of Japan

06

Asahi Group Holdings, Ltd.

INTERVIEW WITH THE PRESIDENT[Progress on Medium-Term Management Plan 2012]

Q.1
Now that the second
year of Medium-Term
Management Plan 2012 iscomplete, what progresshas there been in meetingthe plan’s objectives?

Boosting profitability in existing businesses is the plan’s highest priority,
and we have made steady progress
there. At the same time, we are taking
steps to enhance corporate value bymaking management reforms throughour transition to a pure holding company structure.

targets. Elsewhere, through assertive
M&A activities in the Oceania region andin Southeast Asia, we have developed a
new growth portfolio.
Furthermore, our transition to a pureholding company structure in July 2011
has led to faster decision-making at ouroperating companies, while allowing theholding company to work exclusively on

Today, the Asahi Group is enacting

formulating Group growth strategies. I am

Medium-Term Management Plan 2012convinced that we now have the proper(the 2012 Plan), scheduled to conclude

structure for achieving full-fledged Groupon December 31, 2012, in a bid to realize

global management.

Long-Term Vision 2015. Under the 2012

Over the coming year, operating com-Plan, our top priority is to boost profitabil-

panies will remain focused on strategy

ity in existing businesses, centered on thedevelopment and execution, while thealcoholic beverages business in Japan.

holding company will work quickly to

We are also quickening the pace of busi-

achieve optimal allocation of Group man-ness and capital alliances in Japan andagement resources, new business invest-

around the world, with the aim of devel-

ments, and other tasks. Our goal here, ofoping a new growth portfolio.

course, is to raise the corporate value ofIn terms of results, we have stream-

the entire Group further.

lined unprofitable divisions in our overseas

operations,

and

made

steadystrides in boosting profitability in existing
businesses.

Profitstructurereforms

across the entire Group, for example,
have significantly exceeded our initial

Organization Chart of the Pure Holding
Company Structure
Asahi Group Holdings, Ltd.
Asahi Professional Management
Co., Ltd.

Alcoholic Beverages

Asahi Breweries,
Ltd.

Soft Drinks
Asahi Soft
Drinks Co., Ltd.
LB Co., Ltd.

Food

Overseas

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

Schweppes
Australia Pty
LimitedAnnual Report 201107

INTERVIEW WITH THE PRESIDENT[Overview of the Year Ended December 31, 2011]
Sales were negatively impacted by theGreat East Japan Earthquake, among
other factors. Nevertheless, we posted
record-high operating income thanks
to greater-than-expected progress inachieving profit structure reform.

Q.2

the sale of Haitai Beverage Co., Ltd. inSouth Korea. Operating income, however,rose 12.4% year on year, to a new record
high of ¥107.2 billion. Income was lifted bygreater-than-expected progress on profit
structure reform across all business segments. We also posted record-high net

Can you give an overview of
the year ended December
31, 2011, the second year of
the Group’s Medium-Term
Management Plan 2012?

The operating environment in the year

income for an 11th consecutive year. Net

ended December 31, 2011, the fiscal year

income rose 3.8% year on year, to ¥55.1

under review, was characterized by market

billion, despite extraordinary losses booked

weakness overall. In Japan, conditions

as a result of the disaster.

were impacted by the Great East Japan
Earthquake, which struck in March 2011,(Addressing Priority Issues)in addition to protracted low-level eco-

1. Boosting profitability in existing

nomic growth, a declining population andbusinesses

other negative factors. Outside of Japan,

Despite overall market weakness in thesovereign debt risk in Europe and a lack-wake of the disaster, income growth wasluster U.S. economy caused the economic

driven by two key factors: initiatives bysituation to worsen in the world’s advanced

Asahi Breweries and Asahi Soft Drinks toindustrial nations. In contrast, China andboost the value of their core brands, which

other emerging markets in Asia continued

led to steady growth in market share, andto report strong market expansion.

Group-wide profit structure reforms thatIn this climate, net sales for the Asahi

surpassed initial targets.

Group declined 1.8% year on year, toAsahi Breweries channeled man-

¥1,462.7 billion. This mainly reflected lower

agement resources into strengthening

sales in the alcoholic beverages businesscore brands Asahi Super Dry anddue to the earthquake disaster, along with

Clear Asahi. For Asahi Super Dry, theRise in Profitability of Existing Businesses (Operating Margin Movements)

Medium-Term
Management Plan 2012
TargetMedium-Term Management Plan 2012(*Existing Business OP Margin)
(%)
10.7

12
8.8

10
8

6.4

6

4.8

4

3.5

2

11.3 Alcoholic
Beverages

11% or higher

Consolidated Total

7.3
4.5
4.3

8.2 (pre-amortization)*After transfer of holding
company expenses

Consolidated
7.8 Total

8% or higher}

5% or higher

5.2 Overseas
5.0 Food
5.0 Soft Drinks

2.3*pre-amortization

0
–1.2

–2
–4

2007

2008

2009

2010

2011

2012 (E)

Despite falling short of sales targets due to the earthquake disaster and other factors, we are aiming for steadyprofitability improvement in each business08

Asahi Group Holdings, Ltd.

INTERVIEW WITH THE PRESIDENT

company succeeded in enhancing

progress in revising production processes,

Consequently, our Group business scale inbrand power further through market-

which

structure

Oceania on a full business term basis foring centered on the “Extra cold” value

realignment in beer-type beverages at

all relevant companies in 2011 was $1.4

proposition for enjoying the brandAsahi Breweries and increased internalbillion (AUD), or approximately ¥110 billion.

chilled below freezing point. For Clear

production of PET bottles at Asahi Soft

Similarly, EBITDA based on actual results

Asahi,

con-

Drinks. In parallel, we improved our effi-

was $182 million (AUD), or approximately

sumer campaigns and other efforts

ciency in advertising and sales promotion¥14.0 billion.

led to sales volume expansion for aexpenses and overall fixed costs.

advertisement-linked

includedproduction

operating base in Southeast Asia, wheredebut of the brand. At Asahi Softstreamline unprofitable operations ingrowth is expected to continue into the

Drinks, a focus mainly on strengthen-South Korea and China. This and otherfuture on the back of population growth

ing mainstay brands Mitsuya Cider,efforts led to steady improvement in theand economic progress. This included the

WONDA

Juroku-cha

profitability of overseas operations, so

acquisition of Malaysia’s second-largest

resulted in strong sales. Asahi Rokko

that we achieved improved profitability

soft drink company, Permanis Sdn. Bhd.

no Oishii Mizu mineral water, mean-across all Group businesses.

and

Asahi

Furthermore,

weElsewhere, we continued to build ourtofourth consecutive year since thecontinued

Turning to China, equity-method affili-

while, experienced dramatic growth
on increased overall demand for mineral water. Consequently, Asahi Softate Tingyi-Asahi Beverages Holding Co.,
2. Business and capital alliances inJapan and overseas

Ltd. (Tingyi-Asahi Beverages) entered astrategic alliance agreement with U.S.

Drinks reported growth in total sales

In the Oceania region, where consistent

beverage giant PepsiCo Inc. (Pepsi) involume of 8.7%, far exceeding the

growth is projected going forward, weNovember 2011. This tie-up will giveindustry average.

expanded our business base with four

Tingyi-Asahi Beverages access to promi-

In terms of profit structure reform, ouracquisitions, following on from our pur-nent brands in the carbonated beverages

objective over the three-year duration ofchase of Schweppes Australia Pty Limited

category, while making it the top softthe 2012 Plan is to gain efficiencies of ¥30(Schweppes Australia) in 2009. The new

drinks manufacturer in the Chinese market.

to ¥35 billion across the entire Group.

acquisitions included three soft drink com-

For its part, the Asahi Group will provide

During the fiscal year under review, we

panies and an alcoholic beverages com-even greater support to Tingyi-Asahi Bev-

managed to meet 2012 Plan objectives apany, all with great potential for bolstering

erages, with the aim of steadily growing its

year earlier than expected. This was due toour product portfolio and sales channels.

soft drinks business in China.

Overseas Business
TING HSIN (CAYMAN ISLANDS) HOLDING CORP. 6.5%

Baltika Breweries (Russia)

Tingyi-Asahi Beverages Holding 32%
Shepherd Neame (U.K.)

Molson Coors Brewing (Canada)

Tsingtao Brewery

Staropramen Brewery (Czech)

Boon Rawd Brewery (Thailand)
Carlsberg Brewery (Malaysia)

20%

Beijing Beer Asahi

73%

Yantai Beer Tsingtao Asahi

51%

Shenzhen Tsingtao Beer Asahi 29%

Investment in alcoholic beverages manufacturer
Investment in soft drinks manufacturer
Production base
Investment ratio (subsidiaries)
Investment ratio (equity method affiliates)

Permanis Sdn. Bhd.

100%

Schweppes Australia

100%

Asahi Beverages Australia

100%Charlie’s Group100%

Independent Liquor

100%

Mountain H2O

100%

Annual Report 201109

INTERVIEW WITH THE PRESIDENT[Regarding the Upcoming Fiscal Year]We are striving to meet the mediumterm management objective of ¥65.0
billion in net income by bolsteringmainstay brands and continuing toreform our profit structure.

Q.3

In the alcoholic beverages business,
Asahi Breweries will continue to concentrate investment in mainstay brands. The
year 2012 is the 25th anniversary of thelaunch of Asahi Super Dry, and the company will move to enhance brand value

The fiscal year ending
December 31, 2012 is the
final year of Medium-Term
Management Plan 2012.
What business policies
are in place for successful
completion of the plan?

The current fiscal year, ending December

further by rolling out its very first extension

31, 2012, is the final year of Medium-Termproduct—Asahi Super Dry – Dry Black –.

Management Plan 2012. We intend to

In the growing market for beer-taste bever-strengthen our key brands and deepen

ages, Asahi Breweries is aiming to raise its

profit structure reform across all businessprofile with the launch of a new productsegments to adequately address thecalled Dry Zero.

plan’s top priority—boosting profitability inIn the soft drinks business, the goal isexisting businesses. Another policy will beto raise market share to over 10%, primar-

to seek sustained growth by maximizing

ily by reinforcing core brands Mitsuya

Group synergies, including with newly

Cider, WONDA, and Asahi Juroku-cha, as

acquired operating companies.

well as Asahi Rokko no Oishii Mizu andQualitative Targets for Fiscal 2012*1(¥ billion)

2011 Results

YoY2012 Target■ Operating Income ■ Net Income■ Net Sales■ Operating Income Ratio

YoY

Alcoholic beverages
business

942.4

–5%

963.6

+2%

Soft drinks business

329.8

+6%

342.7

+4%

Food business

100.1

+3%

112.3

+12%

Overseas operations

94.2

–4%

147.7

+57%

(¥ billion)

(3.8)

—

(6.2)

—

1,462.7–2%

1,560.0+7%

Sales excl. alcohol tax

1,048.4–1%

1,144.0+9%Alcoholic beverages
business

101.0

+16%

109.2

+8%

Soft drinks business

14.2

+28%

16.5

+16%

Food business

4.5

–4%

5.6

+25%

Overseas operations

2.9

—

12.2

+322%

Other and adjustment
Total Sales

Other and adjustment

(6.5)

—

(12.3)(8.9)—(13.2)—

Total operating income

107.2

+12%

118.0

+10%

Ordinary income
Extraordinary profit (loss)
Net income

5.5

–44%

5.0

–8%

110.9

+10%

119.0

+7%

(20.5)

—

(6.0)

—

55.1

+4%

65.0

+18%

*1 Sales for each business segment include internal sales and transfers between segments. Operating
income for each business segment is operating income before amortization of goodwill.

10

Asahi Group Holdings, Ltd.

1,472.5

1,489.5

1,462.7
118.0
107.2

95.3

94.5

6.5%

7.6%

82.8
7.3%
6.4%

65.0
5.6%

—

(Goodwill and otherdepreciation costs)

Equity method income

1,560.0
1,462.7

53.1
45.0

2008

55.1

47.6

2009

2010

2011

2012 (target)INTERVIEW WITH THE PRESIDENT

other long-selling brands. Asahi Soft
Drinks has strong momentum as an organization, due mainly to nine consecutive
years of sales growth following a successful earlier strategy of enhancing its mainstay brands. The company will retain its
focus on these brands to boost its market
presence going forward.
In the food business, we will takesteps to build a stronger business base.
Along with enhancing each company’s key
brands, we will also cultivate new businesses where future growth is anticipated,such as yeast extract and natural seasonings, and products for the elderly.
In overseas operations, our goal is to

together the strengths of the companies

6.6% year on year), and operating income

establish a base for growth in China andwhile complementing any weaknessesof ¥118.0 billion (up 10.1% year on year).

Oceania. Particularly in Oceania, ourthey might have. In Southeast Asia, we

As for net income, we are aiming for thepolicy is to generate synergies in sales

will actively seek out business invest-

2012 Plan target of ¥65.0 billion (up 18.0%

expansion and efficiency by centralizing

ments that could further bolster ouryear on year), for a 12th consecutive year

the management of operating companies

growth base in the region.

of record growth.

we have acquired under a locally based

Through these initiatives, our businessholding company. The plan is to draw

targets are sales of ¥1,560.0 billion (upQ.4

For innovation and globalization—
the growth engines of mature industries—one of the key factors for
success is the extent to whichhuman resource capacity can beraised across the entire company.

development system. Efforts here include
setting up an in-house university to train
our next generation of managers, andoverseas postings designed to develop
globally capable human resources. Alongthe same lines, in addition to acquiring
human resources from outside, we are

Since becoming President,
you have made humanresource development a
priority. What are your current
thoughts on the subject?

The Asahi Group recognizes that enhanc-developing a structure to enable ouring its greatest management resource—

people to gain expertise in global manage-

human resources—is the most criticalment through actual work experience. Partelement for advancing Group global man-of this includes active recruitment of theagement and realizing medium- to long-proper Group human resources to manage

term growth. The Japanese market is

acquired companies.

maturing, so innovation and globalization

The benefits of investment in humanare essential as growth engines. I believe

resources are not immediate. Neverthe-that our ability to achieve these depends

less, by strengthening development of theon the extent to which we can raise humanpersonnel needed to support our next

resource capacity across the entire Group.

stage of growth as our business structure

So, we are intensely focused on our initia-

changes, we are laying the groundwork fortives in this area.

becoming a corporate group that will con-Specifically, we are working continuouslytoenhanceourinternaltinued to grow indefinitely.

HR
Annual Report 201111

INTERVIEW WITH THE PRESIDENT

Q.5
What are your financial andcash flow strategies given
the Group’s active business
investment efforts?

While staying mindful of the need tobalance financial soundness with theneed to make further business investments, our policy is to ensure thatcomprehensive shareholder returns
remain strong in order to meet the
expectations of our shareholders.

December 31, 2011. However, should thedemand for investment funds arise, weare prepared to temporarily relax this toaround 1.0 to prioritize investment.
Regarding shareholder returns, we
remain committed to our policy of stably
increasing dividends, with a consolidated
payout ratio of 20% or more. In a follow-up

Over the three years of the 2012 Plan, weto the increase of ¥2 in dividends for the

initially anticipated generating a total of

fiscal year under review, we are eyeing anover ¥360.0 billion in cash flows through aincrease of ¥3 for the fiscal year ending

combination of steady growth in operating

December 31, 2012 by meeting our net

cash flows and asset liquidation. Our prog-

income target of ¥65.0 billion.

ress to date, however, has already surpassed this planned target.

Going forward, along with striving to
generate stable cash flows, we remain

In terms of cash flow allocation, we

dedicated to meeting the expectations ofhave invested some ¥150.0 billion in

our shareholders through comprehensive

M&As over the last two years. However,shareholder returns, including throughour policy remains to prioritize business

improved performance made possible byinvestment, while being careful to maintainbusiness investments.

a good balance with financial soundness.
The D/E ratio was around 0.6 as ofFinancial and Cash Flow Policies
Operating Cash Flows + Asset Liquidation (Cumulative Total, 2010–2012)¥360.0 billion or higher

Cash Flow Allocation Guidelines 씮 Allocate flexibly taking into account management and operating conditions

Investments
to strengthen
the basefor growth

Capital investments to strengthen the base for growth and enhance efficiency:
approx. ¥100.0 billion• Investments for constructing optimal production and distribution frameworks and increasing efficiencies in the softdrinks and food businesses• Environmental investments for a low-carbon society

Aggressively promote capital and business alliances• Make use of financial debt for capital demands in excess of internal funds(The Asahi Group considers an appropriate D/E ratio level to be about 0.6, with temporary increases acceptable)

Shareholder
returns

Consolidated payout ratio: Continue payment of stable dividends with a consolidated
payout ratio of 20% or more
Purchase of treasury stock: Consider purchase of treasury stock as capital demands
and financial soundness permit씮 Prioritize business investment and aim for shareholder returns through higher share prices

ROE target: Maintain current level of around 9%

12

Asahi Group Holdings, Ltd.

INTERVIEW WITH THE PRESIDENT

We value input from all of our stakeholders, and will apply what we learn
to our corporate activities. This willlead in turn to stable, long-term
growth for the Group.

Q.6

achieving a higher shareholder value
through better performance alone: wemust also strive to create social value
based on corporate fundamentals, suchas highly transparent governance, appropriate information disclosure, and compli-

In closing, do you have atake-away message for thereaders of this report?

Nothing is more important to a company’s

ance. This is what will ultimately allow us

sustainable growth than earning the trust

to raise the corporate value of the Asahi

of all its various stakeholders. For thisGroup going forward.

reason, it is crucial that we go beyond

In the process we will gain input fromconversations

with

our

shareholders,investors and all other stakeholders. It isapplying this input to our management
choices that is the key to becoming atrusted company and realizing stable,
long-term growth. We hope that our stakeholders will continue to share this vital
input with us in the months ahead.

Net Income and Total Dividends■ Total Dividends ■ Share Buybacks(¥ billion)

60

53.1

■

Net Income

55.1

47.6
44.8

44.8

45.0

39.9
40
30.6
23.2

0

EPS

15.0

13.0

20

10.0
8.6

6.8
9.0

9.3

9.8

11.6

8.2

10.7

7.3

9.0

6.4

2003

2004

2005

2006

2007

2008

2009

2010

2011

46.8

62.5

82.2

94.0

94.9

96.3

102.5

114.1

118.4

Dividend per share

13.0

15.0

17.0

19.0

19.0

20.0

21.0

23.0

25.0

Dividend payout ratio

27.8%

24.0%

20.7%

20.2%

20.0%

20.8%

20.5%

20.2%

21.1%

Annual Report 201113

REVIEW OF OPERATIONS ASAHI GROUP AT A GLANCE
The Asahi Group’s five business segments, as represented in consolidated accounting, are alcoholic beverages, soft drinks,
food, overseas, and other businesses. In each business segment, the entities that generate major profits are: Asahi Breweries,
Ltd. for the alcoholic beverages business; Asahi Soft Drinks Co., Ltd. for the soft drinks business; Asahi Food & HealthcareCo., Ltd. and Wakodo Co., Ltd. for the food business; Schweppes Australia Pty Limited for the overseas operations.

Net Sales (¥ billion)

Operating Income (Loss) (¥ billion)

101.0

Alcoholic Beverages

100

1,200
958.2

Asahi Breweries, Ltd.

935.9

921.7

78.9

900

84.6

75

The Nikka Whisky Distilling Co., Ltd.
Sainte Neige Wine Co., Ltd.

600

63.0%

Satsumatsukasa Shuzo Co., Ltd.
300

50

25

0

2009

Soft Drinks

400

355.2

Asahi Soft Drinks Co., Ltd.

300

2010

0

2011

2009

2010

391.6

2011

11.4

12

324.8
8

LB Co., Ltd.
200

4.9

22.2%
4

100
0.7

Food

0

2009

2010

2011

92.4

95.4

98.0

100

0

2009

2010

2011

4.2

4.5
3.6

Asahi Food & Healthcare Co., Ltd.

75
3.0

Wakodo Co., Ltd.
Amano Jitsugyo Co., Ltd.

50

2.7

6.7%
1.5

25

0

Overseas

100

Schweppes Australia Pty Limited

75

2009

2010

0

2011

94.2

2009

2010

2011

0

–1.0

Beijing Beer Asahi Co., Ltd.
50

6.4%

<Equity Method Affiliates>
Tingyi-Asahi Beverages Holding Co., Ltd.
Tsingtao Brewery Co., Ltd.

25

0

Other

–2.0

–2.9

–3.0

2009

2010

66.8

66.6

–4.0

2011

80

2009

2010

2011

2.0
1.5

60

1.5

40

24.0
20

0

14

Asahi Group Holdings, Ltd.

1.7%

1.0

0.9

0.8

0.5

2009

2010

2011

0

2009

2010

2011

AT A GLANCE(For the purpose of sales volume, a case is calculated as a case of product ready for shipment.)(Business segments were reorganized from 2011.)

2011 Highlights

Plans for 2012

■ Captured the leading share of the overall beer-type beverages market (taxable shipment volume basis) for a second consecutive year.

■ Aim for net sales of ¥940.5 billion (up 2.0% year on year), and operating income of¥109.2 billion (up 8.1% year on year).

■ Annual sales volume in the beer category for core brand Asahi Super Dry topped 100
million cases for a 23rd consecutive year.

■ For Asahi Super Dry, take steps to further enhance brand value with the release of thebrand’s first extension product: Asahi Super Dry – Dry Black –, and greater focus onbeer cases and premium gift packs emphasizing freshness.

■ In the happoshu category, sales volume for Asahi Style Free rose year on year amid adeclining market overall, for a more robust market presence.
■ In the new genre beverages category, sales volume for core brand Clear Asahi has
increased for four consecutive years since its debut; the launch of a new product, Asahi
Blue Label, alongside Asahi Off resulted in record-high market share on a taxable shipment volume basis.
■ In the shochu, RTD beverages, whisky and spirits, and wine category, overall category
sales were lower year on year due to the Great East Japan Earthquake; however, sales
volume for core brand Black Nikka Clear Blend in the whisky and spirits category rose
for a fifth consecutive year.

■ In new genre beverages, in addition to enhancing the brand strength of core brand
Clear Asahi, revitalize the market with the launch of Asahi Direct Shot, a product offering ”stimulation” as a new value proposition.
■ In the non-alcoholic beverage category, launch new beer-taste beverage Asahi Dry
Zero and aim for annual sales volume of 4 million cases* through an aggressive advertising and sales promotion campaign.
■ With respect to profit structure reform, aim for improved profitability by pursuing greater
efficiency in each business segment and integrating production functions for beer-type
beverages.

■ Overall sales volume rose to a record high for a ninth consecutive year, primarily driven
by efforts to strengthen core brands Mitsuya Cider, WONDA and Asahi Juroku-cha.

■ Aim for net sales of ¥337.0 billion (up 3.8% year on year), and operating income of¥13.7 billion (up 20.2% year on year).

■ Sales volume for WONDA canned coffee rose to a new record high, as intensive marketing investment sparked growth in consumption.

■ Build a stronger foundation for growth by bolstering core brands WONDA, Mitsuya
Cider, and Asahi Juroku-cha.

■ Sales volume also expanded in non-mainstay categories, as the Group focused on revitalizing long-selling brands Bireley’s and Wilkinson, while sales of mineral water grew
substantially on sharply higher demand following the Great East Japan Earthquake.

■ Aim for growth above the market average, and thereby raise the Group’s market profile,by focusing on revitalizing and generating new demand for long-selling brands such as
Wilkinson, Bireley’s and Asahi Rokko no Oishii Mizu.

■ Record-high sales at Asahi Food & Healthcare Co., Ltd. for an eighth consecutive year,
largely thanks to aggressive advertising campaigns and sales promotions targetingcore brand products.

■ Aim for net sales of ¥110.6 billion (up 12.8% year on year), and operating income of¥5.3 billion (up 27.2% year on year).

■ Sharply higher sales volume at Wakodo Co., Ltd. year on year for baby food, food forthe elderly, and other mainstay products.
■ Record-high sales at Amano Jitsugyo Co., Ltd. for a third consecutive year, led by sales
growth at mass-retail outlets and sharp growth in mail-order business.

■ In Oceania, bolstered the business base by developing a more robust merchandise
portfolio through the purchase of the water and juice business of P&N Beverages
Australia Pty Ltd (Asahi Beverages Australia Pty Ltd at present), the Independent Liquor
Group of New Zealand, and others.
■ In China, strengthened the Group’s partnership with Tsingtao Brewery Co., Ltd. (Tsingtao
Brewery), and increased sales volume through measures to expand sales of subsidiaries’
own brands.
■ In Southeast Asia, developed an extensive soft drinks portfolio in Malaysia with theacquisition of Malaysian soft drinks maker Permanis Sdn. Bhd. (Permanis).

<Equity-method affiliate>■ Strategic alliance concluded between Tingyi-Asahi Beverages Holding Co., Ltd.
(Tingyi-Asahi Beverages) and U.S. soft drinks giant PepsiCo Inc. with the aim of further
enhancing business base in China’s soft drinks market.

■ Cultivate core brands and strengthen initiatives targeting key channels to build a solid
position in Japan's food products market.
■ Aim to expand the business base to enable steady growth through aggressive marketing investment in new growth businesses.

■ Aim for net sales of ¥147.4 billion (up 56.5% year on year), and operating income of¥2.1 billion (reversing an operating loss of ¥2.9 billion in 2011).
■ In Oceania, along with pursuing growth for each company, strengthen the businessbase by generating synergies between companies through management under aregional controlling company.
■ In China, in addition to bolstering the individual brands of Yantai Beer Tsingtao Asahi and
Beijing Beer Asahi, aim to expand Asahi Super Dry sales volume in the premium beer market.
■ In Southeast Asia, pursue growth for Permanis that surpasses that of the market
through aggressive marketing focused on noncarbonated soft drinks in Malaysia, whileworking to expand business base in the region over the medium-term.

<Equity-method Affiliate>■ At Tingyi-Asahi Beverages, push ahead with boosting the value of mainstay brands,
while strengthening ties with PepsiCo in a bid to become the undisputed leader in
China’s soft drinks market.

Sales in other businesses increased atop operational expansion in the insurance agency and logistics businesses. Operating income, however, faltered due to increased transportation expenses caused by the Great East Japan Earthquake.

* The yearly sales target was revised upward from 3 million cases to 4 million cases on April 10, 2012.

Annual Report 201115

REVIEW OF OPERATIONS

Alcoholic Beverages

Results for 2011

Asahi Style Free

12.03
Million cases

Asahi Super Dry

108.50

Clear Asahi

Million cases

24.20
Million cases

Business Environment• Decline in demand due to the Great
East Japan Earthquake• Decline in drinking-age population due
to fewer births and aging population• Preference for low-priced products
due to consumer belt-tightening
Sales volumes across the entire
alcoholic beverages industry down
year on year
Market share for the beer category
has bottomed out, while substantial growth in new genre beverages
has settled down

16

Asahi Group Holdings, Ltd.

SIZE OF DOMESTIC BEER MARKET (TAXABLE SHIPMENT VOLUME)(Million cases)
600
500
400

153

300

68

200
221
100
0

93

94

95

96

97

■ Beer ■ Happoshu ■ New genre

98

99

00

01

02

03

04

05

06

07

08

09

10

11

REVIEW OF OPERATIONS

Beer

HapposhuAsahi Super Dry

Market Environment

Asahi Super Dry – Dry Black –Asahi Style Free2011 Business Overview

below the freezing point for a second
straight year. From June, we also began

Japan’s alcoholic beverages industry in

In alcoholic beverages operations inoffering a “space-saving dispenser” that2011 was impacted by factors stemming

Japan, core operating company Asahi

can be installed in half the space required

from the Great East Japan Earthquake.

Breweries, Ltd. worked to enhance its

for previous models. All together, these

These unprecedented challenges exacer-brands and expand the drinking-age con-efforts spurred an increase in the numberbated other negative industry trends,

sumer base through vigorous marketingof establishments serving “Extra cold”

among them a decline in the drinking-age

initiatives. These actions included productAsahi Super Dry. At the same time, we

population due to Japan’s falling birthrate

proposals and sales promotion activities

moved to strengthen the spread of infor-

and aging population, and an ongoing shift

tailored to customer needs. In parallel, we

mation and sales promotion activities in a

towards inexpensively priced products,

took steps to establish a profit structure

bid to enhance brand power for the “Extra

driven by greater belt-tightening on thecapable of withstanding market volatility. In

cold” value proposition by expanding thepart of consumers. While these factors

addition to cost reductions, namely aroundlimited-time opening of “Asahi Super Dry

spurred growth in new genre beverages

the cost of raw materials and through

Extra Cold Bar” locations to four cities—(up 1.8% year on year), shipment volumes

improved production processes, theseTokyo, Osaka, Nagoya and Hakata. Else-for beer and happoshu were down 4.1%

efforts included the more efficient use ofwhere, Asahi Super Dry was awarded theand 12.9%, respectively. Consequently,

advertising and sales promotion expenses.

gold at the Brewing Industry Internationaloverall taxable shipment volume for beer-

As a result, total sales for the alcoholicAwards (BIIA)*3, becoming the only beer

type beverages declined 3.7% from thebeverages business, including Asahi brandfrom a major Japanese brewer to earn any

previous year. By category, beer was

sales overseas, were ¥921.7 billion, down

recognition. These factors ultimately lifted

50.0%, happoshu 15.4%, and new genre

4.6% year on year; however, operating

taxable shipment volume above 100 million

beverages 34.7% of the beer-type bever-income increased 15.8% to ¥101.0 billion

cases (one case equivalent to 20 large

ages market. Of these figures, while thefor the same period.

bottles (633ml each)) for a 23rd consecutive year, despite declining 4.3% due mainly

decline in the beer category was effectively
halted, market share for happoshu contin-

Beer-type Beverages

ued to decline. Growth in new genre

Our market share of taxable shipment

beverages was also substantially morevolume for beer-type beverages in 2011

Happoshu Category

subdued than in the previous year.

was 37.9%*1, up 0.4 of a percentage

In happoshu, we continued to boost the

point year on year. As a result, webrand value of Asahi Style Free, now enter-In categories other than beer-type

to the impact of the March 2011 disaster.

2

beverages, RTD beverages and wine con-remained the market leader* for a second

ing its fifth year of sales, as a pioneer intinued to grow, but the overall market forconsecutive year.

“zero-carbohydrate”*4 happoshu. Actions
included more robust sales promotion

alcoholic beverages contracted. Nonalcoholic beer-taste beverages, mean-

Beer Category

activities and an advertising campaign. As

while, grew around 20% year on year on a

In the beer category in 2011, we again

a result, while sales volume for the overallsales volume basis.

focused on enhancing the brand value ofmarket contracted sharply, with taxable

our core product Asahi Super Dry. Specifi-

shipment volume in the happoshu category

cally, we developed the concept of “Extra

falling 11.2% year on year, our happoshu

cold,” continuing to promote a new way tomarket share rose 0.5 of a percentage

enjoy Asahi Super Dry in servings chilledpoint to 24.5%.

Annual Report 201117

REVIEW OF OPERATIONS

New genre

Clear Asahi

Asahi OffAsahi Blue Label

Based on nutrition labeling standards, sugar
content of less than 0.5g (per 100ml) is indicatedas “zero carbohydrate.”(1) Ingredients are happoshu with a malt content
of less than 50% and soy-based spirits. The
name “Ichiban Mugi” comes from using only
the best wort as an ingredient.
(2) Made using malt, barley and spirits (barley),excluding volume of hops used (less than0.5%).

the role of Kanoka in relaxation and making

by gaining a following for being both a new

Shochu, RTD Beverages, Whisky andon potato-based shochu brands Honkaku

genre and “zero carbohydrate*4” bever-Spirits, Wine

Imo-Jochu Satsuma Koku-Murasaki andage. We also launched two additional

Total monetary sales of shochu, RTD bev-

Satsuma Tsukasa. Nevertheless, due to theofferings, Asahi Ichiban Mugi*5 in Marcherages, whisky and spirits, and wine

market environment and other factors,

and Asahi Fuyu no Okurimono, a limited-

declined 10.6% year on year, despite

overall sales in the shochu category

edition winter beer, in October, in a vigor-

growth in Black Nikka Clear Blend in

declined by 16.5% from the previous year

ous push to propose products tailored towhisky and spirits. The drop in sales

on a monetary basis.

diverse customer needs. The result waslargely reflected persistent product supply

year-on-year growth in taxable shipment

shortfalls due to supply chain manage-

Asahi

volume of 7.0%, and an increase in market

ment (SCM) interruptions caused by thebrand made from domestically produced

share of 1.2 percentage points to 25.7%.

Great East Japan Earthquake, as well as

fruit juice, saw year-on-year growthMarket share was at its highest point ever

the introduction of new transaction sys-driven by improved taste and other qual-

since our entry into the new genre bever-tems based on new terms for trade in

ity enhancements, as well as the launchages market in 2005.

some product categories.

of new additions to the lineup. However,

New Genre Beverages Category*4

In new genre beverages, we moved to
improve the taste and packaging quality ofClear Asahi and Asahi Off, and strengthened our advertising and sales promotion
activities. Asahi Blue Label, launched in
July, greatly exceeded initial sales targets

*1

*2
*3

Beer market share based on statistical data on
taxable shipment volume from Japan’s top fivebeer companies.
Based on taxable shipment volume for beer from
Asahi Breweries, Ltd. in 2011.
Popularly known as the “Academy Awards” ofbeer judging, the BIIA is the world’s longest-running international beer competition held once
every few years in the United Kingdom.

*5

human connections. These efforts notwithstanding, we marked a decline in Kanoka
products on a sales volume basis for theyear. Elsewhere, in Otsu-type shochu, we
proposed products sensitive to customers’
wide-ranging needs. Efforts here centered

In RTD (ready-to-drink) beverages,
Chu-hiKajitsu-no-shunkan,sales of core products Asahi Slat andIn shochu, we conducted aggressive sales

Asahi Cocktail Partner were lower for thepromotion activities designed to reinforce

year, largely due to the impact of thethe Kanoka brand. These included the taste

Great East Japan Earthquake.

and packaging revamp and re-launch of six

As a result, sales of RTD beverages

varieties in the Kanoka lineup in August, as

fell by 9.7% overall on a monetary basis

well as a special campaign underscoring

year on year.

SHARE OF SALES BY PRODUCT (2011)
Shochu, RTD beverages, Whisky and Spirits, Wine

Other contracted manufacturing, etc.

12.5%

2.1%
Beer

64.5%
New genre

14.0%

18

HapposhuBeer-type Beverages

6.9%

85.4%

Asahi Group Holdings, Ltd.

aREVIEW OF OPERATIONSShochuRTD beverages

Honkaku Imo-Jochu Satsuma
Koku-Murasaki

Imo-Jochu Kanoka

Asahi Slat

In whisky and spirits, brisk sales ofcommercial-use California wine Almaden toagreement last November with Carlsberg

core brand Black Nikka Clear Blend con-draft beer sellers resulted in healthy growth.

Brewery Malaysia Berhad regarding Asahitinued, leading to year-on-year growth in

Despite these positive factors however,Superdomestic whisky (excluding canned high-overall sales in this category declined byenhanced our presence, especially in mar-ball liqueur) of 1% on a monetary basis.

7.8% year on year on a monetary basis.

kets across Asia and Oceania.

Dry.

This

and

other

actions

The quality of the Nikka brand, moreover,Turning to non-alcoholic beverages, a

was recognized on the world stage when

temporary halt to sales of beer-taste bev-

Taketsuru Pure Malt 21 Years was named

erages in the aftermath of the Great East

“World’s Best Blended Malt Whisky” at theJapan Earthquake and other factors

World Whiskies Awards*6 in April 2011 forcaused sales volume to decline signifi-

Although a rebound in consumer senti-

the fourth time and for three consecutive

cantly from the previous year. In contrast,

ment, including a push for greater con-years running. No other single product has

cocktail-taste beverage Asahi Double Zerosumption, is emerging, the Alcoholic

received top recognition four times in the

Cocktail, launched in September 2010,

Beverages business is likely to continue tohistory of the competition. In the highball

saw sales rise sharply on the 0.00% alco-

face challenging market conditions. Alongcategory, we launched new products

hol and zero-calorie characteristics thatwith a diminishing amount of drinks con-Black Nikka Clear Highball in May andhave driven the beverage’s popularity.

sumed due to Japan’s falling birthrate andTaketsuru Pure Malt Highball in November,*6

aging population, these challenges include

An international competition focused exclusively on
whisky, chiefly sponsored by U.K.-based Whisky
Magazine.

with both products selling briskly. Overall,sales on a monetary basis in this category

Plans and Strategies for 2012a shift in consumer preferences to inexpensively priced products to save money,

Sales of Asahi Brand Products

as well as more time spent at home in line

Overseas *Excluding China

with work-life balance considerations. In

performed well on the strong showing of

Overview of 2011

this context, Asahi Breweries will seek toSainte Neige Rela, a new brand launched in

Turning to sales of Asahi brand products

produce and propose products that meet

May noted for its taste and convenient PET

overseas, in South Korea, we aggressively

customers’ value criteria and to strengthenbottle packaging. For imported wines,

developed our local sales promotion activi-

its business foundations. Consequently,

along with boosts to sales volume fromties, maintaining our position as the No. 1

we are targeting sales of ¥940.5 billion (upFrench wine Ginestet, Italian wine Zonin

imported beer brand by sales volume. In

2.0% year on year) and operating income

and Chilean wine Caliterra, our efforts to tie

Malaysia,of ¥109.2 billion (up 8.1% year on year).

rose by 1.4% year on year.
In wine, our domestic wine brands

we

ALCOHOLIC BEVERAGES SALESAND OPERATING INCOME(¥ billion)
1,000

935.9

921.7

940.5

concludedalicensing

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

109.2

120

60

101.0
800

90

50.5%

50

84.6

40

37.9%

30

25.7%
24.5%

600
60
400
20
30

200
0

10

2010

2011

2012

0

2010

2011

(Target)■ Sales ■ Operating income* Figures for 2010 are non-consolidated results for Asahi Breweries, Ltd.

0

2012

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11(Target)■Total beer-type beverages

■

Beer

■

Happoshu■

New genre beverages

Annual Report 201119

REVIEW OF OPERATIONS

Whisky and Spirits

Wine

Taketsuru Pure Malt
21 Years

Black Nikka
Clear Blend

Ste. Neige Rela

Beer-type Beverages

freezing during the year. Other efforts toimproved quality and aggressive advertis-

The market for beer-type beverages inenhance brand value further will include, ining and sales promotion measures. These

2012 is predicted to contract between 1

addition to enhanced availability of beerefforts to enhance brand power will enable

and 2% overall. To this end, we are tar-gift packs with an emphasis on freshness,

Asahi Breweries to stake out a moregeting total sales volume of 167 million

the slated sale of Asahi Super Dry – Dry

dominant position in the market for new

cases, up 0.5% year on year.

Black –, the first product to extend the line-

genre beverages. For brisk-selling Asahi

up of our core brand.

Off, noted for having 85% fewer purines
and 70% fewer carbohydrates*7, andBeer

In the beer category, while there are indica-

Happoshu“zero carbohydrate”*8 Asahi Blue Label, intions that the downturn in demand has

The overall happoshu market is projected

addition to further boosting the brandleveled off somewhat, the overall market isto decline by between 9 and 10%, reflect-

value of these existing brands for health-expected to decline between 1 to 2%. In

ing a continued shift in demand towards

conscious consumers, we plan to reinvig-

this climate, Asahi Breweries will remain

new genre beverages. For Asahi Styleorate the market with the launch of Asahi

focused on bolstering the brand value ofFree, the core brand that saw record sales

Direct Shot, which will propose the newmainstay brand Asahi Super Dry to spear-

volume in its fifth year of sale in 2011, Asahi

value of offering a “stimulating” beveragehead a resurgence in beer as it aims for

Breweries will focus on quality improve-in this category.

positive year-on-year growth. In 2012, we

ments in taste, and on raising brand*7

will continue to promote the “Refreshingly

strength further through vigorous advertis-

Sustainable” project, whereby we donate

ing and sales promotion measures.

a portion of the sales from Asahi Super Drybrand products to each of Japan’s 47

New Genre Beverages

prefectures for the protection and preser-

The market for new genre beverages is

Shochu, RTD Beverages, Whisky andvation of the local environment and cultural

expected to grow between 3 and 4%

Spirits, and Winetreasures. We also plan to expand promo-

overall. Given this outlook, Asahi BreweriesContinued steps will be taken in 2012 totion of the “Extra cold” proposal for enjoy-

will continue to reinforce the brand power

boost profitability across shochu, RTD

ing Asahi Super Dry chilled to below

of core product Clear Asahi throughbeverages, whisky and spirits, and wine.

NET SALES FOR SHOCHU, RTD BEVERAGES, WHISKY AND SPIRITS, AND WINE,
AND OPERATING INCOME RATIO(¥ billion)
150

9%
3.2
14.8

100
31.4

6%

52.7

50

2008

11.0

30.4

30.6

33.1

30.8

6%

31.2

50.3

2009

14.8

4.8
10.6

7%
5%

0

7.0
11.5

3.9
12.4
25.9

27.5

28.2

35.0

40.3

37.0

48.3

2010

2011

2012
(target)■ Shochu ■ RTD (Low-alcohol) ■ Whisky and Spirits ■ Wine

20

*8Comparison with the Company’s malt liquors (1)based on happoshu.
Based on nutrition labeling standards, sugar
content of less than 0.5g (per 100ml) is indicatedas “zero carbohydrate.”

Asahi Group Holdings, Ltd.

■ Other■

Operating Income Ratio

REVIEW OF OPERATIONS

Non-alcoholic beverages

Double Zero Cocktail

Asahi Dry Zero

We will concentrate on cultivating andcountries like South Korea where sales areremains to see dramatic improvements instrengthening core brands in each cate-firm. At the same time, we will bolster rela-production efficiency, mainly by integrating

gory, targeting year-on-year growth intionships with existing local partners in

the Nishinomiya Brewery’s beer-type bev-

sales of 14% for the year.

order to raise the brand recognition oferage production functions into the Suita

Asahi, especially Asahi Super Dry, with theBrewery and through optimal equipment

Plans for shochu, RTD beverages, whisky

overall aim of increasing sales volume inand personnel allocation. Progress inand spirits, and wine call for cultivatingeach country.

these areas had been delayed due to thecore brands and solidifying our presenceGreat East Japan Earthquake.

in each category. In the non-alcoholic beverages category, where more growth isexpected, we will launch Asahi Dry Zero as

Elsewhere, we are committed to pursuing a diverse array of other initiatives toProfit Structure Reform

meet the objective of our medium-terma new beer-taste beverage, accompanied

Improving the profitability of alcoholic bever-management plan (operating income ratio

by vigorous advertising and sales activi-

age operations and other existing businesses

excluding the liquor tax of 20% or more).

ties. For cocktail-taste beverage Asahi

is the top priority issue of the Asahi Group’s

Planned actions include the enactment of

Double Zero Cocktail, we will bolster initia-

Medium-Term Management Plan 2012.

cost-reduction plans targeting reductions

tives in the home- and commercial-use

In terms of profit structure reform forin the cost of raw materials and better

markets as a pioneer in cocktail-taste

the domestic alcoholic beverages busi-

production efficiency; improvements in thebeverages to build a more robust market

ness, our policy is to gain efficiencies total-

marginal profit ratio; reductions in fixed

position going forward.

ing ¥25 to ¥30 billion between 2010 tocosts; and more efficient use of advertising2012, and raise the operating income

and sales promotion expenses.

Sales of Asahi Brand Products

ratio, excluding the liquor tax in the alco-

Overseas *Excluding China

holic beverages business, to 20% or more.

Plans for 2012

We have already achieved greater-than-As regards sales overseas, we will pursue

expected profit structure reform over thehorizontal development in countries andtwo years of 2010 and 2011. Our goal inregions that can follow the models of

the plan’s final year of 2012, however,

SALES TARGETS AND ACTUAL RESULTS BY ALCOHOLIC BEVERAGES CATEGORY (ASAHI BREWERIES, LTD.)(¥ billion)
2011

2010

Year-on-year% of Total

2012 Target

Year-on-year% of Total

785.1

812.5

–3.4

85.4

787.2

0.3

83.7

Beer

593.2

620.4

–4.4

64.5

593.7

0.1

63.2

Happoshu

63.3

71.5

–11.4

6.9

56.0

–11.6

6.0

New genre

128.6

120.6

6.6

14.0

137.5

6.9

14.6

Beer-type beverages (total)

Beverages other than beer-type beverages (total)

114.7

128.4

–10.6

12.5

130.9

14.1

13.9

Shochu

40.3

48.3

–16.5

4.4

37.0

–8.2

3.9

RTD

28.2

31.2

–9.7

3.1

35.0

24.2

3.7

Whisky and spirits

30.8

30.4

1.4

3.4

33.1

7.3

3.5

Wine

10.6

11.5

–7.8

1.2

11.0

3.4

1.2

Other alcoholic beverages, etc.

4.8

7.0

–31.7

0.5

14.8

210.7

1.6

Other contracted manufacturing, etc.

19.7

22.4

–11.8

2.1

21.9

11.0

2.3

919.6

963.3

–4.5

100.0%

940.0

2.2

100.0%

Total

Annual Report 201121

REVIEW OF OPERATIONS

Feature: Asahi Super Dry 2012 Brand Strategy
The year 2012 is the 25th anniversary of the launch of the Asahi Group’s core brand, Asahi Super Dry.
Asahi Super Dry is the top brand in the beer category in Japan, boasting a market share of more than 50%*1. The secretbehind the brand’s long-standing support from customers is our constant effort to propose new value.

Chilled Below Freezing Point: A New Value
Proposition

Slim Bottle Revamp—Stylish design featuring a slim size for easy
portability and a reusable cap—

—Temperature as a new taste proposition—

Enjoying Beer Freshness—Drinking a special Super Dry—

Connections—Connecting people, communities and society—Introducing Dry Dark Beer with “Dry Black”
Aggressive Ad Promotion—A new proposition from Super Dry—

1

The Debut of Asahi Super Dry – Dry Black –:A Super Dry Dark Beer

Asahi Super Dry – Dry Black –, launched in April, is the first extension product from the Asahi Super Drybrand. The new product features the “dry,” crisp taste for which Asahi Super Dry has become known. The
product aims to attract not only existing dark beer fans, but to also develop an entirely new customer base.

2

Extended Rollout of “Extra Cold”“Extra cold” is the idea of enjoying Asahi Super Dry chilled to below freezing point. We are extending our promotion of this concept in both the commercial- and home-use markets, and working
to ensure wide penetration among a range of customers. In the commercial-use market, we will
expand the number of stores offering “Extra cold” features to 3,000. In the home-use market,
meanwhile, we will roll out campaigns offering merchandise for enjoying the beer’s “below freezing”
deliciousness at home.

3

Enhancing “Products Offering Real Freshness”

We are working to further embed products offering real freshness, specifically fresh beer casesand premium gift packs. For fresh beer cases, where the emphasis is on freshness, once eachmonth Asahi Super Dry will be shipped to stores from breweries within three days of production.
For premium beer gift packs, Asahi Super Dry is shipped directly to customers from breweries
within the same three-day timeframe. This allows true beer lovers to enjoy the delicious taste of
freshly brewed beer embodied in this special Super Dry gift pack.
Another way in which we are maximizing Asahi Super Dry brand value is by reinforcing informationon the product through aggressive advertising campaigns. This comes in addition to continuing
the “Refreshingly Sustainable” project*2, which has won strong customer support since it wasenacted in the spring of 2009, and reintroducing Asahi Super Dry in a slimmer bottle.
*1
*2

22

Beer market share based on statistical data on taxable shipment volume from Japan’s top five beer companies.
Promoted in each of Japan’s 47 prefectures, the project donates a portion of sales to the protection and preservationof the local environment and cultural treasures.

Asahi Group Holdings, Ltd.

REVIEW OF OPERATIONSSoft Drinks

Results for 2011
Tea-based drinks

35.97
Million cases

Carbonated beverages

43.38
Million cases

Coffee38.58
Million cases

SALES IN DOMESTIC SOFT DRINKS MARKET, BY CATEGORY

Business Environment(Million cases)
600

493.5
434.0
382.5

500
400
300

244.0
190.0

200

• Sales in all key categories were lower
than the previous year when thesummer was hotter, with the decline
also reflecting the effects of the Great
East Japan Earthquake.
• The Great East Japan Earthquake
brought increased demand formineral water, raising sales volume
across the entire industry.

100
0

■

2007

Tea-based drinks

2008■

Coffee■2009

Carbonated beverages■

2010
Fruit and vegetable drinks

2011■

Other soft drinks

Annual Report 201123

REVIEW OF OPERATIONS

Asahi Soft Drinks Co., Ltd.

Asahi Soft Drinks Co., Ltd.

Tea-based drinks

CoffeeAsahi Juroku-cha

Market Environment
In 2011, sales volume in the Japanese soft

WONDA
Kinnobitou(low-sugar)

WONDA
Morning Shotconsecutive year. As a result, Asahi Softwater, including the brand Asahi Fujisan no

Drinks rose to the 4th position in the

Vanadium Tennensui, increased to about

Japanese soft drinks industry.

20 million cases. Asahi Soft Drinks aims to
expand its presence in Japan’s growing

drinks industry is estimated to have grownby around 1% overall. Sales in all key cat-

In soft drink operations in Japan, coremineral water market. Thanks to theseegories such as carbonated beverages,

operating company Asahi Soft Drinks

developments, total sales volume for Asahi

coffee and tea were lower than the previ-enacted initiatives designed to stimulate

Soft Drinks recorded a ninth consecutive

ous year when the summer was hotter.

dramatic growth through a basic policy

year of growth at an all-time high of 8.7%.

This performance also reflects the impact

addressing two key issues: growth strate-

As a result, Asahi Soft Drinks salesof the Great East Japan Earthquake thatgies and improving profitability.

rose 7.2% year on year to ¥305.2 billion.

occurred in March 2011. However, theWith respect to the product-related

market was driven by sales of mineralmeasures at the heart of the growth strate-

efforts made to lower costs included reduc-water that were significantly higher year on

gies, we focused marketing efforts on theing the costs of raw materials, improving theyear due to increased demand because ofcompany’s core brands WONDA, Mitsuya

in-house manufacturing ratios, conducting

the earthquake.

Cider and Asahi Juroku-cha, working con-the internal production of PET bottles,

tinuously to cultivate and strengthen these

implementing production initiatives at Asahi

brands. These efforts were rewarded with

Soft Drinks and Group companies, and rais-an 8.2% higher sales volume of WONDA

ing production efficiency. These efforts

canned coffee, and a 12.4% increase in

resulted in operating income rising 39.1%

Sales for the soft drinks business weresales volumes of Asahi Juroku-cha, whichyear on year to a record ¥11,498 million.

¥324,782 million, up 5.9% year on year,

achieved double-digit growth for thewith operating income up 36.7% tosecond consecutive year. As a result bothLB Co., Ltd.

¥11,389 million.

of efforts to invigorate long-seller brands

In 2011, LB Co., Ltd. (Tokyo) and LB Co.,such as Bireley’s and Wilkinson, and of

Ltd. (Nagoya) were integrated, and a

Asahi Soft Drinks Co., Ltd.

special demand arising from the Great“reborn”

Asahi Soft Drinks Co., Ltd. posted a

East Japan Earthquake, sales of Asahi

However, LB posted lower year-on-yearrecord sales volume and net sales after

Rokko no Oishii Mizu mineral water

sales due to the impact of the Great Eastsales increased year on year for a ninth

climbed 160.3%, and sales of mineral

Japan Earthquake.

2011 Business Overview

Asregards

LB

improvingcommenced

SOFT DRINKS SALES COMPOSITION BY COMPANY (2011)

LB Co., Ltd.

6.0%
Asahi Soft Drinks Co., Ltd.

94.0%

24

Asahi Group Holdings, Ltd.

profitability,business.

REVIEW OF OPERATIONS

Asahi Soft Drinks Co., Ltd.

Asahi Soft Drinks Co., Ltd.

Asahi Soft Drinks Co., Ltd.

LB Co., Ltd.

Carbonated beverages
g

Fruit and vegetable drinks

Water

Chilled beverages

MitsuyaCider

WWilkinson
TansanTa

Asahi Fujisan no
Asao
Vanadium
Van
Tennensui
TenB
Bireley’s
OrangeO

Asahi Rokko no
Asa
Oishii Mizu
Oish

UKON αOcha
OIn the chilled beverages business, the man-operating income of ¥13.7 billion (upmaintain the highest standards of productagement integration of LB Co., Ltd. (Tokyo)

20.2% year on year).

quality, aiming to achieve the industry’s

and LB Co., Ltd. (Nagoya) on January

highest class of cost competitiveness.

2011 created a base for generating syner-

Asahi Soft Drinks Co., Ltd.

gies that resulted in an improved earnings

Asahi Soft Drinks Co., Ltd. will pursue its

LB Co., Ltd.

structure. However, the sales volume of LB

growth strategies and structural reforms

In the chilled beverages business, we will

dropped year on year due mainly to theaiming at growth in both sales and earn-

give priority to strengthening our businessGreat East Japan Earthquake and the factings in all its business activities, and with abase with the synergies from the manage-

that the previous year’s performance wastarget of boosting sales volume 4.1% toment integration of the two companies.

supported by a hot summer. This result

180 million cases.

The year 2012 is the final year of the cur-came despite active sales promotion activi-

With respect to growth strategies, werent Medium-Term Management Plan, andties primarily in the mainstay tea-based

will deploy products and continue to rein-

we will steadily implement the strategies tocategory for major convenience stores

force the core brands of WONDA, Mitsuya

complete its objectives, and we will also

under the wide-area headquarters andCider, and Asahi Juroku-cha, and invigo-

establish the growth and earnings basespecial sales headquarters frameworks.

rate long-seller brands such as Wilkinson,

necessary for completing the objectives of

Bireley’s and Asahi Rokko no Oishii Mizu

the next medium-term management plan.

mineral water. Together with further accel-

Specifically, we will aggressively deploy theerating growth by creating new demand,wide-area headquarters and special sales

we will work to provide high-quality prod-

headquarters frameworks, focus on lever-ucts that are safe and reliable.

aging every sales channel and the cross-

Plans and Strategies for 2012
In 2012, the soft drinks market in Japan ispredicted to perform roughly on par withIn terms of structural reform, we will

selling of products to expand business2011 due to such factors as changes inincrease the degree of completion of anscale, and cultivate new markets by devel-

demand and consumption caused by the

optimal production framework as pre-oping new core products and services.

Great East Japan Earthquake and thescribed in the Medium-Term Management

With back-office divisions, we will work tohigh temperatures of the previous year’s

Plan 2012. With a view to building the next

improve cost efficiency, principally by con-summer. Under these conditions, theoptimal production framework for the new

tinuing to integrate logistics and adminis-

Asahi Group is targeting sales of ¥337.0

growth stage prescribed in the next

tration departments.

billion (up 3.8% year on year) andmedium-term management plan, we will

SALES AND OPERATING INCOME IN
SOFT DRINKS BUSINESS(¥ billion)
400

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

391.6
324.8

337.0

13.7

15

20

17.8%

11.4

300

15

10.1%
10.0%
9.9%
7.3%

10
200

10
4.9
5
5

100

0

2010

2011

2012

0

2010

(Target)■ Sales ■ Operating income* Figures for 2010 include results from the overseas operations.

2011

0

2012

2006

2007

2008

2009

2010

2011

(Target)■■Tea-based drinks ■ Coffee
Mineral water ■ Total■

Carbonated beverages

Annual Report 201125

REVIEW OF OPERATIONS

Asahi Food & Healthcare Co., Ltd.

FoodMINTIA

2011 Business Overview
Sales in the food business rose 2.7% year
on year to ¥98.0 billion, with operating
income climbing 15.7% to ¥4.2 billion.
This steady improvement reflected therollout of strategies tailored to characteristics unique to each operating company,
which culminated in sales expansion inmainstay products.

Asahi Food & Healthcare Co., Ltd.
To lay the groundwork for further growth,Asahi Food & Healthcare advanced a basic
strategy defined by “sales expansion, corporate structure enhancement, and establishing brands known for safety andreliability.” Specifically, the processed foods
business, which accounts for 55% of sales,
saw sales increase steadily year on year
despite being impacted by the Great East
Japan Earthquake. This improvement was
mainly due to assertive advertising campaigns and sales promotions centered on
mainstay brand products MINTIA breath
mint tablets and Ippon Manzoku Bar nutrition bars. In the health and beauty business, sales increased steadily, led bymainstay products such as quasi-drug
product EBIOS, Dear-Natura brand supplements, and our Slim Up Slim line of dietsupport food. Similarly, inroads were madeindevelopingthemarketforhigh-value-added yeast extract and othersectors of the food seasonings business,most notably among processed food
manufacturers in Japan and overseas. As aresult, sales for Asahi Food & Healthcarerose 3.6% year on year to ¥45.3 billion,
setting a record high for an eighth consecutive year.
Profit, meanwhile, was lower for theyear, with operating income down 1.6% to¥2.0 billion. In addition to growth spurredby increased sales, production cost reductions accompanying more efficient production processes and lower procurement
costs for raw materials contributed to
profit. These gains, however, were offset
by increased expenses from aggressive
investment in advertising and sales promotions designed to drive sales growth.

Wakodo Co., Ltd.
Wakodo Co., Ltd. followed a management
policy of rising to the challenge of even further growth, taking steps to strengthen andexpand its business base. Specifically, thecompany based its activities on “infant-safe
quality” honed over the years to meet thesafety and reliability customers expect,launching new products, and revamping
existing ones to bolster its brands.
In the baby food business, powderedinfant formula sales declined year on year
in a soft Japanese market. However, sales

BALANCEUP

continued to grow strongly in the company’s mainstay product, Goo-Goo Kitchenbaby food, spurred by expansion in the
product lineup in March. Sales of PETbottled infant drink series Baby no Jikan
were also firm, largely atop demand forbottled water to prepare infant formula thatrose in the aftermath of the Great East
Japan Earthquake. In the medical carebusiness, sales volume for elderly careproducts Tender Care Oral, Fresh andTender Care Uruoi Keep, as well as the
Shokuji wa Tanoshii series of food products for the elderly, rose sharply year on
year. Sales volume rose as storesincreased their retail space for such products in order to keep up with the market
growth driven by consumers showing
more interest in nursing care. Consequently, sales for Wakodo rose 0.1% overthe previous fiscal year to ¥33.8 billion.
In terms of profit, operating income(before amortization of goodwill) fell 18.2%
year on year to ¥1.7 billion. Although steps
were taken to curb sales promotion
expenses, advertising expenses, and otherfixed costs, these were outweighed byescalation in the price of raw materials andother factors.

Amano Jitsugyo Co., Ltd.
Elsewhere, Amano Jitsugyo Co., Ltd.
worked to expand its business andBusiness Overview

FOOD SALES COMPOSITION BY COMPANY (2011)•Change in food safety awareness after

Other

the Great East Japan Earthquake

1.4%•Diversifying consumer preferences•Rise of online supermarkets

Dear-Natura

Amano JitsugyoCo., Ltd.

17.9%
Asahi Food &Healthcare Co., Ltd.
Wakodo Co., Ltd.

34.5%

26

Asahi Group Holdings, Ltd.

46.2%

REVIEW OF OPERATIONS

Wakodo Co., Ltd.

Amano Jitsugyo Co., Ltd.

Infant formula Lebens
Milk Hai Hai

Goo-Goo Kitchen

Oral Plusboost profitability, with the aim of emerging as the undisputed leader in Japan’s
freeze-dried food market. Specifically,
the company recorded healthy sales of
its mainstay freeze-dried miso soup and
Nyumen noodle soup products bystrengthening sales activities targeting
mass-retail stores in its the mass distribution sales business. Meanwhile, thecompany sought further expansion in the
direct marketing business through thevigorous launch of new products andeffective advertising campaigns. These
actions drove significant growth in thenumber of registered direct order customers in this business. In the corporate
sales business, sales of baby food andother processed food produced undercontract for Group companies were alsofirm. All told, these initiatives lifted sales
5.6% year on year to ¥17.5 billion, for athird consecutive year of record sales.
Turning to profit, operating income
was up 36.2% from the previous fiscal
year, to ¥0.8 billion, despite a sharp rise in
raw material costs. In addition to higher
sales, this growth reflected improvement in
the marginal profit ratio from reductions in
outsourced processing expenses, coupledwith benefits from a push to curb fixed
costs through more effective use of advertising and promotion expenses.

Kyofu Miso Shiru

Plans and Strategies for 2012
Beyond achieving steady growth bystrengthening our cultivation of each company’s core brands and key channels, wewill look to expand the business base in
new growth businesses in a bid to build arobust position in Japan’s processed foodmarket. From these actions, we are aiming
for sales of ¥110.6 billion (up 12.8% year
on year) and operating income of ¥5.3
billion (up 27.2%) for this business in 2012.

Asahi Food & Healthcare Co., Ltd.
In its three growth businesses of processed
foods, health and beauty, and food seasonings, Asahi Food & Healthcare Co., Ltd.
will aim to grow sales by further strengthening existing products, developing new
products, and cultivating new markets. In
parallel, the company is determined tobuild a resilient corporate structure known
for its safety and reliability, and capable ofdelivering consistent profits. Steps will also
be taken to enhance the base undergirding
the natural seasonings business andattract new customers in order to foster
new growth businesses.

FOOD SALES AND OPERATING INCOME(¥ billion)
150

6.0

95.4

0

Wakodo Co., Ltd.
The market environment surrounding
Wakodo Co., Ltd. is likely to remain challenging. Nevertheless, the company will
aggressively invest in bolstering the brandstrength of Hai Hai and Gun Gun in its
mainstay powdered infant formula category, highlighting the “infant-safe quality”
of its products founded on a fundamental
commitment to food safety and reliability.
In the baby food market, Wakodo will
launch new products and conduct aggressive sales activities for its fast-growing
Goo-Goo Kitchen retort pouch lineup andHajimete no Rinyushoku freeze-dried line
up, with the goal of staking out a solid
market position. In new businesses, thecompany is eyeing a reconfiguration of its
overseas operations, particularly in Asia,
and will look to enhance products andexpand business lines in products for theelderly, taking advantage of technology it
has honed over the years.
Amano Jitsugyo Co., Ltd.
In addition to aggressive advertising
campaigns, Amano Jitsugyo Co., Ltd. isseeking to grow the direct marketingbusiness by augmenting production facilities through assertive investment in its
brisk-selling freeze-dried food products.
Alongside these actions, the company istargeting dramatic growth by developing
and cultivating its next wave of possible
core products behind freeze-dried miso
soup and expanding their sales and trading channels.

4.2

98.0
4.0

50

Kaoru Chicken Curry

5.3

110.6
100

Nyumen Sumashi Yuzu

3.6

2.0

2010

2011

2012
(Target)

0

2010

2011

2012
(Target)■ Sales ■ Operating income

Annual Report 201127

REVIEW OF OPERATIONSSchweppes Australia

Asahi Beverages Australia

Overseas
Operations
Oceania Operations

the region. Notably, in September 2011 weFoster’s Australia Ltd, formerly responsible

acquired the water and juice operations offor contract sales, to our Group company

Sales volume for the overall non-alcoholic

P&N Beverages Australia Pty Ltd (Asahi

Independent Distillers (Aust) Pty Ltd. Our

beverages (NAB) market in Oceania in

Beverages Australia Pty Ltd at present),

aim here is to accelerate growth in the2011 rose 1% year on year. This subdued

Australia’s No. 3 NAB company. In New

country’s beer market and to build a more

growth reflected the effects of major

Zealand, meanwhile, we acquired the NAB

robust market position.

flooding at the outset of the year andcompany Charlie’s Group Limited. We also

adverse weather during the peak salesacquiredseason, coupled with a resulting stagna-

which is made up of Independent Liquortion in demand.

LiquorGroup,

China(NZ) Ltd, the largest producer of ready-to-Beer Business

Schweppes

drink low-alcoholic beverages (RTD) in

China’s beer market expanded between 6

Australia posted year-on-year sales growth

New Zealand, and Independent Distillers

to 7% in 2011. The market environment,

of 5% (2.7% on a local currency basis).

(Aust) Pty Ltd, a major company of RTD in

however, grew more challenging as major

Although sales volume was on par with theAustralia. While beyond the scope of thisbrewers invested aggressively in their

growth rate of the market as a whole, thereport, we also purchased Australian bot-

operations and prices soared for malt andincrease in sales was achieved throughtled water manufacturer Mountain H2O Pty

other raw materials and ingredients. In thisproduct price increases and other suc-

Ltd in January 2012.

climate, the Asahi Group increased its

In

this

environment,

cessful price measures that the company

We plan to pursue growth for eachpursued despite strong price pressure fromoperating company in the region in 2012

throughmass retailers. Profits, however, were lower

through aggressive marketing investment

Tsingtao Brewery Co., Ltd. (Tsingtao

for the year, as cost increases primarily

centered on their core brands. In tandem,

Brewery). In addition, we bolstered efforts

from a supply shortfall in carbon dioxide

we will bolster our business base across

to expand sales of Asahi Super Dry anddue to an accident at a supplier outweighed

operations in Oceania by pursuing syner-

the respective beer brands of Yantai Beer

the positive effects of higher sales.

gies among companies through central-

Tsingtao Asahi Co., Ltd. (Yantai Beer), andized

regional

Beijing Beer Asahi Co., Ltd. (Beijing Beer).

expanded the Group’s business base inheadquarters. In Australia, we will transfer

Together, these actions lifted sales volume

Oceania through a series of acquisitions insales functions for Asahi Super Dry fromby 7% year on year. In September, weElsewhere,

webolsteredandmanagement

under

a

contract production of the Tsingtao brandastrongerpartnership

THE AUSTRALIAN SOFT DRINKS MARKETPERFORMANCE OF SCHWEPPES AUSTRALIA(Thousand KL)(Million Australian dollars)
60

3,000
2,397

2,369

2,500

2,469

44
40

1,000

20

2007

Source: AC Nielsen

Asahi Group Holdings, Ltd.

2008

2009

2010

2011

0

with

1,200

2,498

2,000

0

28

Independent

836

800

400

2007

■ Operating income (left scale)

2008
■

2009

2010

Net sales (right scale)

2011

0

REVIEW OF OPERATIONSCharlie's Group

Independent Liquor Grouptransferred all equity held by the Group in

Asahi Co., Ltd., our joint venture with

Hangzhou Xihu Beer Asahi Co., Ltd.

Tsingtao Brewery, to Beijing Beer to(Hangzhou Beer) and Zhejiang Xihu Beer

improve profitability. This transfer ofTsingtao Brewery Co., Ltd.

Asahi Co., Ltd., brewers whose perfor-production will realize greater stability in(Tsingtao Brewery)mance had lagged, to China Resources

quality, allowing us to supply growing

In 2011, we channeled management

Snowdomestic demand in China with evenresources into a “1+3” strategy centeredbetter quality products.

on

Breweries(China)Investment

Limited, as we sought to boost profitability

China

Equity-method Affiliates

themedium-topremium-priced

Tsingtao brand and three mainstay low-by reorganizing beer operations in China.
Food Businesspriced brands. As a result of vigorous busi-

respective brands of Yantai Beer andIn November 2010, the Asahi Groupness investment and other actions, sales

Beijing Beer, we will take steps to expand

acquired a stake in TING HSIN (CAYMAN

growth surpassed that of the market as wesales volume for Asahi Super Dry in China’s

ISLANDS) HOLDING CORP., the holding

rapidly expanded the scale of operations.

premium beer market, which is growing incompany of one of China’s largest foodWe also boosted profitability by consoli-line with the country’s rapid economic rise.

and distribution companies, the Ting Hsin

dating brands to enhance productivity,

Here, we are targeting Beijing, Shanghai

Group. Since then, we have launchedusing marketing expenses more efficiently,

and other major cities as key markets. We

project teams to examine ways to develop

and by increasing the ratio of the more

will concentrate marketing expenditure ona food business in China that can leverage

profitable medium- to premium- priced

the premium price band, where Asahi

the Asahi Group’s strengths. Consumer

Tsingtao brand products in our lineup.

Super Dry is positioned, and further pro-surveys and other marketing efforts ahead

In 2012, we will remain focused on

mote sales in the on-premise market,of commercial operations have alreadyachieving a rate of growth in sales

based on Japanese restaurants, and at

been conducted in several areas. Our goal

volume for Tsingtao and other coremass-retail outlets. Through these mea-

is to spur the development and growth ofbrands that surpasses that of the overallsures we aim to acquire local customers in

our food business in China. To this end, we

market. Our aim is to achieve steady

China who seek a thirst-quenching beer.

will respond to market needs, which differ

growth in sales and profits as we build a

Around May 2012 we aim to partiallyfrom Japan, through the sale of Asahi

stronger market position.

transfer production operations for Asahi

Group products and the use of high-Super Dry from Shenzhen Tsingtao Beer

added-value materials.

In 2012, along with reinforcing the

The Asahi Group is moving tostrengthen alliances with Tsingtao Brewery

BEER CONSUMPTION IN CHINAPERFORMANCE OF TSINGTAO BREWERY(Million KL)
60(Million yuan)
2,500

23,15825,000
2,142

48
40

34

38

41

43

2,000

20,0001,500

15,0001,000

10,000

500

5,000

20

0

2007

Source: Euromonitor

2008

2009

2010

2011

0

2007

■ Operating income (left scale)

2008
■

2009

2010

2011

0

Net sales (right scale)

Annual Report 201129

REVIEW OF OPERATIONSTsingtao Brewery

Tingyi-Asahi Beverages

Permanisin production technology, quality assur-

In 2012, Tingyi-Asahi Beverages isance, distribution, and product develop-

striving for steady growth by working to

ment. Over the medium term, competition

raise value. Initiatives include an overhaul

In November 2011, we acquired all sharesin the market is projected to shift itsof the company’s sales strategy for corein Permanis Sdn. Bhd., Malaysia’s second

emphasis from volume to quality. Given

brands. In parallel, Tingyi-Asahi Beverages

largest soft drink maker, thereby securing

this trend, we intend to focus on technol-

will introduce a sterile bottling line anda base in the Malaysian soft drinks market.

ogy exchanges to share expertise for

produce lighter containers as part of efforts

In addition to a distribution network span-

improving beer quality. To this end, Beijing

to boost cost competitiveness.

ning the country and its own brands,

Southeast Asia

Beer will host experts from Tsingtao

In November 2011, Tingyi-Asahi

Brewery, as we move assertively to sup-Beverages entered a strategic alliance

port Tsingtao Brewery’s growth strategy.

with PepsiCo Inc. In entering the carbon-

We plan to invest heavily in marketingated soft drinks category through this tie-

and facilities going forward, with an

Tingyi-Asahi Beverages Holding Co.,up, Tingyi-Asahi Beverages is slated toemphasis on the fast-growing noncarbon-

Ltd. (Tingyi-Asahi Beverages)

become the top manufacturer in China’s

ated soft drinks category, such as juice

In China’s soft drink market in 2011, thesoft drinks market through the subse-

and tea-based drinks. Our aim here is toprevailing market environment remained

quent transfer of 24 bottlers in the country.

achieve growth that surpasses that of thechallenging. A slower economic growth

Along with enhancing the value of its own

market as we seek to establish a more

rate and a rise in the consumer price index

brands, Tingyi-Asahi Beverages is seek-

dominant presence.

were key factors that caused consumers

ing to grow into China’s undisputed leader

The acquisition of Permanis will serveto spend less. The market was also nega-in the market by leveraging its nationwide

as a foothold for the entire South East

tively impacted by adverse weather condi-

sales channel network to expand its

Asian market, enabling us to expand ourtions during the peak sales season.

market position in the carbonated softbusiness base in this region over thedrinks category.

medium term.

This business climate resulted in a

Permanis has an extensive soft drinks
portfolio as an exclusive Pepsi bottler.

tough year for Tingyi-Asahi Beverages. In
addition to lower sales of core brands due
to slow growth in the overall market, thecompany was affected by soaring prices for
raw materials and increases in personnel
expenses and other management costs.

THE CHINA SOFT DRINKS MARKETPERFORMANCE OF TINGYI (CAYMAN ISLANDS)(SOFT DRINKS BUSINESS)(Million KL)
80($ million)
400
66
59

60

3,999

64
300

52

3,000

46

208

40

200

2,000

20

100

1,000

0

2007

Source: Euromonitor

30

4,000

Asahi Group Holdings, Ltd.

2008

2009

2010

2011

0

2007

■ Operating income (left scale)

2008
■

2009

2010

Net sales (right scale)

2011

0

REVIEW OF OPERATIONS

Feature: Growth strategy of the Oceania Operations
As of January 31, 2012, our operations in Oceania consisted of six main companies. These include four non-alcoholic beverages companies, among them
Schweppes Australia, and two alcoholic beverages companies. In terms ofbusiness scale, the region posted sales of ¥110.0 billion (approximately
A$1,400 million), and EBITDA of roughly ¥14.0 billion (approximately A$180
million). Meanwhile Asahi Holdings (Australia) Pty Ltd (AHA) has been established as a regional headquarters to manage the companies in the region. AHA
will become a core driver of business promotion in this region, promoting business consolidation to integrate the strengths of each company and produce
synergies in the value chains of related divisions involved in production andlogistics, sales, and indirect operations. The goal is to establish a more robust
Asahi Holdings (Australia) Pty Ltd
Managing Directorbusiness base that will spur further growth in Oceania operations.

Atsushi Katsuki

Asahi Holdings (Australia) Pty Ltd

Soft Drinks
COMPANY NAME

STRENGTHS

CATEGORY

Alcoholic Beverages
SALES CHANNEL

Schweppes
Australia

All NAB categories(carbonated soft
Australia’s second
largest non-alcoholic drinks, juice, water,etc.)
beverages (NAB)(Medium pricecompany
range)

Mass retailers,
independent stores,
on-premise venues,
convenience stores

Asahi Beverages
Australia ※1

Acquisition ofAustralia’s thirdlargest NAB
company for waterand juice
operations

Juice and water(Low price range/
private labels)

Mass retailers/convenience
stores/schools,
etc.

Charlieʼs Group
LimitedUp-and-coming
NAB company, fifthlargest in NZ

Chilled juice,organic carbonated soft drinks(Premium pricerange)

On-premise venues/
convenience stores/
mass retailers

Mountain H2O
Pty Ltd

Australian NAB
company specializing in water

Water(Mainly private labels)

Mass retailers

COMPANY NAME

STRENGTHS

CATEGORY

SALES CHANNEL

Independent
Distillers (Aust)Pty Limited

Australia’s thirdlargest ready-todrink low-alcoholic
beverages (RTD)
company

RTD/beer

Mass retailers/chain
stores/independent
stores/exports to Asia

Independent
New Zealand
LimitedLargest RTD
company in New
ZealandChain stores/
independent stores/
RTD/beer/spirits on-premise venues/
exports to North
America*1 Water and juice businesses of former P&N Beverages Australia Pty Ltd. Earnings are provisional estimates made by the Company at the time of acquisition

Synergies will be generated by focusing on the specific initiatives outlined below.
1) Procurement: Achieve reductions in the direct cost and the indirect cost of procurement through optimal Group procurement
by standardization of raw materials and other materials
2) Logistics and production: Realize greater efficiency in production and transport costs through a more optimal supply chain3) Indirect divisions: Enhance efficiency and promote standardization by establishing a shared services center and integrating
back-office functions
Through steady commitment to these initiatives, we hope to generate roughly ¥5.0 billion (A$60 million) in synergies by fiscal
2014. Our business targets are sales of approximately ¥140.0 billion (approximately A$1,700 million), and EBITDA of around ¥24.0
billion (approximately A$300 million).

Annual Report 201131

GROUP MANAGEMENT

Corporate Governance
1. Basic Policy
The Asahi Group recognizes all our stakeholders as “customers”

2. Characteristic Features of Our
Corporate Governance Structure

who provide us with support, starting with the consumers of our

Asahi Group Holdings, Ltd. is bolstering corporate governance withproducts and also including shareholders, investors, suppliers,

the goal of maintaining management soundness, transparency andemployees and local communities.

efficiency. Specifically we have adopted a “company with auditors”

To ensure our corporate activities satisfy all these “customers”

governance framework, under which we strengthen management

and to quickly adapt to an ever-evolving business environment, weoversight functions and preserve transparency by appointing out-

have identified enhancing corporate governance as a priority forside directors. The Company has also introduced a Corporate

management. We are therefore striving to strengthen Group man-

Officer System, designed to separate management duties fromagement, reinforce our relationship of trust with society andbusiness execution, as well as boost management decision-making

enhance our social responsibility and management transparency.

speed, and realize more efficient management overall.

Corporate Governance Structure
Shareholders’ Meeting
Appointment/Dismissal

Appointment/Dismissal

Appointment/Dismissal

Advise/Respond
Audit
Cooperation

Board ofCorporate Auditors

Board of Directors

Compensation
Committee

Appointment/Dismissal/
Supervision

Audit
Cooperation

Chairman of
the Board

President

Auditing Firm

Advise/RespondCommittee

Advise/Respond

Audit

Advise/RespondCorporate Strategy Board

Information
Disclosure
RiskManagement

Governance/Surveillance

Audit

Group Companies

Cooperation

Internal Audit

Operating Companies

Audit Department
Functional Companies

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

32

Nomination
Committee

Asahi Group Holdings, Ltd.

GROUP MANAGEMENT

Move to a Pure Holding Company Structure

Nomination and Compensation Committees

The Company moved to a pure holding company structure on July

Complete fairness and transparency in the appointment and1, 2011. This move is enhancing Group governance functions,compensation of senior officers are achieved by the Nomination

developing manufacturing skills across the entire Group, andCommittee and the Compensation Committee, which serve as

strengthening management infrastructure by integrating common

advisory bodies to the Board of Directors. Outside directors areoperations across the Group and by improving specialty service

present among the directors that comprise the membership offunctions. It is also developing human resources capable ofeach committee.

responding to diverse customers and businesses. In addition, the

The Nomination Committee consists of a total of four officers,

new structure allows the Company to make bold resource alloca-

of whom two are Company-employed directors and two are out-tion to growth areas in Japan and overseas, enabling the Group toside directors. The committee is chaired by a Company-employedgrow more quickly.

director, and is responsible for recommending candidates for director, corporate officer or auditor to the Board of Directors. The com-

Board of Directors

mittee met three times in 2011, mainly to make proposals for

The Board of Directors consists of 11 directors, including 3 outside

corporate officer personnel.

directors (as of March 31, 2012). Outside directors are chosen fromThe Compensation Committee is also comprised of four offi-

a pool of exceptional external candidates who qualify as indepen-

cers, of whom two are Company-employed directors and two aredent directors as defined by the rules of the Tokyo Stock Exchange

outside directors. The committee is chaired by an outside director,

and other bodies. Outside directors have varied career back-and is responsible for proposing compensation systems and pack-grounds, with some having served as corporate executives, educa-

ages for directors and corporate officers to the Board of Directors.

tors, and as advisory government committee members prior to

The committee met four times in 2011, and mainly forwarded pro-their appointments. The wealth of experience and keen insight of

posals regarding the amount of bonuses for senior officers.

our current outside directors are reflected in the continued transparency of the Board’s decision-making processes and manage-

Board of Corporate Auditors

ment oversight.

The Board of Corporate Auditors is responsible for supervising andIn 2000, the Company (then Asahi Breweries, Ltd.) significantly

auditing the management of the Company and the performance of

reduced the number of directors, in the interest of realizing greater

duties by directors. The Board of Corporate Auditors consists ofmanagement efficiency and timelier decision-making.

five auditors, including three outside auditors. Selected from a pool

In 2011, the Board of Directors held 12 regular meetings,

of exceptional candidates who qualify as independent auditors, thewith outside directors Ms. Bando, Mr. Tanaka and Mr. Ito attend-

experience and insight gained from the varying backgrounds of theing 12, 12 and 9 meetings, respectively. (Because Mr. Ito was

outside auditors, a former top executive, a lawyer and a university

elected at the Company’s Ordinary General Meeting of Sharehold-professor, are evident as they audit the management of Asahi

ers held in March 2011, he attended fewer meetings since he took

Group Holdings from multiple perspectives. In 2011, the Board ofup his post.)

Corporate Auditors held nine meetings, all of which were attended
by Mr. Sakurai, Mr. Nakamura, and Mr. Ishizaki.

Annual Report 201133

GROUP MANAGEMENT

3. Corporate Officer System

Internal Audits and Accounting Audits

Introduction of a Corporate Officer System

To enable auditors to efficiently conduct their auditing duties, Asahi

Asahi Group Holdings has introduced a Corporate Officer System

Group Holdings assigns three full-time staff to attend to the needs

to ensure timely execution of operations and clarify responsibilitiesof the Board of Corporate Auditors, enabling auditors’ full atten-

and authority. Corporate officers are granted the authority by thedance at important meetings and facilitating the review of autho-

Board of Directors to execute operations and are responsible forrized documents at all times.

the timely execution of operations. Meanwhile, directors areWith respect to internal audits, the Group has establishedentrusted with the mission of formulating Group management strat-

audit departments comprising seven people at Asahi Groupegies and making key decisions on Group management for

Holdings, Ltd., four people at Asahi Breweries, Ltd., and six people

strengthening and developing the Group, in addition to supervisingat Asahi Soft Drinks Co., Ltd. as internal auditing departments.

the execution of operations.

These cooperate with each other to conduct audits based onGroup-wide auditing standards and our annual audit plan to ensure

Corporate Strategy Board

proper and effective business execution across the entire Group. In

The Corporate Strategy Board holds high-level meetings to fulfill its

addition to reports individually filed with each audit, twice a year,

responsibility of quickly executing decisions made by the Board ofgeneral reviews of the audits are submitted to the Corporate Strat-

Directors. The Corporate Strategy Board deliberates matters per-egy Board to be used as the basis for new policies.

taining to the direction of the entire Group. The Corporate Strategy

The auditors, Internal Audit Department and accounting audi-

Board is chaired by the president and representative director. Its

tor work in concert by exchanging information through briefings

meetings maintain the accountability of directors for the entire

and by transmitting copies of auditing reports periodically, and asGroup and the responsibility of the president and representativeneeded. In 2011, the Board of Corporate Auditors held five brief-

director and corporate officers for the operating companies, thereby

ings with the accounting auditor and three briefings with the Internalclarifying responsibilities and accelerating decision-making. To

Audit Department, respectively. The Internal Audit Department held

maximize operational efficiency, at each meeting, progress is con-four meetings with the accounting auditor.

trolled and assessed based on an objective and rational manageprocess employed for major issues and to further enhance compli-

4. Compensation for Directors andAuditors, and Accounting Auditor

ance management, each meeting is attended by at least one

Resolutions regarding compensation for senior officers become

standing corporate auditor.

agenda items for the Board of Directors following deliberations thatment index. In order to ensure the legality of the decision-making

In 2011, as the second year of Medium-Term Managementtake into account the compensation systems and packages forPlan 2012, the themes deliberated at the meetings were growth

directors and corporate officers proposed by the Compensation

strategies for completing the medium-term plan, including capitalCommittee. In 2011, fixed salaries comprised around 80% of com-and business alliances overseas, the management structure andpensation for directors, with the performance-based portion

human resources development following the transition to a holding

roughly accounting for another 20%. (Note: 100% of performance-company system, profit structure reform, Group policy and busi-

based compensation was short term, none was long term). For

ness plans for 2012, and the topics for the next Medium-Termauditors, compensation consisted entirely of fixed salaries (monthly

Management Plan.

compensation), reflecting the abolishment of the Company’ssystem of benefits from April 2009. (Refer below.)

Compensation for Directors and Auditors (FY2011)(¥ million)

Salary

Bonus

Total

Company-employed Directors (Total: 11) 344.7 103.3 448.0
Outside Directors (Total: 3)

28.8

10.5

Corporate Auditors (Total: 2)

63.6

—

39.3
63.6

Outside Auditors (Total: 3)

32.4

—

32.4

*1 The above figures include directors Masatoshi Takahashi, Noriyuki Karasawa, andToshio Mori, and corporate auditor Yoshihiro Goto, all of whom retired at the end of
the 87th Ordinary General Meeting of Shareholders held on March 25, 2011.

34

Asahi Group Holdings, Ltd.

GROUP MANAGEMENTThe Company (then “Asahi Breweries, Ltd.”) decided at asystem at the Company and the Asahi Group to determine themeeting of the Board of Directors held on February 6, 2007, toproper course of action. Based on these Basic Principles, we areabolish the system of retirement benefits for directors and auditorspresently developing an internal control system that will encompass

and to include the relevant amount in their annual salaries. Retire-the entire Asahi Group. With respect to both risk management andment benefits were traditionally paid as compensation to directors

compliance, we are establishing systems and guidelines that reflect

and auditors at a future date, and the decision to include compen-

the Basic Principles as we conduct control activities (see p. 34 forsation equivalent to retirement benefits in the annual salary was

more details). All major Group companies, specifically Asahi

made in response to the adoption of a one-year term of office. At

Breweries, Ltd., Asahi Soft Drinks Co., Ltd., Asahi Food &the same February 6 meeting, the Board of Directors also decided

Healthcare Co., Ltd., and Wakodo Co., Ltd. have also drafted their

to make no new allotments to the stock option system that had

own basic principles in this area.

been implemented as part of the compensation system for direc-

Going forward, we anticipate that business growth will trigger

tors, auditors and corporate officers, on the grounds that even if

expansion in both the number of Group companies and the regions

they were able to execute their rights under insider trading regula-where we operate. This growth notwithstanding, we are committed

tions, it would be difficult to sell the rights at a later date, so thatto extensively embedding our internal control system throughout

their function as an incentive was unsustainable.

the entire Group. At the same time, we will constantly strive toremain aware of regulatory reforms and social trends in each busi-

Accounting Auditor Compensation

ness and operating region, responding proactively to any changes

In 2011, audit fees payable to the accounting auditor amounted tothat emerge.

¥182 million for an attestation agreement and ¥15 million in othercompensation.

6. Renewal of Takeover Defense Measures
With the approval of the shareholders at the 83rd Annual Share-

5. Internal Control Systemholders’ Meeting held on March 27, 2007, the Company (thenResponse to the Financial Instruments and Exchange
Act (Japanese SOX Act)

“Asahi Breweries, Ltd.”) adopted countermeasures against the

In response to the Japanese SOX Act, Asahi Group Holdings has

The takeover defense measures define procedures for measures to

put an evaluation and reporting framework in place that includes abe taken in the event that the Company becomes the target of aset of guidelines, “Basic Regulations for Evaluation and Reporting

large-scale attempt to purchase its shares. Such measures include

of Internal Control for Financial Reporting,” and the establishment(1) requiring the person conducting the purchase (“the purchaser”)

of the Internal Control Evaluation Office as an organization to con-to provide necessary and sufficient information in advance, (2)duct independent evaluation of managers.

securing the time necessary for gathering and examining informa-large-scale purchase of its shares (“takeover defense measures”).

Based on evaluation results for 2011, the Company has deter-tion concerning the purchase, and (3) presenting management’s

mined that, as of December 31, 2011, it has an effective internal

own plan or an alternative proposal to shareholders of the Company,

control system with respect to financial reporting. This assessment

or conducting negotiations with the purchaser.

was corroborated by an audit of the internal control system performed by the outside auditors.

The potential for abusive share purchases remains a risk inJapan’s current legal framework. Asahi Group Holdings believes itshould therefore continue to maintain highly transparent proce-

Development of Internal Control System Based on the
Companies Act

dures capable of providing shareholders with sufficient information

Following the transition to the holding company system, we newly

become the target of a large-scale attempt to purchase its shares.

established Basic Principles for Asahi Group Holdings that carry on

Accordingly, with the approval of shareholders, the Company

the philosophy of the Basic Principles for Establishing an Internal(then “Asahi Breweries, Ltd.”) renewed its takeover defense mea-

Control System established by Asahi Breweries in 2006. In draftingsures at the 87th Annual Shareholders’ Meeting held on Marchthese Basic Principles, we analyzed and evaluated the current

25, 2011.

and decision-making opportunity should the Company suddenly

Annual Report 201135

GROUP MANAGEMENT

Risk Management
Taking the opportunity of the move to a holding company 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 specific management processes based on the Risk Management Rules. The goal indrafting these rules and procedures is to prevent all types of risks surrounding
the business and to strengthen our risk management system for responding toemergency situations.
The Asahi Breweries Risk Management Committee, established in line with
the Group Rules, is comprised of all the directors of Asahi Group Holdings andone executive officer. In addition to reporting about examples of risk management and compliance, the committee meets to discuss and decide guidelines
for related activities as a whole, as well as priority measures to be taken, basedon the results of a risk survey, and reviews the content of measures and theprogress of plans concerning major risks. The committee also maintains close
contact with supervisors and staff responsible for promoting risk management ineach department at Head Office and in each major business unit within theGroup. The goal here is to conduct preventive activities at the organizational levelto avoid the occurrence of risks on a daily basis.
In 2011, the committee reviewed its fundamental approach in line with theneeds of the times as described in the existing disaster manuals, and focused on
the development of a basic BCP (business continuity plan). Because the Great
East Japan Earthquake occurred in the middle of this work, the Company wasable to reflect knowledge obtained from the disaster in this basic BCP.

Risk Management Promotion System
Asahi Group Risk Management Committees Board of Directors s Corporate Officers

Secretariat
Asahi Group
Holdings

Operating Companiess Supervisor responsible for promotions Staff responsible for promotion

General Affairs /Legal Management
Department

Quality Assurance
Department

Business Units Supervisor responsible for promotions Staff responsible for promotion

Compliance
Asahi Group Holding promotes compliance and risk management throughout
the Group based on the Asahi Group Risk Management Rules. To this end andto act as the highest deliberative and promotional body, the Company established the Risk Management Committee made up mainly of Board Directors
and General Managers of the General Affairs and Legal Management
Department.
In accordance with the Asahi Group Corporate Ethics Rules, we havestationed an appropriate number of compliance promoters with a certain
degree of compliance knowledge at the major business units of the Company
and Group companies, to increase compliance awareness and disseminate
legal knowledge. As of the end of 2011, compliance promoters comprisedaround 150 Legal Promoters (LPs) and 27 Senior Legal Promoters (SLPs).
In 2011, the Company held one training session for all LPs, and two 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 concerning compliance and risk management.
In addition, training sessions focused on business sites were also held for
product development staff at Group companies. All participants reviewed theirlegal knowledge concerning trademarks and other intellectual property, andproduct labeling.
In this manner, the Company has led Group-wide efforts to conduct educational programs, training sessions and other activities aimed at further
improving compliance at business sites, while striving to develop and upgrade
the compliance promotion framework.

36

Asahi Group Holdings, Ltd.

Compliance Promotion System
Asahi Group Corporate Ethics Committee

Secretariat
Asahi Group
Holdings
General Affairs andLegal Department

Business Unit Managers(Including Group companies)
Business Unit:Manager, General
Affairs andSecretary Department

Senior Legal Promoter(SLP)

Business Unit:Manager

Legal Promoter (LP)GROUP MANAGEMENT

Board of Directors, Auditors and Corporate Officers (As of March 28, 2012)

Board of Directors
1. Hitoshi Ogita
Chairman of the Board

2. Naoki Izumiya
President andRepresentative Director

3. Kazuo Motoyama
Executive Vice President

6. Toshio Kodato
Director and Corporate
Officer

4. Katsuyuki Kawatsura
Managing Director andManaging Corporate Officer

Auditors
Standing Corporate Auditors
Yoshihiro Tonozuka
Yukio Kakegai
Corporate Auditors
Takahide Sakurai
Naoto Nakamura
Tadashi Ishizaki

Outside Director

1

2

3

4

9

10 11

10. Naoki Tanaka
7. Shiro Ikeda
Director and Corporate
Officer

5. Toshihiko Nagao
Managing Director andManaging Corporate Officer

9. Mariko Bando

Outside Director

11. Ichiro Ito
Outside Director

5

6

7

8

8. Akiyoshi Koji
Director

Corporate Officers
Managing Corporate
Officer
Fumio Yamasaki

Corporate Officers
Katsutoshi Takahashi
Kiminari Maruta
Hiroshi Kawashita

Yoshihide Okuda
Yasutaka Sugiura
Tetsuo Tsunoda

Annual Report 201137

GROUP MANAGEMENT

Corporate Social Responsibility (CSR)
The Asahi Group and CSR
The Asahi Group is committed to transforming the bounty of nature into the “Kando” of food while becoming a trusted company with global
quality. Guided by this approach, we conduct corporate activities in ways that uphold our corporate philosophy of pursuing customer satisfaction. In all business activities worldwide, we are determined to meet our social responsibility as a corporate citizen through environmentallyand socially conscious actions. At the same time, we strive to create social value, and work to promote the sustainable development of bothsociety and the Asahi Group.

CSR Policy of the Asahi Group (Drafted January 2010)
The Asahi Group seeks to contribute to the development ofa sustainable society through all our business activities worldwide.
Not only will we comply with the various laws and rules of all countries andregions where we operate, but we will also take the initiative to actively engage inactivities aimed at fulfilling our social responsibility with a global viewpoint.
Furthermore, we hope to share the excitement with all the peoples of the world
through the creation of new social values.
We will continue to think about what we can do to bring this about and take action,
together with all the stakeholders that surrounds us.

38

Asahi Group Holdings, Ltd.

GROUP MANAGEMENT

Formulation of the Asahi Group
Environmental Vision 2020

Initiatives for Protection of Biodiversity

In March 2010, the Asahi Group formulated Environmental Vision 2020

grains, and other natural resources. As such, we have formulated

to strengthen environmental preservation activities throughout thethe Statement on Biodiversity*, designed to respect biodiversity

Group. In order to realize a sustainable society for the future, we will

and protect the bounties of nature so that we can pass them on to

focus on reducing the environmental burden of our production andthe next generation. This statement contains three core policies:

business activities and on valuing our relationships with the individuals

protecting the natural environments where plants and animals live,

in society, including the next generation. With this goal in mind, thevaluing the bounties of nature, and working together with people

Group as a whole will promote initiatives to preserve the environment.

around the world.

In its business activities, the Asahi Group makes use of water,

Going forward, the Asahi Group will continue to actively promote sharing of specific biodiversity-conscious business activities
Asahi Group
Environmental Vision 2020

throughout the entire Group.

Bringing the Best of Nature to Tomorrow* For details, refer to the pamphlet “The Asahi Group Statement on Biodiversity.”

Asahi Group conducts business activities thatmake use of the gifts of nature, such as water and grain. We are able todeliver safe and reliable products to our customers only when the
global environment and human society are sustainable.
The changes occurring in the global environment call for urgent andconcrete measures on the part of all businesses and consumers.
The shared mission of humanity is to work to realize a society thatcan exist in harmony with the global environment.
Asahi Group will work actively to address environmental concerns andcontribute to the realization of a sustainable society,in keeping with four key themes:“Building a Low Carbon Society,” “Building a Recycling-Based Society,”“Conserving Biodiversity,” and “Spreading Awareness of the Gift of Nature.”

Protect
the Bounties
of Nature
Conserving
biodiversity

RecycleResources
Building a recyclingbased society

Four
ThemesCommunicate
the Importanceof Nature

Reduce CO2
Building a
low carbon society

Spreading awarenessof the gift of nature

Asahi Group CO2 Emissions(Tons)

900,000

840,000 tons

800,000
5% reduction

700,000

10% reduction

600,000
500,000
400,000

Reduce CO2 emissions
volume of the
Asahi Group by

300,000

30%

200,000
100,000
0

2008

2012

2015

2020

(Year)

Annual Report 201139

GROUP MANAGEMENT

Human Resource Development at the
Asahi Group
Since 2010, the Asahi Group has implemented the “Global Challengers Program,” an HR development program designed to foster humanresources capable of conducting operations on a global stage. This
program is part of efforts to meet the objectives outlined in our LongTerm Vision 2015 and Medium-Term Management Plan 2012.
In 2011, seven program participants were selected based on
their written applications and performance at training in Japan.
They were sent primarily to emerging markets, where they usedtheir initiative over three months to build local networks and survey

Destinations and Number of Participants for 2011
Global Challengers Program
India
China
Vietnam
Malaysia
Indonesia
Poland

2
1
1
1
1
1

the local business environment while undergoing language training.
At the end of their stay, participants offered suggestions on strategy
for the Asahi Group in the countries where they were assigned.

International Year of Forests 2011 and Asahi Forest 70th Anniversary Commemorative Project

MAY

Asahi Breweries Environmental Culture
Lecture “Viewing Forest Diversity During
the International Year of Forests” Held

SEPTEMBER

Asahi Breweries Environmental Culture
Lecture “The Potential and Diversity ofForests” Held

We hosted a number of events to commemorate 2011 as the “InternationalYear of Forests” designated by the United Nations and the 70th anniversaryof Asahi Breweries own Asahi Forest. In May, we held the 50th Asahi BrewJULY

Asahi Forest Nature School Helderies Environmental Culture Lecture entitled “Viewing Forest Diversity
During the International Year of Forests,” followed in July and August by a
new environmental education program called “Asahi Forest Nature School.”

AUGUST

In September we held the 51st environmental culture lecture, this timeentitled “The Potential and Diversity of Forests.”
Asahi Breweries Environmental Culture Lectures feature presentations by researchers, notable names from the environmental protection
movement, and others. Together with the speakers, audience members
consider environmental issues close to their own lives, with the goal ofachieving a more sustainable society.
Asahi Forest Nature School, Asahi Breweries new environmental education program, uses nature experiences to deepen understanding of theimportance of the Earth’s environment among elementary schoolchildren,
who will inherit tomorrow’s world, and their parents and guardians. Held inareas of Asahi Forest such as Konomurayama and Akamatsuyama, the program also helps to strengthen bonds between parents and children.

40

Asahi Group Holdings, Ltd.

FINANCIAL SECTION
42

Eleven-Year Summary

44Management’s Discussion and Analysis

54

Consolidated Balance Sheets

56

Consolidated Statements of Income

57

Consolidated Statement of Comprehensive Income

58

Consolidated Statements of Changes in Net Assets

59

Consolidated Statements of Cash Flows60

Notes to Consolidated Financial Statements

90

Independent Auditors’ Report

Annual Report 201141

ELEVEN-YEAR SUMMARY
Years ended December 31

Millions of yen

For the year:
Net sales
Operating income
Income (loss) before income taxes
and minority interests
Net income (loss)
Capital investments*2
Depreciation*2

2011

2010

2009

2008

2007

¥1,462,736
107,190¥1,489,461
95,349¥1,472,469
82,777¥1,462,748
94,520¥1,464,072
86,95690,42255,09340,225
58,13592,46553,08036,73859,71088,07847,64562,37658,37282,93845,01436,13547,35381,74144,79844,48145,250

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

921,657
324,782
98,033
94,22024,044

966,331306,719
95,44097,67423,297958,156
355,162
92,400—66,751

995,703
316,737
79,203—
71,105

1,012,256
299,663
67,089—85,064

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

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

87,2508,330
3,594(5,138)1,145

78,879
695
2,745
—
889

90,762
616
1,944
—
1,006

79,285
4,593
1,344
—
1,724

1,529,908
390,092
643,799

1,405,358
311,423
612,670

1,433,653
391,876
577,7031,299,059
302,259
534,628

1,324,392
332,458
529,782<Segment information>
Sales:
Alcoholic beverages
Soft drinks and foodPharmaceuticals
Real estate
OthersSales: (New Segments)
Alcoholic beverages
Soft drinks
Food
Overseas
OthersOperating income (loss):
Alcoholic beverages
Soft drinks and foodPharmaceuticals
Real estate
OthersOperating income (loss): (New Segments)
Alcoholic beverages
Soft drinks
Food
Overseas
OthersFinancial position:
Total assets
Interest-bearing debt
Total net assets*3

Yen

Per share data:
Net income
Diluted net income
Cash dividends applicable to the year
Total net assets¥

118.36118.2825.00
1,378.19¥

114.10114.0023.00
1,315.51¥

102.49102.4221.00
1,233.25

¥

96.31
96.14
20.00
1,122.13

¥

94.94
94.74
19.00
1,089.33%

Ratios:ROE
Operating income ratio
Operating income ratio(exclusive of alcohol tax)
Equity ratio

8.8
7.3

9.0
6.4

8.7
5.6

8.7
6.5

9.0
5.9

10.2
41.9

9.0
43.6

8.1
40.0

9.6
40.2

9.0
38.9

*1 U.S. dollar amounts are translated from Japanese yen, for convenience only, at the rate of ¥77.74 to U.S.$1, the exchange rate prevailing at December 31, 2011.
*2 Includes effects accompanying changes in accounting standards for lease transactions and trademarks of an Australian subsidiary at time of acquisition.
*3 Total net assets through fiscal 2005 represents total shareholders’ equity under the former accounting standards, while after fiscal 2006 they were computed in accordancewith new accounting standards.
*4 In case of net loss, disclosure of fully diluted per share data is not required.

42

Asahi Group Holdings, Ltd.

ELEVEN-YEAR SUMMARY

Thousands of
U.S. dollars*1

Millions of yen
2006

2005

2004

2003

2002

2001

2011

¥1,446,385
88,713¥1,430,027
90,249¥1,444,226
101,273¥1,400,302
78,984¥1,375,267
69,341¥1,433,364
77,777$18,815,745
1,378,827

81,16544,77536,894
48,79375,72539,87043,94150,02858,36930,596
40,134
51,33948,681
23,21038,184
53,101

32,483
14,754
41,25751,546

18,611
13,61764,82952,901

1,163,134
708,683
517,430
747,813

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

1,179,412
201,772—
3,058
49,122—————

1,007,558
283,12153,792—
101,914

1,025,447
267,003
25,286—112,291

1,078,931
217,380
22,163—
125,752

1,067,136
185,738
21,547—
125,881

1,057,029
173,773
14,232—130,233

1,101,620
192,526
14,561—
124,657

11,855,634
4,177,798
1,261,037
1,211,989
309,287

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

92,635(1,485)
—
1,833
(816)

—
—
—
—
—

78,186
7,746
445
—
2,173

78,089
8,632
805
—
2,559

90,872
8,114
(599)
—
2,935

72,452
2,645
169
—
3,399

69,145(4,086)
8—
3,855

76,809(2,079)
406
—
2,476

1,299,524
146,50153,486(37,471)
9,776

1,288,501
290,101
509,775

1,218,227
289,202454,892

1,250,818
303,089
417,828

1,244,410
336,285
398,153

1,294,738
402,206
387,539

1,341,103
417,167
385,965

19,679,804
5,017,906
8,281,438

Yen

¥

94.02
93.85
19.00
1,012.77

¥

82.22
80.98
17.00
951.12

¥

62.52
60.64
15.00
860.66

U.S. dollars

¥

46.80
44.58
13.00
810.19

¥

28.90
27.46
13.00
770.86

¥

27.00
25.25
13.00
752.25

$

1.52
1.52
0.32
17.73

%

9.6
6.1

9.1
6.3

7.5
7.0

5.9
5.6

3.8
5.0

3.7
5.4

9.4
37.0

9.8
37.3

11.4
33.4

9.2
32.0

8.3
29.9

9.0
28.8

Annual Report 2011

43

MANAGEMENT’S DISCUSSION AND ANALYSIS

Overview

Net Sales

Market Trends
In the fiscal year ended December 31, 2011, recovery in the global
economy weakened due to the intensification of Europe’s sovereign
debt problem and low growth of the US economy, despite solid performance of the Asian economy centered on China.
Japanese economic conditions remained harsh due to theimpact of the slowdown of overseas economies, the persistently
strong yen, and other factors, even though improvement had been
observed in the second half of the year as a result of reconstruction
demand following the Great East Japan Earthquake.
Against this backdrop, the Asahi Group promoted global Groupmanagement in the second year of its Medium-Term Management Plan
2012, aimed at further enhancing its corporate value. In addition, theGroup sought to clarify authority and accountability in each businessdivision by transitioning to a holding company structure in July 2011.
The transition enabled the divisions to specialize further in reinforcing
the Group’s business base as a whole. At the same time, it enabled theGroup to boldly distribute its management resources to growth fields,with the view to achieving dramatic growth going forward.

In fiscal 2011, net sales for the Asahi Group decreased ¥26.7 billion,
or 1.8% year on year, to ¥1,462.7 billion.
Sales in the alcoholic beverages business declined ¥44.7 billion,
or 4.6% year on year, to ¥921.7 billion, largely reflecting lower sales forbeer-type beverages due to the impact of the Great East Japan Earthquake. In the soft drinks business, sales rose ¥18.1 billion, or 5.9%, to¥324.8 billion, while sales in the food business increased ¥2.6 billion,
or 2.7%, to ¥98.0 billion. In the overseas business, sales decreased
3.5% year on year to ¥94.2 billion.
In sales composition by segment, the alcoholic beverages business’s share decreased from 64.9% in the previous fiscal year to
63.0%, while the soft drinks business’s share increased from 20.6%
to 22.2%. The food business’ share, meanwhile, increased from 6.4%
to 6.7%, and the overseas business’s share decreased from 6.6% to
6.4%.

NET SALES BY SEGMENT(¥ billion)
1,600
67.1

71.1
79.2

66.8
92.4

66.6
95.4

299.7

316.7

355.2

391.6

1,012.3

995.7

958.2

935.9

85.1

PRODUCT SHARE IN THE BEER-TYPE BEVERAGESMARKET BY GENRE

1,200

(%)
23.7

20.2

100

32.8

29.3

34.7

24.0
94.2
98.0
324.8
921.7

800
24.5

80

23.3
20.1

17.0

15.4

60
55.2

53.1

50.2

50.6

400

50.0
0

40

2007

2008

2009

2010

2011

■ Alcoholic beverages* ■ Soft drinks* ■ Food* ■ Overseas ■ Others* Overseas business results are included in other segments prior to 2011

20

0

2007

2008

2009

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

44

Asahi Group Holdings, Ltd.

2010

2011

Operating Income
For the consolidated fiscal year, operating income increased ¥11.8
billion, or 12.4%, year on year, to ¥107.2 billion. This result was due inpart to cost reduction efforts in the alcoholic beverages business suchas curbing advertising and sales promotion expenses and other fixed
costs. Other factors included improved sales volume in the soft drinks
business, coupled with greater internal production of PET bottles andother efforts to lower costs. Another contributor to higher income wasa decrease in amortization of goodwill in the food business. In the overseas business, business restructuring prompted dramatic improvement in profitability with the sale of unprofitable soft drink operations inSouth Korea, along with the sale of China-based Hangzhou Xihu Beer
Asahi Co., Ltd. and Zhejiang Xihu Beer Asahi Co., Ltd.

MANAGEMENT’S DISCUSSION AND ANALYSISNET INCOME/ROE

OPERATING INCOME/OPERATING INCOME RATIO(¥ billion)

(%)

120

107.2

(¥ billion)

(%)

60

15

47.6
45.0

44.8

87.0

55.1

53.1

95.3

94.5
82.8

80

10

8.7

8.7

9.0

10

8.8

6.4
5.6

40

2007

9.0

40

7.3

6.5

5.9

0

15

2008

■ Operating income (left scale)

2009
■

2010

2011

5

20

0

0

Operating income ratio (right scale)

5

2007

■ Net income (left scale)

2008
■

2009

2010

2011

0

ROE (right scale)

Other Income and Expenses

Dividends

Other loss of ¥16.8 billion was recorded, a loss ¥13.9 billion worse
compared to the previous year. Other loss was largely attributed toearthquake-related expenses of ¥17.9 billion associated with theGreat East Japan Earthquake, coupled with business integration
expenses of ¥3.6 billion associated with new business investments.
Other factors included a loss on devaluation of investment securities of ¥2.1 billion.

Asahi Breweries, Ltd. places priority on returning profit to shareholders. The Company’s basic policy when providing shareholder returns
is to take business performance and a range of other factors into
account, seeking to enhance profitability and ensure a stronger financial position. We strive to make consistent and stable dividend payments and aim to increase dividends by generally referring to abenchmark of at least 20% for the consolidated dividend payout ratio.
In tandem, we repurchase our own shares whenever the timing isappropriate, with the goal of ensuring a well-rounded and comprehensive shareholder return program.
Based on this policy, we paid an ordinary full-year dividend of¥25.0 per share, which included a ¥2.0 increase in the year-end dividend to ¥13.5 per share, and an interim dividend of ¥11.5 per share.
In fiscal 2012, ending December 31, 2012, we plan to pay an interim
dividend of ¥14.0 and a year-end dividend of ¥14.0 per share, for afull-year dividend of ¥28.0 per share.

Income Taxes
The actual effective tax rate, including the corporate tax for fiscal
2011, decreased from 44.3% in the previous fiscal year to 38.6%. The
difference between the actual effective tax rate of 38.6% and thestatutory tax rate of 40.4% was primarily caused by the positiveeffects of 3.9% in amortization of goodwill (including impairment loss),and 1.7% in non-deductible expenses, and the negative effects of
5.2% in valuation reserves and 3.1% in non-taxable dividend income.
The major factor behind the decrease in the actual effective tax rate
was the decline in valuation reserves of 5.4% and decline in amortization of goodwill of 4.0%, despite an increase of 3.8% in equity in net
income of unconsolidated subsidiaries and affiliated companies.

Net Income
Net income rose 3.8%, or ¥2.0 billion year on year, to ¥55.1 billion.
The net income ratio was 3.8%, up 0.2 of a percentage point from theprevious fiscal year. ROE was down 0.2 of a percentage point year on
year, at 8.8%. Net income per share (diluted) increased from ¥114.00
to ¥118.28.

Annual Report 2011

45

MANAGEMENT’S DISCUSSION AND ANALYSISDIVIDENDS/DIVIDEND PAYOUT RATIO
(¥)

(%)
50

30

25
23

20

19

40

21

20

30
20.8

20.0

20.2

20.5

21.1

These initiatives spurred sales growth in the new genre beverages category, reflecting budget-conscious spending and a strong
preference for lower-priced products among consumers. The result,however, was a slight dip in sales in the beer category and a sharp
drop in happoshu sales. Consequently, overall sales in the alcoholic
beverages segment, comprised of Asahi Breweries, Ltd. and otheroperating companies, declined 4.6% year on year, to ¥921.7 billion.
Operating income was up ¥13.8 billion, or 15.8% year on year, to¥101.0 billion, with growth mainly spurred by benefits from efforts tocurb advertising and sales promotion expenses and other fixed costs.

20

Beer-type beverages

10

Taxable shipment volume for domestic beer-type beverages from Asahi
Breweries, Ltd. declined 2.9% year on year to 166.1 million cases.
As a result, sales of beer-type beverages declined ¥27.4 billion,
or 3.4% from the previous year, to ¥785.1 billion.
The company’s share of the overall domestic beer-type beverages market was 37.9%, up 0.4 of a percentage point year on year.

10

0

2007

■ Dividends (left scale)

2008
■

2009

2010

2011

0

Dividend payout ratio (right scale)

Review of Operations by Segment

Beer

SALES AND OPERATING INCOME BY SEGMENT(2011/2010)
Millions of yen
2011

2010

PercentchangeSales
Alcoholic beverages
Soft drinks
Food
Overseas
Others¥921,657
324,782
98,033
94,22024,044¥966,331
306,719
95,44097,67423,297

–4.6
+5.9
+2.7
–3.5
+3.2

Operating income
Alcoholic beverages
Soft drinks
Food
Overseas
Others101,025
11,3894,158(2,913)760

87,2508,330
3,594(5,138)
1,145

+15.8
+36.7
+15.7
—
–33.7

Alcoholic Beverages Business(Related information on page 16)
Asahi Breweries, Ltd.
The alcoholic beverages business in Japan continues to face a severemarket climate. Fewer births and an aging population are spurring a
gradual decline in alcoholic beverage consumption, while more stringent belt-tightening amid poor economic conditions is driving a preference for low-priced products. In this context, we strove to leveragecustomer trust and cultivate a sense of familiarity to improve brandvalue, and make new value propositions that offer new discoveries
and enjoyment to consumers in order to grow overall demand. In
parallel, we took steps to further reinforce and develop our core
brands Asahi Super Dry and Clear Asahi. At the same time, we sought
to build a solid earnings base immune to the effects of changes in themarket environment, by minimizing fixed costs across the board andreducing raw materials costs.

46

Asahi Group Holdings, Ltd.

In the beer category, we took action to develop the Asahi Super Dry“Extra cold” (–2°C to 0°C) concept by expanding the number of sites
generating information about this new value proposition, as well as
developing and installing space-saving dispensers. As part of aggressive marketing efforts to reinforce the brand power of Asahi Super
Dry, we also continued to enact a project called “Refreshingly Sustainable.” Promoted in each of Japan’s 47 prefectures, the project
donates a portion of proceeds from sales of Asahi Super Dry to theprotection and preservation of the natural environment and important
cultural treasures in each region. The result was annual sales volume
of over 100 million cases*1 for a 23rd consecutive year, retaining the
55.5%*2 of Japan’s beer market achieved in the previous year. This
achievement notwithstanding, beer sales volume decreased 4.6%
year on year to 11.2 million cases, with beer sales declining ¥27.2
billion, or 4.4%, to ¥593.2 billion.

HapposhuIn the happoshu category, amid the market diminishing, we madequality 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 11.2% year on year to 2.1 million cases and sales
decreased ¥8.2 billion, or 11.4%, to ¥63.3 billion. However, Asahi
Breweries, Ltd.’s share of the domestic happoshu market increased
0.5 of a percentage point to 24.5%*2.

New genre beverages
In new genre beverages, we conducted advertisement-linked consumer campaigns and other initiatives for our core brand Clear
Asahi. These efforts lifted sales volume for a fourth consecutive year
since the debut of this product. We worked to further solidify ourpresence in the market for new genre beverages by bolstering our
product lineup, which also includes Asahi Off, with the launch of
Asahi Blue Label, our “zero carbohydrate” offering, in July. As a

MANAGEMENT’S DISCUSSION AND ANALYSIS

BEER-TYPE BEVERAGES BY SHARE (2011)
0.8%
9.7%
13.5%

BEER

50.5%

Whisky and Spirits

25.5%

1.2%
2.5%
2.7%

24.5%

HAPPOSHU
69.2%

0.9%
23.4%

NEW GENRE

25.7%

12.9%
37.0%

■ Asahi Breweries■ Company D

to these, we endeavored to generate demand among a wide range ofconsumers, including through the release of a new variety of Asahi
Chu-Hi Kajitsu-no-shunkan with a rich tangerine flavor. Nevertheless,sales of RTD beverages declined 9.7% year on year to ¥28.2 billion.

Sales of whisky and spirits increased for the fifth consecutive year asa result of the renewal of the core Black Nikka Clear Blend brand andconsumer campaigns we implemented. The quality of the Nikka
brand, moreover, was recognized on the world stage when Taketsuru
Pure Malt 21 Years was named “World’s Best Blended Malt Whisky”
at the World Whiskies Awards* in April 2011 for a fourth time and forthe third consecutive years running. As a result, sales rose 1.4% fromthe previous year to ¥30.8 billion.
* An international contest focused exclusively on whisky, chiefly sponsoredby U.K.-based Whisky Magazine.

■ Company A ■ Company B ■ Company C

SALES BY CATEGORY(BEER, HAPPOSHU, NEW GENRE, AND OTHERS)

result of these initiatives, sales volume rose 6.6% from the previous
year to 2.4 million cases and Asahi Breweries, Ltd.’s share of thedomestic market for new genre beverages rose 1.2 percentage
points to 25.7%*2. Sales in this category increased ¥8.0 billion, or(¥ Billion)
1,200

900

136.4

129.7

61.7

77.5

6.6%, to ¥128.6 billion.

124.7

110.3

1

705.5

685.7

123.1
101.6

128.4
120.6

96.2

* One case is equivalent to 20 large bottles (663ml 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 0.5g
(per 100ml) is indicated as “zero carbohydrate.”

646.5

600

71.5
620.4

114.7
128.6
63.3
593.2

300

Alcoholic beverages other than beer-type beverages
Overall sales of alcoholic beverages other than beer-type beverages—shochu, RTD beverages, whisky and spirits, wine and beertaste beverages—decreased ¥13.7 billion, or 10.6%, to ¥114.7
billion. The drop in sales largely reflected persistent product supply
shortfalls caused by the Great East Japan Earthquake, and camedespite the promotion of profit structure reforms, including revisions totransaction systems.

ShochuFor shochu, we conducted aggressive sales promotion activities
designed to reinforce the Kanoka brand that had been renewed inAugust. We also moved assertively to expand sales of commercialuse products, centered on Honkaku Imo-Jochu Satsuma KokuMurasaki, which uses a rare variety of sweet potato for shochu named
Akimurasaki. Despite these efforts, however, sales declined 16.5%
year on year to ¥40.3 billion.

Ready-to-drink (RTD) beverages
In ready-to-drink (RTD) beverages, we sought to further cultivate thebrands Asahi Slat, Asahi Cocktail Partner and Asahi Sparx. In addition

0

2007

2008

2009

■ Beer ■ Happoshu ■ New genre

2010

2011

■ Others

Wine
In wine, efforts to boost penetration of the Sainte Neige brand andother domestic wines included the release in May of Rela, a wineoffering an easy-to-drink taste in a convenient PET bottle package. In
imported wines, we worked to expand sales by taking advantage ofour diverse product lineup centered on Louis Latour, which we
expanded in August with the introduction of Vina Albali. However,sales declined 7.8% to ¥10.6 billion.

Other alcoholic beverages segment
In other alcoholic beverages segment, Double Zero Cocktail saw
sales increase substantially year on year as consumers embraced the
0.00% alcohol and zero calories featured in this cocktail-taste beverage. In contrast, sales volume of beer-taste beverages declined
80.7% year on year due to temporary sales suspensions and other

Annual Report 2011

47

MANAGEMENT’S DISCUSSION AND ANALYSIS

disruptions in the wake of the Great East Japan Earthquake. As aresult, sales of other alcoholic beverages segment decreased 31.7%
to ¥4.8 billion.

Overseas Alcoholic Beverages BusinessAmong Asahi brand products overseas, Asahi is ranked No. 1 inimported beer market sales volume in South Korea, thanks to aggressive sales promotion activities. In Malaysia, a licensing agreement was
concluded for Asahi Super Dry with Carlsberg Brewery Malaysia
Berhad in November, boosting the presence of Asahi Breweries especially in the Asia and Oceania region.

Soft Drinks Business(Related information on page 23)
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 structural reform. As
a result, sales in the soft drinks business rose 5.9% year on year to¥324.8 billion. Operating income, meanwhile, increased 36.7% to¥11.4 billion, due to the increase in sales volume at Asahi Soft Drinks
Co., Ltd. and the reduction in costs, some of which was attributable
to the higher ratio of PET bottles manufactured in-house.

Asahi Soft Drinks Co., Ltd.
In the domestic soft drinks market, as part of the product strategy
underpinning our growth strategy, we concentrated marketing investment to continue strengthening and cultivating the core brands Mitsuya
Cider, WONDA and Asahi Juroku-cha at Asahi Soft Drinks Co., Ltd.
We also pursued initiatives for revitalizing our long-selling brands
including Bireley’s and Wilkinson. Elsewhere, we enhanced the production and sales systems for Asahi Rokko no Oishii Mizu mineralwater to meet increased demand for mineral water following the Great
East Japan Earthquake. As a result, overall sales volume at Asahi Soft
Drinks Co., Ltd. rose for a ninth consecutive year to a record high.
In the area of structural reform, we took steps designed to both
improve quality and further reform the profit structure by striving to
reduce prices for raw materials and improve production and logistics
efficiency. These included measures to make PET bottles lighter andproduce them internally.

CoffeeIn our core WONDA brand, sales volume for WONDA Morning Shot
was brisk thanks to aggressive sales promotion activities and campaigns. Overall coffee sales volume was up 8.2% year on year to 38.6
million cases.

Tea-based drinks
During the year, we sought to revitalize the market through brisk salesof core brand Asahi Juroku-cha spurred by aggressive brand investment. As a result, annual sales volume for the Asahi Juroku-cha brandrose 12.4% year on year to 18.4 million cases. Consequently, annual
sales volume for the entire tea-based drinks category increased 1.0%
year on year, to 36.0 million cases. This subdued growth reflected
lower sales volume for black-tea-based drinks.

Fruit and vegetable drinks and other soft drinks
In fruit and vegetable drinks, we focused on revitalizing long-sellingbrands, including Bireley’s and Wilkinson. Annual sales volume for the
fruit and vegetable drinks category increased 14.3% overall year on
year, to 13.4 million cases.
In other soft drinks, total sales volume was up 26.8% year on
year to 41.6 million cases. Growth was primarily due to contributions from the mineral water category, namely special demand in
the aftermath of the Great East Japan Earthquake, coupled with theintroduction of Asahi Rokko no Oishii Mizu mineral water to our
lineup from July 2011.

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

41.6
32.8
150

34.2

For our mainstay Mitsuya Cider brand, a shortage of raw materials
and other disruptions from the Great East Japan Earthquake led toshipment and other adjustments, and a decline in sales volume fromthe previous year. As a result, annual sales volume of Mitsuya Cider
brand beverages decreased 3.5% year on year to 36.5 million cases,
even though they topped 30 million cases for the second consecutive
year. Consequently, the total sales for carbonated beverages
increased 0.3% year on year to 43.4 million cases, due in large part tosales remaining strong in the Wilkinson brand.

48

Asahi Group Holdings, Ltd.

26.3

36.1

41.3

11.2
35.9

34.7

43.2

43.4

11.1
36.9

11.7
35.7

13.4
38.6

31.2

35.6

36.0

100
14.2
28.5

Carbonated beverages

27.4
19.4

50
34.6

0

2007

2008

2009

2010

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

2011

MANAGEMENT’S DISCUSSION AND ANALYSIS

Food Business (Related information on page 26)
In the food business, Asahi Food & Healthcare Co., Ltd. strove tostrengthen its business foundations for further growth by upholding
the basic strategies of sales growth, achieving a stronger corporate
structure, and reinforcing a brand reputation for safety and quality.
Aggressive advertising and sales promotions were conducted for ourcore products—MINTIA breath mint tablets, BALANCEUP nutritionallybalanced snack bars, Ippon Manzoku Bar nutrition bars, quasi-drug
product EBIOS, Dear-Natura brand supplements, and our Slim Up
Slim line of diet support food. The company also tapped into thedomestic and overseas markets for seasonings, including high-valueadded yeast extracts.
Wakodo Co., Ltd., meanwhile, pursued initiatives designed toreinforce its business base and expand business, guided by a management policy of “establishing a management base for the nextstage of growth.” Wakodo leverages its expertise in “infant-safe quality” to meet customers’ demand for safe and reliable products. Consequently, the company saw brisk performance from mainstay
brands, including baby food brand Goo-Goo Kitchen, which resulted
in sales growth over the previous year. In the original equipment
manufacturing (OEM) of household powdered drinks, sales increased
sharply as a result of gaining new customers.
Meanwhile, Amano Jitsugyo Co., Ltd. worked to expand its business and boost profitability, with the aim of emerging as the undisputed leader in Japan’s freeze-dried food market. In the mass
distribution sales business, the company saw expansion in thenumber of mass-retail stores handling its products, including its mainstay freeze-dried miso soup products, Nyumen soft noodles andChiisame Donburi small rice bowls. The total number of customers in
the direct marketing business also increased steadily thanks to proactive advertising campaigns.
As a result of the above actions, which led to strong growth insales of core products, sales in the food business climbed 2.7% year
on year to ¥98.0 billion. Operating income rose 15.7% year on year to¥4.2 billion, thanks to the reduced burden of goodwill amortization,
which offset the huge impact of the Great East Japan Earthquake on
production and logistic systems.

Overseas Business (Related information on page 28)
In the overseas business, existing businesses were reorganized to
improve profitability, while efforts were made to execute growth strategies such as aggressively investing in new businesses focusing on
Asia and Oceania.
We moved to improve profitability in China by strengthening ourstrategic partnership with Tsingtao Brewery Co., Ltd. (Tsingtao
Brewery). This included increased contract production of Tsingtao
Beer brand products. Another initiative was to reorganize alcoholic
beverages operations in China by transferring the Group’s entire
equity interest in Hangzhou Xihu Beer Asahi Co., Ltd. and Zhejiang
Xihu Beer Asahi Co., Ltd. to China Resources Snow Breweries (China)
Investment Co., Ltd.

In Oceania, Schweppes Australia Pty Ltd strived to enhanceearnings structure by concentrating marketing investments on bolstering its flagship brands and by pressing for improvements in production
and procurement efficiency, among other measures. Efforts were also
made to establish a robust business structure in the region that
included the enhancement of subsidiary Asahi Holdings (Australia) Pty
Ltd. to function as a holding company for overseeing Group companies in the Oceania region, in addition to the conversion of Asahi Beverages Australia Pty Ltd, an Australian beverages company, andIndependent Liquor Group, an alcoholic beverages company based inAustralia and New Zealand, into subsidiaries.
In Southeast Asia, efforts were made to build an operating basein Southeast Asia where growth is expected to continue into the futureon the back of population growth and economic progress. This
included the acquisition of Malaysia’s second-largest soft drink company Permanis Sdn. Bhd. in November.
Nonetheless, sales from the overseas business decreased 3.5%
to ¥94.2 billion. Sales declined despite contributions from newly consolidated subsidiaries because the Group divested Haitai BeverageCo., Ltd. of South Korea in January, and sales from this company
were excluded from the scope of consolidation. Operating loss associated with the overseas business was reduced by ¥2.2 billion year on
year to ¥2.9 billion due to improved profitability in the alcoholic beverages business in China and the sale of Haitai Beverage Co., Ltd.

Other Businesses
In other businesses, sales increased by 3.2% year on year to ¥24.0 billion,
thanks to expansion of the insurance agency and logistics businesses.
However, operating income decreased by 33.7% year on year to ¥0.8
billion, due to costs in the logistics business that rose as a consequenceof the Great East Japan Earthquake disrupting the infrastructure.

Outlook for Fiscal 2012
As the final year of Medium-Term Management Plan 2012, fiscal 2012
will see management resources channeled into strengthening brands
for core products in each business, and a continued push to enhancecost competitiveness, in a bid to bolster the earnings power of theentire Group. Similarly, we are seeking to achieve Long-Term Vision2015 through a determined push to reinforce our domestic businessbase in Japan. Efforts here will focus on strengthening the production
capabilities fundamental to boosting profitability and ensuring safety
and reliability in all business segments. We also remain committed tobuilding a business portfolio that enables sustainable growth byacquiring bases that will fuel growth in global markets. In formulating
growth strategies that highlight Group synergies, including with newly
acquired business bases, our goal is to raise corporate value for theentire Asahi Group through faster decision-making and optimal
resource allocation.
Consequently, we are forecasting net sales of ¥1,560.0 billion (up6.6% year on year), operating income of ¥118.0 billion (up 10.1%) andnet income of ¥65.0 billion (up 18.0%) for the fiscal year ending
December 31, 2012.
Annual Report 2011

49

MANAGEMENT’S DISCUSSION AND ANALYSIS

Liquidity and Capital Resources
Asahi Group Holdings, Ltd. gains its capital resources principally fromcash flows generated by operating activities, loans from financial institutions, and the issuance of company bonds, and as a management
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 to invest. Potential investments
include capital expenditure to enhance the management base andincrease 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 andthe issuance of commercial paper.
Asahi Group Holdings, Ltd. and its consolidated subsidiaries
have also introduced a cash management service (or CMS) that channels 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 andminimizing financing costs.
The outstanding balance of interest-bearing debt amounted to¥390.1 billion as of the end of 2011, up ¥78.7 billion from the previous
fiscal year-end. This balance primarily reflected funds procured for business investment in 2011. The outstanding balance was below one-thirdof its all-time peak in fiscal 1992. In addition, during the year underreview 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.

¥40.2 billion. This increase resulted primarily from several sources,
among them investments in profit structure reform in the alcoholic
beverages business centered on production system development inJapan’s Kansai region and ongoing facilities investment, including
construction to upgrade existing facilities and energy-efficiency measures. Other factors included strategic facilities investment in the softdrinks business by Asahi Soft Drinks Co., Ltd. in an ongoing drive toboost production efficiency, as well as various initiatives in the foodbusiness. 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 ¥58.1 billion.

CAPITAL INVESTMENTS AND DEPRECIATION(¥ billion)
80
62.4

59.7

58.4

58.1

60
47.4

44.5 45.3

36.7

36.1

40

40.2

20

0

2007

2008

2009

2010

2011

■ Capital investments ■ Depreciation

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

Assets, Liabilities and Net Assets

390.1

391.9

400

(Times)
1.2

332.5
311.4

302.3

0.9

300
0.65

0.68

0.58

0.61
0.6

200
0.51

0.3

100

0

2007

2008

■ Interest-bearing debt (left scale)

2009
■

2010

2011

0

D/E ratio (right scale)

Capital Investments
Capital investments for the fiscal year ended December 31, 2011,
increased ¥3.4 billion from ¥36.7 billion in the previous fiscal year to50

Asahi Group Holdings, Ltd.

Consolidated total assets as of the end of fiscal 2011 increased by¥124.5 billion, or 8.9% compared with the previous fiscal year-end, to¥1,529.9 billion. This increase was mainly attributable to growth inassets accompanying the inclusion of recently acquired companies in
Oceania and Southeast Asia in the scope of consolidation, along with anincrease in goodwill associated with the acquisition of those companies.
Return on assets (ROA) recovered 0.5 of a percentage point to 7.6%.
Current assets increased ¥36.1 billion, or 8.6%, year on year, to¥457.1 billion. This was mainly due to an increase in inventories. Trade
receivable turnover improved to 5.3 times from 5.4 times in the previous fiscal year. Inventories turnover was 14.8 times, decreasing from15.5 times recorded for the previous year.
Property, plant and equipment decreased ¥20.9 billion, or 3.7%,
year on year, to ¥536.2 billion. The main reason was respective
decreases in land and construction in progress; although buildings
and structures, machinery and equipment, and others all increased.
Intangible assets increased ¥112.5 billion, or 92.3% year on year, to¥234.3 billion, mainly reflecting an increase in goodwill accompanying
acquisitions in the Oceania region and Southeast Asia.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Total liabilities increased ¥93.4 billion, or 11.8%, from the previous fiscal year-end, to ¥886.1 billion. Current liabilities increased¥102.3 billion, or 20.5% year on year, to ¥602.2 billion. This reflected
a 50.1% increase in bank loans, a 195.8% increase in long-term debt
due within one year, and a 100.0% increase in commercial paper.
Non-current liabilities fell ¥8.9 billion, or 3.0%, to ¥283.9 billion, primarily due to a year-on-year decrease of 6.0% in long-term loans.
Total net assets increased ¥31.1 billion, or 5.1%, to ¥643.8 billion.
Total net assets minus minority interests was ¥641.7 billion, up ¥29.5
billion, or 4.8%, compared to ¥612.2 billion in the previous fiscal year.
This resulted from an increase in retained earnings, which overcame adecline in total accumulated other comprehensive income.
As a result, the equity ratio fell 1.7 percentage points from theprevious fiscal year-end to 41.9%.

TOTAL NET ASSETS AND EQUITY RATIO(¥ billion)

(%)
80

800

612.7

643.8

577.7
600

529.9

60

534.6
40.2

38.9

40.0

43.6

41.9

400

40

200

20

0

2007

2008

■ Total net assets (left scale)

2009
■

2010

2011

0

Equity ratio (right scale)

TOTAL ASSETS AND ROA(¥ billion)

1,529.9 12

1,600

1,433.7
1,324.4

9

1,200
7.1

7.4

7.6

6.6

800

6

400

3

0

2007

■ Total assets (left scale)

2008
■

2009

Cash Flows

1,405.4

1,299.1

6.9

(%)

2010

2011

0

ROA (right scale)

7.6
TRADE RECEIVABLE TURNOVER AND
INVENTORIES TURNOVER

For the fiscal year ended December 31, 2011, net cash provided byoperating activities decreased ¥17.1 billion year on year to ¥108.5
billion. This result largely reflected a decrease in loss on factory
restructurings, loss on impairment of fixed assets, and other noncash
expenses, coupled with an increase in income taxes paid.
Net cash used in investing activities went primarily toward thepurchase of stock in subsidiaries in the Oceania region and Southeast
Asia. As a result, outflows for investing activities increased ¥129.4
billion from the previous year to ¥171.2 billion.
Net cash provided by financing activities increased to ¥67.1
billion, a change of ¥157.9 billion from cash used in financing activities
in the previous year. This was primarily due to an increase in bankloans and other financial obligations.
As a result, cash and cash equivalents at the fiscal year-end
increased ¥5.3 billion to ¥16.1 billion.

(Times)
20
16.0

15.6

15.1

15.5

14.8

5.5

5.4

5.3

2009

2010

2011

15

10
5.3

5.4

2007

2008

5

0
■

Trade receivable turnover■

Inventories turnover

Annual Report 2011

51

MANAGEMENT’S DISCUSSION AND ANALYSIS

childbirths and the ongoing aging of the Japanese population may
affect consumption of soft drinks and food as well as alcoholic beverages, and in turn may affect the business performance and financial
condition of the Asahi Group.

CASH FLOWS(¥ billion)
200
125.6
106.1

108.5

106.4
78.5

100 69.6

67.1
41.8

36.1
0
–46.4
–58.2
–117.82007

2008

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

3. Dependence on a specific product
–90.8

–100

–200

2. Higher liquor tax rates–180.62009–171.2
2010

2011■ Cash flows from operating activities■ Cash flows from investing activities■ Cash flows from financing activities

Beer-type beverage sales constitute an important part of sales for the
Asahi Group. The Asahi Group endeavors to increase sales by improving its lineup of products for alcoholic beverages apart from beer-type
beverages, while also expanding businesses other than the alcoholic
beverages business, including soft drinks and food. Nevertheless,unforeseen circumstances, such as a significant drop in consumptionof beer-type beverages due to trends in market demand, may affectthe business performance and financial condition of the Asahi Group.

Research and Development

4. Food safety

R&D expenses for the year under review were ¥8.9 billion, representing a decrease of 5.3% year on year.

6

The Asahi Group upholds its management principle of delivering thehighest quality to customers, and ensures food safety by implementing 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 suchrisks, and to implement countermeasures before they materialize.
Nevertheless, the occurrence of incidents beyond the scope of suchmeasures implemented by the Group may affect the business performance and financial condition of the Asahi Group.

4

5. Fluctuations in raw material prices

R&D EXPENSES(¥ billion)
10

9.1

9.3

9.4

8.6

8.9

8

2

0

2007

2008

2009

2010

2011

The prices of main raw materials used for Asahi Group products fluctuate according to such factors as weather conditions and natural
disasters. Rising costs may lead to higher production costs thatcannot be passed on to sales prices depending on prevailing market
conditions, and may affect the business performance and financial
condition of the Asahi Group.

6. Effects of weather conditions, natural disasters and others

Business Risk
1. Effects of market and economic trends and demographic
change in JapanThe alcoholic beverages business accounts for approximately 63% ofsales 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 consumption of alcoholic
beverages. Furthermore, a continually declining population, fewer

52

Asahi Group Holdings, Ltd.

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

MANAGEMENT’S DISCUSSION AND ANALYSIS

7. Risks related to information systems

11. Trends in the control of alcoholic beverages

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

To fulfill its corporate social responsibility (CSR) as a company that
produces and sells alcoholic 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 andresult in a decline in consumption may affect the business performance and financial condition of the Asahi Group.

8. Risks related to overseas operations
The Asahi Group pursues business operations in Asia and Oceania,
mainly in China, as well as in Europe and North America. The Groupendeavors to proactively identify risks and to implement concrete andappropriate countermeasures before they materialize. Nevertheless,occurrences of incidents such as those listed below, which are
unforeseeable or beyond the scope of prediction, 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 or war• Occurrence of natural disasters such as earthquakes

9. Risks related to the environment
The Asahi Group endeavors to thoroughly implement waste recycling,energy conservation, reduction of CO2 emissions, and the recycling ofcontainers, and complies with the relevant environmental laws andregulations while conducting its businesses. Nevertheless, regulatory
revisions that drive significant increases in costs due to investments in
new facilities and changes in methods of waste disposal may affectthe 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 Groupalso operates under the control of laws and regulations in other countries in which it operates. Changes in such laws and regulations, orthe unexpected introduction of new laws and regulations, may affectthe business performance and financial condition of the Asahi Group.

12. Risks related to litigation
In pursuing its businesses, the Asahi Group complies with relevant
regulations and makes the utmost effort to ensure employees understand and practice regulatory compliance. Nevertheless, the Groupfaces risks of litigation in undertaking its businesses both in Japan andabroad. Lawsuits against the Asahi Group and/or the impact of suchlawsuits may affect the business performance and financial conditionof the Asahi Group.

13. Fluctuations in value of owned assets
Sudden drops in the value of land, marketable securities, and otherassets owned by the Asahi Group, or changes in the business environment, could affect the business performance and financial 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 basedon the discount rate used in actuarial calculations and the rate of
expected returns on pension assets. Major fluctuations in preconditions, including changes in the market price of pension assets, interest rates and/or pension system, may affect the business performanceand 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 line withits medium-term management plan. There is the possibility, however,that these alliances could fail to yield synergies as initially projected
due to the impact of changes in the business environment on the
Asahi Group, its alliance partners, or companies in which the Group isinvested, 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 2011

53

CONSOLIDATED BALANCE SHEETS
Asahi Breweries, Ltd. and Consolidated Subsidiaries
As of December 31, 2011, 2010 and 2009

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 14):Land
Buildings and structures
Machinery and equipment
OthersConstruction in progress
Less accumulated depreciation
Net property, plant and equipment

Investments and other assets:
Goodwill (Note 14)
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
See accompanying notes.

54

Asahi Group Holdings, Ltd.

2011

¥

16,893

2010¥

11,5342009¥

19,584

2011$

217,301

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

274,379
12,391(5,685)95,35914,62318,452421,053274,559
13,721(7,666)97,442
11,176
19,232428,0483,596,553
254,052(42,797)
1,320,183
167,005
368,150
5,880,447

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

184,433
416,591
657,872
10,572
6,382
1,275,850(676,742)
599,1082,264,651
5,132,532
7,995,009
377,682
68,883
15,838,757(8,940,944)
6,897,813

184,408
76,87584,172
76,120100,31483,9892,372,112
988,873

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

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

124,476
4,976
21,021
71,721
406,497¥1,433,653

2,070,582
65,655372,395
1,031,927
6,901,544$19,679,804

CONSOLIDATED BALANCE SHEETS

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

2011

2009

2011

60,10514,00024,155¥ 115,818
30,00040,402$ 1,160,509
360,175
919,244

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

100,854
49,981
132,385
20,42924,09752,462
7,352
573,780

1,339,439
792,655
1,652,637
243,530
321,816
795,948
159,9447,745,897

200,41321,855

213,164
24,739205,656
24,252

2,577,991
281,129372
6,602
35,711
18,990283,943

598
4,831
35,831
13,650292,813602
4,861
36,207
10,592
282,170

4,785
84,924459,365
244,275
3,652,469

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

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

182,531
151,048
252,147(29,283)
556,443

2,347,968
1,939,658
4,358,232(363,983)
8,281,875(2,685)

199

2,445

(34,538)

1
584

693
11,351(7)
14,59213
7,512(2,100)2,066
643,799¥1,529,908

12,243
478
612,670¥1,405,358

17,0304,230
577,703¥1,433,653(27,013)
26,576
8,281,438$19,679,804

¥

2010

90,21828,00071,462¥

Commitments and contingent liabilities (Note 13)
Net assets (Note 12)
Shareholders’ equity (Note 16):
Common stock:
Authorized—972,305,309 shares
Issued—483,585,862 shares
Capital surplus
Retained earnings
Treasury stock, at cost
Total Shareholders’ equity
Accumulated gains (losses) from revaluation andtranslation adjustments
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 gains (losses) from revaluationand translation adjustments
Minority interests
Total net assets

Annual Report 2011

55

CONSOLIDATED STATEMENTS OF INCOME
Asahi Group Holdings, Ltd. and Consolidated Subsidiaries
For years ended December 31, 2011, 2010 and 20092011

Millions of yen
2010

2009

Thousands of
U.S. dollars(Note 1)2011

¥1,462,736¥1,489,461¥1,472,469$18,815,745

491,518
415,725
448,303
1,355,546
107,190509,337
433,987
450,788
1,394,112
95,349508,293450,151
431,248
1,389,692
82,777

6,322,588
5,347,633
5,766,697
17,436,918
1,378,827

1,470(3,668)

1,705(4,328)2,756(4,629)18,909(47,183)

5,480
535

9,846
670

8,512
(99)

70,491
6,882

4,677

32,336

16,09060,162(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(9,176)
1,815(788)(8,318)
—
—
—
(862)
5,301
88,078(13,982)—(28,196)—(9,455)(46,501)(230,435)
3,615(215,693)
1,163,134

Income before minority interests

29,9384,949
34,88755,53553,548(12,626)
40,922
51,54342,370(899)
41,471
46,607385,104
63,661
448,765
714,369

Minority interests in net gain of
consolidated subsidiaries

(442)

1,537

1,038

(5,686)

Net sales (Note 18)
Costs and expenses (Note 18):
Cost of sales
Alcohol tax
Selling, general and administrative expenses
Operating income (Note 18)
Other income (expenses):
Interest and dividend income
Interest expenses
Equity in net income of unconsolidated subsidiaries
and affiliated companies
Gain (loss) on sale of securities—net (Note 6)
Gain on sales of investments in subsidiaries andaffiliated companies
Loss on sale and disposal of property, plant andequipment—net
Gain on foreign currency exchange
Loss on devaluation of investment securities
Loss on impairment of fixed assets (Notes 14 and 18)
Loss on factory restructurings
Business integration expenses
Earthquake related expenses
Other—net
Income before income taxes and minority interests
Income taxes (Note 11):
Current
Deferred

Net income

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

56

Asahi Group Holdings, Ltd.

¥55,093¥53,080¥47,645

2011

Yen
2010

2009

¥118.36118.2825.00¥114.10114.0023.00¥102.49
102.42
21.00$

708,683
U.S. dollars(Note 1)
2011

$1.52
1.52
0.32

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Asahi Group Holdings, Ltd. and Consolidated Subsidiaries
For years ended December 31, 2011, 2010 and 2009

Millions of yen

Net income before minority income
Other comprehensive income (Note 20):
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Share of other comprehensive income of associates accounted forusing equity method
Total other comprehensive income
Comprehensive income (Note 20)
Comprehensive income attributable to:Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

Thousands of
U.S. dollars(Note 1)

2011

2011

¥ 55,536$ 714,381(2,884)(692)(11,462)(37,098)(8,901)(147,440)(623)(15,661)¥ 39,875(8,014)(201,453)$ 512,928¥ 40,750¥ (875)$ 524,183$ (11,255)

See accompanying notes.

Annual Report 2011

57

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (NOTE 16)
Asahi Group Holdings, Ltd. and Consolidated Subsidiaries
For years ended December 31, 2011, 2010 and 2009

Balance at December 31, 2008
Net income
Cash dividends paid
Purchases of treasury stock
Disposal of treasury stock
Decrease resulting from change ofscope of consolidation
Decrease resulting from change of scope ofequity method
Effect of changes in accounting policies applied
to foreign subsidiaries
Net changes of items in accumulated gains (losses)
from revaluation and translation adjustments
Decrease in minority interests
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 inscope of consolidation
Decrease resulting from change inscope of equity method
Net changes of items in accumulated losses fromrevaluation and translation adjustments
Decrease in minority interests
Balance at December 31, 2011

Balance at December 31, 2010
Net income
Cash dividends paid
Purchases of treasury stock
Disposal of treasury stock
Decrease resulting from change inscope of consolidation
Decrease resulting from change inscope of equity method
Net changes of items in accumulated losses fromrevaluation and translation adjustments
Decrease in minority interests
Balance at December 31, 2011
See accompanying notes.

58

Asahi Group Holdings, Ltd.

Commonstock

CapitalsurplusRetainedearnings¥182,531¥151,148¥214,189
47,645(9,529)Millions of yen
Unrealized gains(losses) on
Treasury
available-forstock,sale securities,
at costnet of taxes

Revaluation
surplus¥(29,579)¥ 1,112¥ 1,751

1,333(1,751)

Unrealized
gains (losses)on hedging
derivatives,
net of taxes¥(3)

Foreigncurrencytranslation
adjustments

Minority
interests¥¥13,033

446

(31)
327

(100)
(394)
(15)
251

¥182,531¥151,048¥252,147
53,080(10,000)¥(29,283)¥ 2,445

¥

—

¥

(4)

14,146(7)¥ 14,592

700(3,241)¥ 693¥ 11,351(692)(10,767)(8,803)¥ 4,230

(22)
584

(138)
15
(13)

(2,246)¥182,531¥150,910¥295,229
55,093(11,170)¥(28,721)

¥ 199

¥

—

¥

(3,752)
478

(11)
436

(121)
(125)
(218)

(2,884)¥182,531¥150,789

Commonstock

Capitalsurplus$2,347,968$1,941,214¥338,809¥(28,296)

Retainedearnings

Thousands of U.S. dollars (Note 1)
Unrealized gains(losses) on
Treasury
available-forstock,sale securities, Revaluation
at costnet of taxes
surplus$3,797,646 $(369,449)
708,683(143,684)(141)(1,556)
5,607¥(2,685)$ 2,560

¥

—

$—

¥

1

¥

584

1,588
¥ 2,066

Unrealized
gains (losses)on hedging
derivatives,
net of taxes

Foreigncurrencytranslation
adjustments

Minority
interests$ 8,914$ 146,012$ 6,149(8,901)(138,500)(1,608)(2,805)(37,098)$2,347,968$1,939,658$4,358,232$(363,983)$(34,538)

$—

$

13

$

7,512

20,427$26,576

CONSOLIDATED STATEMENTS OF CASH FLOWS
Asahi Group Holdings, Ltd. and Consolidated Subsidiaries
For years ended December 31, 2011, 2010 and 2009

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 earnings of affiliates
Loss (gain) on sales of investment securities
Loss on valuation of investment securities
Gain on sales of stocks of subsidiaries and affiliates
Loss on sales and retirement of noncurrent assets
Loss on factory restructurings
Increase in notes and accounts receivable—trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable—trade
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
Purchase of investments in subsidiaries resulting in change inscope of consolidation
Proceeds from sales of investments in subsidiaries resulting in change
in scope of consolidation
Payments for sale of investments in subsidiaries resulting in change
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 change of scopeof consolidation
Increase in cash and cash equivalents resulting from merger withunconsolidated subsidiaries
Cash and cash equivalents at end of year (Note 3)

2011

Millions of yen
2010

2009

Thousands of
U.S. dollars(Note 1)2011

¥ 90,422
58,135—(1,423)(1,811)(1,470)3,668(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¥ 92,465
59,71013,5732,141(234)(1,705)
4,328(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¥ 88,078
58,372
8,318
765
(754)
(2,756)
4,629(8,512)
99
788(16,090)
9,176
—
(891)
5,043
(2,820)(4,910)
267
(349)
7,777
146,230
7,162(4,605)(42,429)
106,358$ 1,163,134
747,813—(18,305)(23,296)(18,909)47,183(70,491)(6,882)
28,197(60,162)
13,983
10,780(9,455)(39,748)(11,448)(119,552)(18,305)(4,850)359,827
1,966,864
73,900(43,028)(601,891)
1,395,845

(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)(3,365)2,243(35,120)
1,203(23,418)9(82,838)
39,330(15,362)(7,499)9,442(302,213)
62,452(39,889)
1,119(107,448)
12,567—(142,143)—(60,044)(1,828,441)

3,014

—

—

38,770——(1,026)
1,281(3,483)(171,235)—(5,340)(2,074)2,135(2,940)(41,790)(19)—(3,375)2,629(2,511)(180,638)——(13,198)
16,478(44,803)(2,202,663)

49,278(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

61,616(1,124)42,000(19,740)
25,000(20,000)(31)(9,529)
(61)
716
(302)
78,545643
4,908
12,698633,882(66,118)
64,934(70,684)
643,170(192,951)(141)(143,684)—
540(5,943)863,005
10,54866,735139,092

—

—

476

—

137
¥ 16,138

2¥ 10,813—¥ 18,082$

1,762
207,589

See accompanying notes.

Annual Report 201159

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 preparedin 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 application and disclosure
requirements of International Financial Reporting Standards.
The accompanying consolidated financial statements have been reformatted and translated into English with some expanded descriptions from theconsolidated 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, 2011, which was ¥77.74 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”) (32 domestic and47 overseas subsidiaries for 2011, 35 domestic and 16 overseas subsidiaries for 2010 and 39 domestic and 16 overseas subsidiaries for 2009). 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, areevaluated using the fair value at the time the Company acquired control of the respective subsidiaries.
Effective January 1, 2009, the Company adopted “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” ( Practical Issues Task Force (PITF) No. 18 issued by the Accounting Standards Board of JAPAN (“ASBJ”) on March 17, 2006)
which prescribes: PITF No. 18 requires that accounting policies and procedures applied by a parent company and its subsidiaries to similar transactions andevents under similar circumstances should, in principle, be unified for the preparation of the consolidated financial statements. PITF No. 18, however, as atentative measure, allows a parent company to prepare consolidated financial statements using foreign subsidiaries’ financial statements prepared inaccordance with either International Financial Reporting Standards or U.S. generally accepted accounting principles. In this case, adjustments for the following six items are required in the consolidation process so that their impact on net income is accounted for in accordance with Japanese GAAP unlessthe impact is not material.
(1) Goodwill not subject to amortization(2) Actuarial gains and losses of defined-benefit retirement plans recognized outside profit or loss
(3) Capitalized expenditures for research and development activities(4) Fair value measurement of Investment properties, and revaluation of Property, plant and equipment and Intangible assets(5) Retrospective treatment of a change in accounting policies(6) Accounting for net income attributable to minority interests
As a result of adopting PITF No. 18, effective January 1, 2009, retained earnings at January 1, 2009 was decreased by ¥251 million.
In addition, as a result, operating income decreased by ¥1,377 million, and income before income taxes and minority interests decreased by ¥1,416
million for the year ended December 31, 2009. The effects on segment information are disclosed in Note 18.

GOODWILL
The difference between acquisition cost and net assets acquired is shown as goodwill and 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 cost adjusted
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.

60

Asahi Group Holdings, Ltd.

CONSOLIDATED STATEMENTS OF CASH FLOWSIn preparing the consolidated statements of cash flows, cash on hand, readily available deposits and short-term highly liquid investments with maturities of
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 amountwith respect to certain identified doubtful receivables and an amount calculated using the actual percentage of collection losses.

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 not classified in anyof 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 are reported,
net of applicable income taxes, as a separate component of net assets. Realized gains and losses on sale of such securities are computed using movingaverage cost.
If the market value of held-to-maturity debt securities, equity securities issued by unconsolidated subsidiaries and affiliated companies, and availablefor-sale securities declines significantly, such securities are stated at fair market value and the difference between fair market value and the carrying amountis recognized as a loss in the period of the decline. Debt securities with no available fair market value are stated at amortized cost, net of the amount considered not collectible. If the fair market value of equity securities issued by unconsolidated subsidiaries and affiliated companies not on the equity method
is not readily available, such securities should be written down to net asset value with a corresponding charge in the statements of 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 amount of the securities at the beginningof 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 andby 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 the costof newly acquired property, plant and equipment. When such accounting is followed, the cost of the new property, plant and equipment is reduced to theextent of the deferred capital gains, thereby affecting related depreciation charges and accumulated depreciation.

ACCOUNTING FOR LEASE TRANSACTIONS AS LESSEE
In conformity with “Accounting Standards for Lease Transactions” (ASBJ Statement No. 13, issued on March 30, 2007) and “Guidance on AccountingStandard for Lease Transactions” (ASBJ Guidance No. 16, issued on March 30, 2007) the Company and its consolidated domestic subsidiaries capitalized
finance leases which commenced on and after January 1, 2009, except for certain immaterial or short-term finance leases, which are accounted for as
operating leases. As permitted, finance leases which commenced prior to January 1, 2009 and have been accounted for as operating leases, continue tobe accounted for as operating leases with disclosure of certain “as if capitalized” information. Depreciation or amortization expense is calculated by astraight-line method over the leases term.

INCOME TAXESThe Companies recognized tax effects of 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 theemployees’ 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 ofprojected 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.

Annual Report 201161

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. 9, issued on July 31, 2008). The new accounting standard requires domestic
companies to use the rate of return on long-term government or gilt-edged 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 discount rate determined by taking into consideration fluctuations in
the yield of long-term government or gilt-edged bonds over a certain period. This change had no impact on the consolidated financial statements for theyear ended December 31, 2010.

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 services 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 of the shareholders’ meeting.
At the annual shareholders’ meeting of the Company and several of its consolidated subsidiaries held in March 2007, the proposal of the terminationof their retirement benefit programs for directors and corporate auditors (under which payments would be made at the time of each person’s retirement) wasapproved. 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 the “Other long-term liabilities” of the balance sheets.

TRANSLATION OF FOREIGN CURRENCY ACCOUNTS AND FINANCIAL STATEMENTS
Receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates of the balance sheet dates, and differences arising from the translation are included in the statements 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 the balance sheet dates for assets and liabilities, and at the historical exchange rates for shareholders’ equity. All revenue and expense accounts are translated at
the average rates of exchange 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 thefair 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 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 Research andDevelopment 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 and AccountingStandard 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 Standards for Asset
Retirement Obligations” (ASBJ Statement No. 18, issued on March 31, 2008) and “Guidance on Accounting Standards 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 ($502 thousand) and income before income
taxes and minority interests decreased by ¥500 million ($6,432 thousand) 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, 2011. Comprehensive income for the year ended December 31, 2010 is disclosed in Note 20.

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 applicableto the year then ended.

62

Asahi Group Holdings, Ltd.

3.

Cash Flow Information

A. Reconciliation of cash and time deposits shown in the consolidated balance sheets and cash and cash equivalents shown in the consolidated statementsof cash flows as of December 31, 2011, 2010 and 2009 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

2011

2010

2009

2011

¥16,893(755)¥16,138¥11,534(721)¥10,813¥19,584(1,502)¥18,082$217,301(9,712)$207,589

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 of such acquisition, which are included in “Purchase of investments in
subsidiaries resulting in change in scope of consolidation” for the years ended December 31, 2011, 2010 and 2009 were as follows:
Thousands of
U.S. dollars

Millions of yen
2011

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

4.

¥ 18,528
31,900107,878(13,608)(8,981)
7,175
142,892
2,975(3,724)¥142,143

2010

¥—
—
—
—
—
—
—
—
—
¥—

2009

2011

¥ 13,989
28,111
31,855(10,556)(1,024)(2,547)
59,828
1,407(1,191)¥ 60,044$ 238,333
410,342
1,387,677(175,045)(115,526)
92,295
1,838,076
38,268(47,903)$1,828,441

Inventories

Inventories at December 31, 2011, 2010 and 2009 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Finished goods
Work in process
Raw materials
Supplies
Merchandise
Others
Total

5.

2011

2010

2009

2011

¥ 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¥20,493
36,406
26,897
6,046
7,600
—
¥97,442$ 375,675
429,123
322,588
91,99981,361
19,437$1,320,183

Financial Instruments

The information related to Finance Instruments for the year ended December 31, 2011 was as follows.

(1) QUALITATIVE INFORMATION ON FINANCIAL INSTRUMENTS(a) Policies for using financial instruments
The Companies raise funds by fund procurement using commercial paper and bond issuances, borrowing from financial institutions and other methods, inorder to aim to balance direct and indirect financing with long-term and short-term financing needs while considering procurement cost and risk diversification under the changing business environment.
The Companies adopt the Cash Management System (CMS) utilized between the Company and its consolidated domestic subsidiaries for effective
use of resources, aiming to cut down interest-bearing liabilities incurred in the Companies. As a consequence, surplus funds are allocated only to thefinancial 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 purpose.
(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 credit risks of thecustomers. 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. A part of them is foreign currency-denominated investment securities which are also exposed to foreignexchange risk.
Annual Report 201163

Notes and accounts payable which are accounted for in each consolidated subsidiary are mainly settled within one year. Foreign currency-denominatednotes and accounts payable are exposed to foreign exchange risk.
Commercial paper, bank loans and bonds issued by the Company are exposed to the liquidity risk that the Company would not be able to reimburse
such debts due to a deterioration of the financial market. A certain amount of borrowing is undertaken by using floating interest rates which is exposed tointerest rates fluctuation risk, however, this risk is hedged through the adoption of interest rate swap. Foreign currency-denominated long-term debts arealso 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 rates 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 method of
evaluating hedging effectiveness concerning 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 customer’s credit risk, each business and sales
management division within each consolidated subsidiary conducts periodic monitoring of key transaction partners to assess the risk under the internal
credit policy. In addition, each consolidated subsidiary regularly monitors the status of occurrence and collections of bad debts, and tackles them incollaboration with each 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 rate, interest rates, etc.)
For the purpose of managing to mitigate fluctuation risk in foreign currency exchange regarding foreign currency-denominated future cash flows by
each currency, the Company establishes a foreign currency exchange hedging policy based on the environment and forecast of foreign exchange
market in compliance with rules of authorization. The Company also conducts interest rate swap contracts to avert interest rates fluctuation risk involving borrowing.
Investment securities are periodically assessed by each consolidated subsidiary with respect to market value and the financial status of the issuingentities (business partners), and the merits and demerits of holding such securities are continually reviewed, taking into consideration the relationship withthe 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 rules of authorization. Transaction management at consolidated subsidiaries is undertaken in the 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 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 based on the reports fromconsolidated subsidiaries and operational departments on a timely basis 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 of the financial assets and liabilities as of December 31, 2011 were as follows.
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 *464

Asahi Group Holdings, Ltd.

Book 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¥—¥—

Thousands of U.S. dollars
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$ 217,301
3,596,553(40,173)
3,556,380$ 217,301

Difference

3,556,380—

934,0886,432
826,434
90,211(38,358)
51,853$5,592,488
1,160,509
360,175
2,132,107
243,530
3,497,222$7,393,543$(4,155)

1,504,219
6,496
826,434

570,13164—

52,149$6,162,979
1,160,509
360,175
2,132,107
243,530
3,531,271$7,427,592$(4,155)296$570,491————
34,049$ 34,049$—$—*1 Notes and accounts receivable—trade and Long-term loans receivable are presented, net of 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 Net receivables and payables incurred in derivative transactions are presented on a net basis.

(a) Valuation methodology of 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 the book value because they are settled in short-term and their fairvalue approximates the book value.
(3) Investment securities
Fair value of listed stocks is based on the quoted market price, and fair value of debt securities is based on quoted price which the correspondent
financial institutions estimated.
(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 to 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 shortterm and their fair value approximates the 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 to be applied 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 for as
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 the fair valueof Long-term debt.
(b) The book value of financial instruments whose fair value estimation was extremely difficult was as follows.
Millions of yen

Thousands of
U.S. dollars

2011

2011

Investments in unconsolidated subsidiaries and affiliated companies
The stocks of unlisted companies¥86,608$1,114,073

Available-for-sale securities
The stocks of unlisted companies
OthersTotal

11,642487¥98,737

149,756
6,264$1,270,093

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

Annual Report 201165

(c) Expected repayment of monetary assets and securities with maturity after the fiscal year end were as follows.
Millions of yen
2011

Type

Over one year
but within five
years

Over five years
but within ten
years

Over ten years¥ 16,893
279,596

¥ —
—

¥—
—

¥—
—

¥ 16,893
279,596

—

55

—

—

55

—
¥296,489

500
¥555

—
¥—

—
¥—

500
¥297,044

Within one year

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

Total

Thousands of U.S. dollars
2011

Type

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

Over one year
but within five
years

Over five years
but within ten
years

Over ten years

—
—

$—
—

$—
—

$ 217,301
3,596,553

—

707

—

—

707

—
$3,813,854

6,432$7,139

—
$—

—
$—

6,432
$3,820,993

Within one year

$ 217,301
3,596,553

$

Total

(d) See Note 9 “Bank loans, Commercial paper and Long-term Debt” as for the aggregate annual maturities of long-term debt at December 31, 2011.
The information related to Finance Instruments for the year ended December 31, 2010 was as follows.

(1) QUALITATIVE INFORMATION ON FINANCIAL INSTRUMENTS(a) Policies for using financial instruments
The Companies raise funds by fund procurement using commercial paper and bond issuances, borrowing from financial institutions and other methods, inorder to aim to balance direct and indirect financing with long-term and short-term financing needs while considering procurement cost and risk diversification under the changing business environment.
The Companies adopt the Cash Management System (CMS) utilized between the Company and its consolidated domestic subsidiaries for effective
use of resources, aiming to cut down interest-bearing liabilities incurred in the Companies. As a consequence, surplus funds are allocated only to thefinancial instruments with low risk.
Derivative transactions are undertaken only for the purpose of hedging risks outlined below, as a matter of policy, are not undertaken for speculative purpose.
(b) Details of financial instruments and the related risks
Notes and accounts receivable and long-term loans receivable are exposed to credit risks of the customers. Foreign currency-denominated notes andaccounts receivable are also exposed to foreign exchange risk.
Investment securities are shares issued by business partners and held-to-maturity debt securities, and are exposed to market price fluctuation risk. A
part of them is foreign currency-denominated investment securities which are also exposed to foreign exchange risk.
Notes and accounts payable are mainly settled within one year. Foreign currency-denominated notes and accounts payable are exposed to foreignexchange risk.
Commercial paper, bank loans and bonds issued by the Company are exposed to the liquidity risk that the Company would not be able to reimburse
such debts due to a deterioration of the financial market. A certain amount of borrowing are undertaken by using floating interest rates and is exposed tointerest rates fluctuation risk, however, this risk is hedged through the adoption of interest rate swap. Foreign currency-denominated long-term debts arealso 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 rates fluctuation risk involving borrowing; and commodity
swap contracts to hedge price fluctuation risk involving procurement of raw materials in the Company’s consolidated overseas subsidiaries.
Refer to Note8 “Derivative Financial Instruments” for information about the hedging instruments and hedged items, hedging policy and method of
evaluating hedging effectiveness concerning 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 customer’s credit risk, each business and sales
management division within the Company conducts periodic monitoring of key transaction partners to assess the risk under the internal credit policy. In
addition, the Finance Department of the Company regularly monitors the status of occurrence and collections of bad debts, and tackles them in collaboration with each Sales Department. Almost the same system of risk management is used at consolidated subsidiaries. Through these processes, theCompanies are managing to mitigate the credit risk.
In terms of derivative transactions, the Company deals with selected financial institutions with high credit ratings in order to reduce the credit risks.

66

Asahi Group Holdings, Ltd.

(ii) Management of market risk (risks associated with fluctuations in foreign currency exchange rate, interest rates, etc.)
For the purpose of managing to mitigate fluctuation risk in foreign currency exchange regarding foreign currency-denominated future cash flows by
each currency, the Company establishes a foreign currency exchange hedging policy based on the environment and forecast of foreign exchange
market and the policy is approved by the finance officer. The Company also conducts interest rate swap contracts to avert interest rates fluctuation risk
involving borrowing.
Investment securities are periodically assessed with respect to market value and the financial status of the issuing entities (business partners), andthe merits and demerits of holding such securities are continually reviewed, taking into consideration the Company’s relationship with the respective
business partners.
Derivative transactions are undertaken by the Finance Department, based on a system that limits transactions and amounts. The performance oftransactions is periodically reported to the Manager and Executive Officer as they are undertaken in each case. Transaction management at consolidated
subsidiaries is undertaken in the 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 CMS, and liquidity risk management at participating companies is therefore
undertaken by the Company.
The Company manages the liquidity risk process where its Finance Department formulates and updates cash flow plans based on the reports fromconsolidated subsidiaries and operational departments on a timely basis 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 of the financial assets and liabilities as of December 31, 2010 were as follows.
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¥—¥—*1 Notes and accounts receivable—trade and Long-term loans receivable are presented, net of 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 Net receivables and payables incurred in derivative transactions are presented on a net basis.

(a) Valuation methodology of 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 the book value because they are settled in short-term and their fairvalue approximates the book value.
(3) Investment securities
Fair value of listed stocks is based on the quoted market price, and fair value of debt securities is based on quoted price which the correspondent
financial institutions estimated.
(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 to 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 shortterm and their fair value approximates the 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 to be applied 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.

Annual Report 201167

Derivative transactions
Market value offered by correspondent financial institutions is used as fair value. However, as a specially treated interest rate swap is accounted for as
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 the fair valueof Long-term debt.
(b) The book value of financial instruments whose fair value estimation was extremely difficult was as follows.
Millions of yen
2010

Investments in unconsolidated subsidiaries and affiliated companies
The stocks of unlisted companies
Available-for-sale securities
The stocks of unlisted companies
OthersTotal¥89,100
9,314
516¥98,930

The stocks of unlisted companies and others are not included in investments in unconsolidated subsidiaries, affiliated companies and available-for-salesecurities in the table above because their market price is not available and their future cash flow cannot be estimated, and accordingly it is extremely difficult
to estimate their fair value.
(c) Expected repayment of monetary assets and securities with maturity after the fiscal year end were as follows.
Millions of yen
2010

Type

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

Over one year
but within five
years

Over five years
but within ten
years

Over ten years¥ 11,534
274,379

¥ —
—

¥—
—

¥—
—

¥ 11,534
274,379

80
—

—
55

—
—

—
—

80
55

—
—
¥285,993

2
500
¥557

—
—
¥—

—
—
¥—

2
500
¥286,550

Within one year

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

6.

Securities

A. The following tables summarize book values and fair values of held-to-maturity debt securities with available fair value as of December 31, 2011, 2010
and 2009:
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

68

Asahi Group Holdings, Ltd.

Millions of yen
2009
Type

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

Book value

Fair value

Difference

¥ 2
500
502

¥ 2
509
511

¥0
9
9

—
¥502

—
¥511

—
¥9

Securities with fair values not exceeding book values:
Total

Thousands of U.S. dollars
2011
Type

Securities with fair values exceeding book values:
Corporate bonds

Book value

Fair value

Difference$6,432
6,432$6,496
6,496

$64
64

—
$6,432—$6,496—$64

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 available fair value as of December 31, 2011, 2010 and 2009:
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

Millions of yen
2009
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¥37,32149
37,370¥49,07153
49,124¥11,750
4
11,75424,09087
24,177¥61,547

17,78573
17,858¥66,982(6,305)(14)(6,319)¥ 5,435

Thousands of U.S. dollars
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$254,733
605
255,338$334,152
631
334,783$ 79,419
26
79,445

606,650
978607,628$862,966

490,880759
491,639$826,422(115,770)(219)(115,989)$ (36,544)
Annual Report 201169

C. Total sales of available-for-sale securities in the years ended December 31, 2011, 2010 and 2009 amounted to ¥946 million ($12,169 thousand), ¥3,256
million and ¥11,608 million. The related gains amounted to ¥536 million ($6,895 thousand), ¥1,739 million and ¥388 million, and the related losses amounted
to ¥1 million ($13 thousand), ¥1,069 million and ¥119 million, respectively.
D. The book values of securities with no available fair values as of December 31, 2011 and 2010 were disclosed in Note 5.
The following table summarized book values of securities with no available fair values as of December 31, 2009:
Millions of yen
2009(a) Available-for-sale securities
Type

Non-listed equity securities
Preference shares
Others¥ 10,921
5,000
584(b) Investments in unconsolidated subsidiaries and affiliated companies¥122,375

E. Available-for-sale securities with maturities and held-to-maturity debt securities as of December 31, 2011 and 2010 were disclosed in Note 5.
Available-for-sale securities with maturities and held-to-maturity debt securities as of December 31, 2009 were as follow:
Millions of yen
2009

Type

Available-for-sale securities:
Foreign securities
Corporate bonds
OthersWithin one year

Over one year
but within five
years

Over five years
but within ten
years

Over ten years

Total

¥—
—
—

¥

2
580
—

¥—
—
53

¥—
—
—

¥

2
580
53

—
¥—

—
¥582

—
¥53

—
¥—

—
¥635

Held-to-maturity debt securities:
Total

7.

Research and Development Expenses

Research and development expenses are expensed when incurred. Research and development expenses included in cost of sales and selling, general andadministrative expenses were ¥8,920 million ($114,741 thousand), ¥9,399 million and ¥9,342 million for the years ended December 31, 2011, 2010 and2009 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 from fluctuationin the market price of raw materials.
Forward currency exchange and currency swap, and interest rate swap contracts are subject to risks of foreign exchange rate changes and interest
rate changes, respectively.
The derivative transactions are executed and managed by the Company’s Finance Section in accordance with the established policies and within thespecified limits on the amounts of derivative transactions allowed. The Company’s Finance Section reports information on derivative transactions to theManager and Executive Officer of the Finance Section whenever necessary.
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

70

Asahi Group Holdings, Ltd.

Fair value information of the derivative transactions which were not accounted for by the hedge accounting is as follows:
Millions of yen
2011Classification

Type

Notional
amount ofcontract

Notional
amount due
over one year

Fair market
value¥4,771
164
4,080

—
—
—

¥ 41
(7)
(18)

¥ 41
(7)
(18)

¥

23

—

¥

¥

54
¥9,092

—
—

(1)
¥ 16

(1)
¥ 16

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

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

Difference

11Millions of yen
2010

Classification

Type

Notional
amount ofcontract

Notional
amount due
over one year

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

¥ 787
¥ 787

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

Difference

Millions of yen
2009Classification

Type

Notional
amount ofcontract

Notional
amount due
over one year

Fair market
value¥2,656579——¥2,635
552

¥(21)
(27)

534
¥3,769——545¥3,732

11
¥(37)

¥ 540
¥ 540

—
—

¥ 636
¥ 636

¥ 96
¥ 96

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

Difference

Thousands of U.S. dollars
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

$ 61,371
2,109
52,483

—
—
—

$

528
(90)
(232)

$

528
(90)
(232)

$

296

—

$

13

$

13

695
$116,954

—
—

$

(13)
206

$

(13)
206

$ 43,967$ 43,967——$(4,412)$(4,412)Fair market
value

Difference$(4,412)$(4,412)Annual Report 201171

Fair value information of the derivative transactions which were accounted for by the hedge accounting is as follows:
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

Notional
amount ofcontract

Hedged item

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) (AU 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
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

Notional
amount ofcontract

Hedged item

Notional
amount due
over one year

Fair market
value

2,290
13
2,303

—
—
—

$64
(0)
$64

$668,896$668,896$186,519$186,519*1$
Foreign currency transactions$

Long-term bank loans*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 ispresented by being included in the fair value of Long-term debt.

9.

Bank Loans, Commercial Paper and Long-term Debt

Bank loans at December 31, 2011, 2010 and 2009 were represented by short-term notes or overdrafts bearing interest at average rates of 0.62% per annum
for 2011, 1.57% per annum for 2010 and 1.11% per annum for 2009.
The Company has entered into a yen domestic commercial paper program with a current maximum facility amount of ¥200,000 million ($2,572,678
thousand). There were outstanding balances of ¥28,000 million ($360,175 thousand), ¥14,000 million and ¥30,000 million at December 31, 2011, 2010 and2009 respectively.
Long-term debt at December 31, 2011, 2010 and 2009 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2011

Domestic debentures:
1.34% debentures due in 2010
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
Zero coupon convertible bonds due in 2023
Zero coupon convertible bonds due in 2028

72

Asahi Group Holdings, Ltd.

¥——
10,00015,00010,00010,00020,00030,00020,00035,13335,0002010¥—
15,00010,00015,00010,00010,00020,000——35,14535,0002009¥ 15,000
15,00010,00015,00010,00010,000———35,15635,000

2011

$

—
—
128,634
192,951
128,634
128,634
257,268
385,901
257,268
451,930
450,219

Thousands of
U.S. dollars

Millions of yen
2011Long-term loans, principally from banks, insurance companies andagricultural cooperatives:
Secured loans due through 2020 at interest rates of mainly 1.30% to 2.94%
Unsecured loans due through 2018 at interest rates of mainly 0.31% to 13.39%
Amount due within one year

¥

1,480
85,262271,875(71,462)¥200,413

2010

¥

4,099
83,075
237,319(24,155)¥213,164

2009

¥

4,769
96,133
246,058(40,402)¥205,656

2011$

19,0381,096,758
3,497,235(919,244)$2,577,991

Assets, at book value, were pledged as collateral for loans totaling ¥1,480 million ($19,038 thousand), ¥4,099 million and ¥4,769 million respectively,
at December 31, 2011, 2010 and 2009 were as follows:
Thousands of
U.S. dollars

Millions of yen

Land
Buildings and structures
Machinery and equipment

2011

2010

2009

2011

¥ 9,188
4,120
1,511¥14,819¥16,057
6,129
406¥22,592¥16,733
6,563
535¥23,831$118,189
52,997
19,437$190,623

Millions of yen

Thousands of
U.S. dollars¥ 71,462
15,73525,30026,38830,399102,591¥271,875$ 919,244
202,405
325,444
339,439
391,035
1,319,668$3,497,235

The aggregate annual maturities of long-term debt at December 31, 2011 were as follows:
Years ending December 31,

2012
2013
2014
2015
2016
2017 and thereafter

10. Employees’ Severance and Retirement Benefits
Employees’ severance and retirement benefits included in the liability section of the consolidated balance sheets as of December 31, 2011, 2010 and 2009
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

2011

2010

2009

2011

¥ 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¥ 89,691(42,749)(18,709)(15,133)
2,196
8,956
¥ 24,252$1,181,502(578,184)(276,499)(221,996)
9,210
167,096$ 281,129

The discount rates used by the Companies are mainly 2.0% for the years ended December 31, 2011, 2010 and 2009, respectively.
The pension assets of the funded contributory pension plan are not included in the fair value of pension assets above because the amount of pension
assets can not be calculated reasonably. The contribution to the funded contributory pension plan is reported as severance and retirement benefit expenses.
Included in the consolidated statements of income for the years ended December 31, 2011, 2010 and 2009 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

2011

2010

2009

2011

¥4,232
1,802
(701)
2,399
(341)
722
¥8,113¥ 4,691
1,828(1,342)
2,090
(390)
493
¥ 7,370¥4,485
1,796
(255)
2,228
(443)
477
¥8,288$ 54,438
23,180(9,017)30,859(4,386)
9,287$104,361

Annual Report 201173

The rates of expected return on plan assets used by the Companies are mainly 1.0% per annum for 2011, 3.0% per annum for 2010 and 0.0% perannum for 2009. The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally to each service year using theestimated number of total service years. 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 theestimated remaining service lives of mainly 10 years.

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, 2011, 2010 and 2009.
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
Equity in net income of unconsolidated subsidiaries and affiliated companies
Undistributed earnings of affiliated companies
Temporary differences on investment in affiliated companies
Tax rate changes due to tax reform
Others
Effective tax rate

2011

2010

2009

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%

40.4%
1.9%
(0.3%)
0.4%
5.8%
2.4%
(3.9%)(2.1%)
—
—
2.5%
47.1%

Effective from the year beginning on April 1, 2012, due to the revised Japanese tax law, corporate income tax rate will be modified. As a result, statutory
income tax rates for calculation of deferred income tax assets and liabilities will be changed to 35.3% from present 40.4% in a phased manner.
As a result of this change, deferred income tax assets, from which deferred income tax liabilities were deducted, decreased by ¥1,881 million ($24,196
thousand), deferred income tax liabilities decreased by ¥887 million ($11,410 thousand), income taxes-deferred increased by ¥842 million ($10,831
thousand) and valuation difference on available-for-sale securities increased by ¥152 million ($1,955 thousand) in 2011.
Significant components of deferred income tax assets and liabilities as of December 31, 2011, 2010 and 2009 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 restructurings
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

2011

2010

2009

2011

¥ 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¥ 2,781
15,939
1,719
—
258
3,503
3,182
2,037
11,930
7,215
1,532
—
11,01961,115(22,496)
38,619$ 37,394
171,199
25,791
94,031
1,672
60,36831,978—72,38260,034
20,864—136,057
711,770(110,111)
601,659

(824)
(456)
(5,035)(282)(4,372)(501)(66)(11,536)¥ 35,237(1,042)(700)(5,750)
(—)
(—)
(858)
(976)
(9,326)¥ 40,241(1,159)(2,184)(5,750)(—)(—)(1,493)(697)(11,283)¥ 27,336(10,599)(5,866)(64,767)(3,627)(56,239)(6,445)(849)(148,392)$ 453,267

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 ($167,005 thousand) and ¥28,950 million ($372,395 thousand) respectively, and deferred income tax liabilities included incurrent liabilities and non-current liabilities amounting to ¥95 million ($1,222 thousand) and ¥6,602 million ($84,924 thousand) respectively.

74

Asahi Group Holdings, Ltd.

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.
The net deferred tax assets as of December 31, 2009 consisted of deferred income tax assets included in current assets and fixed assets amounting
to ¥11,176 million and ¥21,021 million respectively, and deferred income tax liabilities included in current liabilities and non-current liabilities amounting to ¥0
million and ¥4,861 million respectively.

12. Net Assets
Under the 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 prices of the new shares as additional paid-in capital, which isincluded in capital surplus.
Under the Japanese Corporate Law (“the Law”), companies were required to set aside an amount equal to at least 10% of cash dividends and othercash appropriations as legal earnings reserve until the total of legal earnings reserve and additional paid-in capital equaled 25% of common stock.
Under the Law, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit by a resolution of the shareholders’meeting or could be capitalized by a resolution of the Board of Directors.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, however, additional paid-in capital and legal
earnings reserve may be transferred to retained earnings by the resolution of the shareholders’ meeting as long as the total amount of 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 the Company
in accordance with the Law.
At the annual shareholders’ meeting held on March 27, 2012, the shareholders resolved cash dividends amounting to ¥6,286million ($80,859 thousand). Such appropriations have not been accrued in the consolidated financial statements as of December 31, 2011, and are recognized in the period inwhich 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 ¥587 million ($7,551 thousand) as of December 31, 2011.

14. 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
were classified as corporate assets because they do not generate cash flows independently from other assets or group of assets. The recoverable amountof each group of assets is the higher amount of net selling price (fair value less costs to sell) or value in use.
No impairment loss 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
Asset for rent
OthersLocationTakatsuki (Osaka) and 1 other—Type of assets
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 with theirfair market value substantially declining. A part of the goodwill reported in the soft drink business and food business was devaluated to their recoverable
amount, since the expected future revenue was considered to be unrealizable. As a result, the Company recognized loss on impairment in the amount of¥13,573 million, which consisted of buildings and structures of ¥366 million, land ¥1,229 million and goodwill of ¥11,978 million.
The Company used net selling price based on real-estate appraisal for the related assets, and the value in use was calculated by discounting future
cash flows at an interest rates of 4.3% to 7.3%.
Loss on impairment of fixed assets for the year ended December 31, 2009 consisted of the following:
Use
Assets used for business (Alcoholic beverages)

Location
Beijing (China)

Asset for rent
Idle properties
OthersSaitama (Saitama) and 5 others
Yufutsu-gun (Hokkaido)—

Type of assets
Buildings and structures, Machinery, equipment
and vehicles, Tools, furniture and fixtures
Buildings and structures, Land
Buildings and structures, Land
Goodwill

Annual Report 201175

Carrying amounts of certain assets used for the alcoholic beverages business were devalued to their recoverable amounts, since the expected future
revenue was considered to be unrealizable. Carrying amounts of certain assets for rent were devalued to their recoverable amounts, since they were considered not to be recoverable with their fair market value substantially declining. Carrying amounts of certain idle properties were devalued to their recoverable amounts, due to substantial decline in the fair market value. A part of the goodwill reported in the overseas subsidiaries of alcoholic beverage and softdrink businesses was devaluated to their recoverable amount, since the expected future revenue was considered to be unrealizable. As a result, the Company recognized loss on impairment in the amount of ¥8,318 million, which consisted of Buildings and structures of ¥1,632 million, Machinery, equipment
and vehicles of ¥1,943 million, Tools, furniture and fixtures of ¥12 million, Land of ¥2,341 million and Goodwill of ¥2,390 million.
The Company used net selling price based on real-estate appraisal for the related assets, and the value in use was calculated by discounting future
cash flows at an interest rates of 4.3% to 8.3%.

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

Millions of yen

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

2011

2010

2009

2011

¥33,268
26,1507,118¥44,758
30,323
14,435¥52,804
29,78523,019$427,939
336,377
91,562Future lease payments as of December 31, 2011, 2010 and 2009, 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

2011

2010

2009

2011

¥5,346
2,188¥7,534¥8,401
6,844¥15,245¥10,371
13,694¥24,065$68,768
28,145$96,913

Lease payments, depreciation equivalents and amounts representing interest under the finance leases which are accounted for in the same manner as
operating leases for the years ended December 31, 2011, 2010 and 2009 were as follows:
Thousands of
U.S. dollars

Millions of yen

Lease payments
Depreciation equivalents
Amounts representing interest

2011

2010

2009

2011

¥8,594
7,918
417¥11,343
10,479660¥13,966
12,935985$110,548
101,852
5,364

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

16. Shareholder’s Equity
Changes in number of shares issued and treasury stocks outstanding during the year ended December 31, 2011, 2010 and 2009 are as follows:
Common stock issued
Balance at beginning of year
Decrease due to retirement of treasury stocks
Balance at end of year

2011

2010

2009

483,585,862—
483,585,862

483,585,862—
483,585,862

483,585,862—
483,585,862

Treasury stock outstanding
2011

Balance at beginning of 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 end of year76

Asahi Group Holdings, Ltd.

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

2009

18,762,163
22,664(205,200)—(2,661)
18,576,966

17. Stock Option Plans
The following tables summarize contents of stock options as of December 31, 2011, 2010 and 2009.
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 are to be exercised

Asahi Group Holdings, Ltd.
March 30, 2000
Directors and Executive Officers: 38
Common Stock 99,000
March 30, 2000
No provisions
No provisions
From January 1, 2005 to March 29, 2010

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 are to 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 are to 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 are to 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 are to 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 are to 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 are to 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

Annual Report 201177

The following tables summarize 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 tables summarize 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¥1,205¥1,566¥1,374¥1,557¥1,688¥—¥ 830¥1,566

The following tables summarize 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 tables summarize 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¥1,205¥1,724¥1,374¥1,740¥1,688¥1,740¥ 830¥1,709The following tables summarize volume and movement of stock options for the year ended December 31, 2009.
Exercisable stock options
Company nameDate of the annual shareholders’ meeting
Stock options outstanding at January 1, 2009
Stock options exercised
Forfeitures
Stock options outstanding at December 31, 2009

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

35,00017,000—18,000242,500
45,900—196,600

410,300
80,300—330,000

536,400
18,500—517,900

598,000
10,500—587,500

620,000——
620,000

166,000
33,000—133,000

The following tables summarize price information of stock options as of December 31, 2009.
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¥1,432¥1,185¥1,372¥1,090¥1,397¥1,374¥1,401¥1,688¥—¥ 830¥1,352¥1,205¥1,351

18. Segment Information
Effective from the year ended December 31, 2011, the Company adopted “Accounting Standard for Disclosures about Segments of an Enterprise andRelated Information” (ASBJ Statement No. 17, issued on March 27, 2009) and “Guidance on Accounting Standard for Disclosures about Segments of anEnterprise and Related Information” (ASBJ Guidance No. 20, issued on March 21, 2008).

(1) GENERAL INFORMATION ABOUT REPORTABLE SEGMENTS
Each reportable segment of Asahi Group is the business unit in Asahi Group, for which separate financial information is available. Reportable segments arereviewed periodically at the Board of Directors Meeting in order to determine allocation of management resources and evaluate business results by eachreportable segment.
Asahi Group mainly engages in the manufacturing and sale of Alcoholic Beverages, Soft drinks and Food for the domestic market, and the manufactureand sale of Alcoholic Beverages and Soft Drinks for the Overseas market. Therefore, the reportable segments of Asahi Group are composed of four segments, “Alcoholic Beverages”, “Soft Drinks”, “Food” and “Overseas”.

78

Asahi Group Holdings, Ltd.

The type of primary products and services of each reportable segment and “Others” are as follows.
“Alcoholic Beverages” includes the manufacture and sale of Alcoholic 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 and sale offood and chemicals. “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, 2011
Millions of yen
Reportable segment
Year ended December 31, 2011

Sales:
Outside 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

Alcoholic
Beverages

Soft Drinks¥921,657
20,767
942,424¥101,025¥698,124*3
Consolidated

Overseas

Others¥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—(74,365)(74,365)¥ (7,229)¥ 82,394¥1,462,736—
1,462,736¥ 107,190¥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

Total*2
Adjustment

Food

304
—
—
—

4,380

91

¥

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

503
—
104
486

58,1356,372
5,480
160,075734

40,225*2
Adjustment*3
Consolidated

Thousands of U.S. dollars
Reportable segment
Alcoholic
Beverages

Soft Drinks

Food

Overseas$11,855,634
267,134
12,122,768$ 1,299,524$ 8,980,242$4,177,798
64,741
4,242,539$ 146,501$2,562,863$1,261,037
26,1381,287,175$ 53,486$1,116,324$1,211,989
219
1,212,208$ (37,471)$ 215,770$ 309,287 $18,815,745
598,354
956,586
907,641 19,772,331$
9,776 $ 1,471,816$5,744,739 $18,619,938— $18,815,745(956,586)—(956,586) 18,815,745$ (92,989) $ 1,378,827$1,059,866 $19,679,804$

469,758—
1,029
11,114$ 142,385
36,069
—
—

$

$

$

$

143,517

228,621

Year ended December 31, 2011

Sales:
Outside 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

36,1083,898(2,277)
1,299
78,33889,182
41,99970,4022,040,443
56,342OthersTotal

3,910 $ 741,343—
81,966—
69,154—
2,052,856
1,170

507,988$6,470 $ 747,813—
81,966
1,337
70,4916,251
2,059,107
9,442

517,430*1 The Company transitioned to a pure holding company structure to clarify the roles and responsibilities of its respective business units and to further develop each unit’s businessexpertise as of July 1, 2011, thus changing the governance of Asahi Group. Along with this change, the restaurant business and wholesale business were included in “Alcoholic
Beverages” from “Others”.
*2 Adjustment is as follows.
(a) Adjustment of segment income (loss) of ¥(7,229) million ($(92,989) thousand) includes corporate expense of ¥(7,826) million ($(100,669) thousand) which is not allocated toreportable segment and the elimination of inter-segment transactions, etc. of ¥597 million ($7,679 thousand).
(b) Adjustment of segment assets of ¥82,394 million ($1,059,866 thousand) includes corporate assets of ¥98,031 million ($1,261,011 thousand) which is not allocated to reportable segment, and the receivables and payables elimination among inter-segment of ¥(15,637) million ($(201,145) thousand). Corporate assets are primarily the assets heldby the Company.
(c) Adjustment of depreciation of ¥503 million ($6,470 thousand) is the depreciation related to corporate assets.
(d) Adjustment of equity in earnings (loss) of affiliates of ¥104 million ($1,337 thousand) is the equity in earnings (loss) of affiliates related to corporate assets.
(e) Adjustment of investment in affiliates of ¥486 million ($6,251 thousand) is the investment in affiliates related to corporate assets.
(f) Adjustment of increase in property, plant and equipment and intangible assets of ¥734 million ($9,442 thousand) is the amount of purchase 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.

Annual Report 201179

Segment information for the year ended December 31, 2010, which is restated in conformity with the requirements of the “Accounting Standard forDisclosures about Segments of an Enterprise and Related Information” (ASBJ Statement No. 17, issued on March 27, 2009).
Millions of yen
Reportable segment
Year ended December 31, 2010

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

Alcoholic
Beverages

Soft Drinks

Food

Overseas

Others¥966,331
22,897989,228¥ 87,250¥816,089¥306,719
5,509
312,228¥ 8,330¥192,358¥95,440
1,881
97,321¥ 3,594¥82,622¥ 97,674
9
97,683¥ (5,138)¥302,802¥23,297
44,55867,855¥ 1,145¥16,538¥1,489,461
74,854
1,564,315¥ 95,181¥1,410,409¥¥ 40,666
(33)
17
784

¥

9,402
2,779
—
—

¥ 2,566
1,047
—
—

¥

¥

¥

¥

12,028

6,502

13,603

6,762
1,905
9,696
158,020
4,222

298
—
—
—

Total

59,694
5,698
9,713
158,804

275*1
Adjustment*2
Consolidated— ¥1,489,461(74,854)—(74,854)
1,489,461¥
168 ¥ 95,349¥ (5,051) ¥1,405,358
16
—
133
460

36,630¥108

59,710
5,698
9,846
159,264
36,738*1 Adjustment is as follows.
(a) Adjustment of segment income (loss) of ¥168 million includes the elimination of inter-segment transactions of ¥168 million.
(b) Adjustment of segment assets of ¥(5,051) million includes corporate assets of ¥7,388 million which is not allocated to reportable segment and the receivables and payables
elimination among inter-segment of ¥(12,439) million. Corporate assets are primarily the assets related to investment in affiliated company.
(c) Adjustment of depreciation of ¥15 million is the depreciation related to corporate assets.
(d) Adjustment of equity in earnings of affiliates of ¥133 million is the equity in earnings of affiliates related to corporate assets.
(e) Adjustment of investment in affiliates of ¥459 million is the investment in affiliates related to corporate assets.
(f) Adjustment of increase in property, plant and equipment and intangible assets of ¥108 million is the amount of purchase of property, plant and intangible assets related tocorporate assets.
*2 Segment income (loss) was reconciled with operating income presented in the consolidated statements of income.

(4) INFORMATION ABOUT PRODUCTS AND SERVICES
Similar information about products and services are disclosed in information about reported segment above. Therefore, its information is not disclosed.
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(a) Sales
Domestic sales in Japan amounted to more than 90% of net consolidated sales. Therefore, its sales are not disclosed.
(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 in the
consolidated balance sheets. Therefore, a geographical breakdown of property, plant and equipment is omitted here.

(6) INFORMATION ABOUT MAJOR CUSTOMERSYear ended December 31, 2011
Millions of yen
Name of customers

Sales

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

¥158,021¥167,360

Thousands of
U.S. dollars
Sales$2,032,686$2,152,817

Segment

Alcoholic Beverages, Soft Drinks, Food
Alcoholic Beverages, Soft Drinks, Food

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

Amortization of goodwill
Unamortized balance of goodwill

Alcoholic
Beverages

Soft Drinks¥——¥ 2,804
33,860Food

Overseas

¥ 302
6,354

¥ 3,690
144,194

Others¥——Adjustment

Total

¥—
—

¥ 6,796
184,408

Thousands of U.S. dollars

Amortization of goodwill
Unamortized balance of goodwill

80

Asahi Group Holdings, Ltd.

Alcoholic
Beverages

Soft Drinks

Food

$—
—

$ 36,069
435,554$ 3,885
81,734

Overseas$

47,466
1,854,824

Others$——Adjustment

$—
—

Total

$

87,4202,372,112

Segment information for the years ended December 31, 2010 and 2009, which had been prepared under the previous standard and formally reported
were as follows:
The Companies primarily engage in the manufacturing and sale of products in three major segments grouped on the basis of similarities in the type andnature of products.
(1) Business segment information for the years ended December 31, 2010 and 2009 was as follows:
Millions of yen
Year ended December 31, 2010

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

Alcoholicbeverages¥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

¥

Consolidated—(75,001)(75,001)(75,723)¥722¥233,7042—
0¥1,489,461—
1,489,461
1,394,112¥ 95,349¥1,405,358
59,71013,57336,738Elimination and/or
corporate

Consolidated

Millions of yen
Year ended December 31, 2009

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

Alcoholicbeverages¥958,156
20,969979,125
900,246¥ 78,879¥737,833
40,672
4,111
15,924

Soft drinks¥355,162
2,572
357,734
357,039¥695¥334,850
13,165761
40,801

Food andpharmaceuticals¥92,400
1,744
94,14491,399¥ 2,745¥90,096
2,500
—
4,341

Others¥ 66,751
52,329119,080
118,191¥889¥ 79,286
2,033
3,446
1,310

¥

—
(77,614)(77,614)(77,183)¥(431)¥191,588
2——¥1,472,469—
1,472,469
1,389,692¥ 82,777¥1,433,653
58,372
8,318
62,376

Pursuant to ASBJ Practical Issues Task Force (PITF) No. 18 issued on May 17, 2006, described in Note 2 “Consolidation”, the Company, effective
January 1, 2009, adopted “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements”.
As a result of this change, operating income of soft drinks decreased by ¥1,377 million for the year ended December 31, 2009.
Pursuant to ASBJ Statement No. 9 issued on July 5, 2006, described in Note 2 “Inventories”, the Company and its consolidated domestic subsidiaries
adopted “Accounting Standard for Measurement of inventories”. As a consequence, operating income of alcoholic beverages, soft drinks, food and pharmaceutical business and others decreased by ¥656 million, ¥730 million, ¥170 million and ¥3 million respectively for the year ended December 31, 2009.
As discussed in Note 2 “Property, Plant and equipment”, in accordance with the revised Japanese Corporate Tax Law and its regulation, the Company
and its consolidated domestic subsidiaries have changed the useful lives for tangible fixed assets in the year ended December 31, 2009. As a consequence,
operating income of alcoholic beverages and soft drinks business decreased by ¥5,961 million and ¥24 million respectively, and operating income of foodand pharmaceutical business and others increased by ¥100 million and ¥1 million respectively for the year ended December 31, 2009.
From the year ended December 31, 2010 the “Food and pharmaceutical” segment was shifted to the “Food” segment. This change in business categories 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:
Outside 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 forJapan are less than 10% of the total amount of consolidated sales and that of consolidated identifiable assets. Therefore, the country or area except forJapan is displayed as “Others”.
Major countries and areas included in “Others” are Australia and China.
Both sales outside Japan and identifiable assets except Japan are less than 10% of the Company’s consolidated sales and that of consolidated identifiable assets for 2009. Therefore, geographical segment information is not disclosed for 2009.
Sales to foreign customers are less than 10% of the Company’s consolidated net sales for 2010 and 2009. Therefore overseas sales information is
not disclosed.

Annual Report 201181

19. Business Combinations
Business combination through the acquisition during the year ended December 31, 2011

(1)OUTLINE OF THE TRANSACTIONS(a) Name and business of acquired company
Flavoured Beverages Group Holdings Limited
Overseas business(b) Outline and purpose of the transaction
Under the Company’s long-term vision, by 2015 the Asahi Group aims to increase its sales to ¥2.0–2.5 trillion ($26–32 billion), increase its share ofoverseas sales to 20–30% of total group sales, and join the ranks of the top global food companies in scale, while becoming a trusted company with
global quality.
To achieve this goal, Asahi Group will drive growth in its existing businesses as well as expand its overseas investment activities to realize further
synergies. Through the acquisition of Flavoured Beverages Group Holdings Limited, Asahi will gain a strong position in the alcoholic beverage markets
in New Zealand and Australia. By promoting collaboration with existing beverage business groups in the region, Asahi Group aims to enhance its overall
corporate value in Oceania.
(c) Effective date of business combination
September 30, 2011(d) Legal form of business combination
Share acquisition by cash(e) Name of the company after business combination
Flavoured Beverages Group Holdings Limited(f) Share of voting rights acquired
100%(g) Main reason of the determination of acquiring company
Due to share acquisition by Asahi Liquor New Zealand Limited which is the Company’s consolidated subsidiary(2) PERIOD OF OPERATION OF ACQUIRED COMPANY INCLUDED IN THE ACCOMPANYING CONSOLIDATED FINANCIAL
STATEMENTS
From October 1, 2011 to December 31, 2011

(3) ACQUISITION COST OF ACQUIRED COMPANY AND ITS BREAKDOWN
The acquisition cost of acquired company is ¥98,155 million ($1,262,606 thousand). However, the Company is in the midst of investigating changes in
the working capital etc. as of the acquisition date based on the purchase and sales agreement. Therefore, the acquisition cost is not fixed yet as ofDecember 31, 2011 and the above-mentioned amount is a provisional value.

(4) GOODWILL, REASON FOR RECOGNIZING GOODWILL, AMORTIZATION METHOD AND AMORTIZATION TERM(a) Amount of goodwill¥73,598 million ($946,720 thousand)(b) Reason for recognizing goodwill
Estimated future excess earning power being expected based on the future business operation.
(c) Method and term to amortize goodwill
Straight-line method over 20 years
The acquisition cost is not fixed yet as of December 31, 2011 and the Company is in the midst of conducting Purchase Price Allocation (“PPA”).
Therefore, the information above is tentatively calculated by rational and available information.

(5) ASSETS AND LIABILITIES OF THE ACQUIRED COMPANY AS OF THE DATE OF THE BUSINESS COMBINATION
Millions of yen

Thousands of
U.S. dollars¥ 9,573
14,230¥23,803¥ 4,205
2,610¥ 6,815$123,141
183,046$306,187$ 54,091
33,573$ 87,664

Current assets
Fixed assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities
Note: Amount of goodwill as mentioned in (4) (a) is not included in the above amount of assets and liabilities.
The Company is in the midst of conducting PPA. Therefore, the information above as of December 31, 2011 is a provisional value.

(6) ESTIMATED IMPACT ON CONSOLIDATED FINANCIAL RESULT IF THE BUSINESS COMBINATION HAD BEEN COMPLETED
AT THE BEGINNING OF THE FISCAL YEAR (JANUARY 1, 2011)
The Company does not calculate it because of the difficulty of calculating the estimated impact.

82

Asahi Group Holdings, Ltd.

Business combination through the acquisition during the year ended December 31, 2011

(1) OUTLINE OF THE TRANSACTIONS(a) Name and business of acquired company
P&N Beverages Australia Pty. Limited and other
Overseas business(b) Outline and purpose of the transaction
Under the Company’s long-term vision, by 2015 the Asahi Group aims to increase its sales to ¥2.0–2.5 trillion ($26–32 billion), increase its share ofoverseas sales to 20–30% of total group sales, and join the ranks of the top global food companies in scale, while becoming a trusted company with
global quality.
To achieve this goal, Asahi Group will drive growth in its existing businesses as well as expand its overseas investment activities to realize further
synergies. Through the acquisition of P&N Beverages Australia Pty. Limited’s water and juice businesses in line with the above policy, Asahi Group aims
to enhance its position within the Australian beverage market by enabling Schweppes Australia Pty Ltd to strengthen its product portfolio and gain efficiencies in supply chain management.
(c) Effective date of business combination
September 2, 2011(d) Legal form of business combination
Share acquisition by cash(e) Name of the company after business combination
P&N Beverages Australia Pty. Limited and other (P&N Beverages Australia Pty. Limited renamed “Asahi Beverages Australia Pty Ltd”)(f) Share of voting rights acquired
100%(g) Main reason of the determination of acquiring company
Due to share acquisition by Asahi Holding (Australia) Pty Ltd which is the Company’s consolidated subsidiary(2) PERIOD OF OPERATION OF ACQUIRED COMPANY INCLUDED IN THE ACCOMPANYING CONSOLIDATED FINANCIAL
STATEMENTS
From September 3, 2011 to December 31, 2011

(3) ACQUISITION COST OF ACQUIRED COMPANY AND ITS BREAKDOWN
The acquisition cost of acquired company is ¥14,981 million ($192,706 thousand). However, the Company is in the midst of investigating changes in theworking capital etc. as of the acquisition date based on the purchase and sales agreement. Therefore, the acquisition cost is not fixed yet as of December
31, 2011 and the above-mentioned amount is a provisional value.

(4) GOODWILL, REASON FOR RECOGNIZING GOODWILL, AMORTIZATION METHOD AND AMORTIZATION TERM(a) Amount of goodwill¥14,110 million ($181,502 thousand)(b) Reason for recognizing goodwill
Estimated future excess earning power being expected based on the future business operation.
(c) Method and term to amortize goodwill
Straight-line method over 20 years
The acquisition cost is not fixed yet as of December 31, 2011 and the Company is in the midst of conducting PPA. Therefore, the information above
is tentatively calculated by rational and available information.

(5) ASSETS AND LIABILITIES OF THE ACQUIRED COMPANY AS OF THE DATE OF THE BUSINESS COMBINATION
Millions of yen

Thousands of
U.S. dollars¥2,323
4,273¥6,596¥5,146—¥5,146$29,882
54,965$84,847$66,195—$66,195

Current assets
Fixed assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities
Note: Amount of goodwill as mentioned in (4) (a) is not included in the above amount of assets and liabilities.
The Company is in the midst of conducting PPA. Therefore, the information above as of December 31, 2011 is a provisional value.

(6) ESTIMATED IMPACT ON CONSOLIDATED FINANCIAL RESULT IF THE BUSINESS COMBINATION HAD BEEN COMPLETED
AT THE BEGINNING OF THE FISCAL YEAR (JANUARY 1, 2011)
The Company does not calculate it because of the difficulty of calculating the estimated impact.

Annual Report 201183

Business combination through the acquisition during the year ended December 31, 2011

(1) OUTLINE OF THE TRANSACTIONS(a) Name and business of acquired company
Charlie’s Group Limited
Overseas business(b) Outline and purpose of the transaction
Under the Company’s long-term vision, by 2015 the Asahi Group aims to increase its sales to ¥2.0–2.5 trillion ($26–32 billion), increase its share ofoverseas sales to 20–30% of total group sales, and join the ranks of the top global food companies in scale, while becoming a trusted company with
global quality.
To achieve this goal, Asahi Group will drive growth in its existing businesses as well as expand its overseas investment activities to realize further
synergies. Through the acquisition of Charlie’s Group Limited, Asahi will establish a position within the New Zealand beverage market. By pursuing further
synergies with existing beverage business in Australia, Asahi Group aims to drive growth of beverage business in Asia and Oceania.
(c) Effective date of business combination
August 31, 2011(d) Legal form of business combination
Share acquisition by cash(e) Name of the company after business combination
Charlie’s Group Limited(f) Share of voting rights acquired
100%(g) Main reason of the determination of acquiring company
Due to share acquisition by Asahi Beverages New Zealand Limited which is the Company’s consolidated subsidiary(2) PERIOD OF OPERATION OF ACQUIRED COMPANY INCLUDED IN THE ACCOMPANYING CONSOLIDATED FINANCIAL
STATEMENTS
From September 1, 2011 to December 31, 2011

(3) ACQUISITION COST OF ACQUIRED COMPANY AND ITS BREAKDOWN
The acquisition cost of acquired company is ¥8,481 million ($109,094 thousand).

(4) GOODWILL, REASON FOR RECOGNIZING GOODWILL, AMORTIZATION METHOD AND AMORTIZATION TERM(a) Amount of goodwill ¥6,910 million ($88,886 thousand)(b) Reason for recognizing goodwill
Estimated future excess earning power being expected based on the future business operation.
(c) Method and term to amortize goodwill
Straight-line method over 20 years
The acquisition cost is not fixed yet as of December 31, 2011 and the Company is in the midst of conducting PPA. Therefore, the information above
is tentatively calculated by rational and available information.

(5) ASSETS AND LIABILITIES OF THE ACQUIRED COMPANY AS OF THE DATE OF THE BUSINESS COMBINATION
Millions of yen

Thousands of
U.S. dollars

¥ 949
1,821
¥2,770¥ 675
557¥1,232$12,208
23,424$35,632$ 8,683
7,165$15,848

Current assets
Fixed assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities
Note: Amount of goodwill as mentioned in (4) (a) is not included in the above amount of assets and liabilities.
The Company is in the midst of conducting PPA. Therefore, the information above as of December 31, 2011 is a provisional value.

(6) ESTIMATED IMPACT ON CONSOLIDATED FINANCIAL RESULT IF THE BUSINESS COMBINATION HAD BEEN COMPLETED
AT THE BEGINNING OF THE FISCAL YEAR (JANUARY 1, 2011)
The Company does not calculate it because of the difficulty of calculating the estimated impact.

84

Asahi Group Holdings, Ltd.

Business combination through the acquisition during the year ended December 31, 2011

(1) OUTLINE OF THE TRANSACTIONS(a) Name and business of acquired company
Permanis Sdn. Bhd.
Overseas business(b) Outline and purpose of the transaction
Under the Company’s long-term vision, by 2015 the Asahi Group aims to increase its sales to ¥2.0–2.5 trillion ($26–32 billion), increase its share ofoverseas sales to 20–30% of total group sales, and join the ranks of the top global food companies in scale, while becoming a trusted company with
global quality.
To achieve this goal, Asahi Group will drive growth in its existing businesses as well as expand its overseas investment activities to realize further
synergies. Through the acquisition of Permanis Sdn. Bhd., Asahi hopes to establish a base in the Malaysian soft drink market and use this as a platform
for mid to long term expansion into Southeast Asia. In addition, to generate synergies within its Oceania operations, together with its strong operationsin China, Asahi intends to establish and strengthen a platform for growth in the Asia Oceania region.
(c) Effective date of business combination
December 31, 2011 (deemed acquisition date)(d) Legal form of business combination
Share acquisition by cash(e) Name of the company after business combination
Permanis Sdn. Bhd.
(f) Share of voting rights acquired
100%(g) Main reason of the determination of acquiring company
Due to share acquisition by Asahi Group Holdings Southeast Asia Pte. Ltd. which is the Company’s consolidated subsidiary(2) PERIOD OF OPERATION OF ACQUIRED COMPANY INCLUDED IN THE ACCOMPANYING CONSOLIDATED FINANCIAL
STATEMENTS
The financial result of acquired company for the year ended December 31, 2011 is not accounted for.

(3) ACQUISITION COST OF ACQUIRED COMPANY AND ITS BREAKDOWN
The acquisition cost of acquired company is ¥21,276 million ($273,682 thousand).

(4) GOODWILL, REASON FOR RECOGNIZING GOODWILL, AMORTIZATION METHOD AND AMORTIZATION TERM(a) Amount of goodwill¥13,260 million ($170,569 thousand)(b) Reason for recognizing goodwill
Estimated future excess earning power being expected based on the future business operation.
(c) Method and term to amortize goodwill
Not determined yet
The acquisition cost is not fixed yet as of December 31, 2011 and the Company is in the midst of conducting PPA. Therefore, the information above
is tentatively calculated by rational and available information.

(5) ASSETS AND LIABILITIES OF THE ACQUIRED COMPANY AS OF THE DATE OF THE BUSINESS COMBINATION
Millions of yen

Thousands of
U.S. dollars¥ 5,682
11,577¥17,259¥ 3,582
5,814¥ 9,396$ 73,090
148,919$222,009$ 46,076
74,788$120,864

Current assets
Fixed assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities
Note: Amount of goodwill as mentioned in (4) (a) is not included in the above amount of assets and liabilities.
The Company is in the midst of conducting PPA. Therefore, the information above as of December 31, 2011 is a provisional value.

(6) ESTIMATED IMPACT ON CONSOLIDATED FINANCIAL RESULT IF THE BUSINESS COMBINATION HAD BEEN COMPLETED
AT THE BEGINNING OF THE FISCAL YEAR (JANUARY 1, 2011)
The Company does not calculate it because of the difficulty of calculating a provisional value.

Annual Report 201185

Business combination under common control during the year ended December 31, 2011

(1) OUTLINE OF THE TRANSACTIONS(a) Name and business of acquired company
Asahi Group Holdings, Ltd. (Company name before the transaction: Asahi Breweries, Ltd.)
Alcoholic Beverages: Manufacture and sale of alcoholic beverages mainly in Japan(b) Effective date of business combination
July 1, 2011(c) Legal form of business combination
Absorption-type demerger under the Companies act of Japan, with the Company as the demerged company, and Asahi Group Holdings, Ltd., theCompany’s wholly-owned subsidiary as the successor company.
(d) Name of the company after business combination
Asahi Breweries, Ltd.
As of July 1, 2011, the Company changed its trade name to “Asahi Group Holdings, Ltd.” and changed its business purpose in accordance with
their management and operation as a holding company.
(e) Outline of other transactions
By the transition to a pure holding company structure, the Company will enhance the functions of the governance of Asahi Group, and thereby further
cultivate its craftsmanship and strengthen the management infrastructure of the entire Asahi Group by integrating its operations across the Asahi Groupand improving specialty service functions, as well as develop human resources that are capable of appropriately responding to the diversity of customers
and businesses. At the same time, as the new structure will allow the Company to make bold resource allocation to growing areas in both domestic andoverseas markets, the Company will speed up its efforts to achieve significant growth of the whole Asahi Group.

(2) OVERVIEW OF THE RELATED ACCOUNTINGThis transition is accounted for as business transaction under common control based on the “Accounting Standards for Business Combinations” (ASBJ
statement issued on October 31, 2003), and the “Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures” (ASBJ Guidance No 10 issued on November 15, 2007).
The amounts of assets and liabilities which Asahi Breweries, Ltd. succeeded to as of the date of business combination are as follow:

Total assets
Total liabilities
Common stock
Capital reserve
Other capital surplus
Valuation difference on available-for-sale securities

86

Asahi Group Holdings, Ltd.

Millions of yen

Thousands of
U.S. dollars¥625,695
138,326
20,0005,000
461,303
1,066$8,048,559
1,779,341
257,268
64,317
5,933,921
13,712

Transactions applied to purchase method during the year ended December 31, 2009

(1) OUTLINE OF THE TRANSACTIONS(a) Name and business of acquired company
Schweppes Holdings Pty Ltd
Production and sales of soft drinks(b) Outline and purpose of the transaction
In the Food and Health business, the Asahi Breweries Group is to strengthen the operating domain mainly in Asia, and to promote the formulation of thevalue chain to realize further secure, safe and high-quality goods with attractive and innovative ideas. In the quest to realize those activities, the Asahi
Breweries Group is pursuing the growth of its existing subsidiaries and the synergy between its existing subsidiaries and new operating bases by further
investments and aiming to establish the Asahi Breweries Group’s growth path.
As for the soft drink business, one of pillars of the Asahi Breweries Group’s operation, the Asahi Breweries Group is aiming to expand the operatingbase mainly through Asahi Soft Drinks Co., Ltd. in the Japanese domestic market as well as strengthen management bases of Haitai Beverage Co., Ltd.
With a significant growth in sales of Tingyi-Asahi-Itochu Beverages Holding Co. Ltd, the Asahi Breweries Group is trying to expand their operating basesin the soft drink business in Asia, and conduct high-level investments for new business as well as promising markets.
By this acquisition, the Asahi Breweries Group is to obtain an operating base not only in Asia but also in Oceania. It is the Asahi Breweries Group’s
policy to strengthen its overseas operating bases and accelerate its further growth by realizing group synergies.
(c) Effective date of business combination
April 3, 2009(d) Legal form of business combination
Share acquisition by cash(e) Name of the company after business combinations
Schweppes Holdings Pty Ltd(f) Share of voting rights acquired
100%(2) PERIOD OF OPERATION OF ACQUIRED COMPANY INCLUDED IN THE ACCOMPANYING CONSOLIDATED FINANCIAL
STATEMENTS
From April 1, 2009 to December 31, 2009

(3) ACQUISITION COST OF ACQUIRED COMPANY AND ITS BREAKDOWN
Millions of yen

Acquisition cost of shares
Expenditures for acquiring the common shares
Acquisition cost

¥59,828
1,406¥61,234(4) GOODWILL, REASON FOR RECOGNIZING GOODWILL, AMORTIZATION METHOD AND AMORTIZATION TERM(a) Amount of goodwill¥31,855 million(b) Reason for recognizing goodwill
Rationally estimated future excess earning power being expected based on the future business operation.
(c) Method and term to amortize goodwill
Straight-line method over 20 years(5) ASSETS AND LIABILITIES OF THE ACQUIRED COMPANY AS OF THE DATE OF THE BUSINESS COMBINATION
Millions of yen

Current assets
Fixed assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities¥13,989
28,111¥42,100¥10,556
1,024¥11,580

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

(6) ESTIMATED IMPACT ON CONSOLIDATED FINANCIAL RESULT IF THE BUSINESS COMBINATION HAD BEEN COMPLETED
AT THE BEGINNING OF THE FISCAL YEAR (JANUARY 1, 2009) (UNAUDITED)Millions of yen

Sales
Operating income
Income before income taxes and minority interests
Net income
Net income per share (yen)¥13,643553
670
342¥ 0.74

Note: The above estimated amounts were the amounts of difference between pro-forma sales and income calculated as if the business combination had been completed at the
beginning of the fiscal year (January 1, 2009), and sales and income per the Company’s consolidated statement of income.
Net income per share was calculated by dividing net income by average number of shares during 2009.

Annual Report 201187

20. Consolidated Statement of Comprehensive Income(1) Comprehensive income for the year ended December 31, 2010 was as follow:
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 follow:
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 equity method
Total¥(2,247)706
28(3,392)¥(4,905)

21. Related Party Transactions
There was no related party transaction for the years ended December 31, 2011 and 2009.
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 was 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 59 equity-method affiliates including Tingyi-Asahi Beverages Holding Co. Ltd (“TAB”) and its 51 affiliates, 40
equity-method affiliates including TAB and its 33, 33 equity-method affiliates including TAB and its 28 affiliates for the years ended December 31, 2011, 2010
and 2009, 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

88

Asahi Group Holdings, Ltd.

2011

2010

2009

2011

¥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¥123,933
242,154
155,496
27,326
183,716
265,619
27,14022,374$2,109,557
7,143,620
3,162,336
952,573
5,155,647
8,131,605
636,596443,260

22. Subsequent EventAppropriations 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, 2011, were approved at a general meeting of the shareholders of the Company held on March 27, 2012:

Cash dividends (¥13.5 per share)

Millions of yen

Thousands of
U.S. dollars¥6,286$80,859

Annual Report 201189

INDEPENDENT AUDITORS’ REPORT

90

Asahi Group Holdings, Ltd.

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

2000

2004

2005

2006

2007

2008

2009

2010

China

190.2

240.6

263.6

288.9

324.8

351.9

368.1

376.6

United States

195.9

199.7

200.0

202.7

205.1

205.6

202.1

198.8

Russia

70.4

70.1

74.3

81.8

93.8

93.3

89.1

98.9

Brazil

47.1

74.4

77.9

81.3

87.1

88.3

84.8

80.0

Germany

87.9

81.5

81.0

82.2

78.3

77.7

76.6

74.9

Mexico

42.9

46.4

47.9

50.5

54.0

54.8

55.2

55.0

Japan*2

60.5

56.4

53.9

54.0

53.4

52.1

51.0

49.5

United Kingdom

48.6

50.4

48.1

47.4

45.3

43.8

43.0

39.1

Spain

24.8

29.4

29.5

29.8

30.4

27.8

27.8

27.7

Poland

19.0

24.9

26.2

27.7

29.8

30.4

27.8

27.7

*1 Excludes non-alcoholic beverages. *2 Includes happoshu and new genre.
Source: Impact Databank 2011 Edition

02 World’s top 10 beer brands*1 in 201003 Per capita beer consumption in major nationsin 2010

2(Millions of barrels* )
80

75.7

(Gallons per person*)
30

71.7

28.3
22.6

60

19.6

19.4

20
40

31.5

29.7

12.1
27.7

26.9

26.0

24.5

22.3

8.6

20.0

18.5

10

YanjingAsahi

0 Germany

20

0 Budweiser Snow

Skol

Tsingtao Corona

MillerBrahma Heineken Coors*1 Includes exports and license volume.
*2 One U.S. barrel = 1.173477653 hectoliters.
Source: Impact Databank 2011 Edition

PolandUnitedKingdom

UnitedStates

Japan

China

* Based on total population. One U.S. gallon = 3.785 liters.
Source: Impact Databank 2011 Edition

04 Tax per unit of concentration of alcohol in

05 Beer tax*1,2,3 in major nations

major countries*2,3,4■ Beer ■ Wine

(%)

500

(Yen)

150

440

139

400
100
300

71

200
73 79
100
0

50

67

Japan

14 2

14 0

5 5

FranceGermany

UnitedStatesUnitedKingdom0Japan

UnitedKingdom*1 Cash values (liquor tax) shown in yen per 633 milliliters.
*2 Foreign exchange rates were: €1 = ¥116.84; U.S.$1 = ¥80.73; £1 = ¥129.78 (based on TTM rate as of June 2011).
*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 (September 2011)

12

10

7

UnitedStatesFranceGermany

Annual Report 201191

FACT SHEETSJapan’s alcoholic beverages market
06 Taxable shipment volume in Japan in 2011
Whisky

1.2%

Sake

Other

7.2%

1.2%

Shochu
Beer

10.8%

32.0%

total

Spirits (includes RTD beverages)

3.6%

8,872,944kl

Wines (includes RTD beverages)

3.4%
Liqueurs (includes new genre beverages and RTD beverages)

Happoshu

22.8%

9.8%

Zasshu (includes new genre beverages)

8.1%
Compiled from National Tax Agency reference materials.

07 Comparison of liquor taxes per 350 milliliters
Alcoholic beverages

Beer*

Malt component ratio Alcohol content

Tax amount (Yen)77

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

47

* Beer-type beverages: their tax amounts are derived from representative products in the market.

08 Distribution route of Japan’s alcoholic beverages industry

RetailerBars and restaurants

Supermarket
Maker

Wholesaler

ConsumerConvenience store

License required for wholesaling
alcoholic beverages.

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

92

Asahi Group Holdings, Ltd.

FACT SHEETS

09 Beer, happoshu and new genre: market

10 Beer, happoshu and new genre: shipment

share in Japan by major company (1954–2011)
Asahi Breweries(%)

Company A

Company B

volume in Japan (January–December 2011)

Company C

ASAHI BREWERIES(Million cases)

Year-on-yearchange (%)

Volume

70

60

50

37.9%

Beer

111.61

Happoshu
New genre

Total

Market share(Increase/Decrease)–5.0(–4.3%)

50.5%(–0.1)

16.64

–2.1

(–11.2%)24.5%(+0.5)

39.39

+2.6

(+7.0%)

25.7%(+1.2)

167.64–4.6(–2.7%)

37.9%(+0.4)

40

36.2%

INDUSTRY OVERALL

30(Million cases)

Year-on-yearchange (%)

Volume

20

13.3%
11.6%

10

0

1960

1970

1980

1990

2000

2011

Source: Asahi Breweries, Ltd.

Breakdown(Increase/Decrease)Beer

221.03–9.4(–4.1%)

50.0%

Happoshu

68.02

–10.1

(–12.9%)15.4%(–1.6)New genre

153.34+2.7(+1.8%)

34.7%(+1.9)

Total

442.39–16.8(–3.7%)

100.0%—(–0.2)

Sources: Brewers Association of Japan and Happoshu online website

Asahi Breweries beer-type beverages sales
11 Sales composition by container type in 2011
■ Bottle ■ Can ■ Keg

(%)
100

18.4

100.0

1.8
98.2

YEAR-ON-YEAR SALES RATIO, BY CONTAINER TYPE
(2011/2010)

18.4

80

Bottle

Can

Keg

Total

90.9%

97.0%

96.5%

95.4%

Happoshu(low-malt beer)

—

88.4%

—

88.4%

New genre(no-malt beer)—105.7%

210.8%

106.6%

90.8%

98.4%

97.8%

97.1%

Beer

60
66.6

66.6

40
20
15.0
0

Beer

15.0

Happoshu

New genre

Total

Total

12 Sales composition by marketing channel
2010 results
Beer

Happoshu andnew genre (total)

2011 results
Total

Beer

Happoshu andnew genre (total)

Total

Convenience stores

8.1%

13.5%

9.8%

8.2%

13.0%

9.8%

Supermarkets

18.4%

41.6%

25.9%

18.9%

42.2%

26.6%

15.9%

22.0%

17.8%

15.6%

21.6%

17.6%

Mass-retail outlets total

Discount stores (outlets)

42.4%

77.1%

53.5%

42.7%

76.8%

54.0%

Commercial-use liquor retailers

36.2%

3.1%

25.6%

36.2%

3.4%

25.3%

General liquor shops, etc.

21.4%

19.8%

20.9%

21.1%

19.9%

20.7%

Total

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%* Composition of commercial-use liquor retailers does not equal the consumption rate for commercial-use liquor.
Source: Asahi Breweries, Ltd.

Annual Report 201193

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 OVERALLASAHI SOFT DRINKS

Tea-based drinks
CoffeeCarbonated beverages
Fruit and vegetable drinks
Other soft drinks(Million cases)
600

Tea-based drinks
CoffeeCarbonated beverages
Fruit and vegetable drinks
Other soft drinks(Million cases)
50

500

493.5
434.0

400

382.5

43.4
41.6
38.6
36.0

40
30

300

244.0
190.0

200

20
13.4
10

100
0

2007

2008

2009

2010

0

2011

2007

2008

2009

2010

2011

2007

2008

2009

2010

2011

(Million cases)(Million cases)

2007

2008

2009

2010

2011

Tea-based drinks

518.0

505.0

487.5

503.0

493.5

Tea-based drinks

34.6

34.7

31.2

35.6

36.0

Coffee

396.0

396.5

391.5

384.5

382.5

Coffee

28.5

35.9

36.9

35.7

38.6

Carbonatedbeverages

210.0

225.0

235.0

246.0

244.0

Carbonatedbeverages

34.2

36.1

41.2

43.2

43.4

Fruit andvegetable drinks

210.0

192.5

179.5

190.0

190.0

Fruit andvegetable drinks

14.2

11.2

11.1

11.7

13.4

Other soft drinks

19.4

27.4

26.3

32.8

41.6

Total

130.9

145.3

146.7

159.0

172.8

Other soft drinks
Total

424.0

421.0

400.5

411.5

434.0

1,758.0

1,740.0

1,694.0

1,735.0

1,744.0

14 Sales in domestic soft drinks market, by container type in 2011
INDUSTRY OVERALL

Paper container
and others

Glass bottle

Total

1,744.0

8.1%
Glass bottle

5.4%

3.3%

2.7%

PET bottle

59.0%(Million cases)

Can

Paper container and others

ASAHI SOFT DRINKS

Total

PET bottle

172.8

52.7%

(Million cases)

32.4%

Can

36.5%

15 Sales composition in domestic soft drinks market, by marketing channel in 2011
INDUSTRY OVERALLASAHI SOFT DRINKS

Other
Other

10.5%

23.9%
Total

Convenience
stores1,744.0

20.6%(Million cases)

Total

Vending machines

33.2%

Convenience
stores13.0%
Supermarkets

35.7%

Supermarkets

33.5%
94

Asahi Group Holdings, Ltd.

172.8
(Million cases)

Vending machines

29.6%

CORPORATE DATA
(As of December 31, 2011)

Major Group companies (domestic)
Company

Capital (¥ billion)

Percentage of voting rights

Sales in 2011 (¥ billion)

20

100.0%

919.6

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

11.1

100.0%

310.9

LB Co., Ltd.

0.5

100.0%

21.3

Asahi Food & Healthcare Co., Ltd.

3.2

100.0%

48.9

Wakodo Co., Ltd.

2.9

100.0%

37.1

Amano Jitsugyo Co., Ltd.

0.1

100.0%

17.8

Domestic food business

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.

3

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

Shizuoka, Toyama, Hyogo

LB Co., Ltd.

2

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

Saitama, Aichi

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, powderedseasonings, and freeze-dried food products

OkayamaAsahi Beer Malt, Ltd.

2

Malt, malt powder, barley tea and otherproducts

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.

Sales and marketing of beer
(Other than Thailand)

12th Floor, Room No.1213, Qhouse Asoke Building, 66 Sukhumvit
21, North Klongtoey, Wattana, Bangkok 10110, Thailand

Asia
Asahi Breweries, Ltd.
Bangkok Office

Annual Report 201195

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.

Sales andmarketing of beer

Headquarters & Los Angeles Branch:
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%

Ownership andmanagement of agolf club

Denham Court Drive, Denham,
Buckinghamshire UB9 5PG, U.K.

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
Company, 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

Australia Holdings (Australia)
Pty Ltd

AU$214
million100.0%

Control of operations in Oceania

Suite 104, 68-72 York Street, South Melbourne,
Vic 3205, Australia

Schweppes Australia Pty Ltd.

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
Company Limited

Asia-Oceania

96

Asahi Group Holdings, Ltd.

INVESTOR INFORMATION(As of December 31, 2011)

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.asahibeer.co.jp/english

Composition of Shareholders(%)

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

Date of Establishment
September 1, 1949

37.7
26.5
16.2
12.7
3.7
3.2

Major Shareholders
Number of Employees
Consolidated: 16,759

Percentage ofvoting rights (%)

Shareholder Name

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

The Master Trust Bank of Japan, Ltd. (Trust Account)

5.1%

Japan Trustee Services Bank, Ltd. (Trust Account)

4.4%

Asahi Kasei Corporation

3.9%

The Dai-ichi Mutual Life Insurance Company

3.5%

Fukoku Mutual Life Insurance Company

3.5%

JP Morgan Chase Bank 38055

2.3%

SSBT OD05 OMNIBUS ACCOUNT–TREATY CLIENTS

2.0%

Sumitomo Mitsui Banking Corporation

1.9%

The Sumitomo Trust & Banking Co., Ltd.

1.7%

Japan Trustee Services Bank, Ltd. (Trust Account 9)

1.4%* While Asahi Group Holdings, Ltd. owns 17,950 millions shares of treasury stock, it is notincluded with the major shareholders listed above.

Number of Shareholders
123,931
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 meeting ofshareholders as necessary, giving at least two weeks priornotice to shareholders.

Stock Exchange Listings
Tokyo Stock Exchange, Osaka Securities Exchange
Newspaper for Official Notice
Nihon Keizai Shimbun
Transfer Agent and Registrar
Stock Transfer Agent:
The Sumitomo Trust & Banking Co., Ltd.
4-5-33 Kitahama, Chuo-ku, Osaka
Handling Office:The Sumitomo Trust & Banking Co., Ltd.
Stock Transfer Agency Department
2-3-1 Yaesu, Chuo-ku, Tokyo
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

2011/1

2011/3

2011/5

2011/7

2011/92011/11(million shares)
25
20
15
10
5
0

Annual Report 2011

97

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